SP 500 and NDX March Futures Daily Charts

Keep an eye on the VIX.

As a reminder this is an options expiration week for stocks.

Gold Daily and Silver Weekly Charts - In the Silver Pit No One Can Hear You Screaming

The Bankmistress and her merry band of pranksters threw a major hissy fit this morning, smacking down the precious metals sector and related trades, like the miners, to such an extent that I put out a special notice about what I was seeing in the markets.  In fear and trembling I actually stepped in and bought position in size and leverage more than ordinary, since the miners had been discounted so badly, even given the decline in the equity markets which also seemed like a trading gambit.  It seems like a no-brainer now, but let me assure you at the time it seemed a bit wanton, falling knife-wise.

As I said, I took quite a bit of that risk back off the table in the afternoon through some sales and hedging as the news from Japan appeared more grim.  All too brief, but sweet nonetheless, as the Blythemaster 2000 had the metalheads backed up against the wall, and then succumbed to their uncouth charms, and gave it all up, and more.  Thanks again for breakfast, sugar buns.  

So now what?  This is delivery time, and I will be reading the information from the Comex and also from experienced commodity traders and commentators in this area like Dan Norcini, Bill Murphy, Denver Dave, and Harvey Organ along with my own efforts to try and puzzle out where we stand with the March delivery process, and how things are shaping up for April. 

It seems to me that the shorts are just trapped, and there are no two ways about it.  The bullion banks are hoist on their own petard in silver, because the central banks cannot lend it to them as they can with gold, and they are down to scraps and shell games with existing supplies.

And with this movement to take physical bullion off the market, it appears that things will only get worse for the shorts before it gets better. I would imagine that unless they can bluff their way out of this, someone is going to try and stop their twisting in the wind, as it causes too much attention to be paid to all the other antics going on with equities and key commodities.

Someone might actually demand legitimate reform. Oh, they already did. Well, perhaps they might actually do something to force the issue, like pick a key vulnerability like the silver market, and take these jokers to the wall. Oh, they're doing that as well. This is going to be quite the ride then.

This is shaping up to be an interesting year to say the least, and we may as well enjoy it while we can, because I remain very concerned about what will happen this summer in the West, if the pigmen start losing their grip on the masses, and  reach for the forbidden excesses of the powerful.

SP 500 and NDX March Futures Daily Charts: Weekend at Bennie's

Neither snow, nor rain, nor riots in Saudi Arabia or once in a hundred year earthquakes shall deter these markets from rallying into the close. Good old Benny, always can depend on him to turn a frown upside down.

Seriously, although the major US indices had a nice bounce off their lows, they are far from out of the woods, and we cannot yet be complacent about this correction.

Defensive positions are recommended until the uptrend is re-established. While it was heartening to see the SP 500 climb back above its 50 DMA which is now around 1299, the NDX tech sector is still lagging withits 50 DMA around 2317, and this is the chart that I watch, in addition to financials and the Russell 2000, to judge the quality of any rallies. Too often they will jam the SP 500 futures higher and try to drag the rest of the market along with it.

I will be keenly interested in seeing the full extent of the damage in Japan, and any follow on problems to a quake of this magnitude, especially with regard to their nuclear infrastructure. I am sure they will handle it as they have done so many times in the past, rising as one people to the challenge. There will be many comparisons to how the markets reacted to the Kobe earthquake in the 1990's.

In terms of the US economy, there is no real recovery yet that I can determine. The earthquake of the financial crisis has left the country divided, its economy sputtering. Repairs have not been made, and those who created and benefited from the crisis are seeking conscripts to take their pain.

John Williams of Shadowstats had this to say:

"Markets Are Flying Blind.

In terms of meaningful economic reporting, the financial markets continue to be flying blind, at the moment. Economic data of questionable significance continue to flow from the government’s statistical bureaus, including this morning’s (March 11th) report of February retail sales. There will be a full review of the economic outlook in the Hyperinflation update, and the constant-dollar February retail sales will be assessed in the March 17th Commentary, following the CPI release.

On its surface, the February retail sales report was positive on a nominal (not-adjusted for inflation) basis, as well as likely in real (inflation-adjusted) terms. The reporting-quality problems remain in unstable monthly seasonal-factor adjustments. Seasonal patterns have been warped by the depth and duration of an economic downturn that is unprecedented in the post-World War II era of modern economic reporting. The retail data will be revised in a pending annual benchmark revision, scheduled for April 29th.

