Gold Daily and Silver Weekly Charts - Quiet Day of Consolidation

Gold and silver consolidated into overhead resistance today after the big run this week.

Intraday commentary on the NAV and on Why a Gold Crisis Looms.

See you Sunday evening.

SP 500 and NDX Futures Daily Charts

The market was light volume and lackluster today when a letter from Ben Bernanke to Darrell Issa was released that suggested a bias to ease 'depending on the data.'

This is nothing new of course, but the market players took it as an opportunity to rally.

There were also rumours and speculation that the ECB would take further action to subsidize rates in their soverigns' debt.

Next week is the end of the month and the Republican National Convention in Tampa.

See you Sunday evening.

Romney Tax Files: Converting Management Fees Into Carried Interest

When Gawker first published the Bain Capital tax return data I remember reading somewhere that one should not bother even looking at them because they are not relevant and won't tell you anything.

That struck me as odd at the time. How could someone just dismiss information like this as not even worth reading? Move on, don't look at them?

Well, apparently that is not the case. They seem to contain some nuggets of information suggesting that Romney was being particular aggressive (euphemism for engaging in extra-legal activity) in misstating not trivial income for the purpose of avoiding taxes.

One can only wonder what those undisclosed personal returns might contain.

I don't want to pick on Mitt in particular, although he is starting to look like a setup to make the other guy look good. And what he had done with his income from Bain is certainly open to interpretation as the author admits.

But rather, this speaks to the 'rule of law' issue and how there is a duality in the US, and some animals are more equal than others. And strangely enough, the barnyard hoots its approval.

"Private equity fund managers are compensated in two primary ways: management fees and carried interest. The management fee, traditionally two percent annually, is paid to the managers to cover overhead, salaries, and so forth. The carried interest, traditionally twenty percent, is a share of the profits from the underlying investments. My paper Two and Twenty described the typical arrangement.

Management fees are taxed at ordinary income rates; carried interest is often taxed at capital gains rates (around 15 percent - Jesse). I focused in the article on why the carried interest portion is better viewed like bonus compensation and should be taxed at ordinary income rates.

Current law on carried interest is already a sweetheart tax deal for private equity, but why not make it better? Private equity folks are not the type to walk past a twenty-dollar bill lying on the sidewalk.

In the 2000s it became common for private equity fund managers to “convert” their management fees into carried interest. There are many variations on the theme, but here’s how many deals worked: each year, before the annual management fee comes due, the fund manager waives the management fee in exchange for a priority allocation of future profits. There is minimal economic risk involved; as long as the fund, at some point, has a profitable quarter, the managers get paid. (If the managers don’t foresee any future profits, they won’t waive the fees, and they will take cash instead.)

In exchange for a minimal amount of economic risk, the tax benefit is enormous: the compensation is transformed from ordinary income (taxed at 35%) into capital gain (taxed at 15%). Because the management fees for a large private equity fund can be ten or twenty million per year, the tax dodge can literally save millions in taxes every year.

The problem is that it is not legal. Because the deals vary in their aggressiveness, there is some disagreement among practitioners about when it works and when it doesn’t. But in my opinion, and the opinion of many tax practitioners, the practices that were common in the private equity industry in the 2000s became very, very questionable, and it’s unlikely that they would have stood up in court.

Gawker today posted some Bain documents today showing that Bain, like many other PE firms, had engaged in this practice of converting management fees into capital gain. Unlike carried interest, which is unseemly but perfectly legal, Bain’s management fee conversions are not legal. If challenged in court, Bain would lose. The Bain partners, in my opinion, misreported their income if they reported these converted fees as capital gain instead of ordinary income."

Victor Fleischer, Romney’s Management Fee Conversions

Read the entire article here.

US Dollar Intermediate Term Chart

Because of the way in which it is constituted, the US Dollar DX Index is largely the 'inverse Euro' chart with some yen and pound and franc thrown in.

Because of that, and as I have noted previously, the index is becoming less meaningful as other currencies, which are not accounted for at all in the index, especially those from the BRICs, gain more importance to the world monetary system. 

