Stocks and Precious Metals Charts - The Storm of Dissolution and Madness

 

"We looked into the abyss if the gold price rose further. A further rise would have taken down one or several trading houses, which might have taken down all the rest in their wake. Therefore at any price, at any cost, the central banks had to quell the gold price, manage it. It was very difficult to get the gold price under control but we have now succeeded. The US Fed was very active in getting the gold price down. So was the U.K."

Eddie George, Governor Bank of England, in a conversation with the CEO of Lonmin, September 1999

“The men of the higher circles are not representative men; their high position is not a result of moral virtue; their fabulous success is not firmly connected with meritorious ability. Those who sit in the seats of the high and the mighty are selected and formed by the means of power, the sources of wealth, the mechanics of celebrity, which prevail in their society.

When institutions are corrupting, many of the men who live and work in them are necessarily corrupted. Within the corporate worlds of business, war-making and politics, the private conscience is attenuated— and the higher immorality is institutionalized.   It is not merely a question of a corrupt administration in corporation, army, or state; it is a feature of the corporate rich, as a capitalist stratum, deeply intertwined with the politics of the military state.”

C. Wright Mills, The Power Elite, Oxford Press, 1956

"If at the start this cancerous growth in the nation was not particularly noticeable, it was only because there were still enough forces at work that operated for the good, so that it was kept under control. As it grew larger, however, and finally in an ultimate spurt of growth attained ruling power, the tumor broke open, as it were, and infected the whole body."

The White Rose, Second Leaflet, Munich 1942

“We are little flames poorly sheltered by frail walls against the storm of dissolution and madness, in which we flicker and sometimes almost go out.”

Erich Maria Remarque, All Quiet on the Western Front, 1928

Stocks had another wobbly, wide ranging trading day.

But fortunately they ended up a little lost, to mostly unchanged.

Gold and silver continued their breakouts higher.

Silver has taken the 35 handle.

Gold is punching higher towards its next measuring objective.

The Dollar dropped and then came back, holding on to 104.

The gold and silver rally is not dollar related.  It looks like a flight to safety.

Let's see if anything substantial comes out of the BRIC summit.

Leaked intelligence documents purport to show the IDF plans to attack Iran.

Curioser and curioser.

As JFK noted to Pierre Salinger in private conversation during the lead up to the Cuban Missile Crisis, "I said, 'Mr. President, you don't have a cold. There’s something going on.'   He said, 'You bet there is something else going on.'  And then he said, 'When you find out, grab your balls and run.' 

Pierre Salinger, On the Cuban Missile Crisis, 1995

Have a pleasant evening.

Stocks and Precious Metals Charts - Snakes in Suits: Influence, Betrayal, and Madness

 

"War against a foreign country only happens when the moneyed classes think they are going to profit from it."

George Orwell, The New Statesman and Nation, August 1937

"Boys who were found hiding were hanged as traitors by the SS as a warning that, 'he who was not brave enough to fight had to die.'   When trees were not available, people were strung up on lamp posts. They were hanging everywhere, military and civilian, men and women, ordinary citizens who had been executed by a small group of fanatics.  It appeared that the Nazis did not want the people to survive because a lost war, by their rationale, was obviously the fault of all of us.  We had not sacrificed enough and therefore, we had forfeited our right to live, as only the government was without guilt."

Dorothea von Schwanenfluegel, Eyewitness account, Fall of Berlin 1945

"Our plutocracy, whether the hedge fund managers in Greenwich, Connecticut, or the Internet moguls in Palo Alto, now lives like the British did in colonial India: ruling the place but not of it.

Mike Lofgren, The Deep State: The Fall of the Constitution and the Rise of a Shadow Government, 5 January 2016

"Under pretence of governing they have divided their nations into two classes, wolves and sheep.  I do not exaggerate.  If once they become inattentive to the public affairs, you and I, and Congress, and Assemblies, judges and governors shall all become wolves.  It seems to be the law of our general nature, in spite of individual exceptions; and experience declares that man is the only animal which devours his own kind, for I can apply no milder term to the governments of Europe, and to the general prey of the rich on the poor."

