Gold Daily and Silver Weekly Charts - Silver Advances While Gold Is Capped

You are a witness to history. Try to step out side of your emotions, the day to day blur of the ordinary, and look at the big picture, the slow but inevitable changes that have occurred over the last fifteen years.

For some background, here is an interview with James Grant that helps to set the stage.

When a monetary system grows faster than its own organic demand, that is a type of monetary inflation, whether it is immediately reflected in consumer prices or not.

The US money supply is still growing far in excess of the natural demand for currency, whether you consider consumption in GDP, or investment, or even per capita growth for that matter.

There is a HUGE overhang of dollars, known as eurodollars, being held 'out of the domestic pricing system' and significantly NOT reported in the money supply figures by the Fed.

If foreign selling of the dollar and US debt starts picking up momentum, the returning dollars will swamp the Fed's ability to sterilize the transactions like a tsunami.

Right now the financial engineers are once again trying to obtain a 'soft landing' for this problem, but vested interests are preventing a successful resolution. The monied interests prefer the status quo, and virtual looting of the public trust. Once they possess critical income producing assets, then the economic system will be restored to some equilibrium, and sound money.

This is roughly the setup that I see in the world economy, and is the cause of much of the instability and contention amongst nations, which I have called the 'currency war.'

There is a strong desire for a change in the reserve currency regime, particularly amongst the developing countries. The Anglo-American banking cartel is fighting that change every step of the way in order to maintain their privileges and positioning. The financial and political leaders from the nations appear to be often at odds, but in some ways they are allied in common interests, with managerial elites finding common cause in the service of their own power and enrichment.

When this natural progression of change can no longer be resisted, things might start moving more quickly, perhaps remarkably so.

But until then bear in mind that these big changes happen slowly and for the most part quietly with sudden bursts of change and release of energy, often over a period of years, until the pressure breaks into the public arena, and voila, a full blown crisis appears as if out of nowhere.  And most swear that it could not have been foreseen or predicted.

I am telling you, again, that it is happening now, and with this continuing resistance to change and reform it may very well break upon the world financial system in the next few years with what could be a terrific, almost astonishing effect that will sweep away whole institutions and many long held beliefs and assumptions, old lessons that have been unlearned, and must be accounted for again.

SP 500 and NDX Futures Daily Chart - Traders Celebrate End of Month By Marking Up Their Portfolios

The economic news in the US is becoming dreadful.

Never faint of heart, fund managers marked up stocks today, thereby improving the value of their portfolios for the important end of month report.

Let's see if mom and pop throw some 401k buying into the mix tomorrow with more employment numbers from ADP.

Jim Grant Discussion with James Turk on Money, Bonds, the Fed, International Trade, and Gold

"...I have a dreadful confidence that existing [monetary] arrangements will not last."

James Grant

This is an excellent discussion of some of the key topics affecting global currency and the roots of the financial crisis.

It provides some background for the unfolding currency war and the evolution of the global reserve currency which is in progress today.

I think it is fair to say that very few people understand this, and yet it is having a tremendous impact on their lives, and that effect will be increasing, perhaps exponentially, over the next few years.

It is said that a shark must keep growing and moving to remain alive, and can never be at rest. It must continually devour all that it can to survive.

This is the nature of a Ponzi scheme as well, since it is founded on nothing more than a growing believe, and misplaced trust. It can ultimately tolerate no dissent, and needs continue to add converts to it, whether it be by persuasion or force.

And therefore we have the not incidental connection between a global fiat currency such as the American Dollar or the British Pound and a far reaching military-political empire. When the empire stops expanding, the currency begins its slow but inexorable decline.

This discussion is presented as a contrast to Modern Monetary Theory.

Comex Silver Deliverable Inventory Continues to Decline to a New Low 31 Million Ounces

The long steady decline in Comex Silver inventory available for delivery continues to reach new lows, now at just over 31 million ounces.

The current front month for silver futures is now July, with an open interest of about 60,000 contracts of 5,000 ounces representing 300 million ounces in terms of open interest. The available silver is an increasingly low percentage of the futures shares traded in the front month.

This is further complicated by the volatility. On Thursday of last week 83,000 contracts changed hands.

Memorial Day Weekend

"Judge of  Nations, spare us yet.
Lest we forget—lest we forget."

"Four score and seven years ago our fathers brought forth on this continent, a new nation, conceived in Liberty, and dedicated to the proposition that all men are created equal.