And of course the Index represents no commodities including gold and silver.

Net Asset Value Premiums of Certain Precious Metal Trusts and Funds - Why A Gold Crisis Looms

It is a slow day today with the usual end of week profit taking. Even the monetary whack-a-mole, Zimbabwe Ben, popped his head out today to give a verbal goose to the markets.

I came across an article that addresses an interesting phenomenon that rarely gets an airing, except perhaps by those stalwarts in GATA.

"The World Gold Council recently released its second quarter statistics on gold “demand and supply trends”. For those not familiar with the WGC, it is an “industry trade group” composed of large-cap gold miners who love bankers.

How much do these mining companies love bankers? So much that they allow the bankers to keep all the records for their sector, and pretty much do all of their of their promotion to the world. It is the WGC which elevated two private “consultancies” (of bankers) – GFMS and the CPM Group – to the status of quasi-official record-keepers for the entire global gold (and silver) industry.

It would be problematic at best for the gold industry to allow itself to be almost entirely represented by a “profession” now known only for its rampant fraud. However, given the known hatred of the banking community toward gold and silver, and their relentless attacks on both the bullion market and the miners themselves; it’s almost beyond comprehension that the world’s largest gold miners choose bankers as their spokesmen.

I’ve already exposed the devious/perverse manner in which these consultancies produce phony inventory numbers in the silver market. In the upside-down world of these “record-keepers”, when someone purchases an ounce of silver from a silver-ETF (and thus takes that ounce of silver off of the market), the CPM Group adds another ounce to total inventories.

In other words, if silver investors were to buy-up every ounce of silver currently available in the world (via silver-ETF’s), global silver inventories would supposedly double, while if silver-ETF holders were to sell all their holdings it would (apparently) collapse inventories..."

Jeff Nelson, Why a Gold Crisis Looms

Speaking of the available supply of silver, Ed Steer reports this morning that:

"Sprott's Physical Silver Trust reported receiving 320,000 ounces of silver yesterday...and still has over a bit over a million ounces left to be delivered from their latest offering. Since they got the first tranche on July 11th, they have received just under seven million ounces...and since they purchased a bit more than eight million ounces, they're just awaiting the balance...44 days [6+ weeks] since receiving the first shipment. It will be interesting to see how long it takes to get the rest. From this information it should be obvious that good delivery bars are not exactly laying around."

I doubt the concerns about manipulation in the markets will amount to anything until an actual crisis hits, and someone big defaults on either gold or silver and threatens to take down an exchange. And then the masters of the universe will run around waving their hands saying 'we have a problem, we have a problem,' and do something obtusely irrational and carelessly self-serving to try and fix it. You know, like TARP, or most corporate reorganizations for that matter.

(Inside the idiom reference. At a certain technical school in Cambridge Mass they used to refer to the case study crackheads up Mass Ave as the 'hand wavers' who, when things did not go as planned, only knew enough to recognize that they were in trouble, and run around waving their hands saying 'we have a problem, we have a problem.' And then, after a few stupid attempts at a quick fix and a cover up made things much worse, look for someone to fix it for them. In my own defense I was not formally enrolled at that particular tech school, I was merely a 'fellow traveler.' In other words, I had a girlfriend.)

Gold continues to command a higher premium than silver in the funds.

In a recent interview (JPM Is In Trouble) Bill Murphy made some allusions to a scandal brewing in the silver market that may burst upon the public before year end. One can only imagine. Bill is an optimist, which is one of his great strengths and supports. I am stoically skeptical, but long term hopeful, about anything approaching transparency, disclosure and reform. And the current trend in reform is not promising.

I provided an update to the NAV chart at 3:00 PM.

See you at the close.

Matt Taibbi and Eliot Spitzer Discuss Eric Holder's (and Obama's) Failure: Credibility Trap

The failure of Obama's Justice Department to engage in any systemic investigations and indictments of a thoroughly rotten and corrupt financial system that has laid waste to the real economy is an almost perfect example of the credibility trap.

