SP 500 and NDX Futures Daily Charts - Hard Time Killin' Floor Blues

"The rich are always going to say that, you know, just give us more money and we'll go out and spend more and then it will all trickle down to the rest of you. But that has not worked the last 10 years, and I hope the American public is catching on."

Warren Buffett

The market tried to rally off the 'better than expected' GDP revision up to 2.5%, with an increase in the inflation factor up to .8% as well.

War jitters have the markets on their heels.

Low paid fast food workers went on strike today for a living wage.  For the disconnected view of reality Bloomberg TV did a fine job this afternoon.  "No one is forcing them to take those low paying jobs." 

But at the end of the day, the biggest fog of tone deafness surrounds Washington from the Beltway in, afflicting most of the power elite including the feral demagogues of the right.

NAV Premiums of Certain Precious Metal Trusts and Funds - Wall Street Glitter Gulch

"Life is a school of probabilities."

Walter Bagehot

The post-option-expiration hit on the metals arrived yesterday and today as gold was pushed back towards 1400 and silver was slammed back to 23.80, a decline of 1.20 from the recent high.

They were treading a bit lighter on gold because available for delivery is in short supply.

Inventory available for delivery took a sizable hit yesterday as there was a large transfer within the shrinking JPM vaults from delivery offered to storage.

The premiums on the Sprott funds are holding up remarkably well. The action in the miners has been fairly obvious with a price hit on that related sector preceding the bear raid on the metals.

That some analysts cannot refrain from drawing broad conclusions from such a small short term price fluctuation shows the desperation and poverty of thought in much of what passes for analysis today. Say and do anything for a raucous headline and some attention.

I almost fell out of my chair when I saw some fellow call the ten dollar decline in gold yesterday a sign that there would not be any military action in Syria. Ten dollars out of Fourteen Hundred. And they make fun of people for reading the fall of bones or chicken entrails. Freedom of speech does not demand freedom from thought.

This could be a deeper correction. Anything can happen. But typically not everything does happen, and that is why life is a school of probabilities. People fool themselves, and others, by making wild guesses, and then writing the hits in marble, and the many more misses in the sand. Well, that may work for coffee talk, but as actionable trading information it is a snare, and a death trap.

Don't get me wrong. I don't mind such chatter talk on chat boards by amateurs. Much of life is taken up in idle and largely harmless diversion and unstructured speculation. And all gamblers lie, and often shamelessly. The problem is when they lie to themselves.

I used to hang out with some of the older fellows at the Stardust's sports book, which was a marvel for the day.  We would watch basketball games and horse races, while they bet the over/under and mostly talked stuff about the old days, and who and what they know and knew.  Fun talk, but it never filtered into any of my wagers. I made some of the best returns betting against the skew of weekend tourist betting on their favorite California teams, against the odds. Gotta love those Lakers and the tourist spread.  And don't even talk about the poker tables.

Don't get me wrong. I am no god of gamblers.  No one beats the house in the long run if their bosses are doing the job right and the gamers are not cheating.   No one can beat true odds all the time. 

I knew a guy who had been the comptroller at Caesar's, who grew up in our old neighborhood back east. And he gave me a copy of Friedman on Casino Management, and set me straight.  I have won big, and lost big.  But the only truly winning bet I ever made there was thirty five years ago when I got married in a little church outside of town, in what was then the desert, but now is just another crowded suburb.

Wall Street reminds me of Las Vegas sometimes.  Pretty women, flashy callers, lousy odds, but no free drinks or cheap buffets. 

The pros and insiders in the US markets have shills and occasional enablers who go around and talk trash for them, but not on the little chatboards. That would be a waste of time and money, and there is no need for it.  There are plenty of parrots who can be taught to repeat lines in the hope of sounding wise.

I have previously mentioned the mostly unremembered testimony of A. Newton Plummer, a Wall Street 'publicist' who testified to the corruption of journalism and analysis by Wall Street money. And what made him credible was that he had a suitcase full of canceled checks to prove it.  They don't take checks or credit cards these days.   Information and high paying positions are the new coin of the realm for these sophisticates.  Journalism is approaching economics as a disgraced profession.

So let's see how the week progresses. September is not a delivery month so babies must play. But there is the problem of physical offtake of real bullion on the world markets that continues despite the antics on the paper exchange.

Deliverable Gold Falls To a New Low Of 725,000 Ounces

There was a transfer of 43,575 ounces out of the deliverable (registered) category to eligible storage with the JP Morgan warehouse, bringing the total gold in the registered category to 725,030 ounces.

Friday will be the last day for August delivery. The next delivery month will be October.

Total gold in the COMEX warehouses remained steady at about 7 million ounces.

Without higher prices it does not seem realistic to expect those with their gold stored in the warehouses to move it to registered and to offer it for delivery.

As I have said, I do not expect the problems with gold and silver to reach a climactic resolution at the COMEX in the form of a default.  That is more likely to be a secondary effect of a greater scandal or failure that will begin with the physical market, and probably overseas. 

What will trigger this reckoning?  Perhaps some large owner or even a central bank will not accept that their gold is missing as readily as the Bundesbank has done, with their gold apparently having been rehypothecated away for the profit of the private bullion banks.

Be that as it may, the leverage within the paper market is obviously at elevated levels, providing a risk factor that sets the bar for counterparty risk rather low.  This could facilitate a rather energetic short squeeze at some point.  I hear that at least one very significant market participant is positioned to benefit from such an eventuality.

Weighed, and found wanting.

Stand and deliver.

Gold Daily and Silver Weekly Charts - Though the Heavens May Fall

"When a man takes an oath, he's holding his own self in his own hands, like water. And, if he opens his fingers then, he need not hope to find himself again...If we lived in a state where virtue was profitable, common sense would make us saintly. But since we see that abhorrence, anger, pride, and stupidity commonly profit far beyond charity, modesty, justice, and thought, perhaps we must stand fast a little, even at the risk of being heroes."

Thomas More

Silver was quite volatile as the new holders of September contracts were given a wild ride last night and today, with gold largely riding on the silver surfer's wave.

The drums are playing a martial tune, and the markets wait with some anxiety.

The bears had all they could manage to keep the price of gold and silver in check today given the importance, in the short term, of the outcome of this week to them. For if they lose control now, they have little hope of making it into the year's end. 

The action around 1420 tends to confirm the neckline. This is all endgame, and delay.  And so there is less doubt in my own mind now that, for the long run, the tide has turned.

This market distortion will not stand, until those who stand entrapped within a tangled web of their own lies and misdirections, finally stand and deliver. And so we will find, at long last, that justice is satisfied.