WayBack Machine 1999: Who Needs Gold When We Have Greenspan?

The irony in this piece is just too good.  

This is almost a template for the anti-gold 'hit pieces' that have appeared almost every year since 1999, put out by the gold bogeys. 

I wonder what people will be saying ten years and five or six more iterations of QE from now?

NY Times
Who Needs Gold When We Have Greenspan?
By Floyd Norris
May 04, 1999

Is gold on its way to becoming just another commodity? The people who run the world's financial system are doing their best to secure that fate for the metal that once was viewed as the only ''real'' money.

"I want to say one word to you. Just one word. Derivatives."

The process of removing the glitter from gold has been a gradual but inexorable one, and is one of the most telling counters to the argument that national governments are less important in this era of globalization. Much of the world is now quite happy to accept the idea that a greenback backed by Alan Greenspan is just as good as one backed by gold.  (And if they are not happy, send in the drones.  The bombings will continue until they are giddy with joy. - Jesse)

Certainly gold's reputation as a store of value has eroded. At the peak of the gold frenzy in 1980, an ounce of gold cost $873, precisely that day's level of the Dow Jones industrial average. Now the Dow is at 11,014.69, about 38 times higher than the $287.60 price of gold.  (and today the Dow is 12, 830 and gold is $1,730. - Jesse)

Actually, that measurement understates the amount by which stocks have outperformed gold. If you had owned stocks all those years, you would have received substantial dividends. If you owned a lot of gold, you got no dividends but did have to pay storage fees for the stuff.  (And if you do business with Wall Street you may be paying storage fees on gold that is not even there. - Jesse)

That is, in fact, how the central bankers of the world look at gold these days. Michel Camdessus, the managing director of the International Monetary Fund, said last week he expected the fund to sell gold for the first time in two decades.  (And how many more times have they said this in the past twelve years?  Jesse)  The Clinton Administration is pushing for such sales by the I.M.F. to help finance a laudable program to forgive debts owed by very poor countries. 

The money received from the gold sales is to be invested in Government securities that will provide income, and that income will pay off the loans. The implicit assumption is that gold, which does not pay interest, is a lousy investment.

A couple of weeks ago, the Swiss electorate voted to begin untying the Swiss franc from its gold backing. The Swiss central bank could begin selling gold as early as next year. Once again, the argument was that selling gold was a way to find easy money for good deeds. To those who still view gold as the only real money, having the Swiss defect is a bit like discovering that Rome is embracing Protestantism. It is the last place that should happen.

But it is happening, and it seems likely that more central banks -- like the Australian and Dutch banks -- will join those that have already begun selling gold.

We have taken the risk out of trading (for ourselves).

The argument against retaining gold is that its day is past. Once it was useful as a hedge against inflation that would hold its value when paper currencies did not. Now financial markets have their own sophisticated ways, using exotic derivative securities, to hedge against inflation.  (Gold bad, CDS good.  Nice trade...if the government is backstopping your enormous losses. - Jesse)

Once gold served as protection for investors against governments that debased their currencies. Now there is plenty of debasing going on -- the Brazilian real is down 27 percent this year -- but the lesson people have drawn is to believe in the dollar. There is growing support for the idea that all of Latin America should adopt the dollar as a currency.

Dollarization, as that idea is called, amounts to a sort of a gold standard without gold. There would be a universal money whose value was based not on gold in the vaults, but on the wisdom of Mr. Greenspan and his successors at the Federal Reserve. (In cyberspace, no one can hear you screaming - Jesse)  Few fear that one of those successors might resemble G. William Miller, the Fed chairman in the late 1970's who seemed to have no idea how to slow inflation.

If the demonetization of gold continues, the price is likely to keep falling as central-bank sales more than offset any increase in demand from jewelers or industrial users. That could change if it turns out that central bankers are not the geniuses they are now deemed to be. But for now, the world believes in Mr. Greenspan and sees little need for gold.  (And now you can sleep well and believe in Timmy and Ben. Got gold, bitchez? - Jesse)

Money For Nothing Exclusive Clip - "Maestro" from Liberty Street Films on Vimeo.