At that time, retail sales levels and growth of at least the last year should be subject to major downside revisions, showing a weaker economy than has been recognized previously. As with the recent, major downside revisions to payroll employment, and the pending downside revisions to industrial production later in March, the retail sales downgrade will be a precursor to major downside revisions in GDP history of the last several years, which are due for release in late July.

While there also are seasonal-adjustment issues with the trade data, the reported January 2011 deficit has set up a potential dampening of growth to be reported in first-quarter 2011 GDP, at the end of April."

Weekend At Bennie's - Looking Good!

A Message Received From a Friend In Japan

As a side note I have taken profits and/or hedged out some of the risks on the somewhat oversized mining trades I had placed this morning in the precious metals complex when the Bankmistress and her crew threw their daily hissy fit over being trapped in a rather large silver short, with the plebes daring to demand delivery.

The news from Japan is not good, and Saudi Arabia is eerily quiet. But at the end of the day, all these US based markets are a hologram remotely related to economic reality anymore, just the dream of a Bernankesque butterfly.

"Just got home 3 AM.

The problem is that most trains are not running. People walking home, streets were packed, traffic really slow. Then they get to Shinjuku, Ikebukuro, Shibuya, and can't go farther, so are packing karaoke boxes and restaurants and sleeping in the station until morning. Ikebukuro station had people lining the walls napping.

So, for the most part, for most people in Tokyo, it was a big nuisance. Had that quake happened off the coast of Chiba or Tokyo Bay, it would have been unbelievably bad.

I have never seen this before. The megaquake seems to be setting off secondary quakes all over, from central Honshu to east Honshu... up to 500 miles from the megaquake.

These are not aftershocks. The secondary quakes are magnitude 4, 5, 6 and are happening so frequently, say every 5 to 10 minutes, that the newscasters can't speak fast enough. No sooner does the alert go off and they describe a quake, then the next one happens somewhere else. I can feel all these quakes even though they occur hundreds of miles from Tokyo.

Basically, there has been a quake you could feel every 10 minutes or so for the last 14 hours."

iPadから送信

A Modest Proposal for Some of the Unhedged Gold and Silver Producers

Going forward as your cash flows improve, one of the ways to combat the naked shorting of your stocks is to provide to your shareholders the option to receive small quarterly dividends in your own products, gold and silver.

Yes I know, those with cash flow will be on a merger and acquisition mania, scooping up the small producers and explorers. But this phase will pass and fall to a more sustainable level. I watched the same phenomenon unfold in the Canadian oil juniors markets last decade.

But returning dividends, not in cash, but in metal, is an extremely attractive proposition and certainly not a new thought. I have proposed it in the past. I was reminded of this while listening to an interesting audio interview that Jim Sinclair had with KWN. The problem is how one can manage the logistics. And so here is something to think about.

A producer or trust could do a direct distribution of physical but this would be awkward and costly. Distribution of things to shareholders is not their business, and requires a certain amount of expertise and infrastructure.

Rather, a producer could work with a group like Sprott to set up a physical gold and silver trust in the manner of a hard closed end fund like the Sprott Physical Trusts with redemption rights. Or they could work with some firm like Goldmoney, supplying them with bullion and then issue certificates to shareholders. Outsourcing the logistics might be the best solution.

This would require the naked shorts to start handing over physical gold and silver, which is much more difficult to do than to provide more paper.

Just a thought and not a complete plan, and the details are quite important. But there are several methods of rewarding shareholders while pulling in the reins on the naked shortsellers, and this is one of them.

Pleading with the regulators to do their jobs may not be fruitful, considering how the banks seem to have their way with them.

And if you are a junior, make it a priority to list on a major exchange in the States. The games being played on the Canadian exchanges are disgraceful, almost as bad as the US futures markets. And the US pink sheets are a snakepit, even by the current low standards of transparency and efficient in equity markets.

SP 500 This Morning: Japan Quake Overshadows Saudi Arabia Day of Rage

Here is what I am watching this morning. There is a potential bull pennant, but the 50 DMA represents an obvious point of interest.

The devastating earthquake in Japan completely overshadowed the Middle East this morning, and the Saudi Day of Rage was subdued. I am exchanging emails with a friend who is riding out the troubles in the Shinjuku district while he waits for the trains to resume so he can head home.

My heart goes out to all my friends in Japan, and all those who are in distress everywhere.

がんばって Ganbatte.

I thought some of the book-talking commentary from Japan bears early this morning was a bit over the top even for pigmen.