A credibility trap is when the regulatory, political and/or informational functions of a society have been compromised by a corrupting influence and a fraud, so that they cannot address the situation without implicating, at least incidentally, a broad swath of the power structure. The status quo has at least tolerated the corruption and the fraud, if not profited directly from it, and most likely continues to do so.  The power brokers have become susceptible to various forms of blackmail.  And so a failed policy can become almost self-sustaining long after it is seen to have failed, and even become counterproductive, because admitting failure is not an option for those in power.

Another example is the blatant fraud, and principles not of productivity but of prey, that prevail on the financial asset exchanges and the monetary system, the stealing of customer funds, and the manipulation of commodity markets such as silver. And it expresses itself in the frivolous coarseness of spectacle, and careless brutality of decline.

"Happy Hunger Games. And may the odds be ever in your favor."

Normally a two party system or a balance of powers would correct such a situation, but if the fraud is pervasive and enduring enough, those remedies can lose their effectiveness since the fraud binds even seemingly diverse elements in its grasp. And therein lies the trap.

There is a general loss of honor, a disparagement of moral principles, the common welfare, and a sense of 'service.' People in power are creatures of the system, 'getting their ticket punched' in Washington, as resume builder on their way to an even more lucrative position back in the corrupt system where they can leverage their connections and knowledge of the system to further undermine the rule of law. Their guiding principles are self-referential greed and power.

After one of the most outrageous periods of widespread fraud in a major developed country, prosecutions for fraud are at twenty year lows.  Who expected this outcome from an election in which the theme was change and reform?

Here is a recent article, Why Can't Obama Bring Wall St to Justice, asking the broader question inferred by this video interview. Why?  And the answer is not to be found in making excuses and allowing him to hide behind the incompetency or disengagement defense so popular in American management circles.

And if you think that voting for the other guy in this case, the emotinally engaging but fatally flawed red v. blue paradigm, is going to provide a cure you are sadly mistaken. The other guy in this case is the poster child for most of the problems that face a nation under siege by a financial elite engaged in an economic, ideological, and political coup d'etat.

As Glenn Greenwald recently put it:

"You can often, and I would say more often than not, in leading opinion-making elite circles, find an expressed renouncement or repudiation of that principle [of the rule of law]...All of these acts entail very aggressive and explicit arguments that the most powerful political and financial elites in our society should not be, and are not, subject to the rule of law because it is too disruptive, it is too divisive, it is more important that we should look forward, that we find ways to avoid repeating the problem...the rule of law is not that important of a value any longer...

The law is no respecter of persons, but the law is also a respecter of reality, meaning if it is too disruptive or divisive that it is actually in our common good, not the elite criminals, but in our common good, to exempt the most powerful from the consequences of their criminal acts, and that has become the template used in each of these instances."

And thanks to the apathy of the people and the gullibility of the badly used, self-proclaimed 'patriots' they are winning.

“The disposition to admire, and almost to worship, the rich and the powerful, and to despise, or, at least to neglect, persons of poor and mean condition is the great and most universal cause of the corruption of our moral sentiments.”

Adam Smith

Such unsustainable social arrangements are backed by force and fraud. And as the fraud loses its power over time, force must increase, until there is an end in genuine reform, or a terrible self-destruction.

Gold Daily and Silver Weekly Charts - Hard into Resistance

So far it has been a real lift for the metals, as they have both broken out of their short term capping and coiling patterns.

Now they have both reached intermediate, rather than short term, overhead resistance from trend lines.

I would not be surprised to see a little consolidation here and a few weak hands taking profits.

Bill Murphy Interview: JPM Is In Trouble (audio)

SP 500 and NDX Futures Daily Charts - Profit-Taking Down to Support

The SP futures closed at 1400 and the NDX futures at 1360.

We *might* have some more downside here even if this is a correction in this summer rally. 1385 or so might be a decent target.

Europe weighs on the market, but volumes remain light.

Earnings and Revenues are not coming in well, so it may be on the central banks to provide some joy juice to the markets. It is likely not to help the real economy however since the monetary transmission systems are on 'shift upward without producing anything of value.'

Net Asset Value Premiums of Certain Precious Metal Trusts and Funds - And Again at 2 PM

Gold is still carrying a higher premium in the funds and trust than silver.

