But When She Got There, the Cupboard Was Bare...

Where is all the gold?

Old Mother Hubbard
Went to the cupboard,
To get the poor dog a bone;
But when she got there,
The cupboard was bare,
And so the poor dog had none.

Gold Daily and Silver Weekly Charts - Educators And the School of Probability

According to LeMetropole Café this word from UBS:

"Demand out of Asia was exceptional last week: Indian demand was the strongest we’ve seen in five years, while volumes and premiums on the Shanghai Gold Exchange reached record highs. This seemingly insatiable appetite is not necessarily limited to the region, though.

Reports of long queues, refinery capacities being maxed out, lead times being extended, stocks running out, and surging premiums are also evident. Retail buyers in Europe and the US have shown strong appetite, too.

Our flows indicate both strong demand for physical gold and growing difficulty in sourcing metal."

And apparently the Perth Mint Works Through Weekend Because of Surging Gold Demand.

As you may recall I showed a video interview with the head of the Hong Kong Precious Metals Exchange who said that their stores were exhausted by demand, and they were having to import gold from London and Switzerland.

This is hardly a sign of long liquidation caused by disenchantment with the precious metals.  Rather, it is the natural outcome of a bifurcation between the paper derivatives markets and the real world.  And such a divergence can be dangerous to the speculative trade if they fail to converge again as expected, no matter the size and power of the paper trade.

Just ask the laureates of Long Term Capital Management.  At the end of the day they were less Nobel in their risk management than misgiven in their assumptions, like the advisors of King Canute.  Fat tails are like tides in their relentless ability to make the experts all wet. And their backers get soaked.

This is what Walter Bagehot meant when he said, 'Life is a school of probability.'

I have been re-reading one of John Kenneth Galbraith's lesser known works, Economics in Perspective: A Critical History.

It struck me today, having audited a history of economics not all that long ago on the web, what a profound difference there is between a teacher and an educator.   It reminded me of some of the great minds which I have had occasion to stumble across in the long cycle of learning.

Even today when I am well past the pursuit of formal education (I went back for an advanced degree in a subject unrelated to any past studies at 40, and even that now seems ages ago), I still am jolted now and then by the education one can obtain from not only personal reading, but from friends and acquaintances, who impart knowledge without perhaps even realizing it and sometimes by example.

An educator (ex-ducare: to draw out from) brings the student along, gives them a model or a framework on which to hang the facts through which they are led by selective readings, draws out what is best in them, beyond even their own nascent ability to see their capabilities.  They are groomers of talent.  And they are able to impart knowledge, and the tools with which to increase it, and often in a wide ranging field of subjects.

Even an older work like Galbraith's,  intended for public consumption,  and which I am quite sure is out of favor and out of date among professionals, and has much to be taken issue with based on more current thoughts, provides a platform or a foil on which to assess new data, and to challenge according to one's own particular thought and inclinations.

An educator provides a lasting substance. An educator illuminates the subject, and the result is a kind of inner satisfaction in the developing mind that serves to provide a new view of things through renovated eyes.

Too many teachers on the other hand, merely provide endless lists of thoughts and a complexity of facts in a hodgepodge manner to be memorized, without providing much in the way of insight or lasting frameworks.  They exult over their own knowledge as compared to their students. They tend to exasperate, rather than inspire. Not because they are demanding, but because they are not quite able to impart knowledge, a deeper understanding of things.  They cannot give what they do not have.

I have known educators that were incredibly demanding, sometimes almost amazingly so.  I had one professor who I thought would break me in the rigor of his expectations.   He changed me for life by showing me what I could do when I put my mind to it using the right tools.  He would not settle for second best.

An educator brings the mind of the student flush up against the mind of genius, explaining without condescension or false complexity, exposing without imposing or overwhelming, and cultivating without judging and demanding except to bring the mind to full flower.  They impart a sense of the joy of learning, the ecstasy of understanding, and can bring people to a greatness and fulfillment that they might not otherwise have achieved.

This is the highest calling that I can imagine, if one has the gift for it, a gift which is honed over long years of practice, often through the hands of other educators.  After all, we stand on the shoulders of giants.

Effusive praise, and not intended for Galbraith per se, but for all those educators in my past of whom he reminds by his gentle, elegant style of coaxing one to learning.  I owe much to them,  most likely the better part of me, and certainly those things I might reflect on that have made me more human.

SP 500 and NDX Futures Daily Charts

Stocks rose today on a better than expected pending home sales number.

The volumes were remarkably thin.   You know what they say about shorting a thinly traded market -- don't.  But you may not wish to establish investment positions in them either.  Thin markets are often a prelude to volatility.

You know what I think about this market. Do not get in front of because the Fed is feeding the trade, and providing what is likely to be seen as a false sense of recovery and complacency that can turn on a dime, or stray bit of bad news.   But in the meanwhile it serves the more agile financial interests to keep it floating higher on a crest of easy liquidity.

The Irresponsibles: The Bubble In Financial Assets Paper and Bernanke's Policy Errors

Here is the failure of the Fed as monetary policy and regulator with greatly expanded portfolio in one picture assuming that one remembers that stocks have risen back to all time highs.

The Fed has been stuffing its expanding Balance Sheet into the reserves of the Too Big To Fail Banks, where they and their Wall Street cronies use the funds to game the markets for financial paper and real goods.

If your goal is to support the one percent at all costs, then creating new bubbles in financial paper that they own makes perfect sense.    And as regulator the Fed promotes a lack of transparency, of financial secretiveness, of cronyism, and laissez-faire corruption that is deadly to healthy markets.

Reform is the only viable response.   And that is best measured by the levels of transparency and accountability.

But the public is no longer heard in the halls of a Congress and a White House dominated by special interest money. And so things become increasingly unsustainable.

"Based on the above data, how is the stock market fundamentally sound when earnings are collapsing? I guess the Federal Reserve is going to print profits for the S&P 500 companies.

Actually earnings are irrelevant when central banks all over the world including the Federal Reserve are juicing the markets with a sea of liquidity and where multiple expansion trumps real earnings or value."

Read the entire story at Minyanville here.

And from the RealNews: