Gold Daily and Silver Weekly Charts - Late Afternoon Smackdown - Ball and Chain

I hope you have had the time to watch the David Cay Johnston videos I put up overnight. They will help to explain much of what is going on in the financial markets and The Recovery™.

 

Gold, and to a lesser extent silver, took a late day price hit after the FOMC meeting in dull trade.  I was wondering if the wiseguys were going to let an FOMC Day go by without at least a cheap shot.

I include the Comex warehouse activity for silver below. I do not believe it is particularly meaningful however.  The real action in precious metals is in the East. 

I am curious to see what is going to happen to stocks here.   The Alibaba IPO should hold them up since it is such a monstrously large snack for Goldman and the Merry Pranksters on Wall Street.

I am now looking for an indication of some traction in the precious metals more than anything else.  I think it will have to come from an exogenous source.  The US markets are thoroughly 'in hand.'  Unfortunately they are the wrong hands.

Have a pleasant evening.

 

SP 500 and NDX Futures Daily Charts - Hump Day

Today is Hump Day, and the humps trotted out Grandma Janet this afternoon to try and justify their serial policy errors designed to advance the well being of the Banks, and leave Wall Street in the financial desert.

All the rest was noise.

Alibaba's IPO looms in the background.  This could be a big 'home run' for the denizens of the Street.

Scotland votes tomorrow.

Let's see what happens.

Have a pleasant evening.

The Divergence Between Debt and Gold

There is little doubt that gold is 'money' in the de facto, if not official, sense. It has been so for at least two thousands years, if not longer.

In a policy regime in which the Western central banks wish to quietly devalue their currencies in concert, it would be awkward to allow gold to speak embarrassing truths.

I would like to think that now, unlike ten years ago before almost every market was shown to be manipulated and sometimes on a global scale, that a concerted effort to discredit the message that gold carries would not be beyond their capability. They certainly have the motive.

As you may recall, in 1985 Larry Summers and Robert Barsky wrote a paper on Gibson's Paradox showing the linkage between prices and interest rates, and more specifically the price of gold under a gold standard.  With the price of gold going higher, it would be much more difficult to manage longer term interest rates lower, he asserts.

We are not under a gold standard at this time.  But with the turning of central bank purchasing towards gold in 2006, with a substantial boost from Asian reserves acquisitions, the fears of the Western central bankers became paramount.  Once again, they 'stared into the abyss.'

I caution that correlation is not causation.  But it is more likely where there are independent linkages, fundamental reasons that support the linkage as it were.

And I also remind the reader that divergence and convergence run in cycles. And convergence tends to return, and often does so with a vengeance.

Brace yourselves, not so much for patience while under determined financial repression, but for the time coming when the failed schemes of today's financial engineers collapse from exposure, a challenge from the East, or from sheer exhaustion.

This chart is from the data wranger Nick Laird at Sharelynx.com.

David Cay Johnston: The Perils of Our Growing Inequality

“Wherever there is great property there is great inequality. For one very rich man there must be at least five hundred poor, and the affluence of the few supposes the indigence of the many."

Adam Smith, The Wealth of Nations

This helps to explain why there will be no sustainable recovery. 

It is a matter of un-official policy.