Net Asset Value Premiums of Certain Precious Metal Trusts and Funds

Certainly subdued, if not gloomy.

The Political and Social Continuum - What About the Outliers? Does Sin Exist?

As you may recall I have constructed this model to help me conceptualize the 'continuum' of political and social thought.

One of the motivations for this particular form was to help me to understand why those at the extremes can 'cross over' so easily from one to the other.

And in practice, the two extremes seem identical in many ways.

But I have struggled for some time where a sociopath or psychopath might fit in this scheme of things.

Today it struck me that sociopaths and psychopaths can fit anywhere they like, although given their attraction to power and control over others they would be mostly found at the extremes.

They can move about most easily because they are 'outside the continuum'  and by definition  are exceptionally under-socialized.   For whatever reason, they do not 'fit' within a social structure, but are essentially outliers because of their pathology, the way in which they have rationalized themselves.

They are a mutated form of the self-actualizing person. They may seem quite personally powerful, but inside they are hollow, almost histrionic. They would be products of broken homes, and have marriages of convenience, mostly their own.

The narcissists are often highly verbally acute and talented at using speech, with high IQs.  But the tell is their lack of consistency.  And they thrive in places of upper management where performance and personal responsibility can be rationalized and diffused.  They are corrosive for the long term.

And the same off model status might be said to apply to misanthropes and hermits, the extreme form of self-imposed isolationism. At some point their social maturity has failed. And then there are the many socially immature who have never progressed beyond adolescence most likely because of some trauma or lack of support for their development. They lash out in anger because they know something is missing in their lives.

Politicians and certain types of public figures can be tough to place on this model because they are often poseurs, in that they are motivated primarily by power, and will assume various modes and guises to obtain it. They are most notable for the lack of consistency between their public and private lives, their very disingenuousness.

Indeed their private lives can often be quite distinct from their public reputations, and remarkably so.

I have known many 'driven' figures who from a public face would seem to be quite successful, and often remarkably so. But almost invariably they are unhappy to the point of being miserable, and they spread their misery to their family and all that come close to them. They are broken but functional and for some their obsession gives them a remarkable focus. They are not distracted by sincere feelings and abstract principles such as 'justice.' People are at best trophies to be collected and more often objects to be used and discarded.

Do not get me wrong.  No one is perfect, and the definition of normal is broad given the natural diversity of creation.  And at the end of the day, we are all imperfect and often broken people.  It is how we react to these things that makes us what we are.  Some must struggle more valiantly than others.

I cannot give you a precise definition of 'sin' without reference to personal belief, along with the usual classical references, although I do believe it objectively exists.   I think the best way to explore this is to ask a higher power, sincerely and with some persistence, to show our own sins to us.  And that might prove to be interesting, especially among those who think they are without it and beyond it.

And although I cannot define what normality and sin are, I think I know what hell is.  To paraphrase Dostoevsky, hell is the inability to love and to be loved, even when it is true and freely offered.  That is the terrible curse of Tantalus, and the source of much anger and discontent and oppression in the world.

So there is my slight modification to this model, and my pass at practical psychology for today.

Gold Daily and Silver Weekly Charts - Cap and Trade Redux - Gold Flowing From West to East

Pop higher but no breakout from the potential bull flag.

Silver lagged a bit.

Congratulations to JP Morgan and Bank of America, who both turned in 'perfect' trading records for the 1Q of this year.  It pays to have friends in high places.  And faithful retainers are even better.

The US markets are almost surreal.  The Fed and its Bankers believe that they can set the price of everything, at will, no matter what, and without consequences.   Just a push here and a pull there.

And that is a dangerous self-delusion.   But it is consistent with a school of Modern Monetary Theory that says that value is what we say it is, and we can 'adjust' the markets at will to make it so.

Well, let's see how it turns out this time.  But as I have said on several occasions, as with most Ponzi schemes, bubbles in financial paper are a matter of degree, belief, and tipping points.

This in from Harvey Organ tonight:

"Today, physical gold continues to leave London with 6.32 tonnes of gold departing the GLD for the shores of China/and or Russia. The game ends when the last physical ounce held at the GLD departs.

Over at the comex gold is departing as investors are frightened to death of a confiscation similar to what happened at MFGlobal or Refco. Tonight, the Comex registered or dealer gold rests at 1.858 million oz or 57.16 tonnes. The total of all gold at the comex rose just above 8 million oz at 8.001 million oz.

Also at the comex, we saw another customer withdrawal of gold from JPMorgan to the tune of 57,863.091 oz. They now have only 137,377.04 oz left in its customer account.

SP 500 and NDX Futures Daily Charts - They Broke Out the Pom Poms Today

Someone describes this as 'the rally that everyone loves to hate.'

I think that is a euphemism for a cynically led rally with a very narrow participation that will head for the exits at the first whiff of trouble and take it down ten percent in a Manhattan minute.

And in the meantime, the cheerleaders are out on the financial networks, urging mom and pop to get in on their good thing.   Some of them fill out their outfits better than others.

Don't get in front of it. But the steadily rising prices are leaving many incredulous for a very good reason. 

This reminds me quite a bit of 2006.  The economics blogs have all retreated into inane details and are missing what is going on as they 'missed' the housing bubble.  It's almost funny.

Fraud is pervasive.  And when the next financial crisis comes, the same jokers will say 'Wow how did we miss that? But our models are still right.'

Divergence: HUI/GOLD Ratio Nearing 2001 Lows

As you know HUI is the 'gold bugs index' of mining companies.

As a sector the miners have been hammered.

This is quite a divergence. 

The Gold/Silver Ratio is also at rather high levels.

 

A Rather Large Long Bet on Silver Made As the Futures Took the Price of the Metal Lower

About the time that spot silver was smacked lower by the action in the futures markets, some punter placed a rather hefty bet on a near term 'out-of-the-money' May 18 calls on AGQ, the ultra silver long ETF.

It was trading around 25.50 at the time.

It *could* be a hedge on some silver short, but it is a rather hefty one given the strike and the timeframe.

Of course this is a pittance compared to the bets being made in the barely regulated and highly opaque derivatives markets.

Gold Daily and Silver Weekly Charts - 'They Make a Desert, and Call It Peace'

"When in any country the small-farmer class is being squeezed off the land; when its labourers are slaves or serfs; when huge tracts are kept waste to minister to pleasure; when the shibboleth of art is on every man's lips, but ideas of true beauty in very few men's souls; when the business-sharper is the greatest man in the city, and lords it even in the law courts; when class-magistrates, bidding for high office, deal out justice according to the rank of the criminal; when exchanges are turned into great gambling-houses, and senators and men of title are the chief gamblers; when, in short, 'corruption is universal, when there is increasing audacity, increasing greed, increasing fraud, increasing impurity, and these are fed by increasing indulgence and ostentation; when a considerable number of trials in the courts of law bring out the fact that the country in general is now regarded as a prey, upon which any number of vultures, scenting it from afar, may safely light and securely gorge themselves; when the foul tribe is amply replenished by its congeners at home, and foreign invaders find any number of men, bearing good names, ready to assist them in robberies far more cruel and sweeping than those of the footpad or burglar'--when such is the tone of society, and such the idols before which it bends, a nation must be fast going down hill.

A more repulsive picture can hardly be imagined. A mob, a moneyed class, and an aristocracy almost equally worthless, hating each other, and hated by the rest of the world; Italians bitterly jealous of Romans, and only in better plight than the provinces beyond the sea;  more miserable than either, swarms of slaves beginning to brood over revenge as a solace to their sufferings; the land going out of cultivation; native industry swamped by slave-grown imports; the population decreasing; the army degenerating; wars waged as a speculation, but only against the weak; provinces subjected to organized pillage; in the metropolis childish superstition, whole sale luxury, and monstrous vice.

The hour for reform was surely come. Who was to be the man?"