Notice how sharply gold and silver have moved after those weeks of tedious capping. And there is not a lot of doubt in my mind that it was conscious and purposeful.

I hope you were able to take advantage of this 'tell' as well as the absurd pinning action which we saw in the equity markets since the beginning of August, especially in the SP 500.

Sprott PSLV is continuing to add to silver inventory and drawing down the cash raised in their last unit offering.

There are still a number of ways to interpret this. I suspect that there is news-in-the-making being digested behind the scenes. War, QE, some major Euro development, take your pick.

Note:  I have included a second set of data from later today.

CNBC's Heavy-Handed Advocacy For Wall Street Is Painfully Evident in This Neil Barofsky Interview

Heavy handed and amateurish performance by the 'journalists' was the name of the game in this interview which CNBC conducted with former TARP inspector general Neil Barofsky.

I think Barofsky was taken aback and kept off balance for much of the interview, and did not present some of the alternatives to TARP that could have been discussed in a more intelligent and less adversarial venue.  I would have thought a former federal prosecutor would have been tougher, but I think he came in expecting a rational discussion and not a tag team group takedown.

This performance represents the level of journalistic quality and objectivity of its parent NBC, which is one of the corporate arms of General Electric.   And such a disregard for any pretense to journalistic principles is no longer the exception.

Maybe I am missing something but it seems astonishing that a major financial network can feature a stock advisor who bragged on tape about how he used reporters for planting stories favorable to his market manipulation to cheat the public when he ran a hedge fund, and apparently sees nothing wrong with it, up to and including breaking the law.

How cynical can a people get? How blindly worshipful of 'success?'

This calls to mind the interview that CNBC had with the California Attorney General who had the presence of mind to just stop the interview and ask the 'journalist,' "Are you pimping for (State Street Bank) the defendant?"

There was a time indeed when the financial journalists were paid for pimping for Wall Street, as recounted in the Congressional testimony of A. Newton Plummer, who had kept a suitcase full of the canceled checks which he had delivered to almost every journalist on the Street. The pool operators of the 1920's paid financial journalists to run stories favorable to their market aims.

A. Newton Plummer subsequently wrote a book about it, and his testimony to the Congress, that had a very limited run. I picked up a copy during my research phase in the late 1990's.

So as you can see, the integrity of journalism in reporting financial news is not merely an idealistic and theoretical concern during periods of excess and subsequent change. It is one of the major elements of corruption and therefore of reform. And laws were put in place to ensure fairness and diversity in the news media. And they were much later knocked down during 'the great deregulation' when ideology and PR campaigns trumped experience once again.

Do people still go to journalism schools and subscribe to certain principles that we used to take for granted that would be put forward if not always upheld?

How are the mighty fallen.

Here is a link to the interview at the CNBC site in case there are problems with access to it here.

Note:  Business Insider also covered this interview.  Their story here includes some of the tweets which Barofsky sent after the show.

Gold Daily and Silver Weekly Charts - Rally Intensified on Fed's QE Statement

Gold and silver were rallying even as stocks were declining, when the Fed released its minutes from the most recent meeting this afternoon. The Fed is concerned about the lack of growth in the economy and signalled its willingness to invoke additional quantitative easing 'fairly soon.'

This intensified the rally in gold and silver and helped stocks to lose some of their early losses.

Gold has stuck a close above the big resistance, and now needs to take out the trendlines around 1665 to get some legs.

Stocks are running on liquidity and hot money expectations, and not much else.

SP 500 and NDX Futures Daily Charts - Pop Goes the Fed

The Fed minutes caused the market to reverse its correction today as the Fed signalled its concern about the lack of growth in the economy, and its willingness to engage in additional quantitative easing 'fairly soon.'

Otherwise it is still a dull market.

Interviews with 'The New Economists' From Mindful Money

Mindful Money has published an eclectic collection of short interviews with those whom they describe as 'the new economists.'

