Gold Daily and Silver Weekly Charts - 'Orchestrated Panic'

"Oh what a tangled web we weave,
When first we practise to deceive."

Sir Walter Scott

Intraday commentary here and here.

In particular listen to what Jeff Sachs has to say.  If you do nothing else, listen to what this man has to say. 

John Brimelow calls the most recent action in the metals markets an 'orchestrated panic.'

And it may not be over. The underlying causes for this, besides the usual opportunity for looting, most likely remain.   The system is failing and the masters of the universe are afraid.

As a reminder, next week on the 25th is the precious metals option expiration on the Comex.

I thought it was interesting that the IMF Has Told the UK To Rethink Austerity.  Oops.

Lars Schall has a very good interview with Norbert Haering:  Money Lies Disguise Banking Truths.

And to everyone's delight the DharmaDude has a new piece out, Unklung Goldenfreude.   He gives Herr Krugman a light spanking with his own words.  Where is Mademoiselle Le Moderateur?

And finally Denver Dave serves up a piece on The Law of Unintended Consequences.

Russia is running the G20 this year.  They have scheduled a conference in May titled Global Finance in Transition.  An intriguing title, and yet so few have heard of it.  The BRICs are not happy campers.

On May 7-8, 2013, Istanbul (Turkey) will host the Global Finance in Transition conference. The event is organized by the Central Bank of the Republic of Turkey jointly with the Reinventing Bretton Woods Committee and the Russian Ministry of Finance.

Representatives of G20 finance ministries and central banks, international organizations, research institutions and businesses will take part in the conference. Head of Turkey's Central Bank Erdem Basci, Deputy Minister of Finance of Russia Sergei Storchak and Executive Director for the Reinventing Bretton Woods Committee Marc Uzan will give the opening remarks at the conference.

Five panel discussions are planned as part of the event. They will cover the international financial architecture, in particular, changes in the flow of global investments, local bond markets and growth in emerging economies, incentives and determinants of investment and other issues. In addition it is expected that new instruments and incentives for making the global financial system safer will be suggested during the forum

Change occurs slowly, and greatest changes occur very slowly and almost imperceptibly.  Until they make themselves known that is, and then it is like lightning flashing across the sky.

SP 500 and NDX Futures Daily Charts - Edgy Trade Today, Option Expiration Tomorrow

The trade today was quiet but 'edgy.'

Option expiration tomorrow.

Prices are down to diagonal trendline from the beginning of the rally.

The economic news is not encouraging unless one wears rose-coloured glasses.  Or is hiding their head in some anatomically improbable place.  Or wearing an anatomically improbable hat.

There is no recovery.  There is no reform.  There is no leadership. 

Jeff Sachs: The Pathological Environment on Wall Street (and in Washington, London, and Berlin)

"But there is a sort of  'Ok guys, you're mad, but how are you going to stop me' mentality at the top."

Robert Johnson, Audacious Oligarchy

Thanks to Bill Still for making this available on the web, and thanks to several people who sent it to me.

It is remarkably similar to something I wrote earlier today, but I am certainly not the only one.  Reform and the lack thereof is the 800 pound gorilla in the room.

Sachs certainly livened up a clubby conference of complacent financerati in the Pennsylvania Room at the Federal Reserve Bank of Philadelphia. The topic is "Fixing the Banking System for Good."  It is not so much what Jeff Sachs said alone, but also how out of touch with reality that group of people may be.

I find this interesting because just today Mary Jo White, the new head of the SEC, has indicated that their policy would be to 'move along' and not look at the financial crisis any longer.

This will continue until there is a problem too large to hide, and the confidence breaks. And then good luck controlling the reaction in the global markets. 

But for now they don't care, because they are operating within hermetically sealed capsules of personal privilege, and are locked into an odd form of group think and willful denial which I call the credibility trap.   In times of general deceit, telling the truth becomes a revolutionary act. 

And it is killing the economic recovery. 

And for now, anyone who speaks out, who speaks the truth, is ignored, ridiculed, marginalized, and threatened sometimes subtly and sometimes not, and generally isolated because no one will stand up with them. 

Neither austerity or stimulus will work until there is genuine reform. 

Don't forget that the CBC's documentary on the precious metals market is on this evening.  I will post a link with the commentary later, and will link to a video when it becomes available.

