Gold Daily and Silver Weekly Charts - Flight To Safety

"Make no mistake about it, just as Lehman Brothers was set up to take the fall for triggering the 2008 collapse, China is being groomed as the new scapegoat for the coming crisis. But China’s economic slump is only a symptom, not the disease...

The reality is that the repeal of Glass-Steagall ushered in the greatest wealth transfer scheme in the history of America, allowing six mega banks in America to control the vast majority of insured deposits, use those taxpayer-backed deposits to gamble for the house, loot the bank from the inside by paying billions of dollars to select employees and customers and then hand the gambling tab to the taxpayer when the casino burns down. This model is a staggering headwind on both U.S. and global growth because it has created the greatest wealth and income inequality since the Great Depression.

Pam and Russ Martens, The Real Reason Global Stocks Are Flashing Red this Morning

The quote above is from last October, but it serves today just as well as it did then.

Gold benefited from a fairly obvious 'flight to safety' today, even though it was clipped a bit in the afternoon as stocks rallied back in what felt like a technical bounce.

Silver had a little upside but not nearly as much. It is not a flight to safety metal in the same manner as gold, in part because of its dual nature as both monetary and industrial.

When things really fall apart you will know it, because gold, real gold, will go to an absolute scarcity that may be shocking.

Sooner or later, everyone sits down to a banquet of consequences.

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - Consequences Being Served

Stocks sold off very hard today and set some new recent lows.

There was a technical oversold rally into the close led by Big Tech that brought stocks back up to near even or lesser lows, holding support around the prior lows from the end of last year.

So what next?

Clearly we have a major adjustment happening to a chronic mispricing of risk and a financial asset bubble. I mean, how many times have I said this was a bubble, and that there was little strength underpinning it?

I am expecting a short term capitulation low. We *might* have seen that today, or we might have to go back down again and flush the market out and retest today's lows. It depends on how much of the rally back this afternoon was short covering and the resurgence of the mo-mo dip buyers.

But at some point we set a low, and then we should rally back, maybe as much as thirty to fifty percent of the recent declines and then, if nothing much changes on the global scene, we will go back down and retest the lows and set some new ones. I am looking at 1770 on the SP 500 futures chart.

Until there is reform, there will be no recovery. And I see little moral high ground with many people on it still standing.

Have a pleasant evening.

Gold Daily and Silver Weekly Charts

Sorry for the brief comments but I have an appointment with the vet and so must leave early. I have been caring for a sick pooch for several days now and she is really not recovering as quickly as we would like.

Gold was under a little pressure, but silver managed to retake the 14 handle.

Stocks were wobbly, and looking for some support. I would not step in there yet myself if you have a mind to that.

A hat tip to Ned Naylor-Leland for the first chart below showing bank exposure to China and Hong Kong by country.

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - Looking For Footing, But Wobbly

Gold Daily and Silver Weekly Charts - Metals Rally, Miners Spanked on Stock Option Expiry

"Price discovery is not a sexy function of markets, but it is critical to the efficient allocation of scarce capital and resources, and to the preservation of the long term wealth of investors and the economy as a whole. If price discovery is compromised by manipulation, then we will all be gradually impoverished and the economy will be imbalanced and unstable."

London Banker, Lies, Damn Lies, and Libor


"Delivery takes on a note of finality, of a reckoning, when the available supply has become rehypothecated into little more than a digital entry and a state of mind. The unanswered call for delivery begins the final lifting of the veil."

Jesse

Gold managed to hold a rally around 1090 and silver at 14 almost on the nose.

Some of the miners were spanked, in what could have been related to the January stock option expiry.  Or not.  

There is a general repricing of the mispriced risks from last year going on if you had not noticed in the general equity markets.  It is possible that the miners are being caught up in that urge to liquidate uncertainty.  A miner is a leveraged 'if-come' bet on the metal with varying degrees of uncertainty.

If the trends continue as they are then this is the year I think we may see the first very visible (to the general public) manifestations of the divergence between synthetic gold derivatives trading and the physical gold bullion trade.   But let's wait for that event to happen in its own time.

I have made up the new calendars for gold futures and futures options for 2016 and have included them both below.

The Bucket Shop was quiet as usual, although we saw a little action in silver.

As a reminder the US markets will be closed for the observance of Martin Luther King day on Monday.

Please try to carry on without their guidance with regard to values.

Have a pleasant weekend.  See you on Monday evening.