These include Steve Keen, Unlearning Economics, Positive Money, Modern Monetary Mechanics, Pragmatic Capitalism, and a little known Café which they describe as:

An anonymous blogging site with a pleasant relaxed feel ("an oasis of civility in an increasingly uncivil world", the site includes images from the Café's signature dishes in the left margin), wry humour and a global readership. Jesse has a strong interest in reining in the banks and reforming economics and incorporates some stunning graphs into his blog posts.

However in a a recent, somewhat resigned post, he wrote: "I do not think the US is ready to insist on serious reform. It will take another crisis. The anti-regulatory slogans are too effectively ingrained in the public psyche. And self-deception is a powerfully addictive state of mind. Especially for those whose expansive lifestyles depend on it."

I don't feel as resigned as exasperated at times. But that is the nature of a sea change which happens slowly and quietly over a long interval until one suddenly notices it and, voilà.

Do not expect profundity and lengthy expositions of economic thought from yours truly, because after all it was a Q&A and I was able to give what I thought were plain answers that struck to the heart of the questions right 'off the cuff' as they say. We become lost in a fog of words, at a time when action is becoming ever more important on the individual level.

The menu of answers should surprise no regular patron of Le Café. But I see in reading it now that I did manage a quip or two to quicken the sauce of the dismal science.

Q. If you could travel back in time and change something in the financial world that would benefit society, what would it be?

A. I would help Alan Greenspan achieve a wonderfully rewarding career as a professional clarinetist.

And then I would skip forward ten years or so and stop the Bankers' campaign to repeal Glass Steagall.

Enjoy.

You can read the entire interview here and the entire piece with links to the entire collection of interviews here.

Gold Daily and Silver Weekly Charts - The Old Switcheroo

Gold and silver had a nice rally today, and ran up into hard resistance as one can see from the charts.

I published a note on the Net Asset Value Premiums today that shows that for the first time in my memory the premiums on gold versus silver had turned decisively in favor of gold.

This has occurred before, when a fund was expanding its size using a shelf offering for example. They sell units and raise cash to buy metals, and the size of their cash reserves go up and then down. This affects the NAV premium quite a bit.

Sprott's PSLV has recently completed a large expansion which showed up in the premiums in the end of July and August.   These expansions have caused PSLV to underperform SLV for the year to date. 

And in early August we saw the premiums at par in the Central Funds as well.  That might be a drag on effect as investor enthusiasm for silver become subdued.

But now gold is clearly edging out silver. I'm not sure why, but I suspect that if this trend continues and deepens then the market is pricing in some event as yet unforeseen, at least by us.

A change in monetary policy, war, a new trade regime? All these exogenous events are possible, in addition to endogenous factors such as a big official buyer or two in gold.

Let's see what happens.

SP 500 and NDX Futures Daily Charts

Stocks ran up to resistance around 1425, and then the buying seemed to fall apart for no reason.

Stocks gave up all their gains and ended the day with a slight loss.

For now this is just a pullback since stocks did not violate any key support.

After the bell Dell cut its forecasts. Even though the company is troubled, the economy is certainly not robust in the states.

Net Asset Value Premiums of Certain Precious Metal Trusts and Funds - The Oddest Thing

My net asset value premium indicator shows that gold is commanding a higher premium over NAV as compared to silver, for the first time that I can ever recall.

I do not remember seeing the premium on gold higher than the premium on silver, as shown in the Sprott precious metal funds. Ever.

At least not while the funds are not in the midst of implementing a shelf offering. Sprott silver (PSLV) recently completed a major buy and the premium there often lags in such a period of time.

When I saw the results my jaw dropped. I have checked and rechecked them. And my own estimates of their NAV track perfectly with their indicative intraday indicators, so I am fairly sure there is not an error in the fund calculations.

And as confirmation, the premium of the Central Gold Trust (GTU) is higher than the premium of the Central Fund of Canada (CEF), which is a mix of silver and gold. That is also strange.

In early August the premiums in the funds had pulled equal, but I tended to dismiss that as a drag on effect from the Sprott silver expansion. CEF and PSLV have some correlation in premiums with the larger PSLV being the price leader.

Something is a bit odd in this market.