There is a strong push for change, and an even greater resistance from those whose paychecks and allegiances require them to oppose it.  This generally makes for an interesting episode in history.

Listen to this carefully. 

Thank you to Janet Tavakoli for this:

"I believe we have a crisis of values that is extremely deep, because the regulations and the legal structured need reform. But I meet a lot of these people on Wall Street on a regular basis right now. I'm going to put it very bluntly. I regard the moral environment as pathological. And I'm talking about the human interactions that I have. I've not seen anything like this, not felt it so palpably.

These people are out to make billions of dollars and nothing should stop them from that. They have no responsibility to pay taxes, they have no responsibility to their clients, they have no responsibility to people... counterparties in transactions. They are tough, greedy, aggressive, and feel absolutely out of control, in a quite literal sense. And they have gamed the system to a remarkable extent and they have a docile president, a docile White House and a docile regulatory system that absolutely can't find its voice. It's terrified of these companies.

If you look at the campaign contributions, which I happened to do yesterday for another purpose, the financial markets are the number one campaign contributors in the U.S. system now. We have a corrupt politics to the core, I'm afraid to say... both parties are up to their necks in this.

... But what it's led to is this sense of impunity that is really stunning and you feel it on the individual level right now. And it's very very unhealthy, I have waited for four years... five years now to see one figure on Wall Street speak in a moral language. And I've have not seen it once. And that is shocking to me. And if they won't, I've waited for a judge, for our president, for somebody, and it hasn't happened. And by the way it's not gonna happen any time soon, it seems.

SP 500 Futures Daily Charts Intraday - Option Expiration Tomorrow

Here is a picture of where the June SP 500 futures stand on a daily chart.

They are obviously at key support.

As a reminder, tomorrow is an option expiration in US stocks.

I think the option market is something best left for professionals because of the mispricing of risk.

And that goes double for options on the Comex, and even the futures contracts there for that matter. 

As a reminder, the 25th will be a Comex option expiration in the precious metals.

There are not too many things of which I am sure.  But one thing I am certain of is that if the SP 500 futures market were subjected to a bear raid in which tens of thousands of contracts were dumped into a quiet, non-event-driven market, the exchange and its traders would be up in arms, and the regulators would be getting phone calls at home about it.

Unless, that is, enough trading houses and traders were in on it. And the regulators were obliged to look the other way out of professional courtesy. This happens more often than you might care to believe these days. It is reminiscent of the markets of the late 1920's.

This strategy of moving markets is well known, and goes by the moniker, the Dr. Evil strategy.  Click on the links and read more about it.

Citi Fined for Euro Bond Trades By British Regulator; Italy Indicts Citi Traders; Citi Haunted by Dr. Evil Trades in Europe; Citi Agrees to Pay 14m in Bond Scandal

It is how some marginally talented but especially well connected people beat the market, go to the best schools, and get piles of unaccountable wealth.   And the career minded go along to get along. The best market operations and control frauds are rarely investigated and always denied because they are inclusive enough, and well executed.

Unless of course a single party gets out of line and hurts some other 'major players' who complain about it.  And then there is a real investigation of sorts, like the London Whale, which is quickly smoothed over.

And this does not even begin to touch on the culture of the elite, the insider trading where favors and secrets are the currency of the well connected.  This has always been the case of course, but at times it becomes so bad that it leads to dysfunction in politics and in markets, and is corrosive to the society at large.  And it may go on until it gets so bad that there is an inescapable problem, and attempts to cover it up so that 'confidence' does not break. 

This becomes a vicious cycle, which is the opposite of the virtuous cycle.  It leads to stagnation and disorder.

Charts can only tell a part of the story.  If charting systems really 'worked' the people who had them would become so rich that you would never hear about them.  I have looked at all of them.  The only techniques that work at a high percentage are the ones that rely on asymmetric information flows, and the ability to act in the market with foreknowledge and the power of size. 

One needs to look at the market structure, the volumes, and who is buying and who is selling as best they can.  The lack of transparency is a great weakness in most market systems, and especially in markets that are also lightly regulated and tainted with insider dealing and technical trading gimmickry. 

Transparency is the disinfectant to fraud.  And that is why it is avoided at all costs.

And I still cannot quite understand why no one is talking about what has happened in silver.  It's the dog that doesn't bark.