Now we are engaged in a great civil war, testing whether that nation, or any nation so conceived and so dedicated, can long endure. We are met on a great battle-field of that war. We have come to dedicate a portion of that field, as a final resting place for those who here gave their lives that that nation might live. It is altogether fitting and proper that we should do this.

But, in a larger sense, we can not dedicate -- we can not consecrate -- we can not hallow -- this ground. The brave men, living and dead, who struggled here, have consecrated it, far above our poor power to add or detract. The world will little note, nor long remember what we say here, but it can never forget what they did here. It is for us the living, rather, to be dedicated here to the unfinished work which they who fought here have thus far so nobly advanced.

It is rather for us to be here dedicated to the great task remaining before us -- that from these honored dead we take increased devotion to that cause for which they gave the last full measure of devotion -- that we here highly resolve that these dead shall not have died in vain -- that this nation, under God, shall have a new birth of freedom -- and that government of the people, by the people, for the people, shall not perish from the earth."

Abraham Lincoln, 19 November 1863

"If Athens shall appear great to you," said Pericles, "consider then that her glories were purchased by valiant men, and by men who learned their duty." That is the source of all greatness in all societies, and it is the key to progress in our time.

The second danger is that of expediency: of those who say that hopes and beliefs must bend before immediate necessities. Of course, if we must act effectively we must deal with the world as it is. We must get things done. But if there was one thing that President Kennedy stood for that touched the most profound feeling of young people around the world, it was the belief that idealism, high aspirations, and deep convictions are not incompatible with the most practical and efficient of programs -- that there is no basic inconsistency between ideals and realistic possibilities, no separation between the deepest desires of heart and of mind and the rational application of human effort to human problems. It is not realistic or hardheaded to solve problems and take action unguided by ultimate moral aims and values, although we all know some who claim that it is so. In my judgment, it is thoughtless folly. For it ignores the realities of human faith and of passion and of belief -- forces ultimately more powerful than all of the calculations of our economists or of our generals. Of course to adhere to standards, to idealism, to vision in the face of immediate dangers takes great courage and takes self-confidence. But we also know that only those who dare to fail greatly, can ever achieve greatly.

It is this new idealism which is also, I believe, the common heritage of a generation which has learned that while efficiency can lead to the camps at Auschwitz, or the streets of Budapest, only the ideals of humanity and love can climb the hills of the Acropolis.

And a third danger is timidity. Few men are willing to brave the disapproval of their fellows, the censure of their colleagues, the wrath of their society. Moral courage is a rarer commodity than bravery in battle or great intelligence. Yet it is the one essential, vital quality for those who seek to change the world -- which yields most painfully to change. Aristotle tells us: "At the Olympic games it is not the finest or the strongest men who are crowned, but those who enter the lists." "So, too, in the life of the honorable and the good it is they who act rightly who win the prize."3 I believe that in this generation those with the courage to enter the conflict will find themselves with companions in every corner of the world.

For the fortunate amongst us, the fourth danger, my friends, is comfort, the temptation to follow the easy and familiar paths of personal ambition and financial success so grandly spread before those who have the privilege of an education. But that is not the road history has marked out for us. There is a Chinese curse which says, "May he live in interesting times." Like it or not we live in interesting times. They are times of danger and uncertainty; but they are also the most creative of any time in the history of mankind. And everyone here will ultimately be judged, will ultimately judge himself, on the effort he has contributed to building a new world society and the extent to which his ideals and goals have shaped that effort.

So we part, I to my country and you to remain. We are, if a man of 40 can claim the privilege, fellow members of the world's largest younger generation. Each of us have our own work to do. I know at times you must feel very alone with your problems and with your difficulties. But I want to say how I -- impressed I am with the stand -- with what you stand for and for the effort that you are making; and I say this not just for myself, but men and women all over the world. And I hope you will often take heart from the knowledge that you are joined with your fellow young people in every land, they struggling with their problems and you with yours, but all joined in a common purpose; that, like the young people of my own country and of every country that I have visited, you are all in many ways more closely united to the brothers of your time than to the older generations in any of these nations. You're determined to build a better future.

President Kennedy was speaking to the young people of America, but beyond them to young people everywhere, when he said: "the energy, the faith, the devotion which we bring to this endeavor will light our country and all who serve it; and the glow from that fire can truly light the world." And, he added, "With a good conscience our only sure reward, with history the final judge of our deeds, let us go forth to lead the land we love, asking His blessing and His help, but knowing that here on earth God's work must truly be our own."

Robert F. Kennedy, Cape Town University

Gold Daily and Silver Weekly Charts - Le US Douleur

Both gold and silver are holding some important support levels and rallying off them.

