SP Weekly Chart Updated

Here is the chart we have been keeping through this decline and now into the bounce.

The bounce will end when it ends. It is a 'false flag' intended to spark a recovery in confidence and the economy. It is fueled by an enormous infusion of liquidity by the Treasury and Federal Reserve into a few favored banks, who are making the bulk of their newly found profits by trading.

The rally cannot be sustained without continuous printing of money. The difficulty with this tried and true monetary approach which has lifted the economy out of the last two bubble breaks is that the financial sector is closer to the heart of the credit bubble than tech or housing, which were just vehicles for the Ponzi scheme.

And the largesse is not being distributed evenly, as relative outsiders like Ken Lewis are finding out. "Not all animals are equal." And not all the pigs have purchased premier positions at the trough.

So, when will it end? On the charts, the area between 1060 and 1100 is likely, since it is in the area of a valid and confirmed neckline. But given the strength with which the SP has penetrated the prior resistance, one has to approach any forecast of an end to a rally like this with fear and trembling, and a generous portion of caution.

Still, our point is not to make a killing for the punters, but rather to help to illuminate the perfidy at the heart of the US financial system. It is truly amazing at how brazen it has become, especially under their token reformer.

The comments on this chart are those that had already been there. All that has been done is to update the chart from July, and to clean it up a bit for readability.

An Opportunity for Purveyors of Gold in London

Le Proprietaire has favored shopping at Harrod's at holiday time for many years, and finds the Food Halls to be a delight. One has to wonder if buying gold bars 'off the shelf' in size such as this indicates that there is a market to be made in London for lower scale purchases.

The Prechterian wave weenies may see anecdotal 'signs of a top' in this, but in general they have been chasing themselves silly throughout this entire multi-year bull market.

One has to wonder if the Harrod's card could be used for this type of purchase. Do they deliver the gold in their familiar green trucks? Perhaps at least provide a reinforced shopping bag for takeaway.

Ah, a ceramic post of Stilton and a box of cream crackers. Those were the days.


Harrods adds gold bars to its luxurious image

LONDON — Glittering bait for the well-heeled shopper: Harrods department store has added gold bars to its merchandise line.

The store announced Thursday that it has joined with Swiss refiner Produits Artistiques Metaux Precieux to offer gold bars weighing 27.5 pounds (12.5 kilograms). The move comes as gold prices have been going through the roof. On Wednesday, they hit another record high of $1,072 an ounce.

Based on Thursday's afternoon gold fixing price in New York, a gold bar would cost about $462,440. Customers can buy the gold through Harrods financial arm Harrods Bank, which is located in the central London's department store (didn't that used to be Lloyds? - Jesse)

"The financial environment has kindled a new demand for physical gold amongst private investors in Britain," said Chris Hall, head of Harrods Gold Bullion.

"Up until now, however, London has had no well-recognized name serving this market," he added.

Many investors believe it is currently safer to invest in gold than in stocks, property, or currencies.

"The fact that a company like Harrods is moving into the physical gold market is interesting ," said Adrian Ash, head of research at Bullionvault.com, the online gold trading company. "It shows gold is moving back into the mainstream, having spent two decades in the arena of cranks and gold bugs."

Mehdi Bakhordar, managing director of Produits Artistiques Metaux Precieux, said Harrods was the only location in London where investors could buy a 27.5 pound (12.5 kg) gold bar "off the shelf."

Sumitomo Forecasts Dollar to 50 Yen, End of Dollar as Reserve Currency

"We can no longer stop the big wave of dollar weakness," said Daisuke Uno at Sumitomo.

Nothing goes straight up or straight down. Look for corrections in the precious metals and the dollar, and the strengthening currencies such as the Aussie dollar, which seems headed to US dollar parity. However, the macro trend is apparent.

We get a chuckle over this dollar weakness when free market people like Steve Forbes come out and look for market intervention to stop it. The market is taking the dollar where it should be, where it needs to go. If only countries with obvious pegs and ongoing manipulation to support export mercantilism were also to allow their currencies to float more freely. It is going to kill off global trade. It is the great failure of the WTO and US trade policy to have allowed pegs and overt currency manipulation policies which are de facto tariffs and subsidies on trade.

A 'crash' in the US stock market, should one occur, will temporarily jar nearly everything. More likely is a long slow slide as in the second phase of the Great Depression, from 1931 to 1933.

Monetary inflation can make the nominal charts more palatable as it is doing today. The problem is that all Ponzi schemes come to bad ends.

The only way out, the only viable path, is for the US to embrace a serious reform of its markets and its financial system, and to change system that encourages the debilitating corruption of decision-making in Washington, which is under the influence of an army of well-heeled lobbyists.

To that extent, the "straight talking" pre-Palin version of John McCain had it right. Little serious reform can be done until campaign finance and influence peddling in Washington is addressed. McCain saw the danger of this conflict of interest in his own career as part of the Keating Five, and his own party and the rise of the neo-con statism and its assault on republican ideals.

The Democrats have shown themselves to be no better, having gone down the slippery slope of Clinton capitalism, the partnership of special interests and government. Obama failed when he embraced it. And now both parties are deep in the mire of corruption.

The banks must be restrained, and the financial system reformed, and balance restored to the economy, before there can be any sustainable recovery.


Bloomberg
Dollar to Hit 50 Yen, Cease as Reserve, Sumitomo Says
By Shigeki Nozawa

Oct. 15 (Bloomberg) -- The dollar may drop to 50 yen next year and eventually lose its role as the global reserve currency, Sumitomo Mitsui Banking Corp.’s chief strategist said, citing trading patterns and a likely double dip in the U.S. economy.

“The U.S. economy will deteriorate into 2011 as the effects of excess consumption and the financial bubble linger,” said Daisuke Uno at Sumitomo Mitsui, a unit of Japan’s third- biggest bank. “The dollar’s fall won’t stop until there’s a change to the global currency system.”

The dollar last week dropped to the lowest in almost a year against the yen as record U.S. government borrowings and interest rates near zero sapped demand for the U.S. currency. The Dollar Index, which tracks the greenback against the currencies of six major U.S. trading partners, has fallen 15 percent from its peak this year to as low as 75.211 today, the lowest since August 2008.

The gauge is about five points away from its record low in March 2008, and the dollar is 2.5 percent away from a 14-year low against the yen.

“We can no longer stop the big wave of dollar weakness,” said Uno, who correctly predicted the dollar would fall under 100 yen and the Dow Jones Industrial Average would sink below 7,000 after the bankruptcy of Lehman Brothers Holdings Inc. last year. If the U.S. currency breaks through record levels, “there will be no downside limit, and even coordinated intervention won’t work,” he said.

China, India, Brazil and Russia this year called for a replacement to the dollar as the main reserve currency. Hossein Ghazavi, Iran’s deputy central bank chief, said on Sept. 13 the euro has overtaken the dollar as the main currency of Iran’s foreign reserves....