US Tax Brackets Spread For the Past 100 Years and the Concentration of Economic Decision Making

In 1913, the 16th Amendment to the Constitution made the income tax a permanent fixture in the U.S. tax system. Here is a history of the 'brackets spread.'

These are the nominal rates and do not account for tax shelters and deductions. This also does not include non-income taxes such as the federal gasoline tax.

Below this I also include a chart that shows the share of income obtained by the top 1%. I am not necessarily implying that low tax rates on the wealthy leads to a greater share of income for them, in a causal manner.

I think it is a correlation, that low tax rates for the wealthy are an artifact of their increased political power because of wealth obtained by other means, whether it be through monopolies, changes in public policy, cartels, financial fraud, technological change, and quite often corruption.

There should be little doubt from the last chart that the great turning point occurred during the Reagan era, but that it also obtained a 'second life' during the second term of Clinton and the beginning of the twin financial bubbles in tech and housing.

What was damaging in the Reagan philosophy was not so much any change in tax rates, but the promotion of the idea that the rule of unfettered markets was naturally superior to the rule of law, with beneficial effects for everyone. What this ignores is the tendency of unregulated markets to duopoly, monopoly, cartels, frauds and spectacular failures.

I hypothesize that not only does 'supply side economics' not work, but rather, a concentration of wealth and political power in the top one percent actually tends to drag down the overall well-being of the country in terms of robust growth and median standards of living.

This concentration of economic decision making tends to 'starve' the real economy by dampening aggregate demand, and distorting investment from the real to the artificial, particular, and ostentatious, in the manner of many third world oligarchies. It is similar to the concept that decisions made across the broadest number of market participants tend to be the most correct.

This is a somewhat counter-intuitive observation, that a ruling elite tends to 'get it wrong' as compared to a more broadly based decision model in a transparent information model, because their perspective tends more to distortion and group-think as compared to one that includes a reasonably educated and informed middle class. In other words, for all its flaws, democracy works when information flows.

Oligarchies never work, because benevolent dictatorships are mythical for many of the same reasons as the naturally efficient markets model.

Or as Lord Acton put it so succinctly some years ago:

"Where you have a concentration of power in a few hands, all too frequently men with the mentality of gangsters get control. History has proven that.

Lord Acton

There are two major models for recovering from such a situation: the Japanese model and the Swedish model, with a number of variations.

The Japanese model attempts to hold the financial structure largely intact, diverting huge amounts of policy action and public funds to supporting 'zombie banks' and interwoven corporate cartels. This led to a protracted period of stagnation.

The Swedish model is to nationalize, reorganize, reregulate and reform the financial sector into a more benign banking system. This has proven to be more successful in several instances, including Iceland more recently.

It will be interesting to see how the next ten years play out in North America and Europe.

h/t Barry Ritholtz

Source: WSJ
Looking Past Fiscal Cliff to Fixing Taxes
By Gerald F. Seib

Let's imagine you just landed from Mars and discovered that America's political system is in gridlock, and its economy is being held hostage. What, you would ask, is the giant problem creating all this trouble?

The big dispute, you would discover, is over whether the top individual marginal tax rate should be 35% (the rate established under George W. Bush) or 39.6% (the rate under Bill Clinton).

That is an oversimplification of the issues that are driving Washington toward the so-called fiscal cliff, of course. Still, that top rate is at the heart of the roaring economic debate.

Read the rest here.

Top 1% Share of the Wealth of the US During the same 100 Year Period

A Closer Look at the SP 500 Futures Daily Chart

Net Asset Value Premiums of Certain Precious Metal Trusts and Funds

The recent increases in cash and bullion in Sprott Physical Silver Bullion Trust have been added. The premium is rather modest.

Veteran's Day 2012 - We Can Stand on the Shoulders of Giants, If We But Remember Them

"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, Day of Affirmation Address, Cape Town University, June 6, 1966

Gold Daily and Silver Weekly Charts - Zzzzzzz

The US bond market was closed today, and the stock markets posted their lowest volume of the year as the banks were closed for Veteran's Day, once upon a time known as Armistice Day.

There is quite a bit of noise about the 'fiscal cliff' and much of it is grossly overdone. But that is how one can make the people more malleable when it comes time to accept 'the grand bargain.'