In the spirit of never wasting a crisis, the Masters of the Universe staged a major bear raid on the metals complex this morning. I had to steel my resolve and pick up some positions at deep discounts to reality in the opening half hour of trade. Easier said than done.

Silver is in delivery now and the negotiations for cash settlement are introducing noise into the markets. Their hypocrisy knows no bounds, so prepare for additional swings as their massive short position is in its death throes. It will not be pretty.

“So do not be afraid of them, for there is nothing which they conceal that will not be revealed, or hidden, that will not be made known. What is spoken in the dark will be heard in the light; what is whispered in the ear will be proclaimed from the rooftops. Do not be afraid of those who can harm only your body but cannot take your soul. Rather, be afraid of the One who can destroy both body and soul in hell. " Matt 10:26-28

These events in the Middle East and Japan provide the perfect rationale for the Fed's QE3.

Gold Daily and Silver Weekly Charts - Blythe Strikes Back - Mechanics of a Bear Raid



Let's play a game.

 The metals and stocks in general corrected today on weak US economic news and reports of growing unrest in Saudi Arabia, especially ahead of tomorrow's 'day of rage.'

Is this anything new? Not really, although traders finally decided to acknowledge the weak US economy and growing unrest throughout the Mideast, so in that sense, it is 'new.'

I mentioned the other day that Blythe is being given some time and some leeway to 'fix her problem,' and the raids that swept the markets today were part of the trade. Take them up, get mom and pop leaning in, and then wash and rinse their position out for a trade.

And certainly the markets were overdue for a correction. How deep a correction we will find out tomorrow, since the key markets have dropped down in many cases to pivotal support. I have clarified a possible bull pennant forming up on the March SP 500 futures and the associated pivot. The 50 DMA on the futures is around 1299 and so that must be watched closely.

It may be clearer now why I repeatedly show my own positions as a paired trade, long the metals and short the US equity indices with a varying emphasis. It makes these corrective drops much less distressing, and provides cover if one should decide to add new positions on retracements and weakness.

Remember, we sell strength and buy weakness; easy to say but hard to do.

Harvey Organ had some very interesting data in his commentary this evening. I thought his comment at the end about mining shares would also be of interest. He describes what sounds quite similar to what Citi had called its 'Dr. Evil' strategy in the eurobonds markets.  Interesting that if what Harvey says is true, then the banks are engaged in a what sounds like a clearly criminal conspiracy to defraud the markets through price manipulation.  No wonder so many people were upset by Andrew Maguire's testimony to the CFTC, as he alleged to be receiving the word to pull the bids by a certain bank-who-must-not-be-named.  And he previously demonstrated it to the CFTC, and was met with a yawn until commissioner Brad Chilton acted, later to be brought to heel by CFTC Chairman and Goldman Sachs doyen Gary Gensler.

"Before I head over to the comex, for those newcomers, let me outline how the raid is orchestrated over at the comex. First the bankers send a signal the day before that a raid is coming. You need to get all the bankers in line that the raid is on for the next trading day. Then the bankers who also represent investors tell investors to hold their bids for later in the day. They will obtain gold and silver cheaper and thus they withhold their bids.

Then the bankers offer huge number of contracts at the opening with hardly anybody bidding. This dramatically forces the price down and in turn it trips all of those stop losses which in turn fuel another downturn. The bankers do not have any signal for a retreat. They only know to keep supplying massive contracts.

With 20 minutes to go, they start covering their shorts as quick as they can. Whatever they cannot cover, it increases the banks total shorts in the precious metals and he see this in the COT report. I will report on this on Saturday but the COT report is from last Tuesday to this past Tuesday. I will not pick up the major raid today.

That is the mechanics of the raid...

Many are calling me about the gold and silver shares. I think you should all be careful here as we are playing with crooks. The bankers are shorting gold and silver shares like crazy and they do not cover their shorts.

They use the money received for their nefarious activities. When time comes to deliver the shorted stock certificate, they say sorry I do not have the certificate. They are then in default and go on a list called failure to deliver or FTD's. The list of FTD's is enormous!! and our regulators do nothing to correct this!

The owner of the clearing house in the states is the DTC and you guessed it..who owns this fraudulent vehicle? JPMorgan and fellow bankers.

So please be careful when you buy mining companies. Please register your certificate and do not lose sleep over a falling mining share prices. However make sure your mining company is a producing mine and in good geographical areas where there would not be confiscation."

