SP 500 and NDX Futures Daily Charts

"Woe to those who call evil good and good evil, who substitute darkness for light and light for darkness, who call bitter for sweet, and sweetness for bitter."

Monday is the end of the first quarter, and the end of March. The paint may not yet be dry on the tape.

The economic calendar has more interesting tidbits next week, and so that may drive some of the action after the end of quarter rituals.

Have a pleasant weekend.

Jim Rickards: Study Will Show That Gold Is Being Manipulated on the Comex (Again)

"If I were running the manipulation I would be embarrassed at this point, it is so blatant...The regulators have been asleep at the switch."

Jim Rickards

As an aside, and in case you wondered, I do not take Rickards at face value. I sift what he says, carefully. And that is enough said about that, except that it is good advice in general especially when it comes to money and investments.

No one listens because the US regulators don't want to see it,  Wall Street traders make money off it, the mainstream media ignores it, and the shills deride anyone who brings it up. So I do not expect anything to come out of this latest version of a study that I have seen several times before, unless it is somehow associated with more undeniable smoking gun evidence uncovered through the London Fix investigation, and a 'limited hangout' operation. But I can doubt that as well, because it requires too much self-awareness for the masters of the universe.

The real smoking gun will more likely be tied to be an unanticipated default somewhere in the system.  And then people will ask, 'how did we not see this coming?'  And the hunt for a scapegoat or patsy will be underway. God will not forgive us if we once again allow some of the old and shameful persecutions of the weak and innocent and the other to carry that burden of guilt yet again.

The public will be trimmed and skinned in yet another bailout, or should I say 'bail-in,' to replace what had been rehypothecated. Possession will be nine-tenths of the law. And the big crooks will throw the shills, stooges, and the little crooks to the mob, without a second thought.

It is different this time, because we are different. It can't happen here. The most delusional words ever spoken.

Gold Daily and Silver Weekly Charts - Roll Over Beethoven

There was intraday commentary on the gold market and in particular the April delivery month here.

We are crossing over into the April delivery month, and I think the price and volume action reflect that reality. Especially with regard to the relatively high number of potential contracts that are still in a position to stand for physical delivery.

More gold came into JPM eligible storage yesterday.   I'll have to take another look at the ETF inventories in the next couple of days.  Has anyone seen the Ukraine's national hoard?   lol.

Let's see how the next two or three days go.   I expect this will settle out by the end of the first two delivery weeks.

As you might have expected Ben Bernanke is no cheap 'intimate dinner' date. I hope they at least give him cab fare with the check.

Spring is in the air.  Have a pleasant evening.

 

SP 500 and NDX Futures Daily Charts - Tottering Into the End of the Beginning

Monday will be the end of the third quarter.

If they are going to paint the tape then they will have to begin tomorrow.

The big depressant on US equities yesterday was that Citi failed the Fed stress test for the second time in three years.   This is the beast that Sandy Weill and Robert Rubin wrought, in overturning Glass-Steagall and marrying Wall Street to Washington, with Bubba as the Elvis impersonating preacher.

Judging by the earnings-less, piece of crap IPOs being shoved out the door, I think this year may bring some clarity to market valuations, most likely in the second have after most of the steaming IPO deuces being held in the pipeline have dropped.

Have a pleasant evening.

NAV Premiums of Certain Precious Metal Trusts and Funds - Stand and Deliver, or Roll Over

The metals are getting pressed heavily as we come out of options expiration,

The open interest, or number of April gold contracts that are going into First Delivery notice next week for the April active delivery month, are still rather high and are being pressured, especially those stalwarts who held in the money calls yesterday.

The open interest for April alone as of yesterday was 69,714 contracts representing 6,971,400 ounces.  The 'deliverable ounces' on the Comex were about 637,591 ounces of gold as of yesterday. 

So obviously not all the open interest can stand for delivery, and it never does, unless the price goes higher and encourages more eligible ounces to warranted over for delivery. 

I suspect a little of today's April price decline is due to the jackals taking a piece out of those who are rolling their contracts over to the next active month of June.  Notice that the preliminary volume for the April contract is well over two times yesterday's open interest.  Those are some hot little potatoes.

As usual, it appears that JPM has its hand on the jukebox, or the organ grinder crank if you prefer.

Our Samoan Attorney: When Corporations Take Precedence Over People

"There is felt today very widely the inconsistency in this condition of political democracy and industrial absolutism.  The people are beginning to doubt whether in the long run democracy and absolutism can coexist in the same community;  beginning to doubt whether there is a justification for the great inequalities in the distribution of wealth, for the rapid creation of fortunes, more mysterious than the deeds of Aladdin’s lamp."

Louis D. Brandeis, The Opportunity in Law, Speech to Harvard Ethical Society, May 4, 1905

I was curious about this current US Supreme Court Case of Sebelius v. Hobby Lobby. The basic contention is that a for-profit corporation with no other religious responsibilities can claim an exemption to the law based on the religious beliefs of the owners of that corporation.

I should add that, at least in my own perspective and apparently that of the legal precedent, there are organizations specifically dedicated to the fulfillment of a religious purpose that can claim such exemptions where the law conflicts with some of their deeply held beliefs.  Indeed, individuals can also claim such exemptions in some cases as well, as in the case of conscientious objectors.