Let's see if this can continue next week. If so it is exceptionally bullish.

SP 500 and NDX Futures Daily Chart

Caption This...

Que disent-ils?

US Stocks in a Pivotal 'Decision Square' - the Fed as Outlaw

The story of these markets is a slumping economy and a debilitated middle class versus currency debasement and excess liquidity, selectively spread amongst friends.

And also an undercurrent of manipulation of prices and information, to extract wealth and shape perceptions.

The management of perception is a facet of government, always. To think otherwise is to naively ignore history and the practicalities of leadership.

But when that management becomes a more powerful and self-serving impulse than the written law, than the public good and the very fabric that binds people together into a society, then it becomes an end unto itself, an extra-legal excess, literally outside the law, that invalidates the legitimacy of what may have been an otherwise legitimate organization.

This phenomenon is most often seen in organizations with a long standing individual leadership by strong personalities, and an embedded bureaucracy that is excluded from effective oversight and the customary balances of power. One example of this is the late stage Hoover administration of the FBI, which began to turn in on itself and its own ends, and use its control of private information to control and subvert the political process.

"Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one."

Charles Mackay

Of course these herds of the misguided often have a thought leader whose own perspective, and sometimes even delusions, become an almost unshakable set of core assumptions expressed as slogans and tenets of fundamental belief, the center of the whole, the familiar and comforting orthodoxy, and trusted filters of knowledge for a profession.

In the case of the Fed, it is based on similar principles as the efficient market hypothesis and of dogmatic deregulation, which are the natural goodness and incorruptibility of a highly educated and privileged elite, not subject to transparency and oversight, public checks and balances. These fatally flawed assumptions have been the cause of much misery in the last 30 years.

Power indeed corrupts all, and their thinking, even in the well intentioned.

And this is what I fear the Federal Reserve is becoming, or more likely, has already become. And so I would not necessarily argue that an independent central bank is a bad idea per se, although such an argument can certainly be made.

But I would propose that the Greenspan-Bernanke Fed itself has outlived its lifespan as an effective organization, and is in dire need of reform and refocusing, and it must come from outside the group think of their bureaucracy. And the Congress and the Executive seem insufficient to the task having been severely compromised over the years through participation in the Fed's decisions and its control of money flows.

So the question of reform is problematic. The current government, both Republicans and Democrats, seem to be up to their elbows in the muck, beholden to a powerful elite and their vested interests that operate behind the scenes, and too often outside the law.

Terrible thoughts in their implications, and so most cannot bear to even think them. In times of the big changes people may desperately cling to the familiar, even if it is a rotting corpse of what it had once been. Reform is hard and often tedious work, never easy, and it has it own dangers. The cure may be as dangerous as the disease, and so it bears much thought and careful action. But action is required, it must be done.

Transparency and disclosure are always a first step, if not a prerequisite, to expose the true dimensions of a problem and the impediments to its resolution, and the flaws and conflicting priorities, and too often corruption and coverup, that always seem to underlie such systemic failures. 'Let justice be done though the heavens may fall' is a principle not in favor amongst those embroiled in a corrupted system. And so they rush to push out ineffective and superficial solutions in order to control the impulse to reforms and control the subjects of the debate in their own favor.

And this is what is paralyzing an effective response to the financial crisis in the US today.

"The control of information is something the elite always does, particularly in a despotic form of government. Information, knowledge, is power. If you can control information, you can control people."

Tom Clancy

Let's see which way the market breaks, perhaps before the long American holiday weekend.

Gold Daily and Silver Weekly Charts - US Financial System Death Watch

Comex Silver Will Make It Through May, But Barely - Minyanville

24hgold did correct their Comex Silver Inventory chart to show that no bullion was added.

Blythe is now accepting the donation of any junk silver which you may have lying around the house.

Her handcarts and small trucks will be passing through your neighborhoods in the near future, making a distinctive boing, boing sound as they travel down your streets.

They will also be able to provide financial advice, repair broken umbrellas, or sharpen your knives and scissors, all for a small fee.

SP 500 and NDX Futures Daily Charts

Stocks came in weak on poor economic news. The professional funds and trading desks managed to buy the major stock indices on low volumes, allowing stocks to drift higher most of the day.

Hollow and cynical market, with very weak underpinnings. Handle with care.

Gold Daily and Silver Weekly Chart - Le Douleur - No Soup for Blythe

The bounce in silver continued, with gold experiencing a little more capping today, and the dollar once again failed to obtain positive traction.

This market gives me a bad feeling, and I am tending to like bullion more than miners.

I took everything off the table short term today, and booked the profits.

