Gold Daily and Silver Weekly Charts - Non-Farm Payrolls Next Week - 116:1 and No Fear

"Greed is the inventor of injustice as well as the current enforcer."

Julian Casablancas

I will be interested to see how traders square up tomorrow ahead of the weekend.

Here is 'the lay of the land' as we head into the month of August next week.

The first chart shows just how silly the trading at The Bucket Shop has become.

The next shows the results of the attempts to knock down the open interest at Comex.  It has succeeded a bit, but these lower prices taken to shake out the bulls are not enticing many to put their actual bullion up for delivery. 

Deliverable stocks are at a low and therefore the 'leverage' of paper potential claims to available bullion is still rather high at 116:1.

Sentiment has gotten silly low with the momentum boys piling on, and activating their opinion bots to enhance their trade.

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - Triumph of the Swill

"Pride goes before a destruction, and arrogance before a fall."

Prov 16:18

This was a fairly lackluster day in US equities.

Sentiment is now back to somewhat complacent as the VIX has fallen back to a 12 handle.

I picked up a little VIX today.  I may buy more if we see some additional fluff to the upside.

This is probably not going to last, and is marking a top of sorts.  Whether this is a major top or just a passing intermediate term thing I cannot tell.

The forces of crony capitalism are ready to stick a fork in the rest of the world, and start carving off chunks for themselves.

When a people begin to consider themselves exceptional, above all others, you know that the downfall is just around the corned.  It may be considered the 'German disease' by some, but we are all susceptible to it.

Have a pleasant evening.

Gold Daily and Silver Weekly Charts - Gold Is the Statist's and the Con Man's Bête Noire

"I have one other issue I'd like to throw on the table. I hesitate to do it, but let me tell you some of the issues that are involved here. If we are dealing with psychology, then the thermometers one uses to measure it have an effect. I was raising the question on the side with Governor Mullins of what would happen if the Treasury sold a little gold in this market.

There's an interesting question here because if the gold price broke [lower] in that context, the thermometer would not be just a measuring tool. It would basically affect the underlying psychology.

Now, we don't have the legal right to sell gold but I'm just frankly curious about what people's views are on situations of this nature because something unusual is involved in policy here. We're not just going through the standard policy where the money supply is expanding, the economy is expanding, and the Fed tightens. This is a wholly different thing."

Alan Greenspan, Federal Reserve Minutes from May 18, 1993

If you take a look at the Fed minutes over the years you will see that Bernanke's response to the Congress that the FOMC does not think about gold is just prevaricating nonsense.

At this point I am getting curious why the Fed in particular would wish to see the price of gold kept down.  And I don't say this too lightly, but it would take a serious effort to ignore the blatant and heavy handed public relations campaign downplaying the value of gold, in the face of increasing physical demand around the world, and the undeniable fact that for the first time in several decades the central banks of the world have turned from being net sellers to net buyers.

As we see from the minutes above most clearly, the Fed was watching gold carefully for indications of monetary inflation.  And this was during the long bear market in gold in the 1990s when central banks were still routinely and openly selling gold to keep the price lower.

Why would the Fed, if indeed they are involved or more likely fully aware, like to see an indicator of inflation supine while they are laboring mightily to convince people that there is a recovery in the economy so that they can get off the zero bounds and raise rates?   Wouldn't a rising price of gold give them some credibility in such a move?

Or is this 'a wholly different things' as then chairman Greenspan said above?   Are we at that kind of moment that Eddie George, the governor of the Bank of England, talked about in late 1999, culminating in the infamous Brown's Bottom when England's financiers sold her gold on the cheap, presumably to bail out the Banking speculators.

"We looked into the abyss if the gold price rose further. A further rise would have taken down one or several trading houses, which might have taken down all the rest in their wake.  Therefore at any price, at any cost, the central banks had to quell the gold price, manage it. It was very difficult to get the gold price under control but we have now succeeded. The US Fed was very active in getting the gold price down. So was the U.K."

This current pool operation is indeed odd, unless one subscribes to the idea of a currency war pitting the US dollar status quo against the emerging economies who wish to find alternatives to what they feel is an abusive, almost neo-colonial form of monetary repression and at times a facility for plunder.

Although as I have mentioned before, I have a very open mind to the notion that some of the shenanigans from the last decade put some official sector and too big to fail jokers 'over their skis' in the precious metal markets, to the extent that Eddie George's abyss was starting to yawn like the Grand Canyon again. I never like to attribute to bad policy what can be just as easily attributed to purely stupid and short-sighted personal concerns and greed.

August looks to be a littler more interesting at The Bucket Shop. There were some more dribbles out of the warehouse, and the 'leverage' of claims is probably still well over 100:1. I'll have a look at it when mon ami Nick puts out his latest.

Fundamentally speaking, if we dare do such a thing in such dodgy markets, the demand for physical silver is increasing in 2015 while the supply is contracting, resulting in a projected deficit for the year.

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - Failure to Achieve Liftoff, GDP Tomorrow

 

 

There was intraday commentary about the FOMC statement here.

 

Even though The Recovery does not warrant it, I am still of the same mind I have been, that the Fed will raise 25 basis points in September unless the wheels are falling off the global financial system and/or the economy.  It is purely an inward-looking policy thing, and they are falling all over themselves to prepare the markets and to justify their actions. 

 

The Fed wants to get off the zero bound so they have room to maneuver when the next financial crisis comes, most likely from the bursting of their latest financial assets bubble.  The Fed is a servant to the Banking system.

 

The SP managed to gain some ground after an initial flip flop.  I was disappointed that a purchase of some powered up VIX did not get filled at the announcement when they smacked VIX lower to clear the stops and then ran it the other way.  You have to be pretty aggressive to get past the HFT spoofing and front running at times like these.  It never really did get back to a cheap buy. 

 

Let's see how the Advance GDP number for Q2 looks tomorrow.

 

This is an artificial market, so 'policy considerations' and private greed will most likely continue to trump any reasonable estimation of 'investment' and 'price discovery.'

 

Have a pleasant evening.