I am interested because of the general trend of providing corporate entities in the US with the same level of privilege and protections as individuals, but without all the commensurate obligations of a citizen.  Therefore it could be rightly held that corporations would be superior in the eyes of the law, having the same rights but without having to go to war, or to send their children to war, and be required to offer their last full measure of devotion to the Constitution and their nation.

Let us not kid ourselves. A corporation exists merely as a legal invention, to provide certain protections and conveniences to individuals who own those corporations, most notably access to preferential tax and bankruptcy treatment, and protections against certain types of risks and liabilities.  To give that legal invention the same regard, or as I point out above a higher status, than a person is to degrade the nature of the individual human being under the law, and essentially to deny them equal status. Is a man four-fifths of a corporation?

I am not being facetious.  If corporations were treated as equal to people, the Too Big To Fail Banks would probably be in prison, instead of living large on public subsidies.  And a few corporations might even be sitting on death row.  As it is, that they are too big to punish has become an unspoken tenet of American justice.  And for this unaccountable power, they deserve to enjoy the greatest and most sacred freedoms of the individual as well?   Can you imagine a more certain recipe for injustice?

I see the human individual as under attack in this society, where the law is twisted to promote the ascendancy of power of organizations over the rights of individuals. In reality it is individuals behind the corporations pulling the levers from behind the legal protections and subsidies of the corporate entity.  It is just another form of leverage, and too often an abuse of power and privilege.

In politics these days, it sometimes seems to be all stick and no carrot, all threat and little incentive, unless you are one of the privileged, protected by a swath of money, legal representation, and corporate power.

It reminds me sometimes of The Planet of the Apes, where the gorillas have all the weapons and horses, and they ride around capturing or killing the human beings. 

This is nothing new.  I grew up under the canard that States' Rights allowed certain areas of the country to intimidate and oppress certain whole classes of people as a matter of public policy.   There are those who even now will say that a business person has the right to refuse service to an individual on the basis of the color of their skin, or their religious beliefs, or their choice of partners. 

Freedom of conscience does not give one the right to inflict their private conscience on the rights of other individuals under the law.  But there are corners of the Constitution that have long been the refuge of scoundrels, who would kill freedom in its own name in order to advance their own selfish prerequisites and privileges.   

But being woefully out of touch on the case law and legal trends, I asked le Café's Samoan attorney for his opinion of this issue, and he has responded as you can read below.

I think that we might find the position of Hobby Lobby in Sebelius v. Hobby Lobby Stores to be almost nonsensical, but consistent with our currently fashionable mental diseases and defects. If our central bank thinks QEternity is actually benefiting the masses, our 'intelligentsia' believes that either there is no systemically driven income inequality, or that if it exists, it does not matter, socially or economically, I should not be surprised that we either will accept, or come close to accepting, the argument that purely legal entities have religious rights.

While my rant-o-meter can go off the charts when I start talking about this sort of sophistry, the case represents something potentially much more bothersome, which is the use of bogus First Amendment arguments to gut government legislation and regulation. I believe that le Café had linked to an article on precisely that subject not that long ago.  How Corporations Hijacked the First Amendment

Between 1895 and 1937 (the dates are imprecise but reasonably accurate), a conservative Supreme Court had engaged in social engineering, especially in the economic arena, by imputing substantive rights into the due process clause of the 5th and 14th Amendments. In various cases, the court held that certain rights were so fundamental and inalienable, that government could not legislate in those arenas. Indeed, legislating in those areas was deemed to be equal to depriving someone of the right to life, liberty, or property without due process of law.  Hence, that line of jurisprudence became known as substantive due process ("SDP"). A five- or at most six-justice majority used the 14th Amendment to strike down government legislation that benefited society as a whole, but harmed the interests of the monied interests and big business in general.

Not surprisingly, during that 40-year period, the Supreme Court Justices were obsessed with the principle of "freedom of contract." To protect that quaint notion, the court struck down minimum wage laws, child labor laws, maximum hours laws, and the like.

The most famous case involving substantive due process was Lochner v. New York, 198 U.S. 45 (1905), in which the court struck down by a 5-4 vote NY legislation governing the maximum hours that bakers could work.   The five justices in the majority concluded that bakers had an absolute, inviolable right to contract to work long enough hours to harm their health. Here is what Justice Rufus Peckham wrote on behalf of the five buffoons:

"The question whether this act is valid as a labor law, pure and simple, may be dismissed in a few words. There is no reasonable ground for interfering with the liberty of person or the right of free contract by determining the hours of labor in the occupation of a baker. There is no contention that bakers as a class are not equal in intelligence and capacity to men in other trades or manual occupations, or that they are able to assert their rights and care for themselves without the protecting arm of the State, interfering with their independence of judgment and of action. They are in no sense wards of the State. Viewed in the light of a purely labor law, with no reference whatever to the question of health, we think that a law like the one before us involves neither the safety, the morals, nor the welfare of the public, and that the interest of the public is not in the slightest degree affected by such an act." (198 U.S. 45, 57.)

Having concluded that the law could not be upheld as a labor law, Justice Peckham concluded that it could not be upheld as a health law either:

"We think that there can be no fair doubt that the trade of a baker, in and of itself, is not an unhealthy one to that degree which would authorize the legislature to interfere with the right to labor, and with the right of free contract on the part of the individual, either as employer or employee. In looking through statistics regarding all trades and occupations, it may be true that the trade of a baker does not appear to be as healthy as some other trades, and is also vastly more healthy than still others.... But are we all, on that account, at the mercy of legislative majorities? .... No trade, no occupation, no mode of earning one's living, could escape this all-pervading power, and the acts of the legislature in limiting the hours of labor in all employments would be valid, although such limitation might seriously cripple the ability of the laborer to support himself and his family." (198 U.S. 45, 59-60.)