Last week someone notified me of some unusual trading patterns in the gold funds. I have been keeping an eye on them, but never expected this.

Silver has a much higher beta than gold. If this continues, if the gold premium continues to exceed silver, it would suggest a clear signal that at least some market participants are pricing in an unusual financial event.

What that might be, I cannot say. I do not even know if it is positive or negative for the precious metals market or their related markets, except to speculate.

On one hand it could represent some manipulative action in the silver market, some unusual effort to cap its tendency to rally.

On another hand it might be a precursor to a dramatic market decline in equities, with a safe haven move into gold ahead of time.

And it could also merely be particular buying pressure from official sources in gold that has not yet spilled over into the silver market.

Take your pick. They are all equally defensible at this point, until we obtain more data.

SP 500 - Telling Action

Unnaturally tight upward ranges like this are generally the sign of a 'market operation' to take equities higher.

The question of course is by whom and for what reason.

It could just be the tendency of the wiseguys to take it higher in the absence of real activity, just because they can, until it becomes priced for fantasy.

Or it could be some of the better connected banks and trading desks front running the Fed.

It certainly is not justified by the economic fundamentals. But that may be an artifact from the old days in which the market reflected the real economy, and allocated capital according to its needs to enable efficient use of productive resources.

In these days of fading empire when the major activity of the US is making money from money, the market is the economy, and its primary function is to redistribute wealth from the bottom to the top.

Gold Daily and Silver Weekly Charts - Nice Little Rally In Silver

Gold and silver had a little rally today with silver leading the way.

The breakout point is obvious.

Gold has already banged its head five times on this resistance where it stands today.

SP 500 and NDX Daily Charts - 'No Fear' Levitation on Fed Put Perceptions

The market has the perception that the powers that be will not allow the markets to falter ahead of the fall elections.

If that perception fails, look out below.

Bill Black On Wall Street Control Frauds and Moral Hazard

Lack of Justice Department and regulatory prosecutions for Wall Street fraud creates incentives for more control frauds and climate of lawlessness.

John Ralston Saul: The Collapse of Globalism

"The transnational corporations and the money markets have declared the era of human-designed regulations over. Now the market must reign. Because few people in the business community are paid to think about phrases such as 'western civilization,' they don't seem to realize that they are proposing the arbitrary denial of 2,500 years of human experience...

Ever since the democratic systems permitted their various courts to give corporations the status of persons, the individual as citizen has been on the defensive. How could it be otherwise? If you are a person before the law and Exxon or Ford is also a person, it is clear that the concept of democratic legitimacy lying with the individual has been mortally wounded...

If allowed to run free of the social system, capitalism will attempt to corrupt and undermine democracy, which is, after all, not a natural state...Capitalism was reasonably content under Hitler, happy under Mussolini, very happy under Franco and delirious under General Pinochet."

John Ralston Saul


“The powers of financial capitalism had a far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences."

Carroll Quigley, Tragedy and Hope

Globalism, or globalization, is the theory that the world marketplace should be free of local, nation, and regional limits. It is founded on the belief that unregulated markets are the epitome and center of rational decision making, described as the most profit maximizing in the aggregate and therefore the most 'efficient.'

Globalism elevates economic measures as the arbiters of policy, and subordinates society and individuals to economic outcomes. Its value system is dominated by money and corporations, which are monetary organizations, in contrast to nations which are organizations of people.

"Bankers: Pillars of society who are going to hell if there is a God and He has been accurately quoted."

John Ralston Saul

Gold Daily and Silver Weekly Charts - Cap and Coil

Stocks are on a non-stop rally on light volumes towards a new bull high, and Benny has not even flapped his jawbone.

And we are supposed to take this seriously?

SP 500 and NDX Futures Daily Charts

Confidence up, and Leading Indicators strong.

Now if only the economy would not be so bad.

Beyond boring day.

Chris Hedges: Empire of Illusion and the Cult of Spectacle and the Self

Here is a recent talk by Chris Hedges at the Cambridge Forum.

