Stocks and Precious Metals Charts - After the Bell Stock Futures Plunge, Metals Rally On Trade Talks Gloom

"...the basis for highly geared interest rate arbitrage by borrowing gold is running into a brick wall.  Not only is there no incentive for lessors but also there is also a diminishing appetite for lessees because the opportunities are vanishing.  Synthetic gold liabilities are being gradually reduced, not only by ceasing the creation of new obligations, but by buying bullion to cover existing ones. 

This will have been particularly the case when the USD yield curve began to invert in recent months (itself a backwardation of time preference), and was the surface reason, therefore, that the gold price moved rapidly from under $1200 to over $1500.

This change in direction for bullion banks represents another fundamental difference between this rally in the gold price and rallies of the past. What’s more, given the entrenched low-rate environment, it looks like it might remain a factor for some time to come."

USA*GOLD, What Makes This Gold Rally Different From All Others


“What is amazing about this run-up in gold that we have seen is that it has taken place with the U.S. dollar actually quite firm.”

David Rosenberg, Financial Post

Stocks were attempting to rally from the overnight session, and managed to take and hold some decent gains today.

Volume was very light today, probably due in part to the Jewish holiday of Yom Kippur.

Turkey opened its assault on the Kurds today. President Trump seemed to dismiss his betrayal of the Kurds, who have been the long time fighters with the US against ISIS.  They are generally recognized by the US military as faithful and valiant allies.

"They didn't help us in the Second World War, they didn't help us with Normandy," Trump said of the Kurds.  He added, "With all of that being said, we like the Kurds."

John Haltiwanger, Business Insider, Trump defends abandoning the Kurds by saying they didn't help the US in WWII

Iraqi Kurdistan first gained autonomous status in a 1970 agreement.

Turkey entered the war on the side of the Allies in February, 1945 after a long and careful neutrality.

Gold and silver were largely unchanged, as was the Dollar.

After the bell stocks have plunged and the metals rallied after Chinese media report that the China-US trade talks have made no progress.

The charts below show the market close at 4 PM.

Have a pleasant evening.

Stocks and Precious Metals Charts - Seeking Safe Harbors

"A fair amount of the earnings growth the S&P 500 has exhibited in recent years might be ephemeral, related to gains in the value of companies’ investments rather than the underlying strength of their operations.   Under the hood, then, profit margins aren’t as good as they appear.   If business starts to falter, companies’ may take an ax to costs, with bad repercussions for the economy."

Justin Lahart, Wall Street Journal, Squeeze on U.S. Companies May Be Worse Than It Seems


"Every bubble rests on two pillars: a) it’s different this time; b) some other sucker will buy this worthless asset from me at a higher price, so I should hold on against my better judgment."

Louis-Vincent Gave

Today was clearly a 'risk off' day as stocks were sold steadily all day, and bearishly going out on the lows.

There was a corresponding bid of money seeking safer havens in gold, silver, and the Dollar.

The purported reason was the war of words that continues between the US and China.

As I noted several times in the past, this roller coaster action, this bipolar viewpoint towards risk in the markets, is not constructive, and may signal some inherent instability that seeks its level.

And that level may be about 20-30% lower, given the right sort of trigger event.

But as I have noted many times before, forecasting a significant market decline is something that people like to do, in order to grab headlines and subscribers.  But it can make you go broke if you try to front run the markets on the bearish side.

I will only urge caution, and note that markets are still near to all time highs.

Jay Powell provoked a little market rally today with some expansively dovish words about the Fed's Balance Sheet.

It did not last.

Gold and silver caught a definite safe haven bid.

Gold may be forming up a bull flag.  I have marked it on the chart, and took an estimate on the initial measuring objective.  

Obviously this means nothing until the formation goes active with a confirmed breakout.   But it's still nice to see that messy price action we saw into the October contracts option expiration start to clarify.

Silver is a a hot item, as they say.  Hard to predict, sometimes hard to hold.  But when it goes, it can ride.

Have a pleasant evening.

Stocks and Precious Metals Charts - Sleepwalking Into the Abyss

"As I have stated strongly before, and just to reiterate, if Turkey does anything that I, in my great and unmatched wisdom, consider to be off limits, I will totally destroy and obliterate the Economy of Turkey (I’ve done before!)"

Donald J. Trump


"China uses a host of monopolizing strategies to extend its geopolitical and commercial power, everything from below cost pricing to grab market share, patent trolling, espionage, mergers, and financial manipulation. In fact, the CCP is best understood as a giant monopoly that also controls a nation of 1.4 billion people and a large military apparatus...

China’s biggest asset in gaining power was how most people in the West just didn’t realize that the CCP aimed to use it. Now China’s cover is blown. The raw exercise of power to censor a random Houston Rockets basketball executive has made millions of people take notice. Everyone knows, the Chinese government isn’t content to control its own nation, it must have all bow down to its power and authority.

Matt Stoller, How Joe Biden Empowered China's Censorship of the NBA

Matt overstates the headline I think.  The empowerment of China may have gone into higher gear with Bill Clinton perhaps, but has been fully supported by every President, both parties, and especially the moneyed interests in the US, who place their short term greed first and foremost.

Follow the money.  China is certainly not alone among organizations, and even nations, in playing on the personal greed, divided loyalties, and lust for power of our political and financial class. 

This in itself is nothing new.  But the extent of it, and the fashionable acceptance of it amongst our society's elites, the industrialization of political corruption and big money in politics, has been breathtaking.

Stocks were wobbly for much of today.

Trading volume was lackluster and the market action for the most part was 'dull.'

There was a brief rally around the middle of the day, when Larry Kudlow lit up the trading algos with talk about the progress being made in a trade deal with China.

That wore off fairly quickly, as the human beings quickly realized this was just another story designed to pump up the markets, and that there was no substance to it.

Gold and silver were off a bit and the Dollar was marginally higher in a seesaw session.

Have a pleasant evening.

Precious Metal Holdings and Commitments of Traders

Thanks to Nick Laird the data wrangler at goldchartsrus.com as always.