That rationale was just as nonsensical then as it is today.  It is worth noting that the three New York state courts that had reviewed the law had upheld it. 

The case is now remembered primarily for its famous dissents. John Marshall Harlan, who is most famous for his solitary dissent in Plessy v. Ferguson, dissented with two other justices that the state certainly had the right to legislate and regulate for the common good and that the "freedom to contract" was hardly inviolate. Harlan noted that:

"It may be that the statute had its origin, in part, in the belief that employers and employees in such establishments were not upon an equal footing, and that the necessities of the latter often compelled them to submit to such exactions as unduly taxed their strength. Be this as it may, the statute must be taken as expressing the belief of the people of New York that, as a general rule, and in the case of the average man, labor in excess of sixty hours during a week in such establishments may endanger the health of those who thus labor. Whether or not this be wise legislation it is not the province of the court to inquire." (198 U.S. 45, 69.)

Justice Oliver Wendell Holmes had the last word then as he does today:

"This case is decided upon an economic theory which a large part of the country does not entertain.... The liberty of the citizen to do as he likes so long as he does not interfere with the liberty of others to do the same, which has been a shibboleth for some well known writers, is interfered with by school laws, by the Post Office, by every state or municipal institution which takes his money for purposes thought desirable, whether he likes it or not. The Fourteenth Amendment does not enact Mr. Herbert Spencer's Social Statics.... Some of these laws embody convictions or prejudices which judges are likely to share. Some may not. But a constitution is not intended to embody a particular economic theory, whether of paternalism and the organic relation of the citizen to the State or of laissez faire." (198 U.S. 45, 75.)

Justice Holmes' dissent is only two pages, but it gets to the heart of the matter. The 14th Amendment does not enact Mr. Herbert Spencer's Social Statics. In other words, the constitution does not require us to adopt Social Darwinism, that being the survival of the fittest, or laissez-faire as our national ideology.

By 1937 or 1938, SDP was dead. It is so dead today that even Justices Scalia and Thomas have spoken out against it as judicial overreach. For example, in United States v. Carlton, 512 U.S. 26, 39 (1994), Justice Scalia referred to SDP as an "oxymoron" in a concurring opinion that Justice Thomas joined. Unfortunately, that is little more than hypocrisy in my opinion. A similar group of conservative justices is imposing its own conservative, and I would argue reactionary, world view by expanding the scope of the First Amendment disingenuously to do exactly what the justices were doing during the Lochner Era.

Ultimately, what these five men are doing will fail, just as SDP failed 80 years ago because it is as illogical now as it was then. The court cannot thwart the will of a nation to govern itself in a more forward-looking and rational manner.  Justice may be deferred, but it will not be denied. 

Currency Wars: The Plot Thickens

"International discord over Ukraine does not bode well for the settlement of differences over the IMF’s future. Though the G7 is excluding Russia from its number, in retaliation for its action in Crimea, this does not amount to isolating Russia. There has been no suggestion that Russia be excluded from the G20.

The USA and its allies have suspected that several other G20 members would not stand for it. This suspicion was confirmed yesterday when the BRICS foreign ministers, assembled at the international conference in The Hague, issued a statement condemning ‘the escalation of hostile language, sanctions and counter-sanctions’. They affirmed that the custodianship of the G20 belongs to all member-states equally and no one member-state can unilaterally determine its nature and character. In short, their statement read like a manifesto for a pluralist world in which no one nation, bloc or set of values would predominate...

It now seems unlikely that the USA will complete (or, indeed, begin) legislative action on the IMF reform by the 10 April deadline the BRICS have set. The odds are moving in favour of a showdown at the G20 finance ministers’ and central bank governors’ meeting due in Washington on that date...

Beijing leaders have long dreamt of displacing, or at least dethroning, the US dollar from its reserve currency role. US dominance of the IMF is one of several effective bars to the achievement of such a goal. The kind of action Russia is advocating, the BRICS wresting control of the IMF in despite of US veto power, might have some appeal.

That would mark the end of the unified global monetary system that has developed since the IMF was founded in 1945, to be replaced by a bloc of fiat currencies in the developed countries and a system in the emerging sector where currencies were linked to drawing rights in some new international fund, possibly with some material backing. (gold, silver, and possibly commodities - Jesse)

It seems unlikely that convertibility between these monetary systems could be maintained for long. Consequently, the 10 April meeting is shaping up as a potentially critical juncture in world economic history."

Paul Mylchreest, A Critical Juncture

Paul Mylchreest published this essay over at ZeroHedge this evening, and it is worth a read, as Paul is connecting some fairly important dots for us. I doubt that many traders will really understand the implications of what he is saying, without even having read the comments. Good traders often take a highly focused, very detailed, but narrow and short term view of things, and this is both their strength and their weakness. It deserves a broader stage, but it is unlikely to get it when the major media remains willfully blind.

I had not thought of a dual system previously, in which the Anglo-Americans and their allied states decide to go in one direction, maintaining their hegemony around the dollar and the euro, and the rest of the world going in another. It would be inherently unstable, and throw the global credit and forex markets into a somewhat chaotic state. But then again, who could have predicted the folly of a loosely associated set of nations adopting a single currency without the rigor of monetary transfers and fiscal union with which to balance the system.