Portrait of a Bear Raid on the Precious Metals - Harvey Organ

And before we all walk around with puss faces about the 'losses' from the heights of our recent gains in the metals, keep in mind how well we all are doing overall.

A smackdown in the metals keeps our heads from growing too big for our bodies to hold up. The gains are always due to our genius of course, and the 'losses,' well those must be due to bad advice from somewhere else, or some similarly irrelevant superstitious thing. We seek to explain the ups and downs where the explanation is so obvious: things go up and down, and never straight up. Is the primary trend broken? Not yet. Have the fundamentals changed? No, not at all.

To be strong you have to own your trades. I had to learn this lesson the hard way, and chances are you will too. The greatest curse is an early and easy success, and the euphoria of thinking we are greater than we really are.

This is why it is better not to be a trader, because you cannot afford the dues, and if you are successful, you will see the darker sides of human nature and face temptations that are almost overwhelming, especially in times of general apostasy.

Take your positions and hold them, without leverage, and with realistic expectations. And then go do the things that you are well suited to do, and address the needs of your family and your friends, and enjoy what you have, the gifts of life and God's tender mercies. And when you need the occasional wake up call, He will provide that too.

SP 500 and NDX March Futures Daily Charts

The paired trade of long metals and miners and short US equity indices should be a little clearer today. Yes it limits upside, but it certainly provides some comfort on these big down days, and provide some will to be able to add selectively to positions, or open new ones, on weakness.

So what next? Tomorrow is the Saudi 'day of rage' and I suspect the markets were due for a breather, and this provided an excellent reason for taking profits.

The drops in many of the key markets I watch were down to pivotal support areas especially in the SP 500, so we'll have to see which way it goes. If we break this pivot, I would be looking down to the 1250 level. I am not sure how far bullion would travel down this road once the initial liquidation is done.

I have clarified a possible bull pennant forming up on the March SP 500 futures and the associated pivot. The 50 DMA on the futures is around 1299 and so that must be watched closely.



What's Going On In The Silver Market: Audio Interview with Harvey Organ

First a bit of housekeeping. There will be no chart updates tonight.

Here is an interview that may be a little overdone in some parts, and with the opening codenames, but is very interesting, containing an abundance of informative content nonetheless. This is an interview from December of 2010. I thought it would be interesting to reprise it now, because so many of the things which they say are unfolding even three months later. The gold/silver ratio has dropped to 41, and silver has rocketed higher in price. I missed it initially because of an illness in the family.

Harvey Organ is a wealth of knowledge and detail.  I am not sure what is happening obviously because of the opaque nature of the situation and the apparent dissembling and obfuscation regarding the facts, especially in a period in which fraud has been revealed to be rampant in a variety of financial transactions.  I mean, really. How can one be certain of anything when dealing with this brood of vipers running the financial system?

And yet trust and confidence is at the very heart of a well functioning free market system for the allocation of capital and the pricing of goods.  And so it seems that crony capitalism could write its own epitaph in its mindless pursuit of greed. It is this abject and otherwise inexplicable failure to reform the financial system and break up the Wall Street Banks that undermines the economic recovery. I can think of no more obvious reason than a credibility trap.

The shorts appear to be trapped, and are playing for time, in what seems to be an increasingly untenable situation. I mean, unless you are completely naive or a book-talking dolt, having one or two institutions short about 25% of the world supply does seem a bit much, especially with all the secrecy surrounding it, and the inability to demonstrate that this is due to legitimate hedging by producers, information which should be disclosed since it absolutely impacts the valuations of publicly traded companies.

And it's a serious issue for the powers that be, because the trapped fish are some very big fish indeed, and may be connected to other things in other markets, and much bigger fish, perhaps the biggest in their ponds.

Before that happens, and after a protracted period of trading antics in which Blythe is given some leeway to try to wiggle out of the problem, I think that they will be told to 'throw in the towel,' and let silver run to roughly 16:1, from the existing ratio of about 41:1, with whatever price they can tolerate for gold given their limitations, on the basis that this is the historical and natural balance.

Without admitting any wrongdoing of course. The Fed can print enough paper to cover their losses. I suspect this would be done in concert with some other crisis. So I would not be looking for JPM to 'crash' per se. Rather, I would look for the next bagman patsy for a stealth bailout of the banks such as the role that AIG played for the Street in the 2008 financial crisis.

This gives me rough targets of $2000 gold and $125 silver. If you prefer $400 silver, then you should be looking for gold around $4000. And I think gold will at least reach a ratio of 2:1 with the Dow Jones Industrial Average, and maybe 1:1, so take it from there.

