Net Asset Value Premiums of Certain Precious Metal Trusts and Funds - No Exuberance

I am now accumulating new bullion positions for the intermediate to long term.

I may hedge those positions if I feel there is a higher than normal probability of a general market liquidation.

I tend to agree with Ted Butler and others that the bullion banks are setting up the technical and momentum funds, shifting their physical short positions.

The physical market remains robust despite the short term paper price manipulations.   The gold and silver markets for retail physical are in their nascent phase, largely conducted from large internet sites with little local presence other than a few coin shops and jewelers buying scrap.

I proceed with caution, as I may be incorrect. The markets are opaque, and the currency war adds additional risk.

Gold Daily and Silver Weekly Charts - Metals Oversold on Paper Metal Gimmickry

Ted Butler is looking at the data he follows, and he believes that the bullion backs are setting up the technical funds to hold the bag on the metal short positions if the metals markets turn higher. I think this is a very valid hypothesis based on the COT reports.

I have included a couple of my own technical charts as well as the usual suspects today.

I went into the market and bought some miners on weakness today and yesterday and also bought some new metals positions.  I do have them hedged out a bit for now.  I don't like to buy on the way down except to establish some initial positions held flexibly.

Let's see what happens. 

If the wiseguys try to bull up stocks and smack metals on a bad Jobs number I will be looking for additional entry positions counter that trend into the weekend.

Today is the 45th anniversary of the assassination of Martin Luther King.

SP 500 and NDX Futures Daily Charts - Non-Farm Payrolls Tomorrow

The new unemployment claims data today was much larger than expected, which put a chill into stocks for most of the day.

Consensus for Jobs tomorrow is about 190k.   I think they will come close or miss, but there might be some 'good news' on the unemployment percentage, which is meaningless since they throw out so many potential workers from their calculations.

What is saving this market is that it is so lightly traded by real investors.  So the algos and momentum shops can just bat the averages around at will.

Chart-wise it was constructive that the SP futures held support but that was about it.  This market looks tired, but quite a few people are waiting for a correction, so it may not come as anticipated.

I put a little volatility back on today.

After the bell HP gave Chairman Ray Lane the boot. 

Cyprus Is Not So Much An Anomaly as the Template For the Next Financial Crisis

This is not so much anything new, but a concrete reminder of the breadth of systemic banking risks inherent in the Anglo-American banking structure in which depositor money is intermingled with the Bank's speculative interests. 

The repeal of Glass-Steagall stripped the average person of important and time-tested safeguards against loss.   Things are different now.

Any deposits you have at a bank in excess of 'insurance guarantees' are at risk in case of another financial crisis.

This exposure may include wealth you think that you own, but do not know exactly where and how it is being held. This may include 401k's and IRA's, pension plans, health insurance deposits, life insurance and annuities, and so forth.

MF Global was very instructive on how even cash deposits and physical assets backed by a certificate of ownership may be fair game for the banking system in the event of a crisis.

Nothing is perfect and foolproof, but there are degrees of safety.

And you may wish to consider that the next time something like Occupy Wall Street starts up and demands reform, don't stand by on the sidelines and join in with the orchestrated jeering from the one percent's water bearers.

Simplify, streamline, organize.

Demand serious, meaningful, and genuine reform and transparency in the banking and political system.

"The goal is to produce resolution strategies that could be implemented for the failure of one or more of the largest financial institutions with extensive activities in our respective jurisdictions. These resolution strategies should maintain systemically important operations and contain threats to financial stability.

They should also assign losses to shareholders and unsecured creditors in the group, thereby avoiding the need for a bailout by taxpayers. These strategies should be sufficiently robust to manage the challenges of cross-border implementation and to the operational challenges of execution...

But insofar as a bail-in provides for continuity in operations and preserves value, losses to a deposit guarantee scheme in a bail-in should be much lower than in liquidation. Insured depositors themselves would remain unaffected.

Uninsured deposits would be treated in line with other similarly ranked liabilities in the resolution process, with the expectation that they might be written down."

Bank of England and Federal Reserve Joint Statement on Resolving Globally Active, Systemically Important, Financial Institutions.

Related:
A Message From the Banking and Brokerage System
Lawmakers Must Heed the Wisdom of the 1930's
Why Has the Financial System Failed and What Are We Going To Do About It?
A Brilliant Warning on Robert Rubin's Proposal to Deregulate the Banks in 1995