This is not likely to be a singular event, but part of an evolutionary change in the makeup of the international monetary system that has been developing for years. At some point things will begin moving more quickly, and change may come in an avalanche of events that will leave most analysts gaping in disbelief.

When do you think the American Revolution began, on 4 July 1776?  Such great turns in human events happen over long periods of time.  But, in retrospect, there are always critical junctures in the process of change, with hard positions taken, and opportunities for peaceful evolution lost.

"All successful revolutions are the kicking in of a rotten door."

John Kenneth Galbraith

And since the grand failure of the Soviet state, nothing has grown more corrupt and self-serving than the ring of corporations and crony capitalists that have become the post Bretton Woods banking cartel. It has begun to consume itself, and to kill its own. The economic hitmen have finally come home.

But predicting 'when' is difficult in matters such as this. What starts the avalanche, what sound triggers the slide, which snowflake proves to be too much?  When is enough wealth and power— enough?

Certainly the events in the Ukraine are difficult to understand without a broader geo-political and economic context, except in the most facile and jingoist of caricatures of different perspectives. They are barbarians, and hate us for our freedom, the wonders of our financial engineering, and the beauty of our culture. We are the liberators. We bring loans and economic progress. We come in peace. Look on our works, ye mighty, and despair.

"Although U.S. Navy and Marine forces generally operate on a regular cycle of deployments to European waters, they rely on a network of permanent bases in the region, especially in the Mediterranean. These should be retained, and consideration given to establishing a more robust presence in the Black Sea. As NATO expands and the pattern of U.S. military operations in Europe continues to shift to the south and east, U.S. naval presence in the Black Sea is sure to increase."  Project For the New American Century, 2000

We are not the makers of history. We are not gods. We are not even the sovereigns of our own passions and delusions and fears.

We who forget history are its victims.

Gold Daily And Silver Weekly Charts - Option Expiration

Yes Virginia, it was a precious metal options expiration on the Comex today.

Yesterday there was the usual inflows and some outflows in the Comex gold bullion warehouses as the bullion banks ready themselves for the April active delivery month.

I have placed the gold technical averages chart up today, because in addition to the 'golden cross' of the 50 and 200 DMA, the price of gold has fallen to test the 200 DMA. Anyone who considers themselves a technical analyst must be aware of these developments. As far as chart formations, there are some possibilities, but time will tell.

Let's see what happens.

SP 500 and NDX Futures Daily Charts - Wash and Rinse

I think this is where they dump the dogs ahead of the end of quarter tape painting, but let's see.

This is a dicey market.

 

Houseless

“If you judge people, you have no time to love them...

If you can't feed a hundred people, the feed just one.”

Mother Teresa

Here are the words that I hope none of us ever will hear. And the real loss, the pity, is that some will. 

‘Depart from Me, accursed. For I was hungry and you gave Me no food, I was thirsty and you gave Me no drink, I was a stranger and you did not welcome me, naked and you did not clothe, sick and imprisoned and you did not care for me.’ And they will answer, ‘Lord, when was it that we saw You hungry or thirsty or a stranger or naked or sick or in prison, and did not care for You?’ And He will answer, ‘Truly I tell you, when you did not do it for one of the least of these, you did not do it for Me.’

Gold Daily and Silver Weekly Charts - Option Expiration Tomorrow

There was some cursory movement of bullion out of the Comex warehouses yesterday, but in general they are reasonably well equipped ahead of the April active contract period which begins next Monday with first notice.

As you know there is a precious metals option expiry for the April contract tomorrow.  We may consider the gut check already delivered for it ahead of time perhaps, but there is still the off chance of another hit in the quiet periods tonight and the day after tomorrow.

I have included a chart of the gold price in dollars with a few technical because we finally saw the 50 DMA climb over the 200 DMA.  That is known as the 'golden cross.'   It would be more meaningful if it was occurring on substantial volumes.

I am not such a big believer in technical measures except at their extremes in an inefficient market that is being managed to certain ends.   But it is worth noting at least. 

The delivery calendar is more important, and not so much even that for New York and London.  The real markets for precious metals are now in the Mideast and Asia.

Time settles all accounts.

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - Hope Floats, and Apparently So Do Stocks Into Quarter End

As a reminder we are coming into the end of the first quarter of the year on Monday next, and that should be a prompt for those trying to understand this stock market action, which seems amazingly resilient.

Desperate men and women do desperate things. And to the extent that their 'good fortune' has been excessive and largely unwarranted, so their ability to rationalize even the previously most unthinkable things becomes increasingly possible, and in the end, almost commonplace and compelling, at least to them. There may be no better contemporary showcases for this than Washington and London, although Brussels is certainly in contention.

Have a pleasant evening.

Oxford Union Debate On Snowden: And Chris Hedges On Civil Disobedience

The Oxford Union Debate on the question "Is Edward Snowden a Hero?" is quite interesting, and I am glad that they have made the individual contributions available on youtube. I wish they had made it available as a whole piece, but this will have to do.

It was a formal debate, and so we see the usual rhetorical ploys here and there.  A Mr. Crowley, speaking against, tried to make the case that only history can pass a judgment on Mr. Snowden. He threw in a little fear, uncertainty and doubt as well. One can always argue that time is needed to make any decision, so it is a bit of a red herring and somewhat cheap, but nevertheless it was nicely done.