But first they have to dampen any talk of placing silver in the SDR basket if it is given international reserve status in lieu of the dollar. And then they have to persuade the world to move on, and not take any inconvenient notice of this particular fraud, as it may lead to questions about all those other frauds and deceptions being played, well-intentioned as they think they may be, or at least as they represent them, as in the case of the Wall Street bank bailouts, the insider trading, naked short selling, fraudulent financial instruments, campaign payoffs, and revolving door sinecures.





Harvey Organ's Gold and Silver Report

"As for the gold-silver ratio? It currently stands at about 41. Deutsche Bank, in a not particularly daring forecast, says it should fall below 40 in 2011 and 2012. We’re nearly there.

They run through some history that hints that the ratio could drop even further. Among their tidbits:

* From the 12th to the 17th century, the ratio held at about 12.
* Isaac Newton set a ratio of 15.5 early in the 18th century.
* The earth’s crust: silver exceeds gold by a ratio of about 18.75.

Lastly, China and Hong Kong were the last places to abandon the silver standard, in 1935. The China word for bank: Silver House.

'Trading activity from China has increased considerably over the past several years; we believe that much of this is a function of increased investor demand within the country as inflation threats build.'

So, like any good bull story these days, China plays a role."

Deutsche Bank: Silver Will Keep Streaking

Additionally, here is something a little more controversial. I am not quite sure what I think about it yet. In this interview Harvey is discussing what he perceives to be the musical chairs nature of GLD and SLV, Part 1 and Part 2. They work well in what might be called 'normal market conditions.' I would not use the word fraud, as it appears that it could be more in the nature of undisclosed counter party risk. And of course, I have little to no background in securities law. It is my very lack of knowledge that made this discussion interesting.  I do think their comparison between PSLV and SLV is unfounded and incorrect, because one is a closed end fund and the other is an ETF. 

I have felt for some time that Brown's Bottom in gold, the sales of England's bullion near the bottom of the market, were stealth bailouts of a bullion bank or two caught short in deals such as those discussed in the above interview.

No matter, these markets do appear on the surface to resemble a house of cards.  And this is cause for me at least to view them with concern, especially with the rank failures of regulation which the financial crisis recently disclosed.

Gold Daily and Silver Weekly Charts

SP 500 and NDX March Futures Daily Charts

Gold Daily and Silver Weekly Charts

The manipulation of prices during the US trading window is fairly apparent, and with more people paying attention to the metals, particularly silver, the duplicity of the markets is becoming more accepted fact, as people see it with their own eyes.

As for silver, even though it was heavy pressed today after a European and Asian session which saw it soaring, a spike up to 40 intraday is still possible, but our target of 37.50 remains intact before any substantial correction or consolidation sets in.

We might also wish to consider that there may be no real correction, just a pause and a move higher. This is what happened after the first pause after the initial breakout, leg 2 in our silver chart shown below.

SP 500 and NDX March Futures Daily Charts

The Fed is continuing to add liquidity to the markets, and with light volumes it remains relatively easier to subsidize a soft lift to the market throughout the day.

Nice volatility for short term trading, but otherwise a treacherous market.

US Dollar Very Long Term Chart: Emperor et Ses Amis du Vins

The weakness with this US Dollar DX index is that it is highly weighted to the developed economies of Europe and Japan. As such it may not reflect erosion of dollar purchasing power vis a vis the BRICs, and external measures such as gold, oil, and silver. It may be masked by the mutual weakness of central banks all inflating their currencies in unison.

This is what the Federal Reserve desires: to repair its economy and unpayable debts by expanding its monetary base while exporting much of the negative effects of such monetary inflation to the rest of the world, keeping things relatively stable to maintain confidence in their paper. And this is why the central banks attempt to control the price of less manageable currencies such as gold and silver. Silver is the most problematic because its supplies are difficult for the banks, as they have none of their own, and the world has largely depleted its discretionary strategic stockpiles of this metal. Long term price suppression breeds underinvestment and the inevitable shortages of real goods.

The support levels are as marked and fairly obvious. With the dollar index around 76.28 today it is threatening to break down out of the chart formation. Lateral support around 74 and 71 is fairly strong.

Rather than rallies through economic vitality and recovery, the dollar rallies have been marked by relative declines primarily in the euro on their sovereign debt problems. It is almost like a couple of drunks leaning on each other for support, except that the US is picking the Eurozone's pockets while they do it.