Nothing of consequence occurred in the metals market, so why bother with comments?

It was nice outside, a good day for clearing fallen trees and rebuilding broken steps and mending fallen fences. The market will be open tomorrow.

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - Holiday Snoozer

Today was THE lowest volume full trading day of the year. The bond markets and the banks were closed for Veteran's Day.

Nothing of consequence happened. It was a good day to remember those who have gone before us, and paid for our freedom with their sacrifices.

Bill Black: Grand Bargain and Great Betrayal

Real News Network

The Distribution of Economic Pain From the Financial Crisis in One Chart

No wonder the wealthiest ten percent feel so clever, and even perhaps triumphant.

The collapse caused by the widespread banking fraud has barely affected them, whereas it wiped out most of the last ten years of growth in the middle class and the poor.

In my considered opinion this is largely the result of policy and tax decisions that have been made by the government over the past twenty or more years, in which they fostered a financially predatory economy.

Financial bubbles are often wealth transfer mechanisms, and in this case it appears that you can also keep what you kill.

From Amir Sufi, Professor of Finance at the University of Chicago.

Net Wealth Shock in US, by Net Worth Percentile

Gold Daily and Silver Weekly Charts - Sprott Silver Does Follow On Offering

"This new form of existence, with its mass psychology and social dependence on the fluctuation of markets and wages, produced an individual who was unstable, insecure, and suggestible.

He was aware that his life depended on boards of directors and captains of industry, and he supposed, rightly or wrongly, that they were chiefly motivated by financial interests. He knew that, no matter how conscientiously he worked, he could still fall a victim at any moment to economic changes which were utterly beyond his control. And there was nothing else for him to rely on.

Moreover, the system of moral and political education prevailing in Germany had already done its utmost to permeate everybody with a spirit of dull obedience, with the belief that every desirable thing must come from above, from those who by divine decree sat on top of the law-abiding citizen, whose feelings of personal responsibility were overruled by a rigid sense of duty.

No wonder, therefore, that it was precisely Germany that fell a prey to mass psychology, though she is by no means the only nation threatened by this dangerous germ. The influence of mass psychology has spread far and wide."

Carl Jung, Civilization in Transition, V.10, 1946

Intraday I reported that the Sprott Physical Silver Bullion Trust has launched its anticipated follow on offering. Details are here.

The cup and handle formation continues its pace, despite the fiscal cliff jitters designed to make the people more malleable to the 'grand bargain.'

Have a pleasant weekend.

SP 500 and NDX Futures Daily Charts

A pause in the action, or the decline if you prefer, with a bit of a trading range.

Next week is stock option expiration I believe. Monday is Veteran's Day in the US. Markets are open.

Have a pleasant weekend.

Thomas Jefferson On the Danger of a Concentration of Power On Government

Thomas Jefferson, Collected Papers and Correspondence Vol. 12, Letter to George Logan:

Poplar Forest near Lynchburg, Nov. 12, 1816

Dear Sir,

I received your favor of Oct. 16, at this place, where I pass much of my time, very distant from Monticello...

Your idea of the moral obligations of governments are perfectly correct. The man who is dishonest as a statesman would be a dishonest man in any station. It is strangely absurd to suppose that a million of human beings collected together are not under the same moral laws which bind each of them separately.

It is a great consolation to me that our government, as it cherishes most its duties to its own citizens, so is it the most exact in its moral conduct towards other nations. I do not believe that in the four administrations which have taken place, there has been a single instance of departure from good faith towards other nations. We may sometimes have mistaken our rights, or made an erroneous estimate of the actions of others, but no voluntary wrong can be imputed to us.

In this respect England exhibits the most remarkable phaenomenon in the universe in the contrast between the profligacy of its government and the probity of its citizens. And accordingly it is now exhibiting an example of the truth of the maxim that virtue and interest are inseparable.

It ends, as might have been expected, in the ruin of its people, but this ruin will fall heaviest, as it ought to fall, on that hereditary aristocracy which has for generations been preparing the catastrophe.

I hope we shall take warning from the example and crush in its birth the aristocracy of our monied corporations which dare already to challenge our government to a trial of strength and bid defiance to the laws of our country.