Of all the negative arguments,  Mr. Toobin makes the most representative and pertinent case, with the usual amount of diversions and rhetorical equivalences, which is basically what the US government takes as their perspective in this.  I believe those fellows interrupting him are the 'judges' of debates, who can push a bit on things that are unclear, which is a polite way of saying 'howlers.'  But I could be mistaken. 

I have never attended an Oxford debate, but I have visited there numerous times. I have a framed needlepoint framed, compliments of a talented relative, hanging in my study.  I sketched it from one on the kneelers in Newman's church, St. Mary's, that has the Oxford motto, Dominus Illuminatio Mea.  The Lord Is My Light.

The positive side of the question carried the day and quite well. I suggest you listen to all the presentations, as you may find others that you like more, and that offer insights for your own thought.  You can search for them using Google, and typing in search words like "Oxford Union Debate Snowden youtube videos" for example. You can also try the Oxford Union youtube channel which I have just found here.

I wanted also to highlight Mr. Hedges' presentation, because in it he speaks to the much broader and more interesting subject, that of civil disobedience which he calls 'moral courage.' At first it rankled a bit that he distinguished such courage from that shown on the battlefield, but then as I listened his point became clear. And as always, his speaking style and literary allusions are quite pleasant to hear.

I regret that the modern news in the US does not offer such interesting forums for discussion, instead staging 'debates' between two paid actors who merely yell at one another.

One thing that never came out explicitly in the debate, at least in the portions which I have read or heard so far, is the concept of natural law. There are the laws of a nation, and in terms of strict legality, things which are done there may be judged illegal or lawful, based on those laws.

But what happens when a country grossly violates human rights, for example, under the aegis of their laws? Are they protected? Are those who follow those laws merely following the law, or orders, if you will?

Under the laws of the Reich, Sophie Scholl committed treason, judged by a lawful court, and was duly beheaded. A German lawyer emailed me some time ago and made that case quite forcefully. 

But those who did the judging and the beheading were later themselves convicted of a number of crimes, including crimes against humanity, and conspiracy to wage aggressive war among them, that were extra-legal to the Reich, and any written body of laws of which I am aware. They were judged guilty under the laws of what is moral, or the natural laws. It is the appeal to these overarching natural laws that Jefferson appealed when he wrote, "We hold these truths to be self-evident..."

It is an interesting concept. Martin Luther King directly attributes it to Divine Providence, in one of his most famous speeches which I almost never tire of excerpting, as I do in the last video below.  It is why he gave up his life, after all.

If we did not have a Constitution in the US, it might be necessary to engage in this discussion. But since the Constitution is quite clear on any number of these points, and the distribution of power, and oversight and transparency, and supremacy of individual rights, we need not worry perhaps.

Except for those who would hide and deceive and ride roughshod over what the narrowly legal mind and the flourish of rhetoric can consider just 'another piece of paper' when weighed on the expedient scales of the scheming mind, servile apathy, and the will to power.





I have just found Mr. Binney's presentation here.    Although it was dry, sometimes disjointed, and a bit technical, it was nevertheless interesting because he has quite a few of the facts and history of these programs at his fingertips through personal experience.

I thought Chris Huhne gave a nice summation for the proposition here. I include it because this meme that Snowden purposely fled to Moscow to live there is quite irritating. He was trapped there because the US yanked his passport, and through pressure even went so far as to stop an official flight carrying the Ecuadoran president in order to prevent his seeking asylum there. How obligingly forgetful and servile the presstitutes in the mainstream media can be when it suits.

Gold Daily And Silver Weekly Charts - Precious Metals Comex Options Expiration on 26 March

There was intraday commentary on Banks and corporations and gaming the system here. I have added a few things to it since first posting it as is my wont when reader comments via email point out things that are either incorrect or unclear.

I appreciate the feedback, and respond to all but the very few thoughtless and/or pointlessly unproductive comments.  It is one of the reasons why I do this for feedback, but do not have a comments section which requires monitoring. I have done that on another forum, and it is just another example of how life imitates high school.

Gold and silver took some fairly obvious hits today. More gold was added to the eligible category on Friday at HSBC and more notably JPM.

As the calendar below shows there will be an option expiration for the precious metals on the Comex, Wednesday 26 March. Antics are often abounding around option expiration. I used to note them on my metal charts until it became too complex and confusing. The reaction is not always straightforward.

April is an active delivery month, and the bullion banks are bracing for it. The inventory levels do not seem overly short, given that the Comex is not much of a venue for taking physical deliveries. Ted Butler has likened it to a 'bucket shop' and that may not be far off the truth, if at all.

Look for more revelations and shocking events as the world progresses. We are in a currency war.

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - Danger Zone

There was no economic news to speak of this morning, except for the Markit produced US PMI which came in below expectations for March. I am not sure why, but Briefing.com stopped reporting the PMI data once it was taken over by Markit. The Briefing.com calendar for the week is below.

Stocks had an interesting range in price today, with techs in particular testing some interesting support levels.  The action on the tape still seems very technical, with light volumes.

Other than the growing confrontation over the Ukraine, and the steady flow of biased views from both sides, the only other news of importance was the announcement from  Henry Blodget's Business Insider of their newest columnist, notorious key banging ex-NYC politician Anthony Weiner, aka Carlos Danger.

