Net Asset Value Premiums of Certain Precious Metal Trusts and Funds

Mario Draghi pledged the ECB to 'unlimited' purchases of short term sovereign debt for any Eurozone country that requested such help, any objection from Germany notwithstanding apparently. There will be a court ruling in Germany over such matters on 12 September.

They are expected to rule in favor of this action because the purchase of troubled sovereign bonds will be done in the secondary market, rather than directly. This also provides a nice opportunity for the banks to 'front-run' the ECB.

I am wondering what if any 'conditions' a country might be expected to meet should they ask Draghi and the ECB for 'help.' That may be an overlooked detail.

The ECB has pledged to 'sterilize' any such market actions so that they will not provoke inflation. The purchasing will be done on the short end of the curve, 3 years and in, and the actions may serve to drive more private buying at the longer ends in search of positive yields. In some sense Draghi is just catching up to Bernanke.

But at the end of the day, this is monetization of sovereign debt for the sake of propping up a zombie banking system and failed political union.

I should add here a parenthetical remark, that the same dynamics that caused the faux union in Europe to fail under the policy strains of a single currency would happen on a much larger scale should the world adopt a single currency regime or a harder peg to the dollar.

One cannot have a single currency and monetary policy without a fully integrated political union, or a set of artificial barriers and supports that emulate transfer payments. One size rarely fits all.

As the economic health of a country ebbs and flows, this should be reflected in the strength and weakness of their national currency in a 'freely traded' marketplace. The only way to counteract this is by trade barriers and subsidies, or outright transfer payments.

This is a lesson that must be learned, or rather re-learned again, by the world apparently.

The equity market took off like a scalded cat, but gold and silver are being firmly capped with relatively modest gains. What else might one expect on the day before a Non-Farm Payrolls report?

The equity rally *might* be overdone a bit at 1430 on the SP 500, but a cautious man would not care to stand in front of it, except perhaps to hedge bullion positions and other long positions.

Still, the reality of the economy has not changed one bit, just another opportunity for hot money to chase risk. So a man of a speculative mind might begin to nibble on the skeptical side.

Gold Daily and Silver Weekly Charts - Russia Stockpiling Gold, Likely for a New Trading Currency

The markets in general paused before the ECB announcement tomorrow and the Non-Farm Payrolls number in the US on Friday.

Early today there was a violent 7.6 magnitude earthquake in Costa Rica, but fortunately the damage was contained, there were few deaths, and there were no tsunamis. This is good news.

FedEx warned last night which is an indication that the real economy is lagging. But in today's high powered money economy where the market is the economy, that may not matter in the short term. When the currency and the economy become disconnected, life can get wild on the tails of probability, and unlikely things can happen.

Why Is Russia Stockpiling Gold? - MarketWatch

Perhaps it is due to the effort by the BRICs to reconstitute the SDR, with some gold in the basket of currencies, as a major instrument for international trade when the US dollar falters as the world's reserve currency. It is the most important thing that no one is even discussing.

Big things are underway behind the scenes, the kind of sea change that everyone understands after the fact, but almost no one sees coming, especially those whose gaze is fixed from within deep wells of subjectivity.

"Look back over the past, with its changing empires that rise and fall, and you can foresee the future, too." Marcus Aurelius

The only certainty is change. Let's see what happens.

SP 500 and NDX Futures Daily Charts

The markets paused before the ECB meeting tomorrow and the Non-Farm Payrolls on Friday.

God Bless You, Mr. Rosewater

"Noah and his brother George inherited from their pioneer father six hundred acres of farmland, land as dark and rich as chocolate cake, and a small saw factory that was nearly bankrupt. War came.

George raised a rifle company, marched away at its head.

Noah hired a village idiot to fight in his place, converted the saw factory to the manufacture of swords and bayonets, converted the farm to the raising of hogs. Abraham Lincoln declared that no amount of money was too much to pay for the restoration of the Union, so Noah priced his merchandise in scale with the national tragedy. And he made this discovery: Government objections to the price or quality of his wares could be vaporized with bribes that were pitifully small.

He married Cleota Herrick, the ugliest woman in Indiana, because she had four hundred thousand dollars. With her money he expanded the factory and bought more farms, all in Rosewater County. He became the largest individual hog farmer in the North. And, in order not to be victimized by meat packers, he bought controlling interest in an Indianapolis slaughterhouse. In order not to be victimized by steel suppliers, he bought controlling interest in a steel company in Pittsburgh. In order not to be victimized by coal suppliers, he bought controlling interest in several mines. In order not to be victimized by money lenders, he founded a bank.

And his paranoid reluctance to be a victim caused him to deal more and more in valuable papers, in stocks and bonds, and less and less in swords and pork. Small experiments with worthless papers convinced him that such papers could be sold effortlessly. While he continued to bribe persons in government to hand over treasuries and national resources, his first enthusiasm became the peddling of watered stock...

Noah and a few like him perceived that the continent was in fact finite, and that venal office-holders, legislators in particular, could be persuaded to toss up great hunks of it for grabs, and to toss them in such a way as to have them land where Noah and his kind were standing.

Thus did a handful of rapacious citizens come to control all that was worth controlling in America. Thus was the savage and stupid and entirely inappropriate and unnecessary and humorless American class system created. Honest, industrious, peaceful citizens were classed as bloodsuckers, if they asked to be paid a living wage.

And they saw that praise was reserved henceforth for those who devised means of getting paid enormously for committing crimes against which no laws had been passed. Thus the American dream turned belly up, turned green, bobbed to the scummy surface of cupidity unlimited, filled with gas, went bang in the noonday sun.

E pluribus unum is surely an ironic motto to inscribe on the currency of this Utopia gone bust, for every grotesquely rich American represents property, privileges, and pleasures that have been denied the many. An even more instructive motto, in the light of history made by the Noah Rosewaters, might be: Grab much too much, or you'll get nothing at all.

And Noah begat Samuel, who married Geraldine Ames Rockefeller. Samuel became even more interested in politics than his father had been, served the Republican Party tirelessly as a kingmaker, caused that party to nominate men who would whirl like dervishes, bawl fluent Babylonian, and order the militia to fire into crowds whenever a poor man seemed on the point of suggesting that he and a Rosewater were equal in the eyes of the law.

And Samuel bought newspapers, and preachers, too. He gave them this simple lesson to teach, and they taught it well: Anybody who thought that the United States of America was supposed to be a Utopia was a piggy, lazy, God-damned fool. Samuel thundered that no American factory hand was worth more than eighty cents a day. And yet he could be thankful for the opportunity to pay a hundred thousand dollars or more for a painting by an Italian three centuries dead. And he capped this insult by giving paintings to museums for the spiritual elevation of the poor. The museums were closed on Sundays...”

Kurt Vonnegut, God Bless You, Mr. Rosewater