Present me respectfully to Mrs. Logan and accept yourself my friendly and respectful salutations.

Thomas Jefferson

Net Asset Value Premiums of Certain Precious Metal Trusts and Funds

As noted earlier, the Sprott Physical Silver Bullion Trust announced a large follow on offering which priced at $13.15.

Lauren Lyster Interviews Dan Ariely on Financial Fraud, Moral Hazard, and the Psychology of a Cheater

I would not necessarily compare the deterrent effects of punishments for a capital crime, which is often a crime of passion, with financial fraud. And beyond some point no matter how severe the punishment may become, the deterrence is not commensurately increased.

The problem is that there is little or no personal penalty these days for even the most egregious forms of financial misbehaviour and fraud. There is a fellowship of mutual corruption at the heart of the money system.

And as some have warned for years, political capture and moral hazard have broken the Anglo-American financial system with profound implications for the real economy. What I find appalling is when so called progressive economists dismiss this important principle for the sake of their models and expediency.

As you know, my theory on the cycles in society is that there is always a minority of people, perhaps ten percent, who are essentially amoral or immoral, whether from sociopathy or some other outlying behavioural tendency.  They are often attracted to positions of power if they have the mind and education for it, and if not, then perhaps to various forms of crime.

But there are times when corruption and callous greed becomes more tolerated, and a larger segment of the population that is not amoral, but is perhaps morally ambivalent or suggestible, joins in on the action and tries to get theirs. And the guilt which they feel often turns into a mean-spirited contempt and anger against their own victims.

"Because of the increase of wickedness, the love of many grows cold."

I found some of the examples of corporate accounting corruption in this discussion to be interesting. I have seen some of it first hand. This sort of corruption distorts markets, undermines the capitalist system of competition, and destroys whole companies and even industries.

I knew that Erskine Bowles was on the board of Morgan Stanley, but I did not know that his wife is on the board of JP Morgan. It is an interwoven world of mutual benefits and interconnecting interests at the top.

The current climate amongst the power elite is one of personal entitlement based on rationalization as described by Dr. Ariely, and assumptions of a natural superiority, self-portraying their actions even to the point of benevolence and civic spirit, guiding the poor helpless sub-humans who are incapable of self-governance and perhaps not even worthy of freedom: useless eaters. I call it the Tsar Nicholas complex.

It is a culture of narcissism, self-indulgence, exclusion, and self-reinforcement through separation from the other. The private discussions that were exposed in the recent presidential elections were a brief view into the mindset and groupthink.  Their words betray them.

And it always ends, often badly.

Sprott Physical Silver Trust Prices Follow On Offering at $13.15

As we have watched the cash levels of the Sprott Physical Silver Trust drop below $7 million in the occasional Net Asset Value Premiums calculations posted here, I have been cautioning that they were going to be doing another follow on offering to raise cash and expand the silver inventory.

This offering is generally bullish for silver as it will take another large chunk of bullion out of the spin machine, further reducing the physical basis for leveraged paper silver.

The premiums have been reflecting that anticipation for some weeks now. The offerings tend to compress the premium on the fund for a period of time.

And here it is.

Press Release
Sprott Physical Silver Trust Prices Follow-on Offering of Trust Units In An Aggregate Amount of US$269,575,000

Nov 9, 2012

TORONTO, Nov. 9, 2012 /CNW/ - Sprott Physical Silver Trust (the "Trust") (NYSE: PSLV / TSX: PHS.U), a trust created to invest and hold substantially all of its assets in physical silver bullion and managed by Sprott Asset Management LP, announced today that it has priced its follow-on offering of 20,500,000 transferable, redeemable units of the Trust ("Units") at a price of US$13.15 per Unit (the "Offering"). As part of the Offering, the Trust has granted the underwriters an over-allotment option to purchase up to 3,075,000 additional Units. The gross proceeds from the Offering will be US$269,575,000 (US$310,011,250 if the underwriters exercise in full the over-allotment option).