What do you call a shameless flock of wieners?   Hint:  not the Congress.

Welcome to the Danger Zone.

Have a pleasant evening.

Martens: Ghouls of Wall Street - JP Morgan Bets BillIons On the Death of its Workers

"Plunderers of the world, when nothing remains on the lands to which they have laid waste by wanton thievery, they search out across the seas. The wealth of another region excites their greed; and if it is weak, their lust for power. Nothing from the rising to the setting of the sun is enough for them. Among all others only they are compelled to attack the poor as well as the rich. Robbery, rape, and slaughter they falsely call empire; and where they create a desolate wasteland, they call it peace."

Tacitus, Agricola

IF the Banks are self-insured, and IF they are offering death related benefits to the employees for which this employee insurance is strictly a hedge, then this might make some moral and legal sense. But it does not appear to be the case.

And certainly for years companies have taken out life insurance on key employees, whose loss would be a blow to the company, as the article acknowledges.  But they go on to point out that this program is not related to key employees, but is widespread, and continues on even after they leave their employment with that firm.

It seems that there is some perverse loophole in the tax laws and insurance calculations that makes it profitable for a corporation to 'bet' on the deaths of its employees, for its own profit, as this article implies, and not as any hedge against the loss of their talent. And if they are doing the insurance and reinsurance through subsidies, they may be moving any losses from book to book in order to further game the tax laws, similar to the methods by which multinationals create 'income' in subsidiaries located in tax havens offshore.

The point is not that this is nefarious, but that it epitomizes the kinds of government subsidies for non-public-beneficial activities that corporations exploit. 

The failure of the Fed and the Regulators in general is in not aligning the interests of the Banks with the success of Main Street.  Banks are not making loans that encourage capital investment in sound projects and activities.  Instead the Banks are incented to game the system, play the markets, and invest their innovation and energy into the financialisation of nearly everything, including the deaths of their own employees.

In some other news  analysis of the day, What is Wrong with American Capitalism, it has been pointed out that US corporations are busily engaged in buying their own stock to improve their quarterly earnings and stock option returns for executives, rather than investing in infrastructure, rather than in research, innovation, and employee development and training.  This is another subsidy and distortion promoted by the government in service of corporations.

As the article below by Martins reminds us, Senator Carl Levin said that JPMorgan has 'the lowest loan-to-deposit ratio of the big banks, lending just 61 percent of its deposits out in loans.' Apparently, said Levin, 'it was too busy betting on derivatives to issue the loans needed to speed economic recovery.'

And gaming the markets as well, Senator, as well as all sorts of other extracurricular activities other than serving Main Street and efficiently allocating capital. 

And you can place a large portion of that blame on those in Washington who are only too eager to take soft bribe money in the form of large campaign contributions and other perks and revolving door payoffs from the Banks, Super PACs, and corporate interests.

I am aware that not only JPM does this, or even started this practice. I remember the stories about Walmart doing this as well some years ago. Their abuse of this prompted legal action and a thorough public shaming.

Generally speaking, Code section 101(a) of the US Tax Code makes the receipt of insurance proceeds nontaxable. Wal-Mart was insuring the lives of its employees for $50,000 or thereabouts and collecting the money if the employee died. Its employees apparently were not aware of this, and Wal-Mart was making money on this insurance 'program' free of income tax without providing any benefit to the employee or their heirs.

A new tax provision 101(j)in 2006 made insurance proceeds in excess of premiums paid taxable as income to the employer unless the employee consents in writing before the issuance of the insurance contract. The notice must state affirmatively that the employer may continue the insurance coverage even after the employee is no longer employed.

There is an income tax form (Form 8925) that a company must file and sign indicating if the employee has affirmatively consented.

If memory serves Walmart was shamed into discontinuing this practice by the publicity. Apparently JPM and the TBTF Banks have turned it into a sizable line of business, after having been bailed out by the Fed, and the taxpayers, with billions in subsidized dollars and forgiveness for their gambling losses and frauds. 

And therein is the point. JPM and the other Banks are only nominally Banks, and therefore do not deserve the protections, exemptions, and subsidies extended to them by the government for banking and depository activity, which is becoming a smaller portion of their overall activity.  The Volcker Rule was intended to change this, and given the London Whale and other abuses, including some not yet come to light, it is not working.

Corporate capitalism is turning ghoulish, and it is not just the western Banks and corporations that are joining in on the feast, but their political associates here and abroad who are enabling the death of whole countries for profit. Neo-Liberalism As Social Necrophilia: The Case of Greece.

'And what rough beast, its hour come round at last, slouches towards Bethlehem to be born?'

JPMorgan Chase Bets $10.4 Billion on the Early Death of Workers
By Pam Martens and Russ Martens
March 24, 2014

Families of young JPMorgan Chase workers who have experienced tragic deaths over the past four months, have been kept in the dark on many details, including the fact that the bank most likely held a life insurance policy on their loved one – payable to itself.  Banks in the U.S., as well as other corporations, are allowed to make multi-billion dollar wagers that their profits from life insurance policies on employees will outstrip the cost of paying premiums and other fees. Early deaths help those wagers pay off.

According to the December 31, 2013 financial filing known as the Call Report that JPMorgan made with Federal regulators, it has tied up $10.4 billion in illiquid, long term bets on the death of a large segment of its employees.