A.H. Beesley, The Gracchi Marius and Sulla, 1921

The mouthpieces in the media are maintaining a steady drumbeat against gold and silver.  The real economy wallows in official and financial corruption.

From discussion with friends in Japan, it seems that a version of a striking financial recovery in the US is being painted by the government and the media there, that seems to be at odds with the reality which the common American is facing. I am informed that a similar situation exists in the UK,  but with much less effect.   Who dares to question the sanctification of such success, and the power of an Empire?

"By dulling the blade of tyranny, I reconciled Rome to the monarchy."

Emperor Tiberius Claudius Augustus, I Claudius

SP 500 and NDX Futures Daily Charts - Excelsior, Dow Closes Above 15,000

Complacency and hot money are faithful friends, unless one of them falters.

Net Asset Value Premiums of Certain Precious Metal Trusts and Funds

Fund are largely negative and under pressure.

Gold Daily and Silver Weekly Charts - Cap and Trade

There is not much economic news this week.

The markets shrugged off the attack by Israel on Syria over the weekend, as stocks rallied and the metals were flat.

I was intrigued to hear that hedge funds are now at new all time highs in leverage, and that over half the trading at the London Metals Exchange is being driven by algorithms.

Talk about a recipe for a fresh wave of market volatility.

Let's see how the rest of the week goes, especially the latter part.

SP 500 and NDX Futures Daily Charts - War? What Us Worry?

Here are two news items worth remembering when the next financial crisis hits:

Hedge Fund Leverage Hits All Time High

Algorithms Driving Over Half of London Metals Trading

I believe the Fed still controls the margin requirements for stock as the Big Daddy of US financial regulators, teaching all by its example.

The Bloomberg trotted out Jeremy Siegel who spotted a bubble in bonds, a bear market in commodities, and a stock market that is going to keep going higher, finishing the year on the Dow between 16,000 and 17,000.

The stock market is in a bubble driven by the Fed's peculiar approach to expanding the money supply, the general laxity of financial regulations, and an invasive kleptocracy that has distorted the money side of the real economy almost without exception.

There is another financial crisis coming, and this one is going to be even more impressive than the last. And like the last heroes who 'saved the world,' Messrs. Greenspan, Rubin, and Summers, the current hero Bernanke will be remembered as a banker of the last age, in much the same manner as the hopelessly out of touch French Generals who commanded the Maginot Line.

Even In a Time of Vanity and Greed

"Gentleness is everywhere in daily life, a sign that faith rules through ordinary things...

Even in a time of elephantine vanity and greed, one never has to look far to see the campfires of gentle people. Lacking any other purpose in life, it would be good enough to live for their sake."

Garrison Keillor

I know this is hard to remember, especially with all the ugly selfishness that is so evident these days. And because of the increase in wickedness, among people in high places who provide bad examples, the love of many will falter and grow cold.

It is never really between them and you, but between you and yourself, between you and your God. It is how you rise above, and become human.

It is fine and necessary to look after your wealth in order to fill the needs of your family. But random acts of kindness will make a difference in your life and in theirs.

No act of kindness is wasted.  You store them in your heart, and these are the only things that you will take with you when the day is done.  You will remember them, and you will be remembered for them, if not in this life, then in the next.

You have a choice. Essere umano. To be human.  Be a light to the world.



Thanks to Lambert Strether for this.

Flowers grow, even amongst the desolation of empires, and other passing follies.

Gold Daily and Silver Weekly Chart - The Metal Bears Advance To Stalingrad - How Are the Mighty Fallen

“To understand reality is not the same as to know about outward events. It is to perceive the essential nature of things.

The best-informed man is not necessarily the wisest. Indeed there is a danger that precisely in the multiplicity of his knowledge he will lose sight of what is essential. But on the other hand, knowledge of an apparently trivial detail quite often makes it possible to see into the depths of things.

And so the wise man will seek to acquire the best possible knowledge about events, but always without becoming dependent upon this knowledge.

To recognize the significant in the factual is wisdom.”