Thomas Jefferson,  Letter to Edward Carrington, 16 January 1787

"Treason doth never prosper: what’s the reason?
Why, if it prosper, none dare call it treason."

John Harrington, Epigrams: Of Treason, 1618


Gold and silver came in steaming from the overnight foreign trade.

But a rally in the Dollar in NY time knocked them back down to mostly unchanged.

Stocks gathered themselves together at the same time and turned sharp losses into smaller losses and nearly unchanged.

The BRICs will have their summit meeting in Kazan, Russia over the next two days.

Never, ever expect the classic narcissist leader to fail to try every trick in the book, up to and including leading their nation into the abyss, in order to advance even their most narrow, pettiest desires.

This stuns those who would never even considering doing something so dishonorable and madly selfish.   

The disadvantage of the average person is that they are not given over to madness, and find the mere concept of it horrifying.

But for some it is just the business of the day.

We have seen it in history.  I have seen it in business.  It is stunning.

Have a pleasant evening.

Stocks and Precious Metals Charts - These Violent Delights Have Violent Ends

 

"The period of financial distress is a gradual decline after the peak of a speculative bubble that precedes the final and massive panic and crash, driven by the insiders having exited but the sucker outsiders hanging on hoping for a revival, but finally giving up in the final collapse."

Charles Kindleberger, Manias, Panics, and Crashes

"These violent delights have violent ends
And in their triumph die, like fire and powder,
Which, as they kiss, consume."

William Shakespeare, Romeo and Juliet

"Simply put, a market dislocation is when a sustained bubble begins to wobble and fall apart, and the realization comes generally that it is collapsing, with all participants remaining invested heading for the exits in a mass panic. These patterns of collapse tend to have a common framework. The challenge is separating a market dislocation from an ordinary correction. 

The setup for a market dislocation begins with a sustained increase in price (the Ramp) to a significant new high (the Top) over a period of time which is multiples of the subsequent decline. US equity markets saw such a top late last year in October. From there the first assault in confidence occurs as profit taking, creating a decline more significant than the declines serving as corrections up to the Top.

It is usually an initial decline of ten percent or greater. Often we get an uncharacteristic decline. The rally back from this first low not exceed the Top (obviously) and is referred to as the Second High (with the TOP being the first or highest high). It can be equal to the TOP. The next low must set a lower low, ruling out a double bottom. It is preferable but not necessary that the Lows be noticeably lower than the Highs.

The lower the lows, the more likely that the dislocation will mark the start of a bear market rather than just a market clearing event like the Crash of 1987. It is not uncommon to reach this point, and the vast majority of times will merely be an A-B-C correction. The next step is a critical differentiator, the Failed Rally. If there is a bounce of 2 to 5 percent that fails to gain momentum, and drops back to a lower low, and fails to rally again from there, it sets up a higher than normal probability of a market dislocation which we define for our purposes as a market decline of 30 percent or greater within a one year period."

Jesse, Crash: The Rally that Fails as Hallmark of Major Market Dislocations, 27 January 2008


It was rally mode today for equities.

They were certainly not cowed by the anniversary of Black Monday in October 1987.

Even more impressive, gold and silver both broke out of resistance and ran higher.

It was in the charts.  It's just hard to believe when it actually happens.

We don't believe in plagues, or wars.  Or the occasional triumph of reality over madness.

VIX fell.

The Dollar did an all day decline, sans chop.

All in all, another monthly option expiration.

It is definitely autumn weather here now, with the temperatures falling towards freezing at night.

And the 'boys of autumn' are in their playoff season.

Halloween is around the corner, and Thanksgiving is in the air.

So let us be thankful, and prayerful.

Have a pleasant weekend.