Saudi Arabia Mobilises Troops: Provinces in Revolt as the Empire Declines

What has been hidden will be revealed.

The Independent - UK
Saudis Mobilise Thousands of Troops to Quell Growing Revolt
By Robert Fisk, Middle East Correspondent
Saturday, 5 March 2011

Saudi Arabia was yesterday drafting up to 10,000 security personnel into its north-eastern Shia Muslim provinces, clogging the highways into Dammam and other cities with busloads of troops in fear of next week's "day of rage" by what is now called the "Hunayn Revolution".

Saudi Arabia's worst nightmare – the arrival of the new Arab awakening of rebellion and insurrection in the kingdom – is now casting its long shadow over the House of Saud. Provoked by the Shia majority uprising in the neighbouring Sunni-dominated island of Bahrain, where protesters are calling for the overthrow of the ruling al-Khalifa family, King Abdullah of Saudi Arabia is widely reported to have told the Bahraini authorities that if they do not crush their Shia revolt, his own forces will.

The opposition is expecting at least 20,000 Saudis to gather in Riyadh and in the Shia Muslim provinces of the north-east of the country in six days, to demand an end to corruption and, if necessary, the overthrow of the House of Saud. Saudi security forces have deployed troops and armed police across the Qatif area – where most of Saudi Arabia's Shia Muslims live – and yesterday would-be protesters circulated photographs of armoured vehicles and buses of the state-security police on a highway near the port city of Dammam.

Although desperate to avoid any outside news of the extent of the protests spreading, Saudi security officials have known for more than a month that the revolt of Shia Muslims in the tiny island of Bahrain was expected to spread to Saudi Arabia. Within the Saudi kingdom, thousands of emails and Facebook messages have encouraged Saudi Sunni Muslims to join the planned demonstrations across the "conservative" and highly corrupt kingdom. They suggest – and this idea is clearly co-ordinated – that during confrontations with armed police or the army next Friday, Saudi women should be placed among the front ranks of the protesters to dissuade the Saudi security forces from opening fire.

If the Saudi royal family decides to use maximum violence against demonstrators, US President Barack Obama will be confronted by one of the most sensitive Middle East decisions of his administration. In Egypt, he only supported the demonstrators after the police used unrestrained firepower against protesters. But in Saudi Arabia – supposedly a "key ally" of the US and one of the world's principal oil producers – he will be loath to protect the innocent.

So far, the Saudi authorities have tried to dissuade their own people from supporting the 11 March demonstrations on the grounds that many protesters are "Iraqis and Iranians". It's the same old story used by Ben Ali of Tunisia and Mubarak of Egypt and Bouteflika of Algeria and Saleh of Yemen and the al-Khalifas of Bahrain: "foreign hands" are behind every democratic insurrection in the Middle East.

US Secretary of State Hillary Clinton and Mr Obama will be gritting their teeth next Friday in the hope that either the protesters appear in small numbers or that the Saudis "restrain" their cops and security; history suggests this is unlikely. When Saudi academics have in the past merely called for reforms, they have been harassed or arrested. King Abdullah, albeit a very old man, does not brook rebel lords or restive serfs telling him to make concessions to youth. His £27bn bribe of improved education and housing subsidies is unlikely to meet their demands.

An indication of the seriousness of the revolt against the Saudi royal family comes in its chosen title: Hunayn. This is a valley near Mecca, the scene of one of the last major battles of the Prophet Mohamed against a confederation of Bedouins in AD630. The Prophet won a tight victory after his men were fearful of their opponents. The reference in the Koran, 9: 25-26, as translated by Tarif el-Khalidi, contains a lesson for the Saudi princes: "God gave you victory on many battlefields. Recall the day of Hunayn when you fancied your great numbers.

"So the earth, with all its wide expanse, narrowed before you and you turned tail and fled. Then God made his serenity to descend upon his Messenger and the believers, and sent down troops you did not see – and punished the unbelievers." The unbelievers, of course, are supposed – in the eyes of the Hunayn Revolution – to be the King and his thousand princes.

Like almost every other Arab potentate over the past three months, King Abdullah of Saudi Arabia suddenly produced economic bribes and promised reforms when his enemy was at the gates. Can the Arabs be bribed? Their leaders can, perhaps, especially when, in the case of Egypt, Washington was offering it the largest handout of dollars – $1.5bn (£800m) – after Israel. But when the money rarely trickles down to impoverished and increasingly educated youth, past promises are recalled and mocked. With oil prices touching $120 a barrel and the Libyan debacle lowering its production by up to 75 per cent, the serious economic – and moral, should this interest the Western powers – question, is how long the "civilised world" can go on supporting the nation whose citizens made up almost all of the suicide killers of 9/11?