What next? Obviously the next move in equities and the dollar are key to many things. The end of QE II, at least in name only, is at the end of June. The US is tottering towards a budget crisis on August 2.

The market does not seem to be pricing anything risk-wise in yet, and seems very hollow.

Intraday 24hour gold showed a remarkable gain in the deliverable silver inventory at the Comex. This is not squared up with the public numbers from the exchange, and so I wonder if this is a glitch. We'll know soon. If it is correct I think the site needs to explain their sources ahead of the market. But all things considered, I am skeptical until the numbers are 'official.'

Later: There is no such increase in inventory shown from the Comex per Harvey Organ's update this evening. I have sent another email to 24hgold and asked them to correct or clarify their chart. I think it is just one of those things and not true.

"Had I the heavens' embroidered cloths,
Enwrought with golden and silver light,
The blue and the dim and the dark cloths
Of night and light and the half light,
I would spread the cloths under your feet.

But I, being poor, have only my dreams.
I have spread my dreams under your feet;
Tread softly because you tread on my dreams."

W.B. Yeats, Cloths of Heaven

SP 500 and NDX Futures Daily Charts

Futures were very weak overnight, and for the 10,001st time the bulls came in and bought the market back up on light volumes. I took my short profits in the first ten minutes and let the metals run into the last hour and took the miners off as well.

I just *hate* this market action.

Consequently I took almost everything short term off the table today and booked my trading profits. I want to see what comes next. I don't think the market will decline severely yet, but like most traders I have one eye on June and the nominal end of QEII.

After the bell the Freescale IPO priced at the bottom of the range, at $18.

The US has a three day holiday weekend (Memorial Day) coming up.

Voila! 37 Million Ounces of Silver Appear at the Comex Warehouse - Or Not

"Manipulating cash prices for a larger derivative payout is a regular feature in all markets. And $50 million is chump change compared to the billions being made manipulating the markets on almost a daily basis."

Bill King, The King Report

At least according to this update from 24hourgold it is crisis averted for Blythe and her Merry Pranksters, just in time for the May - June deliveries, as 37 million ounces of silver have been added to the dealer inventory at the Comex.

I believe that an addition of this size in one fell swoop, if true, might be called 'unprecedented,' at least since the benefice of Buffett supplied the silver for the newly forming SLV.

Such a huge addition, if true, is certainly worth some examination in what is known to be a tight market for physical supply. This inventory system does seem to move improbably large amounts of 'bullion' around like Tinker to Evers to Chance.

These are the saddest of possible words:
"Tinker to Evers to Chance."
Trio of bear cubs, and fleeter than birds,
Tinker and Evers and Chance.
Ruthlessly pricking our gonfalon bubble,
Making a Giant hit into a double –
Words that are heavy with nothing but trouble:
"Tinker to Evers to Chance."

It might even be just a 'data glitch' at 24hourgold since the public Comex sources do not yet confirm any such addition. (I have highlighted this caveat to prevent the 'I told you so' crowd from embarrassing themselves more than necessary.)

You just have to love these option expiration days in the metals.

I will have to take a look later tonight to see where it may have come from, and if it is even true. Or better yet, I will wait for either Danny Norcini or Harvey Organ to show their findings. Never makes sense to duplicate effort.

Wishful thinking from the bullion bears or real supply, we'll have to wait and see. But no matter how you wish to view it, Blythe, you're called.  Let's see what you've got.

"He who sells what isn't his'n,
Must buy it back, or go to prison."
(or obtain a presidential pardon
for services rendered.)

Daniel Drew

Gold Daily and Silver Weekly Charts - Le Douleur

Once again the dollar was weak, and metals rallied, while stocks wallowed.

I am once again long metals, short stocks. Options Expiration on the Comex tomorrow. If they cannot bring prices down watch for a secondary bear raid into the weekend. This is how they played the last one.

Of course it is possible that the paper bears will be broken in their attempts to take on the bullion demand, and will be forced to retreat and attempt to defend a higher price level. This has also happened around an expiration.

The US is heading towards a crisis that very few understand, whether out of ignorance or arrogance. I have been a little surprised by this, but it is only to be expected, and is the hallmark of the really 'big events' in which God let's us have our way, if only to teach us that our ways are not His, and bear the taint of death.

"In this world there's room for everyone, and the good earth is rich and can provide for everyone. The way of life can be free and beautiful, but we have lost the way. Greed has poisoned men's souls, has barricaded the world with hate, has goosestepped us into misery and bloodshed."

Charlie Chaplin

They'll never learn, it seems, except the hard way.