Dietrich Bonhoeffer

The bullion supply lines for this recent market operation seem a bit overextended and ill equipped for the ferocious waves of physical buying that have been reported, especially in Asia.

This from UBS:

"On the physical front, strong appetite out of Asia continues. Our index of physical flows to India continues to indicate very strong demand coming in, at least five times the average over the last 12 months.

Premiums in India are now quite high, particularly for the 0.9995 purity kilo bar, the more popular product, amid extremely limited supplies at the moment."

The bullion bears are drawing a line in the sand for gold at 1480.   The physical drawdowns are going to eat them alive if they try to hold the easy ground they gained by heavy selling in quiet market periods. 

And so I think that level will fall, and they will fall back to the real test which will be in the area of 1580 when gold takes on the longer term downtrend.  And they will continue to have their easy victories, while sowing the seeds of their own downfall. 

And for our modern financial speculators, who think that price is the value,  rather than the other way around, welcome to the winter of your discontent.  There are going to be some very punishing lessons in the fundamentals of supply and demand given out,  and of the limits of the will to power and fraud.   And given time they will be haunted and hunted, and reviled beyond their ability to conceive it.

That is the underlying story of the last financial crisis, and sadly, little has changed.  One thing I will give the financiers, they often persevere in their greed and folly until achieving, at last, their own shame and remarkable self-destruction.  That is the heroic commitment of the mad to a foolish and unworthy end.   It is a sickness unto death. We have seen such downfalls in our day, again and again and again.  They would be as gods; and in their madness they never learn to avoid plunging into the abyss.

Think about those who have shown this tendency. Bernie Madoff, the Enron Boys, the London Whale. How can one explain such unaccountable madness, and yet account for it in their economic models?

 And in truth, there are times when a sector that promises power becomes the playground of the psychopaths and the morally ambivalent. And there would be tragedy, except that they fall not from heights of greatness, but from monumental and foolish pride.  And so they lie, scorned and unpitied.

How are the mighty fallen, stripped of the accoutrements of their war. And there are many more, and greater yet, to come.   And they scorn the simple prescription that would save them:  need little, want less, and love more.

But let's not get ahead of ourselves, and let the markets show us what is really happening.  The biggest changes are not events but processes, with many twists, and the turning of the tide is only knowable in retrospect.

Here is a recent chart linked to below that purportedly compares housing and gold as a hedge against inflation.

Gold Versus Housing As An Inflation Hedge

The scales are utterly misleading. If you wish to compare two things over the same period of time a percentage increase is much more effective than splitting it across two unrelated nominal scales on opposite sides of the chart.

Housing on the left scale went up on the chart 2x, and gold on the right has gone up 6x at least.   

The chartist *could* be trying to show that housing, as the major measure of inflation, was not closely followed by gold.  But that does not come out in the commentary, and is a bit off the wall, since housing was not a major measure of general inflation.  Housing was a secular phenomenon, a flat out bubble marked by significant fraud and highly leveraged mispricing of risks.

The central banks were net selling gold into the first part of the chart.  As you may recall the period of 1999 to 2002 was the infamous "Brown's Bottom."  They turned to net purchasing around 2006, and now there are shortages of bullion. 

And I don't see the government subsidizing and promoting the purchase of gold as they had been doing with housing, at least not directly.  However, the US financial system is doing a pretty good job of incenting the world to buy gold by creating negative real interest rates of return on the dollar, and allowing the bullion banks to game the metals markets.  But I think that has hardly run its course.

As you may have heard today,  JP Morgan and their derivatives diva Blythe Masters are under scrutiny for gaming the energy markets, among other things.   I am convinced that the scandals that keep coming out are still just the tip of the iceberg.   As Jeffery Sachs said, Wall Street has become a pathological environment, and it is so 'in your face' that is hard to miss.  Unless your paycheck depends upon not seeing it.

The G20 has its conference on Reinventing Bretton Woods next week. I do not expect anything dramatic to come out of it. This process of change is going to move slowly.

See you Sunday evening.

