James Turk Interviews Eric Sprott About Gold and Silver

Gold Daily and Silver Weekly Charts - Brother, You Ain't Seen Nothing Yet

"In a society built largely on confidence, with real wealth expressed more or less inaccurately by pieces of paper, the entire fabric of economic stability threatened to come toppling down."

New York World, October 25, 1929


"In economics, things take longer to happen than you think they will, and then they happen faster than you thought they could."

Rudy Dornbusch

Next week is a Thanksgiving Holiday week in the states, as the markets will be closed on Thursday and a light session on Friday.

Metals Option Expiration is next Tuesday. December is a big delivery month.

Several people have mentioned that the bankruptcy of MF Global takes a lot of large specs out of play for this delivery, with their positions trashed and funds frozen in both gold and silver.   And the failure of MF Global was a 'hit' or some ploy by the Wall Street wiseguys to break the speculative longs in the metals and take down the biggest retail futures firm that arranges physical delivery.  Talk about going the extra mile.

I don't know about that one, but wait until a major exchange defaults on some commodity like silver, and then forces cash settlements on the position holders at a price the big exchange members dictate.  And maybe not even in cash, but some kind of paper markers. If you don't think this can happen then you have not been reading enough about US market history.

That should set a few more minds free of their illusions about fair and efficient markets..

The Super-Committee has its deadline next week and a good resolution seems unlikely, which is what most expect. Obama helped to set this impasse up by extending the Bush tax cuts at the beginning of 2011, which are now a major sticking point.

I have an open mind to the theory that this is a bit of chess, with Defense Department cuts being set up by default if no resolution is reached, although they will only start in 2013. 

Most politicians are loathe to put military spending cuts on the table and take responsibility for them. A failure by the Super-Comm makes the cuts 'automatic.'

Headline risk in European sovereign debt remains very elevated.

I remain in a paired trade of short stocks and long bullion.

Have a pleasant weekend.

SP 500 and NDX Futures Daily Charts

Some decent swings but overall a quiet stock option expiration today.

Next week is a holiday shortened week in the US.

It will be marked by a metals option expiration on the Comex, and the results of the Congressional 'SuperCommitte' on the US budget deficit.

Headline risk from Europe is very high.

US Corporate Taxes As a Percent of Corporate Profits

"Once upon a time, the corporate income tax generated a significant share of tax revenues; now, it’s bumping along in the 2%-of-GDP range. Yes, the marginal rate of corporate income tax is high, at 35%. But US companies are extremely good at not paying that.

But at least we know the aggregate amount that corporations pay in taxes. What we don’t know — because they won’t say, and no one’s forcing them to say — is how much any given public company pays.

Allan Sloan has a very good column on this today. Companies already report 16 different tax metrics; they should simply be required to add a 17th — the amount they pay the IRS in taxes — which in many ways is most important. The companies already file tax returns; the number’s right there, on lines 31 and 32. They just refuse to say what it is."

Charts of the day, Corporate Income-tax Edition, Felix Salmon

One thing that is true is that the US has a high 'headline' corporate tax rate at 35%. This was used to justify the distribution of corporate profits as dividends that were made tax free.

But like most things in America, the headline numbers are one thing, and the reality behind the headlines is a very different picture. Some of the loopholes that allow 'offshoring profits' are eating like acid into the real economy. Why is this? As Jack Abramoff recently admitted, Congress is a willing vassal to the monied interests.

"During my years as a lobbyist, I saw scores of congressional staff members become the willing vassals of K Street firms before soon decamping for K Street employment themselves. It was a dirty little secret. And it is a source of major corruption in Congress."

And nothing will make this more clear than the discussions about the US budget. All politicians will work for tips and favors and campaign funds. But if you cannot spot who is on the full-time payroll of the 1 percent, then you might need to change your news channel.

The corporate propagandists do a good job of managing the American people. As one of the more pre-eminent of the pigmen once privately told me: 'Old people are the easiest to handle. You just scare them.'

Greed draws people in, and fear keeps them in line. Its a well-worn script. It is the basis for most ponzi schemes and financial frauds. It is the well-spring of a credibility trap.

The reporting on NYC financial TV was particularly repugnant this morning, as they called the OWS movement over, with nothing left but a few professional agitators.

They contrasted its lack of strict purpose and organized ideology with the much more compliant Tea Party Movement, that allowed itself to be reorganized around corporate advertising principles. It morphed from a financial reform movement into obedient lobbyists for the Koch Brothers and the monied interests.

And it angers the Wall Street demimonde that the loose organization of OWS does not permit an easy foothold with a few influential leaders that can be easily bought and scripted.