The program is known among regulators as Bank Owned Life Insurance or BOLI. Federal regulators specifically exempted BOLI in passing the final version of the Volcker Rule in December of last year which disallowed most proprietary trading or betting for the house. Regulators stated in the rule that “Rather, these accounts permit the banking entity to effectively hedge and cover costs of providing benefits to employees through insurance policies related to key employees.” We have italicized the word “key” because regulators know very well from financial filings that the country’s mega banks are not just insuring key employees but a broad-base of their employees.

Just four of the largest U.S. banks, JPMorgan Chase, Bank of America, Wells Fargo and Citigroup hold over $53 billion in investments in BOLI according to 2013 year-end Call Reports. Death benefits from life insurance is purchased at a multiple to the amount of the investments, meaning that $53 billion is easily enough to buy $1 million life insurance policies on 159,000 employees, and potentially a great deal more. Industry experts estimate that the total face amount of life insurance held by all banks in the U.S. on their employees now exceeds half a trillion dollars.

When the General Accountability Office (GAO) looked into the matter for Congress in 2003 and 2004, it found the insidious practice of continuing the life insurance even after the employee had left the company – nullifying any ability to consider him or her a “key” to the business. The GAO wrote: “Unless prohibited by state law, businesses can retain ownership of these policies regardless of whether the employment relationship has ended.” The GAO found that multiple companies held life insurance policies on the same individual...

One reason banks are enamored with taking out policies on other people’s lives and keeping the practice as hush-hush as possible with the willing consent of regulators is that the gullible U.S. taxpayer who bailed out the banks to the tune of trillions of dollars from 2008 to 2010 and is now subsidizing too-big-to-fail through an implied permanent Federal backstop, is also subsidizing these death wagers. Both the buildup in the cash value of the policy over time and the payment of the death benefit are tax-free income to the bank; the more workers they insure, the more tax-free income they receive to help their bottom line; and the less corporations pay in their share of Federal income taxes, shifting more and more of the burden to the struggling middle class.

Banks have also exploited other tricks with the billions invested in these policies. JPMorgan is the assignee for Patent number 5,806,042 at the U.S. Patent and Trademark Office, titled “System for Designing and Implementing Bank Owned Life Insurance (BOLI) With a Reinsurance Option...”

Read the entire article here.

Gold Daily and Silver Weekly Charts - The Hunger Games

Last night Nick Laird showed me some excellent original data analysis from his site, Sharelynx.com, that demonstrates that a decline in the price of gold during an FOMC week is no sure thing, but more normally distributed. And we have to balance that against a different, and much less statistically robust graph, that was on ZH, and which I also presented here, that clearly showed declines in FOMC weeks, and no similar declines in off weeks, but for a much shorter period of time.

Nick looked at full weeks, and even much tighter spreads of days, but only looked at FOMC events, and a lot of them going back to 2006, and then even to 1994. I plan on looking at some of his data much more closely, but it does drive home the conclusion that simply betting blindly on around certain events does not work. If it was that easy, everyone would do it. Rather, there are other variables at play, of that I am certain. And I will take a much closer analytical look at all the data, and not just cycles and dates, when I have a greater opportunity.

Next week is an option expiration for the precious metals futures on the Comex. A large tranche of gold was deposited into the JPM warehouse. Perhaps these are preparations for the next active month for physical bullion which is April. Otherwise things were quiet.

Another thing of which I am reasonably confident is that there is a 'currency war' in progress, and some great changes in the composure and complexion of international finance and trade. This 'war,' more like a new kind of cold war than a military war, ebbs and flows, manifesting itself first in one way and then in another. And sometimes it pokes its head out of the financial pages and onto the headlines, as it has recently done in the Ukraine and Crimea.

As you might always expect in times of change and contention, truth is in short supply. And I think some long standing trends are coming to a head. And so we should expect the unexpected, and look for things to happen, particularly from the top down, that we had not seen coming.

I will never forget how, shortly after the tragic events of 911, and the expected response against the Taliban in Afghanistan, that the word was given out from the top down, 'attack Iraq.' And people looked at each other and said with their eyes, what? And the media machine was put into gear, and the march to Iraq was begun.

I mean that sort of unexpected thing, that does not seem to make sense if you have been following some logical sequence of things, but that the media picks up from the top and repeats without fairly batting a jaundiced eye.

If you want a vision of the future, I would not look for a 1984 type boot stomping endlessly on a human face. Rather, I think we will see the kind of bifurcated society of a few effete haves in a few cities, and the great number of have nots, as is depicted to some effect in The Hunger Games. President Snow reminds me of the consummately ruthless CEO, moreso than a dictator. The various District have been reduced to their basic economic elements, and the people of the Capitol are living large on their efforts.

Like most works of fiction it is an oversimplification. But it has a resonance with the kids, wildly popular in the teens and younger set. The young have a tendency to pick up on trends based on behaviours that are not carried overtly perhaps in the official news and the spoken words of adults. When the books became popular I read them, just to keep in touch with my own children and what was attracting those of them who were thinking. And now the movies are coming out. The books are better, but you may find the movies to be diverting.

So it looks like interesting times ahead. And may the odds be ever in your favour.

Have a pleasant weekend.

SP 500 and NDX Futures Daily Charts - Quad Witch Boogie Woogie

Today was a quadruple witching expiration, with the futures rolling over to June, and the options expiration on US equities.

And naturally we saw the rest of the wash and rinse cycle, the up and down, that has characterized this week.