This is what quite a bit of the non-English speaking world thinks is happening.   And they are getting mad as hell about it. 

There is change in the wind, and before it's over, it may be blowing a hurricane.

SP 500 and NDX Futures Daily Charts - Jobs Report Runs Stocks to the Top of Trend, Gap Down VIX

Stocks are really straining to the upside here and running against the top of the trend.

The reaction to the Jobs Report today was very overdone.

But let's allow the market to take its course, and not try to get in front of it.

I think Wall Street is getting desperate to hand this hot potato off.

Greg Palast: Introducing Obama's New Commerce Secretary Penny Pritzker

This contains some interesting background on then State Senator Obama and his sudden entrance into the national spotlight.

Billionaire Bankster Breaks into Obama's Cabinet
By Greg Palast
May 2, 2013

You made fun of me when I suggested that President Barack Obama would nominate a confessed bank scammer, a loan-sharking mortgage predator, to his cabinet. But thar she blows!

Today, Obama has named Penny Pritzker Secretary of Commerce. As the President says, It's a milestone: the first female fraudster to hold that post. No longer will criminal bankers have to lobby the administration - because now they'll have one of their own in the Cabinet.

The following is taken from the Chapter, "Penny's from Heaven?" you'll find in my bestseller, Billionaires & Ballot Bandits.

"We never heard of this guy Barack Obama until 2004. Less than three years before taking the presidency, he was in the Illinois state senate, a swamp of scammers, backhanders, and party machine tools - not a stellar launch pad for the White House. And then, one day, state Sen. Barack Obama was visited by his fairy godmother. Her name is Penny Pritzker.

Pritzker's net worth is listed in Forbes as $1.8 billion, which is one hell of a heavy magic wand in the world of politics. Her wand would have been heavier, and her net worth higher, except that in 2001, the federal government fined her and her family $460 million for the predatory, deceitful, racist tactics and practices of Superior, the bank-and-loan-shark operation she ran on the South Side of Chicago.

Superior was the first of the deregulated go-go banks to go bust - at the time, the costliest failure ever. US taxpayers lost nearly half a billion dollars. Superior's depositors lost millions and poor folk in Sen. Obama's South Side district lost their homes.

Penny did not like paying $460 million. No, not one bit. What she needed was someone to give her Hope and Change. She hoped someone would change the banking regulators and the Commerce Department so she could get away with this crap.

Pritzker introduced Obama, the neophyte state senator, to the Ladies Who Lunch (that's really what they call themselves) on Chicago's Gold Coast. Obama got lunch, gold and better - an introduction to Robert Rubin. Rubin is a former Secretary of the Treasury, former chairman of Goldman Sachs and former co-chairman of Citibank. Even atheists recognized Rubin as the Supreme Deity of Wall Street.

Rubin opened the doors to finance industry vaults for Obama. Extraordinarily for a Democrat, Obama in 2008 raised three times as much from bankers as his Republican opponent...

Read the rest here.

Gold Daily and Silver Weekly Charts - Gold Is Flowing From West to East - Stench of Wall Street

Intraday commentary on the Chinese gold rush and the ongoing currency war here.  It might be well to read this if you have not so already.   What the People's Daily Online has to say about the Chinese market for physical gold is stunning.

It correlates heavily with the gold and silver market action and represents a kind of summary of what I think might be going on.

Stocks are in a bubble. A lot of the stock market action is reminiscent of the tech bubble with overtones of the housing bubble.

Europe is in trouble. Draghi is considering negative interest rates to force the Banks to lend. 

Bernanke and company are papering over problems with their exorbitant privilege. 

Non-Farm Payrolls tomorrow.

"I think that the public is utterly disgusted, of course, and that is a major start. There’s going to be a massive backlash. But some thought, and I thought at the beginning, that Obama was going to bring in control, that’s essentially what he promised, but he actually essentially brought in Wall Street to do the clean up.

Perhaps the next government, or perhaps the next crash, it’s hard to say. But what one does feel is that the extent of abuse, the stench of it, is reaching such a high level that we’re not in an equilibrium, political or social, right now."

