SP 500 and NDX Futures Daily Charts - Slippage

The Fed wants to raise their key interest rate by 25 basis points next week, at their meeting on September 16-17.

The reason they would like to raise is not because of the real economy or any concerns about inflation or even 'full employment.'

The Fed has been stuck on the emergency zero bound for far too long, and stood idly by while economic inequality widened through the gaming of a corrupt system, and paper assets once again grew into a dangerous bubble.

They would like to raise rates to give themselves some room to maneuver policy when the next financial crisis comes.

They, and much of the status quo, is caught in a credibility trap that inhibits them from reforming the corrupt system that has been rewarding them, handsomely. The US is currently in the hands of a relatively small number of oligarchs.

There are indeed other countries that are 'worse.'   That does not make what the US is now 'good.'  Putting aside both good and bad for a moment, as a democratic republic it is not sustainable.  

Sustainable recovery will only come when true reform of the political and financial system is accomplished.

Thinking people around the world are increasingly wise to the true nature of things. Their reactions vary. The rest of the people are angry, confused, and unfortunately often malleable to suggestions and PR campaigns from the major media.

That is the situation which we are in. I do not think I can state it any more clearly. Keep it in mind and it will help you to understand what happens next.

Is there anything you don't understand about this?

Have a pleasant evening.

Comex Registered Gold to Open Interest at New All Time High 207:1

The ratio of open interest to registered gold is at an all time high of 207:1 potential claims per ounce.

Since this is not an active month for gold it is not pressing.

However, the amount of registered (deliverable) gold at these prices has fallen to at least a twelve year low and perhaps more.

Of late the Comex has fallen away from physical delivery in gold, with most of the bullion in the warehouses being held in storage.

More concerning is the overall tightness of the gold market, particularly in the LBMA which serves as a major wholesale physical bullion distribution hub for the world.

Speaking of London, I came acress a brochure from JP Morgan's new London based service for taking unallocated and ETF gold and applying it as collateral in tri-party arrangements around the world.  Leveraging up the assets you might say, adding a bit of income performance to the old portfolio.  Counterparty risk as well I would imagine.

It was a very slick brochure for the high end portfolio managers with excess bullion just laying around gathering dust that might be put to work as they say.

What was particularly interesting is the way in which they describe the gold market in 2011.  Does this sound like the familiar refrain from the financiers and their talking heads?

Here is a brief excerpt.

Gold has many characteristics that make it appealing as collateral. It is liquid, high quality, and traded and priced globally. As counterparties seek to diversify their collateral pools and stringently review their collateral options, gold takes its place amidst other high grade collateral such as government securities and cash.

Gold has the added attraction for collateral takers of being 'right way collateral,' which means that in times of crisis, its price is generally expected to rise, thus providing added protection and diversification to traditional forms of non-cash collateral such as fixed income or equities.

According to John Rivett, global business executive for collateral management, 'It would be difficult to find a more stable and secure asset than gold. Gold shines when there’s a flight to quality: it runs counter to the market in valuation whenever there’s a credit crunch or fear of contagion.'

J. P. Morgan, Golden Opportunities, 2011

Gold Daily and Silver Weekly Charts - Good Thing Where Has It Gone

"The woods decay, the woods decay and fall,
The vapours weep their burthen to the ground,
Man comes and tills the field and lies beneath,
And after many a summer dies the swan."

Tennyson, Tithonus

Among the usual suspects worth watching, there are two things that any experienced trader watches carefully: counterparty risk and liquidity.

The issue of liquidity in the physical gold market is quite easily overlooked, because its true nature, and that of counterparty risk, and kept veiled behind an opaque curtain in a market structure that might have been designed by carnies.   And that is probably being unkind to most carnival folk.

There was intraday commentary titled Claims Per Deliverable Ounce' Likely Soars to over 200:1. You may wish to read it, consider the pros and cons, and then do what you will.

I am getting a bad feeling about the markets in general.  Especially with regard to the precious metals markets.  Perhaps I should just blithely dismiss all these things that seem unusual as some are wont to do.   Things will just continue on forever, in a downward spiral that we will keep calling 'the new normal.'

I do think that an ounce of caution here is advisable.

But I have had a similar caution and have been mistaken in my caution before, particularly in 2013.  I underestimated the audacity of the privileged and the powerful.

But I was all too right about 2000 and 2007.  And I made quite a bit of money in them, and protected my portfolios extraordinarily well.

And I have made mistakes also, and paid for their tuition dearly.  Every experienced trader, if they are honest with themselves, has done the same thing.  It is part of the learning process.

Only act on your own convictions, or otherwise circumstance will blow your decisions here and there, and dissipate your plans.

I do not expect these jokers in the financial sector to give up their 'good thing' too readily, that is, the gold and silver market manipulation so similar to so many others they have had.

I will feel much more confident in my suspicions when I see an actual chart pattern form and work.

Right now the markets seem well in hand, someone's hand at least.  But unlike purely speculative markets, at some point the precious metals may prove to be a worthy nemesis for their protracted abuse.

But there are signs enough that the night grows long in the tooth, and the party is almost at its miserable but inevitable end, and so some caution here is advisable I think.

Have a pleasant evening.