Gold Daily and Silver Weekly Charts - Year End

Very light volumes and a bit of 'profit taking' although I would tend to say this is painting the short positions up for the year end close.

I include a chart below that shows the 20 biggest stock short positions on the Toronto Stock Exchange. You can see how the miners fit into this picture.

There was no meaningful inventory movement in the Comex warehouses on Friday last.

January is a non-active month, whereas February may once again stress the ability of the Comex to maintain its vestiges of actual precious metals delivery.

This 'feels' like a bottom action here.  But in times of 'currency wars' I will tend to wait for confirmation before getting too excited about anything.

But with the fiat meisters of the status quo DeLong and Krugman chirping so loudly, it may not be as good as a fat lady singing, but it might be close.

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - Year's End

Perhaps a little more paint on the tape for the sake of bonuses, and then we are done.

Little volume today and even less tomorrow. Mostly squaring of portfolios.

Have a pleasant evening. VIX did tick up a bit as I thought it might but nothing of significance yet.

 

Gold Daily and Silver Weekly Charts - Tottering Into Year End

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

Sir Walter Scott, Marmion


“The arrogance and brutality of empire are not repealed when they temporarily get deployed in a just cause.”

Michael Kazin

When governments intervene in markets, other than occasionally and transparently in currency and interest rate markets in pursuit of clear policy, I do not see how they can expect investors to maintain the confidence in their policies and actions.

It is understandable that such actions in commodity markets may be occasionally necessary to help to manage the impact of some exogenous crisis.  This is the right and proper role of a government in responding to the needs of their people in the face of natural disasters, wars, and other exceptional events.

But when interventions become a routine and necessary component of central bank policy, there should be no question that the economy is being maintained in an unstable and untenable equilibrium, and that forces of imbalance are being allowed to accumulate that will result eventually in a market dislocation and a further crisis, that often will be worse. 

When the temporary becomes permanent, and the discretionary becomes required, then the winds of great change will begin to blow, and what has been hidden, however long, will be revealed.

SP 500 and NDX Futures Daily Charts - VIX - A Warning On the Equity Market

It is the end of year, and the market volume is light, almost as light as the regulatory oversight.

Stocks are drifting higher as the paint is lightly stroked across the tape. VIX is quite low and I have included a Year-To-Date look at it below for you to gauge it more effectively. That is not to say it cannot remain low for a period of time as we have seen in this market during the year. 

It is too bad the major VIX ETFs, and short stocks ETFs, are designed to lose money over any extended time period.  One will have to find some other way to seek safety or a contrarian event without trying to precisely time the market.  What that might turn out to be I can only say what I tend to think about it, having no crystal ball of my own, alas.

As you know I have said it looks like the Fed is blowing an asset bubble in financial assets, for the purposes of a 'trickle down' recovery. Since then some others, more renowned and less easily ignored like Jim Grant, have said the same thing. And I do believe it is absolutely true.

This policy choice, to which the 'scholar-gentry' are trying to accommodate themselves because it feels so good for their own situations, is going to have some consequences. I suspect those consequences are going to start showing up next year.

Confidence, once lost, is hard to regain. Sometimes those in power can be so effective in bullying others to their views, along with their choirs of careerist supporters, that they can take a bad trend much too far beyond the sustainable to a false equilibrium. This is what we have seen in both the tech stock bubble, and the collateralisation of housing related debt bubble. And the reversion from it comes unexpectedly and with some release of energy.

I am fairly persuaded that we will see the same thing again, sometime in the next two years. We will likely see a 'market break' to confirm this first, a small one in the new year and another in spring. This is difficult to time because of the Fed's blatant attempt in support of the markets.

What will precipitate it, what the particular 'trigger event' will be I cannot say, but I am sure that it will be the result of this horrible policy decision fostered by the Federal Reserve and the administration of making the rich richer, in the hopes of making all boats rise, or as Galbraith noted, 'feeding the sparrows with the hay that passes through the horse.'

Have a pleasant evening.