The video starts after two introductions and a brief expository by Hedges about the tragic life of Michael Jackson, which he sees as emblematic of the cult of celebrity and the exploitative tendencies of the reality show tv culture.

Gold Daily and Silver Weekly Charts - Ben Bernanke, With A Printing Press, On the Comex

Question: Who destroyed the public's confidence in the markets and the monetary system?

Answer:  Ben Bernanke, With a Printing Press, On the Financial and Commodity Exchanges.

And his motive was never really to save the real economy, but to reward the one percent and save the Banks.

SP 500 and NDX Futures Daily Charts - Cue Ethel Merman

Volumes on the NYSE just crossed over 550 million here today.

There is little selling pressure, but almost as little buying pressure except for the fluff generated by HFTs and cynical bubble-meisters.

I wonder if Ben and his Merry Pranksters are mad enough to stress the system with another asset bubble again for the benefit of the one percent.

I am starting to hear traders say: "This doesn't make sense, but don't fight the tape."

From here to whenever, all it will take is one event. As it goes higher, the magnitude of the event becomes less and less.

Ben did not know when it was time to just quit...

Gold Daily and Silver Weekly Charts - Markets In Monetary Driven Stasis

I believe that at some point the bullion dealers will abandon spot pricing which is based on a Net Present Valuation of the futures front month.

But what would they use instead, the London fix? That is just as dodgy if not more.

Let's see if Bart Chilton and the CFTC can do anything to restore confidence and transparency in the futures markets. I am not expecting much if anything from them.

SP 500 and NDX Futures Daily Charts - Low Volume Levitation

Cisco after the bell. Let's see if they can make the revenues. They are harder to gin up using accounting gimmicks.

Sleeply trade, with little conviction.

The Time of Antichrist

"God's temple in heaven was opened, and the ark of his covenant could be seen. And there came flashes of lightning, rumblings, peals of thunder, earthquakes, and severe storms.

A great sign appeared in the sky, a woman clothed with the sun, with the moon under her feet, and on her head a crown of twelve stars."

"...Surely, there is at this day a confederacy of evil, marshalling its hosts from all parts of the world, organizing itself, taking its measures, enclosing the church of Christ as in a net, and preparing the way for a general apostasy from it. Whether this very apostasy is to give birth to Antichrist, or whether he is still to be delayed, we cannot know; but at any rate this apostasy, and all its tokens, and instruments, are of the Evil One and saviour of death.

Far be it from any of us to be of those simple ones, who are taken in that snare which is circling around us! Far be it from us to be seduced with the fair promises in which Satan is sure to hide his poison!

Do you think he is so unskillful in his craft, as to ask you openly and plainly to join him in his warfare against the truth? No; he offers you baits to tempt you. He promises you civil liberty; he promises you equality; he promises you trade and wealth; he promises you a remission of taxes; he promises you reform.

This is the way in which he conceals from you the kind of work to which he is putting you; he tempts you to rail against your rulers and superiors; he does so himself, and induces you to imitate him; or he promises you illumination, he offers you knowledge, science, philosophy, enlargement of mind. He scoffs at times gone by; he scoffs at every institution which reveres them.

He prompts you what to say, and then listens to you, and praises you, and encourages you. He bids you mount aloft. He shows you how to become as gods. Then he laughs and jokes with you, and gets intimate with you; he takes your hand, and gets his fingers between yours, and grasps them, and then you are his."

J.H.Newman, The Times of Antichrist

Jamie Dimon: Beyond God's Work, Defender of Truth

"Narcissism is a failure not of conscience but of empathy, which is the capacity to perceive emotions in others and so react to them appropriately. The poor narcissist cannot see past his own nose, emotionally speaking, and as with the Pillsbury Doughboy, any input from the outside will spring back as if nothing had happened.

Unlike sociopaths, narcissists often are in psychological pain, and may sometimes seek psychotherapy. When a narcissist looks for help, one of the underlying issues is usually that, unbeknownst to him, he is alienating his relationships on account of his lack of empathy with others, and is feeling confused, abandoned, and lonely.

He misses the people he loves, and is ill-equipped to get them back. Sociopaths, in contrast, do not care about other people, and so do not miss them when they are alienated or gone, except as one might regret the absence of a useful appliance that one has somehow lost.”