So what next. Ukraine is the visible manifestation of the currency war, and it seems to be getting warmer, not colder. With round two of the financial retaliation of the US going forward, with credit cards and accounts being frozen, and downgrades from the credit ratings agencies, a message is going out to the rest of the world, loudly and clearly.

I expect this will be a volatile year overall, with stocks tottering a bit on their lofty heights. I am not looking for a crash or anything such as that, although this is the kind of environment in which an exogenous event would cut to the bone.

The Fed has the market's back, and certainly the backs of their owners at the Banks. The pundits were touting the financial stocks today. Of course, these are the same types who would say things like, "The signs are that the end is near. Up next, a list of stocks that are expected to outperform in the apocalypse."

Have a pleasant weekend.

NAV Premiums of Certain Precious Metal Trusts and Funds

As you may recall today is the 'quadruple witch' for the equity markets.

The premiums are at their 'new normal' levels.

The cash level continues to be historically thin at Sprott Silver, although they seemingly face no short term needs from their cash burn rate.  But at some point they will have to do another offering. 

Ted Butler: J. P. Morgan And Precious Metal Price Manipulation On the Comex

I am no legal expert, and therefore have no idea of the merits of this as a prospective case.  The law involves things like intent, opportunity, evidentiary proof, and so forth. Apparently one can sue another entity for just about anything, but that does not mean that the case has any merit.   And I certainly could not advance such a case based on even industry knowledge. That strikes to the heart of my own issue.

My primary concern is a lack of transparency. And that lack of transparency in these markets is not conducive to market efficiency.  It allows for gaming the system, either occasionally or, as we have seen, systematically.

I cannot tell if these markets are manipulated because so much of what is being done is hidden.  And it does not help that the CFTC conducted a five year long study into the subject, and then quietly killed it without ever having issued any information about their findings.

Some have shown evidence they say that proves that it is the tech funds that set price, and that JPM is just 'making a market.' If this is true, then additional transparency on the part of JPM and the other market makers would be perfectly reasonable to allay any doubts about the honesty and fairness of the markets for precious metals.  This is why the people have established, and paid for, regulators.  So they do not have to resort to lawsuits in order to achieve justice and equity in their transactions.

Considering the widespread rigging of key benchmarks and prices, I think to just dismiss these concerns with a sneer and a snigger is unreasonable, requiring people to maintain an almost slavish belief in the integrity of the Banks, trading desks, and the system.  Given the amount of abuse that has been exposed already along these same lines, that does not seem to be a thing that a thinking person would ask.

The major objection to transparency, by the way, is that it would diminish the profits of those in the position of market makers.  Well, market making is intended to be a utility function, with a small but regular return.  It is not appropriate for market making to be in the hands of those who are also major market players.  It is a certain invitation to corruption.

One of the more general things that struck home in this commentary by Ted is the concern that the Comex is becoming like a bucket shop, a betting parlor that is at arms length from the markets for which they are presumably setting prices.   The lack of delivery and the ability to create large amounts of contracts to receive or deliver on the fly, and then to transact them at whatever price you wish without seeming constraint if you are big enough, with deep enough pockets and enough advantageous information, is tantamount to setting up a con game, and then trusting in men to be angels.

Relying on self-regulation, under the discipline of private lawsuits, merely reinforces our increasingly bifurcated society, in which a small minority have ease and rights and freedom and even justice, because they can afford it.  And those many who rely on the justice provided by government will be faced with an upward facing and unresponsive bureaucracy, and with that, hard times.  Like quality Healthcare, there will be Justice, for some.

As you know I am no longer hopeful of change in the short term, given the nature of the credibility trap that has encompassed the political party process and the mainstream media. To paraphrase the discouragement pessimism of Czech author and political figure Václav Havel:

“No attempt at reform could ever hope to set up even a minimum of resonance in the rest of society, because that society is ‘soporific,’ submerged in a consumer rat race... Even if reform were possible, however, it would remain the solitary gesture of a few isolated individuals, and they would be opposed not only by a gigantic apparatus of national (and supranational) power, but also by the very society in whose name they were mounting their reform in the first place.”

It is no accident that the nascent movements for financial reform were either ruthlessly crushed, as in the case of the almost rudderless Occupy Wall Street, or co-opted by money and politics, as unfortunately happened with the Tea Party. Co-opt if you can, crush if you must.

Ted presents some of the facts in the contrary case, and I found them to be interesting.  It is hard to believe that the London Fix is so corrupt, but the Comex, which is the major pricing platform, is pristine, since the players are playing across all global markets.

Suing JPMorgan and the COMEX
Theodore Butler|
March 21, 2014

I’ve had some recent conversations with attorneys who were considering class-action lawsuits regarding a gold price manipulation stemming from reports about the London Gold Fix. I told them that while there is no doubt that gold and, particularly, silver are manipulated in price, I didn’t see how the manipulation stemmed from the London Fix. I wished them well and hoped that they may prevail (the enemy of my enemy is my friend), because you never know – if the lawyers dig deep enough they might find the real source of the gold and silver manipulation, namely, the COMEX (owned by the CME Group) and JPMorgan.

So I thought it might be constructive to lay out what I thought a successful lawsuit might look like, although I’m speaking as a precious metals analyst and not as a lawyer. I’ll try to put the whole thing into proper perspective, including the premise and scope of the manipulation as well as the parties involved...

Read the entire article for free here.