Jeffrey Sachs: Banking Abuses 'Can't Get More In Your Face' - Wall Street Journal

SP 500 and NDX Futures Daily Charts - Non-Farm Payrolls for April Tomorrow

Non-Farm Payrolls tomorrow.

Modern Economics: Mario Draghi, Medieval Barber

People forget that in terms of science, economics is still very much in its infancy despite the pretensions of economists otherwise.   They are often wrong, but rarely in doubt.

And too often despite what could be described as best intentions they prove to be l'enfant terrible.



Thanks to Washington's Blog for reminding me of this old SNL skit.


Meanwhile in the States thanks to the advances of Keynesianism and the deft use of liquidity,
the Princeton School assured that there were no more cures attempted through bloodletting.  

Currency Wars: Chinese Gold Rush and American Pravda

Sometimes there is a juxtaposition of stories that is just too striking.

Here is a piece that appeared today in the People's Daily Online.  It presents some interesting information on the buying of gold in China during the most recent fluctuation in price.

As I seem to recall, China holds so many US dollars that if they tried to convert them into gold and silver, they couldn't.  Well, not at anything near today's prices.  And their bond selling would certainly stress the Fed's Balance Sheet. 

Those in the know who were able to position themselves for such a move could make quite a bit of money out of it, especially if they could keep it quiet.  But if some major insiders were to demand their metal from the hypothecation schemes of the bullion banks it would create some short term traffic jams and delivery problems.  High leverage makes for a tough and often volatile unwind.  

One might even see a few bullion banks with major outflows from their bullion storage as servile managers and brokers leak the word, over cocktails and canapés, to favored customers with significant financial deposits at the firm overall.  As Jeff Sachs says, that is the way it is these days on Wall St.

And with the right finesse, it could be used to recapitalize some Banks who were positioned with leverage in derivatives.  It has a similar feel to the two step operation that FDR used in recapitalizing the Banks by revaluing gold against the dollar after taking it from the public.  It was public money then and within the purview of the state; it is private property now, at least to the extent that it has not been 'bailed in' and rehypothecated away.

As for the second story, the G20 conference on Global Finance in Transition and Reinventing Bretton Woods begins next week.  And the discussion of replacements for the US dollar reserve system, which is so near and dear to the Anglo-American banking cartel, are high on the topics to be discussed.  The BRICs are growing increasingly unhappy with the financial status quo, and the exorbitant privilege of a single country controlling the world's reserve currency and thereby having the ability to promote their domestic ends with it.

They would like to replace the existing international trade regime with something more broadly based on a basket of currencies and precious metals like gold and silver.  How do we know this?  Because they have said so.  And the dollar mouthpieces will object, pointing to the metals' recent volatility.

As George Orwell once remarked 'we have now sunk to a depth at which restatement of the obvious is the first duty of intelligent men.'

And before one unctuously dismisses the news in the People's Daily as statist messaging,  which by the way I am sure it often is, here is an interesting piece on the craven and tarnished performance of the corporate media, Our American Pravda.  It is a bit uneven, but an interesting read nonetheless.

When the Anglo-American media does get inexplicably involved in something, other than the real news and the trivial diversions they so enjoy, and even when they are inexplicably silent in the manner of the dog that does not bark,  one suspects that the moneyed classes see an opportunity for profit in it, and the public interests be damned.  Their designated role is to keep quiet and 'bail-in.'

As the fiatscos of relativistic monetary theory like to say, a currency is all consensus.  Money is what we say it is, is worth whatever we say it is, and goes wherever we command it to go.   And fiat means never having to say your are wrong, if you have enough power on your side to bend truth to will.

Even if you do not believe that there is a currency war, quite a bit of the rest of the world does -- and they are holding a lot of votes. 

Perhaps currency war is a misnomer.  At times this appears less like a conventional difference of intentions among nations, and more like the internecine power struggles amongst competing crime families that often do not cleanly divide themselves by political boundaries.  So the common person, mark, and pawn is often given to ask, 'is our side on my side?'

