Comparing a Few Popular Gold Plays This Year, the Past Two Years, and in the 2016 Gold Rally

Comparing GLD and PHYS, we see that their performance is fairly close to the performance of gold itself.

In the decline of this year there is more 'slippage' in PHYS as compared to GLD, by about 100 bp.

But in the gold rally of 2016, PHYS outperformed GLD by almost 60 bp.

If  we run a comparison over a two year period to date, which includes a decline - rally - decline the price of gold, we see the spread between PHYS and GLD widen to a more substantial 228 bp.

And that is an even more substantial slippage of 334 bp compared to the price of gold itself.

There is a 'premium' in PHYS as compared to Gold and GLD that expands and contracts depending on the bullish temperament of the market.

I have included two more charts back from 2010 that shows this.

And then there are the miners.  I have included two charts with the large cap gold miners GDX below.

Just a quick glance at those charts clearly shows the leverage, or beta with regard to the underlying asset which is gold, in the miners.

The gains are significantly greater, but the declines are also much larger.

I am merely providing the data here for you to consider.  If you don't know what to do with it, then it probably is something you ought not to worry about.

There are other things to consider of course, including security, fees, storage, the purpose of the asset in your portfolio, and the time horizon for which you are holding it.

Change Is Coming, and With It a Reckoning - A Fire Smoldering in the Minds of Men

"The world needs a new generation of policymakers who don’t hobnob with billionaire speculators and who understand workers’ concerns. Unfortunately, the change will not come smoothly."

Andy Xie


"At the root of America's economic crisis lies a moral crisis: the decline of civic virtue among America's political and economic elite. A society of markets, laws, and elections is not enough if the rich and powerful fail to behave with respect, honesty, and compassion toward the rest of society and toward the world."

Jeffrey Sachs


"Wealth, in even the most improbable cases, manages to convey the aspect of intelligence.  Wealth is the relentless enemy of understanding. In a community where the primary concern is making money, one of the necessary rules is to live and let live. To speak out against madness may be to ruin those who have succumbed to it. So the wise in Wall Street are nearly always silent.   The foolish thus have the field to themselves. None rebukes them.

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


“Although I say that wisdom is better than strength, nevertheless the common wisdom is despised, and its words are not heard.  A wise man speaking quietly is worth more than the shouts of a tyrant commanding fools.  Wisdom is better than weapons of war, but one sinful man can destroy much that is good."

Ecclesiastes 9:16-18


"Do you not think an angel rides in the whirlwind and directs this storm?"

John Page, To Thomas Jefferson

The world's leadership is heavy with hubris, to the point of gargantuan madness.  And in all such cases, in its own time and its own way, change is coming— and hell may be coming with it.

In a way, it is already here. Evil walks among us. But so does love. And therein lies our hope.

Below is an excerpt from a recent essay from Andy Xie in the South China Morning Post. You may read it in its entirety here.

"The lack of external checks has led to rising internal imbalances in both countries. Since the end of the cold war, the US has been marred by surging inequality, while bubbles and ignorant hubris have come to occupy the central ground in China’s economic management and political thinking.

Financial speculation and corruption have become normalised around the world. The titanic rivalry between the world’s No 1 and No 2 economies will put all on their toes. Some of the most egregious trends could be reversed...

Bubbles bursting is a necessary condition to bring sense to all players. Policymakers have been paying too much attention to asset prices. One major factor is that they hang out with speculators at places like Davos. This is why, despite incredible economic growth since 1989, most people are discontent.

The world needs a new generation of policymakers who don’t hobnob with billionaire speculators and who understand workers’ concerns. Unfortunately, the change will not come smoothly. Political turmoil in the West is very much about this. A heavy price has to be paid to bring about the change.

The Sino-US rivalry is the main driving force to bring about the needed global change. The Beijing-Wall Street axis has been driving the global economy towards speculation and inequality.

In 2008, Beijing and Washington pumped in massive amounts of money to bail out speculators in the name of saving the economy and helping workers. The reality is that they used workers’ money to enrich parasites."

Andy Xie, Can US-China trade war rivalry reverse the worst economic trends in both countries?

Stocks and Precious Metals Charts - Autumn - FOMC and Comex Option Expiration Next Week

There was a 'flash crash' in the precious metals futures this morning in honor of the quad witch option expiration.

