NAV Premiums of Certain Precious Metal Trusts and Funds

As a reminder, next week there is a two day FOMC meeting, with an announcement of their decision and opinions on Wednesday afternoon.

There is also a triple witch March stock expiration on Friday.

Gold Daily and Silver Weekly Charts - Killing Fields

Imagine a case in which markets offer very profitable opportunities to wealthy and well-connected participants. Let's call them insiders. And let's assume that the government does little in the way of effective regulation, except for the occasional small fry or relative outsider who is caught breaking the rules.

Imagine that the insiders either directly or indirectly control the rule based governance of the exchanges, which are often supposed to be self-regulating in those areas in which the government is not able to exert the rule of law.

What is there to limit the ability of those insiders to set prices where they wish for their own benefit? What are the real world consequences such as being required to actually deliver something which they have sold, or pay a serious and personal criminal penalty when they are caught rigging the game and breaking the rules?  

In such a system, one has to ask themselves, what is there to keep this market from just degenerating into a control fraud, a type of killing field, where those in the real economy who dare to venture in, either willingly or without recourse, are led into a blind alley and robbed, and sometimes economically strangled for the benefit of a few?

And what are the likely longer term consequences to the real world of people who work and produce things, of such a corrupt and inefficient arrangement?  Some might suggest the decimation of certain industries and economic sectors, eventual systemic shortages, significant inequality of power and wealth, and a straining of the social fabric in widespread cynicism and discontent.

Who could even imagine people allowing such a dreadful state of affairs to exist, especially in a land of the free?

"He prompts you what to say, and then listens to you, and praises you, and encourages you. He bids you mount aloft. He shows you how to become as gods. Then he laughs and jokes with you, and gets intimate with you; he takes your hand, and gets his fingers between yours, and grasps them, and then you are his."

Have a pleasant evening.

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SP 500 and NDX Futures Daily Charts - Jitterbugs

Geopolitical considerations overwhelmed those peachy US economic results this morning.

China is only projected to turn in about 7.4% growth this year, and of course Russia's actions in the Ukraine, particularly in the Crimea, has everyone all twitchy.

How dare they meddle with our meddling on their borders? We are the deciders about what is meddling around the world, in consultation with our client states.

Speaking of meddlers, the Fed will be meeting next week, and this will give us more time to contemplate the tapering of the Balance Sheet, which is the fundamental engine of our growth in paper assets and the wealth of the one percent, Fed be praised.

Let's see if the jitters pass, or if tomorrow gives us another chance to test that lower trend support.

Have a pleasant evening.

Ted Butler: Why Not Just Close the COMEX

This column tonight from Ted Butler at Butler Research set me back a bit. It would be like one of the most die hard economist Fed watchers, after forty years in the business, coming out and saying that the Fed has gone so far off the rails that we ought to just shut it down.

It is a subscription only site, and so I cannot do justice to his reasoning which was far more extensive and complete than what I excerpt here.

Rather than closing the COMEX, engaging in some substantial reform and bringing it back to its original purposes would be preferable. But in the current climate of financial corruption and regulatory weakness it is not practically achievable, at least not yet.

Here is just a snippet of what Ted had to say.

"Not to be delusional, I have little expectation that the COMEX will be closed; but I think the idea has merit and should be considered. In fact, the vast majority of market participants and society as a whole would benefit from a closing of the COMEX for the simple reason that all the commodities traded there have been manipulated in price. The simplest way of ending these manipulations is to shut down the mechanism of manipulation...

Since it can be demonstrated and proven thru CFTC data that prices are set on the COMEX with no input from the real world producers or consumers, society as a whole would benefit if the COMEX didn’t exist. This is a private club that has no legitimacy in dictating to the world what prices should be.

The COMEX has undermined and replaced the free market law of supply and demand with a phony price-setting mechanism never intended when Congress authorized regulated futures trading. The COMEX is not functioning as intended and it’s hard to see what might change that. As such, it should be shut down."