What this all means for us is interesting times, and never a dull moment.  Change is in the wind.

Enjoy

Shanghai Daily
Housewives' gold rush keeps price from falling
By Wang Yanlin
08:21, May 02, 2013

A "TUSSLE" to determine gold prices has connected two groups of people who could hardly be more different - Wall Street moguls and Chinese housewives, with the latter turning out to have the edge.

According to Voice of China radio program, one of this year's most popular phrases may be "Chinese housewives" - as a major force which reportedly spent 100 billion yuan (US$16 billion) over the past two weeks purchasing 300 tons of gold and thus helping to sustain gold prices at US$1,468 an ounce.

The Chinese gold rush has prevented short selling, where gold is sold and then bought back when prices fall. The practice was seen as a possible bid to shore up the US dollar - gold is often regarded as a means of safeguarding wealth against a weak dollar - and to maintain stable interest rates in the US...

Some critics said the fall in gold prices was a well-planned scheme drawn up by investment bankers to bolster the US economy, as two days before the price slump, Goldman Sachs released a research note saying gold's prospects for the year had eroded and recommending investors to sell short.

Before Goldman Sachs, investment banks including Barclays, Societe Generale and Deutsche also projected gold had ended its 12-year bullish performance. Societe Generale even predicted an outright crash, saying "gold may have had its last hurrah."

On April 13, China National Gold Group, the country's biggest gold producer, slashed the bullion price from 313 yuan per gram to 298.5 yuan per gram, the lowest level in two years.

This triggered the enthusiasm of Chinese shoppers, who swarmed into jewelry shops desperate to get their hands on a bargain. In most Chinese cities, gold bars were selling like hot cakes and some even reported empty inventory during the May Day holiday...

The number of Chinese gold buyers and the money they spent caught out those investment bankers who had bet on prices continuing to fall.

"A large rebound in gold prices is unlikely barring an unexpected sharp turn in the US recovery," analysts at Goldman Sachs had written in its research note.

But to their disappointment, gold prices rose by more than 10 percent yesterday compared with that on April 16...

Read the entire story here.

Related: Currency Wars

Gold Daily and Silver Weekly Charts - Benny's Theme: Flirtin' With Disaster

"All frauds, like the wall daubed with untempered mortar, with which men think to buttress up an edifice, always tend to the decay of what they are devised to support."

Richard Whately

Well, as we have come to expect, the FOMC day was marked by an early bear raid and comic shenanigans in the precious metals markets.

We might get more of the same around the Non-Farm Payrolls Report on Friday. In itself,  the Jobs Report should be a real knee-slapper of  slack jobs growth and the ever disappearing unemployed.

The Fed dispelled any illusions about ending QE early in their statement today. The chill passing over the economy has quite a bit to do with it. But the Fed will keep doing what they are doing until something improves or breaks, because they are locked into an obsessive compulsive box by the credibility trap of their own past policy failures and conflicts of interests.

So expect another bubble and crisis.

ADP employment numbers came up short, and that impinges on expectations for the Non-Farm Payrolls report on Friday.

National ISM was aenemic, but not quite a contraction.  But it was enough to show that 'The Recovery' is no recovery.

Intraday commentary about the Fed statement here and the bubble environment caused in part by the Fed here. Please be sure to listen to Jeff Sachs entire speech and the Q&A session here, and recall that he was speaking to a conference at the Philadelphia Fed.  Every time I listen to it I am astonished that it did not get a wider exposure, and nary a mention in the mainstream media.  Sachs is no outsider, and hardly a starry eyed reformer.    The venal stupidity of those in command is frightening even to longer term stalwarts.

I think it will take another financial crisis, and even more scandals and revelations.  And I will be surprised if there are any lack of any of them, despite the war on whistleblowers and the muzzling of the media.

And speaking of modern money, it appears that the whizkids are short about $11.2 Trillion in money good collateral.   I can only think of one form of money that bears no counterparty risk.

Benny's Theme