This is the Dr. Evil strategy, as so named by the US traders who got nailed pulling this baloney in the European bond market some years ago.

It is a massive dumping of contracts into a dull market for the purpose of gaming the price to achieve some objective.

There is a rollback of financial reform and purposefully lax enforcement under the Republicans, who are servants to the moneyed interests. The corporate Democrats do not really care about financial reform either, except to pay it lip service. Like so many other donor-sensitive topics in our corrupt political system it interferes with their pandering to the big money interests which they favor.

One of the spokesmodels called this a 'risk on' day. While the VIX declined a bit, stocks really not robust at all. It was a quad witch day in which fundamentals apply even less than normal.

Next week there will be an FOMC meeting, with 100% probability of a rate increase, and also an option expiration on the Comex, mostly involving gold. I have included the calendars below.

My mail order of Hula Daddy Kona coffee showed up today, just in time for the weekend.  My son is into coffees.  It's a treat for him.

Need little, want less, love more. For those who abide in love abide in God, and God in them.

Have a pleasant evening.

Stocks and Precious Metals Charts - This Low, Dishonest Age - The Unholy Monopolies of Corporatism

"Although journalism was always a loose extension of establishment power, something has changed in recent years.  Dissent tolerated when I joined a national newspaper in Britain in the 1960s has regressed to a metaphoric underground as liberal capitalism moves towards a form of corporate dictatorship. This is a seismic shift, with journalists policing the new groupthink, dispensing its myths and distractions, pursuing its enemies.

The source of  'fake news' is not only trollism, or the likes of Fox News, or Donald Trump, but a journalism self-anointed with a false respectability: a liberal journalism that claims to challenge corrupt state power but, in reality, courts and protects it, and colludes with it.

Complex stories are reported to a cult-like formula of bias, hearsay and omission. So much of the mainstream has descended to this level. Subjectivism is all; slogans and outrage are proof enough. What matters is the 'perception.'"

John Pilger, Hold the Front Page: The Reporters are Missing


"I am weak and small, but I want to do what is right."

Hans Scholl


“Stand up for what you believe, even if you are standing alone.”

Sophie Scholl

With the Philly Fed coming in much stronger than expected this morning, and lows in the unemployment numbers, stocks powered higher led by the unholy monopolies of corporatism: tech, healthcare, and finance.

Gold and silver moved higher, to the top of the recent trading range, on a lower US Dollar that broke below 94.

Tomorrow is likely to be a bit volatile because of the quad witch expiration in stock options.

There will be a Comex option expiration for the precious metals next week.

And an FOMC meeting. The market is pricing a 100% probability of a rate hike.

Dolly and I did some shopping this morning at our favorite eastern European deli.  It is much cooler now, the heat of summer seems to have broken.  The harvests are being gathered from the fields all around here.  It will not be too long before it's frost and pumpkins.

On the way home we spent a little time with the queen, to tidy things up, and change her flowers from Summer roses to something more autumnal.

"And now, bless the God of all,
who has done wondrous things here on earth;
Who fosters people’s growth from their mother’s womb,
and would fashion them according to his will.
May he grant you joy of heart,
and may peace abide among you."

Sirach 50:22-24

Have a pleasant evening.

Tales From the Dark Side: Ray McGovern

Here is a discussion that covers a variety of topics.

I find it to be fascinating.   It goes well with a drink in the evening when nothing is on the boob tube.

McGovern is a good conversationalist.  He is the kind of guy you might like to have a cup of coffee or a beer with, and just talk—  even if he was not a very knowledgeable former insider.   He and his partner at VIPS, Bill Binney, tend to piss a lot of people off, because they are willing to give voice to unpopular opinions, to it like it is, and back it up with reasoning and facts..   It is a dangerous habit in a time of general deceit.   After all, we kill the prophets, and stone those messengers sent to warn us.

Raymond McGovern (born August 25, 1939) is a former CIA officer turned political activist.  McGovern was a CIA analyst from 1963 to 1990, and in the 1980s chaired National Intelligence Estimates and prepared the President's Daily Brief. He received the Intelligence Commendation Medal at his retirement, returning it in 2006 to protest the CIA's involvement in torture.  McGovern's post-retirement work includes commenting on intelligence issues and in 2003 co-founding Veteran Intelligence Professionals for Sanity (VIPS).