The Arabian peninsula gave the world the Prophet and the Arab Revolt against the Ottomans and the Taliban and 9/11 and – let us speak the truth – al-Qa'ida. This week's protests in the kingdom will therefore affect us all – but none more so than the supposedly conservative and definitely hypocritical pseudo-state, run by a company without shareholders called the House of Saud.

Dwindling Comex Silver Bullion, But Where Is the Gold Coming From?

Special thanks to 24hourgold. This interactive chart can be viewed here.

I wonder how much of this silver being sold is leased out from unallocated accounts and holdings in ETFs.

How unfortunate for the silver shorts that the bankers lack a ready supply of bullion from the central banks.  Most national stores of silver in the west have already been depleted.

Gold bullion, however, is still available from those central banks who lease their gold to the bullion banks, where it is then sold into the private market, and is afterward carried on the national accounts as bookkeeping entries. 

This scheme has been promoted by some of the TBTF banks for many years as a means of providing a steady income for the central bankers and their Treasuries on their 'idle resources.'  Lease us your gold, and we will pay you a percent or two for it in paper.

What Mubarak and other dictators in history past have done using cargo planes, trucks and trains, the western bankers may have done over a period of time using computer entries and their cronies in the central banks: plundering the national treasuries of Europe, quietly and over time. And it was not stored in salt mines and lake bottoms, but sold in plain sight.

Won't the people be surprised if they find how much of their gold is gone, and how it was used to deceive them while their other assets were stolen using phony paper. Do you think there will be reparations made, and justice done?

They will most likely try to ignore it and dismiss it, claim that it is not needed and we are better off without it. And then they will buy it back, but at what prices? And what so called patriots will be their willing stooges and accomplices in theft, again.

Watch how they weave their arguments over the misappropriated social trust funds and pensions, bank bailouts, and subsidies to the corporations and monied interests to see what their methods will be. This debt is sovereign, a matter of national interest if not sacred honor, and so must be paid whatever the cost. But that debt to those people, well, the money is gone, so too bad for them. Sacrifices must be made, and we will choose who makes them based not on the law or justice, but on the principles of crony capitalism, which are always for private benefit of the few.

What a scandal! And irony indeed if this banking fraud is exposed not by the virtuous West, but by China and the BRICs, and their unwillingness to go along with the scheme.

But this could not be true.  Banks do not do this.  It would be like their presenting forged documents, concealing evidence, and committing blatant perjury to take people's homes in their very own courts!

But this is merely rhetorical speculation and conspiracy theory of course, because the theft could never pass undisclosed with all the independent audits, transparency, oversight, and accountability in the central banking system.  Surely the people have a good account of the amount, number, and quality of every bar that they own from an impeccable source which they control.  Uh, there have been no such audits or accountability, the system is necessarily opaque? Oh.  We are shocked, shocked, that the gold is gone and the private banks cannot replace it.  The smartest minds told us it was a good plan, an excellent idea.  The US pressured us to do it to support the dollar.  How could we have known that people would demand these barbarous relics again.  Do they not understand monetary theory? They are to be ridiculed1

And now all that is left is running the bluff, and playing for time, looking for an opportunity to deflect the issue to something, someone else. 

Gold Daily and Silver Weekly Charts - Blythe Spanked

The Gartman Letter, understandably pleased with yesterday's very abrupt sell decision, suggests gold will retreat to the uptrend line at $1,340-$1350:

“…sometime in the course of the next two or three weeks…We'll be buyers there.”

Gartman changes his stance often enough to function as a decent contrary indicator for a fade, unlike Nadler from Kitco who seems almost always wrong and therefore useless for anything but a coat rack.

This is a conventional view from Dennis. Gold and silver have run high and into resistance. He could be right. He seems to occasionally signal from the hedge funds as to certain intentions floating about. They will need a break in the drumbeat of townspeople carry pitchforks and torches however.

The action in the equity markets today was not constructive to a bullish view, but not decidedly bearish yet either.

Lets see how the geopolitical situation plays out in the Middle East, and particularly in Libya and parts east of there, especially the Sinai peninsula.

I took most of my trades from yesterday off the table, covering the index shorts especially financials, and selling many of the miners picked up on the dips. Kept a little of both with a bias to bullion over miners, although I did dabble in miners enough to take a stock short forward as a hedge.

