Gold Daily and Silver Weekly Charts - FOMC Next Week - Policy Error of the First Order - YTD Returns

Both the FOMC and the BoJ will be meeting next week, and the markets will be watching what they say and do with keen interest.

As you may recall, the Bank of Japan is now overtly monetizing the debt of Japan, having bought something like 90 percent of their bonds. What makes it monetization rather than money printing is the fact that the bonds are at least passing through a semblance of a public market on their way from the Treasury to the Central Bank. What makes it monetization is the size of the purchases and the non-market rates paid by the Bank.

In this sense, in addition to the BoJ, the Fed is also monetizing debt, as well as the ECB. They have been emboldened in that so far this has not produced any seriously disruptive consequences, although consequences there most certainly are.

The manner in which this is done and the proceeds distributed in a series of speculative asset bubbles that transfer wealth from the stimulus of aggregate demand to acquisitive rent-seeking makes it a policy error of the first order.

As for the FOMC meeting next week, they are faced with wishing to raise rates, for what I believe are their own policy purposes, in an economy that appears to be slipping into recession. That the Western financial Illuminati may wish to blame Europe and Asia for their economic troubles is another matter.

The US will be reporting much more economic news next week which may provide more clarity on the state of the economy.

Gold is having an unusually large month for delivery action on the Comex. And as for silver, although this is a quiet month, silver bullion continues leaking out of the warehouses. If you take a look at the numbers you can see why some think that JPM has almost cornered the market on free silver bullion at least in the NY markets.

Lets see if gold and silver can break out here. If so, then I think we can provide some reasonable estimates of the upsides.

Have a pleasant weekend.

SP 500 and NDX Futures Daily Charts - European Jitters

Stocks were in sell off mode today, with a gap open down driven mostly by the selling in Europe.

But mostly, at the end of the day, some of the speculative froth was just coming off an overvalued market ahead of a weekend, with some notable economic events coming next week.

Have a pleasant weekend.

Gold Daily and Silver Weekly Charts - Big Deliveries at Big Price Resistance

"What is at stake is a rather heroic rebellion by a very beleaguered people against a doctrine which has been destroying their lives— the austerity doctrine and the whole neoliberal project."

James K. Galbraith

Although Jamie was speaking about Greece, this can be applied across the developed nations.

There was another big delivery day for NY gold yesterday, at least by Comex historical measures, as HSBC led the delivery of over 100,000 ounces of gold at 1,249, with the house account and mystery customer at JPM as the big stoppers.

Silver is not so active this month, due to the nature of its June contract, but bullion keeps trickling out of the warehouses. Denver Dave has suggested that this might be an arbitrage play between NY and Asia.

Gold is banging its head against the big resistance at 1,270.  If it takes out that level then the next battleground will be for the breakout around 1300.

As a reminder there will be a highly watched FOMC meeting next Tuesday and Wednesday.

President Obama endorsed Her Royal Hillary Clinton today.  What a surprise.  Her campaign slogan could be 'more of the same, but with a corporate servility even more brazen and tawdry.'

I am not sure which of the two candidates is more fraught with risk. As you may have gathered I do not care for either of them. Well, that is just me perhaps.

I am expecting it to be a rough four years no matter which of these two chuckleheads are elected.  The 'establishment' is not going to give up its good thing easily, and we seem to be nearing a 'break point.' As John K. Galbraith put it so well:

"People of privilege will always risk their complete destruction rather than surrender any material part of their advantage. Intellectual myopia, often called stupidity, is no doubt a reason. But the privileged also feel that their privileges, however egregious they may seem to others, are a solemn, basic, God-given right."

John Kenneth Galbraith

Let's see what happens.  Whatever may come, it may be a good idea to hang on tightly to one's integrity, as well as their wallet.

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - Buoyant On Light Volume

What is making the Fed's interest rate waffling is not the impact of 25 or 50 or even 100 basis points on the real economy.

Rather, the impact is coming from the highly leveraged risk assets like bonds and stocks.  A little movement by the Fed is swinging a big stick in the speculatively mispriced markets, creating quite a bit more tail risk than most would be assuming.

Let's see how this all works out.

Have a pleasant evening.