Gold Daily and Silver Weekly Charts

The miners showed a positive divergence today.

If gold is going to set up an inverse H&S bottom it must hold support at 1570 although 1580 is preferable. Otherwise we will be looking for a double bottom.

Intraday commentary here.

SP 500 and NDX Futures Daily Charts

The momentum trade has fallen into an easy pattern of lower futures prices overnight, and then an intraday rally starting around the European close.

To say that I do not trust this market is an understatement. It is running on liquidity and waiting for another fix from the Fed or the ECB.

Net Asset Value Premiums of Certain Precious Metal Trusts and Funds - Miners Rally

I see you stand like greyhounds in the slips,
Straining upon the start. The game's afoot:
Follow your spirit, and upon this charge
Cry 'God for Harry, England, and Saint George!'

Henry V, Act 3, Sc. 1

If only investing were so dramatic, and the signals so clear, as they are to insiders by privilege, and foolhardy amateurs by the dawdling nature of their inevitable insolvency.

Those of us who place our pants on one leg at a time build positions steadily, buying on weakness, and holding those positions while the fundamental trend is intact, perhaps trimming a little here and there on excessive movements in price.

If you have not noticed, the better quality miners are running counter-trend to bullion and the equity indices today.

I am still running short broad equity indices and long gold bullion. I have added more to bullion here. I am sidelined for the short term on silver.   Of course it would be nice to have a dramatic capitulative buying opportunity as we have seen a few times recently in the past, but those are only clear in hindsight, even to a seasoned trader.

Those who lose their positions entirely in the bull market have a terrible time buying back in, because they want all in at once, and at the lowest price.  They are victims to their pride, for they are not disciplined, trading not only for profit but bragging rights, in service to a hard mistress, their own ego.

And so they miss opportunity after opportunity and turn sour, wishing more to join them in their regrets.  I hear from them at times like this, and they are my best indicator that things are near to turning.  

If you buy, then buy slowly and not for a trade but to build a position you can hold while the long term trend is in your favor. 
Of course anything can happen, but the most real risk is a general liquidity panic in the manner of 2008. And as then, it would likely represent a spectacular long term buying opportunity.   But timing such a thing is the very devil itself, and often a snare of pride. 

I think the Fed and the central banks were caught by surprise in 2008. So they have no excuses for inaction this time around. But there is a strong element in the financial community that would like to buy real assets on the cheap with overvalued paper.

Otherwise the speculation has been largely 'squeezed out' of the precious metals judging by these premiums.

Still, they could go lower. We need to see the price find chart support. I will not take my hedges off again until I am sure that the price trend has changed.

And I cannot caution enough when I say that these markets are distorted by easy money and tainted by fraud, and cyncially played moreso than I have seen in many years. Such are the times in which we live.

I suspect that quite a few more entities will be taking physical delivery at these prices and that will pressure supply. That is the downside of price manipulation and why it inevitably collapses against the primary trend. 

The Question Is 'How Best To Default' and Not 'How Best to Maintain the Unsustainable'

"The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks."

John Dalberg Lord Acton

Greece is the most awkward of the EU countries by far in terms of economic fit.

There is no conceivable way that Greece can remain in a single currency union without regular transfer payments from the rest of the EU to compensate them for holding a highly overvalued currency relative to their own economy, geared more to the Germans and the French.

The problem is that the political structure of the EU does not accommodate this sort of adjustment, and within the current political character of the EU the notion of such payments is abhorrent.  The Germans, for example, have never thought of themselves as 'fellow Europeans' with a country such as Greece, and the economic structure of Europe does not easily lend itself to de facto payments.

Compare this to the US, with Greece as one of the poorer states, which receives much more in tax receipts and federal projects than the tax revenue that they send in.

It 'works' in the US because it is one nation by structure and by character. Despite their regional differences, most Americans can comfortably think of themselves as 'Americans' first wherever they might live. Unless they are urban cowboys from Texas perhaps (lol).

Every time I look at the structure of the EU politically and economically with the one currency I ask myself, "What were they thinking?"  There is no way to go by halves with a single currency and no accompanying political union. 

But this is the sort of building by half measures to which Europe has often been susceptible.  Bureaucrats love compromise, often blinded to how weak and unsustainable that compromise might be. Any deal is not always better than 'no deal,' except to the dealmakers.

So either the EU will change politically, which is highly unlikely, or Greece will leave the EU and once again obtain its own currency.

I think that outcome is almost predetermined. Now it is only a question of 'how' and mostly with regard to the possibilities of cross-contamination in the financial realm.

The best solution is for Greece to simply leave the EU, default on its debts, nationalize its banks, and restore the drachma at some highly devalued level. I think Iceland shows the way in this. This will greatly disappoint the private financiers who are licking their lips at the prospect of buying real national assets on the cheap with overvalued paper.

The worst problems will be for the European banks who hold Greek debt.

I would consider seriously an action that allows the banks to simply write off the Greek debt, and declare all CDS on Greek sovereigns null and void except for those who actually hold Greek bonds, to the extent of fifty percent of their nominal value.

If this is not workable, I would suggest that Europe also should nationalize and restructure their banks. This is what ought to have been done in 2008, and much of what has been done since then is waste. The greatest resistance to this will come from the one-worlders and their friends in the Anglo-American financial cartel. They would also like a single world currency, which is unworkable without government by a 'new world order.'

The absolute worst model is the American way, in which the banks are given the keys to the Treasury, the markets, and the political process, and allowed to do as they please, while maintaining a thin facade of legitimate government by the people.

They may as well get this done, and stop the charade. And then the rest of the world can begin thinking of how they might reform international trade, replace the existing reserve currency system, and bring the Anglo-American privateers back under control once again.