Blythe, I'm trying to help, but its time to 'fess up, and give it up.
Stick to sugar, sugar. When you are on the wrong side, silver hurts.

SP 500 and NDX March Futures Daily Charts - Emperor In Flagrante Delicto

“Hypocrisy in anything whatever may deceive the cleverest and most penetrating man, but the least wide-awake of children recognizes it, and is revolted by it, however ingeniously it may be disguised.”

Leo Nikolaevich Tolstoy

I cannot quite settle this in my mind. Has fraud and hypocrisy become so prevalent because the people have devolved into idiots, or because the financial powers, their media, and corporate and government supporters have become so emboldened, and brazen, and will continue to do even moreso until the common people, so often slow to action, finally decide what to do?

I can hardly watch the US financial television channels on the internet anymore, as the deception and hypocrisy is becoming almost fantastic, disorienting. These are educated people, and they seem to be willing to say almost anything no matter how ridiculous it might be.

The Daily Show

Gold Daily and Silver Weekly Charts - Emperor Nakedly Monetizing, Desperately Seeking Stability

The Fed is monetizing debt, colloquially known as 'printing money.'

At this point you either understand this or you do not,  and if not it is probably because you will not to do so. 

But it is the reality we have, and presents fairly volatile conditions for the world financial system. And the limit to the monetization are the value of the US bonds, and the American dollar which are notes of zero duration.

The monetization cannot revitalize the economy because most of the problems that led to the financial crisis remain as they were.  The government of both parties is caught in a credibility trap, and under obligations to the monied interests for campaign funds and compromised by past favors granted.

Adding liquidity and stimulus at this point is like pouring enormous quantities of gasoline into a car that has just been towed out of a ditch, with four flat tires, a seized transmission, and a crushed radiator, and saying, "We'll be back on the road anytime now once we fill 'er up."   And austerity is like making the passengers get out and push.  The Congress, who failed to properly maintain the vehicle by taking kickbacks from dishonest mechanics, the Banks, sits in the front seat eating doughnuts, urging the middle class to stop whining and push harder. And Bernanke is bouncing up and down on his seat saying 'vrooom, vrooom,' and the corporate media and economists marvel at his accomplishments. It is less a recovery than a tragedy.

The Fed has tried this twice now. First in response to the Asian/Russian currency crisis and Y2k panic, with the resulting tech bubble. And then in response to the tech bubble collapse and 911, with the resulting housing bubble and a bloated and virulently fraudulent financial sector. And we expect the result to be different this time because....?

All that is required is a stray spark, and you will see the results. If you enjoyed the Russian currency crisis, you will love the US currency crisis. Just be sure to wear sunglasses and watch from a distance, and higher ground. Unfortunately the taxis in this area only take hard currencies.

The Banks must be restrained, and the financial system reformed, with balance restored to the economy, before there can be any sustained recovery. And reform does not mean selectively defaulting, a nice form of stealing, from the old and the weak.

Bloomberg
Fed Treasury Purchases `Monetizing Debt,' May Spur Inflation, Hoenig Says
By Steve Matthews and Caroline Salas
Mar 2, 2011 9:56 AM ET

Federal Reserve Bank of Kansas City President Thomas Hoenig said the central bank is “monetizing debt” with its purchases of U.S. Treasuries, a program that he says may spur inflation.

“Yes, we are monetizing debt,” Hoenig said today in a speech in New York. “You buy bonds and you monetize debt.  Right now, a lot of that is going into excess reserves so it is not having an immediate effect on inflation. It will initiate inflationary impulses. It takes time.”

Hoenig, the lone dissenter from every Fed meeting last year, warned that the central bank’s near-zero interest rates and record monetary stimulus could lead to asset price bubbles and increase inflation in a few years. He voted against the Fed’s plan to purchase $600 billion in U.S. Treasury securities through June during the final two meetings of 2010.

Hoenig told the Council on Foreign Relations the Fed needs to explain how it plans to reduce its record $2.54 trillion balance sheet. While he would avoid “shock therapy” of selling assets all at once, “we want to begin to show how we will withdraw that.”

Policy makers were divided over whether further evidence of a strengthening recovery would warrant slowing or reducing the $600 billion of purchases, according to minutes of their January meeting...."

SP 500 and NDX March Futures Daily Charts

Non-Farm Payrolls tomorrow.

This will end badly, but it is hard to say when.

Le Market c'est moi, says Zimbabwe Ben. And we believe it.

Reform, American Style