Martha Stout, The Sociopath Next Door


"Even psychopaths have emotions. Then again, maybe not...Killing is killing whether done for duty, profit, or fun."

Richard Ramirez, The Night Stalker


"I have no desire whatever to reform myself. My only desire is to reform people who try to reform me...I don't believe in man, God nor Devil. I hate the whole damned human race, including myself. I preyed upon the weak, the harmless and the unsuspecting. This lesson I was taught by others: might makes right.”

Carl Panzram, Diary of a Monster

Free the Wall Street One Percent.

Oh, that's right. We forget. Not one of the principals has even been prosecuted.

“Everyone is talking about the culture, the culture, and all that, and it’s just not true. Most bankers are decent, honorable people. We’re wrapped up in all this crap right now.

We made a mistake. We’re sorry. It doesn’t detract from all the good things we’ve done. I am not responsible for the financial crisis. I hate to tell you. We were a port of safety in the storm.

I find it unbelievable that that is the general theme—that you have to walk in a room and act like you are responsible for things you are not responsible for.

I’m an outspoken defender of the truth.

Everyone is afraid of retaliation and retribution. We recently had an event with a hundred small bankers here, and 85 percent of them said they can’t challenge the regulation because of the potential retribution. That’s a terrible thing. Okay?

This is not the Soviet Union. This is the United States of America. That’s what I remember. Guess what. It’s a free. Fucking. Country.”

Jamie Dimon, Interview with New York Magazine

For a dose of reality see the interview with Neil Barofsky below.

“The suspicions that the system is rigged in favor of the largest banks and their elites, so they play by their own set of rules to the disfavor of the taxpayers who funded their bailout, are true. It really happened. These suspicions are valid.”

Neil Barofsky

Neil Barofsky: Ongoing Bailout of Wall Street

Gold Daily and Silver Weekly Charts - Cheap Shot at the New York Open

Carney game antics, nothing more, nothing less.

The financiers will not back off until they bring the real economy to exhaustion and failure. Or someone stops them.

SP 500 and NDX Futures Daily Charts - Technical Tug of War in Sparse Volumes

The US markets are dying for lack of real volume and a drought of investment funds.

The action is little more than a tug of war by short holding time trades.

If this market gets hit by an exogenous event that provokes selling it could drop quite impressively.

Gold Gets Attitude Adjustment On Hot PPI Number

The monthly change in PPI came in hot this morning at 8:30 with core PPI at .4% versus an expected .2% and PPI at .3% versus the same .2% expected.

The NY open hit gold on light volume.

Stocks rose on a 'surprisingly strong' retail sales number of .8% versus .2% expected.

Gold Daily and Silver Weekly Charts - Zzzzzz

Europe is on vacation, and all but the hard core momentum traders are on strike in the US.

SP 500 and NDX Futures Daily Charts

Sleepy day, stocks and commodities shoved around the plate.

Bill Black Educates the Media On the Nature of Financial Fraud, With Little Apparent Effect

Although I linked to this last week, I thought I would like to feature it today.

In one of his rare appearances on the 'mainstream media' Bill Black educates the CNBC news anchor Maria Bartiromo and news contributor Bethany Maclean on the nature of financial fraud.

It is interesting to see the NBC news people acting as apologists for the financial powers, trotting out false arguments and talking over or rushing past the facts when they are presented. At least Bloomberg is more straightforward in their presentation of blatant hucksterism, making little pretense to journalism or presenting any other side of the Wall Street story. They are salespeople and spokesmodels for the financial industry and the monied interests.

Just putting a letter or two in front of a storied call sign, as in the case of MSNBC and CNBC, does not protect that brand from the tarnish of increasingly low standards and future scandal. All of the major media seems to be dancing to Rupert's pied piper's tune.

As storied NBC news anchor David Brinkley once said:

"Being an anchor is not just a matter of sitting in front of a camera and looking pretty."

"News is what somebody somewhere wants to suppress; all the rest is advertising." Lord Northcliffe