Gold Daily and Silver Weekly Charts - Cap and Fear

There are some very significant events happening behind the scenes, even though the markets would seem to hide this with their sleepily accommodative nature to the status quo.

I thought Volcker's call for a new Bretton Woods agreement was significant, in a Chamberlain-like manner. Volcker is certainly out of power, riding the tide of events more than shaping them now. But he certainly still has insights into what is going on.

I am a little surprised at the push by the neo-cons at this point to advance the New American Century. It makes me wonder.

There is plenty of room for speculation here. I will take a pass on it for now, and wait to see some indication of what is happening, before ranging out onto the seas of possibilities, and legends.

But I do know that this too shall pass.

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts

They had to restate the PMI number a couple of times this morning before they got it right.

I had not realized that they seasonally adjust these surveys. Do they seasonally adjust opinion polls too?

These markets are already acting like the dog days of summer, with an upward bias on sleepy volume.

There is a yawning divergence between Bonds and Stocks. I suspect this might be due to Fed interference on the Bond side, which we know about, as well as some free range tinkering with values on the Stock side.

Either way, this is going to end badly. I have an open mind to a summer slump, but unless something happens to provoke more selling at higher volumes we may just muddle along until something more traditional in the autumn, and event inspired. This is a midterm election coming up after all.

I found these words from Daniel Ellsberg below about Snowden and some other things to be worth hearing.

Have a pleasant evening.

Gold Daily and Silver Weekly Charts - Why The State Might Prefer a Purely Digital Form of Fiat Money

"This place is like somebody's memory of a town, and the memory is fading.
It's like there was never anything here but jungle."

Rust Cohle, True Detective

Gold and silver took it on the chin for this week, as we welcome the active month of June.

This is a historically weak period for precious metals, and the metals bulls should be glad of it, because contrary to the portraits being drawn on the paper charts, they are in a highly vulnerable position with regard to physical supplies. They are never so brazen as when they are desperate, and seek to put on a bold face, while quietly shitting their pants offstage.

I have been meaning to say something more about digital money, and the recent blurbs in its favor by some of the Western central banks, and their kindred voices amongst the economists. I intended to write a follow up to yesterday's Arbiters of Value, expanding the discussion to pure fiat in purely digital form, but became distracted by other matters. As I have noted before, sometimes procrastination has its benefits, because someone else speaks up, and says what one is thinking, and sometimes even better and more concisely.

I think Janet Tavakoli 'hit the nail on the head' with this recent letter she sent to The Financial Times with regard to Kenneth Rogoff's proposals for purely digital money. It was of course a nonsensical piece, but one might ask themselves why such a thing would be put forward now in this manner.

Here is an excerpt from the letter. You may read the entire piece at the link provided below.

It seems to me Kenneth Rogoff’s commentary, “Paper money is unfit for a world of high crime and low inflation” (May 28), is less about deterring crime and the problems of “low” inflation – food consumers in the US know double-digit inflation – than it is about eliminating the zero bound on interest rates and preventing people from bailing into cash.

 

In other words, Mr Rogoff proposes to machinegun one of the lifeboats by eliminating paper currency as an alternative to unlimited digital currency..

 

His specious argument about the anonymity of paper currency facilitating tax evasion and crime is propaganda..."

Janet Tavakoli
Tavakoli Structured Finance
Chicago, IL USA

Read the entire letter at The Financial Times

'Negative interest rates' are a hightoned euphemism for systematic confiscation, a highly regressive form of bail-in.

I could not have said that better myself.  When money is purely digital, the state obtains a significant control over all money everywhere, no matter what 'security' and 'algorithms' are said to be built into it.   Digital anything requires a exceptional amount of trust in what those who manage the system do while no one is watching.  And I would like to think that we are well beyond that point by now.

Non-Farm Payrolls report next week. We are now in the June delivery month, and the relevant chart shows the initial positions stood for below.  Gold fell to a deeply oversold level on heavy volume for the option expiration 'mini-puke.'

As a reminder, the importance of the Comex is fading, and it will begin to fade even more quickly as the year progresses until it falls into irrelevancy, unless it is reformed.

Have a pleasant weekend.

SP 500 and NDX Futures Daily Charts - Markets Most Complacent Since March 2013

We will be getting a Non-Farm Payrolls report next week. It will likely be closely watched as a more contemporary indicator of the economy since we saw the big negative revision on 1Q GDP.

That does not mean that the NFP report will be valid, since the monthly headline number itself is subject to significant revisions in its first few months. But that is how the markets are likely to take it.

VIX is at its lowest level since early in 2013. While it can certainly continue on at these levels, especially given the coddling of the big trading desks by their friends at the Fed, it still leaves the equity markets vulnerable to even a relatively small exogenous shock.

The bond bears have been taking a beating, and that is probably more a technical trade than anything else, and supported and even promoted by the Fed.

Have a pleasant weekend.