SP 500 and NDX Futures Daily Charts

This is about the area where the bulls need to obtain traction and take this market higher, or risk losing control of the trend.

I added index shorts on strength today to bring my short term portfolio to a neutral stance, long metals and short stocks.

Net Asset Value of Certain Precious Metal Trusts and Funds

Gold Daily and Silver Weekly Charts - Comex June Option Expiration on 25 May

Flight to safety day as the European debt crisis continues to shake the markets. So we saw a rally in gold and the dollar, with stocks selling off.  From a short term trading standpoint this downtrend is getting a little old unless we are seeing an intermediate trend change to the downside.

It looks like we might be a in period of chop and consolidation, with brief rallies and declines within some trend probably upward slowing.

I thought it was very interesting that the VIX remains relatively quiet. Watch this carefully.

A 'flash crash' is possible as the markets are thin and the technical gamesmanship and fraud are thick.  Equally thick is the propaganda that dominates Western economic discussions and tends to cloud the problems and issues. 

SP 500 and NDX Futures Daily Charts

Gold Daily and Silver Weekly Charts - Flight to Safety on Fears of Greek Default

"We now know that there has been a dramatic reversal in world central bank thinking, and instead of selling gold as they have been doing, world central banks, on balance, are buying gold. We know that China, Russian and many Asian countries are urgently increasing their gold-to-reserves ratio.

Rising gold is also putting pressure on the silver shorts. I've heard that there is now more silver shorted on the COMEX than is available in physical silver.

A few weeks ago, shorting silver was considered a "no-brainer." In this business, if you run with the crowd, you're liable to get trampled to death...

But more powerful than anything else will be the trend of the stock market. If the bull market dies here or even if it corrects severely, the pressure will fall heavily on the administration and the Congress.

For this reason, I expect the rest of the year 2011 to be 'wild and wooly.' I expect government lies and propaganda to reach a crescendo. I'm bracing myself for a parade of surprises. Politicians love power and perks. But to keep those two, they must also keep their jobs. Therefore, coming up, I expect an extreme in dirty politics and internecine political battles.

The year 2011 should wind up as a banner year for political and economic propaganda, all lies and bull-shit.”

Silver Shorts Liable to Get Trampled - Richard Russell

There was a remarkable divergence in the markets today as gold rallied sharply, dragging silver behind it with a lag, while stocks headed lower.

The impetus was clearly the Greek debt decision by Fitch, as the markets moved right with the announcement, breaking up the usual option expiration shenanigans.

Let's see how this progresses next week. This breaking of the mold will likely not continue without interruption, since old tricks die hard.

But it may be a portent of things to come. Great events and changes are in motion.

SP 500 and NDX Futures Daily Charts

Another options expiration with shenanigans, and a downgrade to Greece sovereign debt that roiled the market mid-day and triggered a bit of a flight to safety.

The markets generally ignored the financial crisis as it unfolded, and stocks were largely unchanged on the weekend before the collapse of Lehman Brothers took the markets down hard. I do not expect the next financial crisis to be anticipated any better by this market. Price discovery and efficient capital allocation is not possible in a system permeated with fraud.

Let's see how the Asian markets open on Sunday.

SP 500 Futures Intraday - Options Expiration - Fitch Downgrades Greece, Metals Rally

Here is what I am watching in US broad equities in the May option expiration. There is support for the SP around 1321-1324. If it breaks that and sticks the close there might be something to this, moreso than the usual option wash and rinse.

On the NDX chart the intermediate uptrend is more pronounced with strong support at 2330.

Update at 11:10 - FITCH DOWNGRADES GREECE TO 'B+'; RATING WATCH NEGATIVE

Fitch has downgraded Greek debt, which has caused a flight to safety in the dollar and precious metals.

Chart That Should Accompany Every Discussion of the US Deficit

The Chart That Should Accompany Every Discussion of Deficits - The Atlantic

Obama shares a significant portion of the blame, contrary to what the Atlantic may be implying. But the sources of the financial collapse and deficits are identifiable, but little discussed by the corporate media.

The Banks must be restrained, and the financial system reformed, with balance restored to the economy, before there can be any sustained recovery.

Gold Daily and Silver Weekly Charts - Le US Douleur Wallows

SP 500 and NDX Futures Daily Charts

No breakouts, stocks remain in a short term downtrend.

LinkedIn IPO came into the market today, and it was bubblicious.

GAP slashed its outlook after the bell on rising costs.

Dominique Strauss-Kahn was granted bail, with a form of house arrest while he awaits trial.