The Trust will use the net proceeds of the Offering to acquire physical silver bullion in accordance with the Trust's objective and subject to the Trust's investment and operating restrictions described in the prospectus related to the Offering. Under the trust agreement governing the Trust, the net proceeds of the Offering per Unit must be not less than 100% of the most recently calculated net asset value per Unit of the Trust prior to, or upon determination of, pricing of the Offering.

The Units are listed on NYSE Arca and the Toronto Stock Exchange under the symbols "PSLV" and "PHS.U", respectively. The Offering will be made simultaneously in the United States and Canada by underwriters led by Morgan Stanley and RBC Capital Markets in the United States and RBC Capital Markets and Morgan Stanley in Canada...

Jon Stewart's Post-Election Show Wrap Up

Bill Moyers and Tom Engelhardt On America's 'Supersized Politics' and the Age of Spectacle

The Grandeur That Was Rome

"In the past thirty years it seems that Anglo-American culture has grown increasingly narcissistic. I do not know if there are more narcissistic individuals in society now, and perhaps there are not.

But I do think that narcissism is much more widely tolerated, rewarded, and even admired now than it would have been in the period of 1930 to 1950 for example. And that is what makes all the difference. More people feel free to indulge their selfish and egotistical tendencies, and to cultivate them, in order to be fashionable and competitive.

As an aside, I think this also tends to explain the decline of literature and poetry in American culture, and the rise of reality shows and the preoccupation with extravagance. Literature calls us out of ourselves, ex stasis, in order to fill us with knowledge and the creative impulse, while spectacle merely panders, and flows in to fill the empty and undeveloped voids in our being."

Jesse, Empire of the Exceptional:  The Age of Narcissism

Tom Engelhardt is the founder of TomDispatch.com and author of The End of Victory Culture and co-author, with Nick Turse, of Terminator Planet: The First History of Drone Warfare.



The impulse to evil is not the domain of any particular people or time, but a recurrent problem that must be confronted by each generation, and each individual person, in their own way and calling.

There is always the temptation to look upon injustice as insurmountable, and to simply turn away and to wash our hands with the thought that there is no use of trying, and even worse, in a descent into the apathy of relativism and uninvolvement saying, 'what is truth?'

That is the fate of those who who have ceased trying to be human, who have given themselves over to self-absorption, addictions, or despair, who are dying inside, and who when the time comes will make beasts of themselves, to escape the painful fragility of their own insubstantial being.

If there was any good news in the recent elections it is that so many well funded corporate efforts to promote particular candidates and their own agendas failed, despite the expenditure of hundreds of millions of dollars in slickly deceptive advertising campaigns.

This was a small victory for the American people, as the sputtering Karl Rove and the more cynical among the corporate interests went down to a general defeat, even as they were unable to accept or even comprehend that not everyone will play the fool for money, all the time.

But the more general problem of the corruption of the political parties by big money remains, and reform is the ingredient without which there will be no progress, and no sustainable economic recovery.

Gold Daily and Silver Weekly Charts - Rally Day for the Precious Metals

"You can fool some of the people all of the time, and all of the people some of the time, but you can't fool all of the people all of the time."

Abraham Lincoln

The precious metals had an exceptional rally today,  given that it was in the face of another sharp decline in the equity markets.  This is constructive for the bullish case.

I have closed out the 'short stocks' portion of my stocks-bullion hedged trade today. There may be more downside ahead for equities, but it looks to be a bit overdone, at least in the short term.   I also took some of the bullion positions down as I had taken it to a maximum on that big decline shortly before the US Presidential election.  Now it is at a more comfortable 'running' level.  As always, this is with regard to my 'trading positions' as I do not touch or even look at my long term holdings.  

Gold has moved very nicely through the resistance around 1720 and 'stuck a close' for today over 1730. We *might* see a test of that resistance at 1720, which is now support below the current price. But if this is a handle in a cup-and-handle formation, then that does not matter, and it is playing out very well.  However a clear break above 1800 is key.

The central banks are printing money to rescue the Western banking system. There is an enormous macro event taking place in the global currency as the US dollar reserve currency agreement, in place since World War II, has been changing for at least the past ten or more years, first slowly but soon with increasing speed.

Very few people understand what is happening, even amongst economists. Those who stand against this sort of change will find themselves swimming against a rather powerful secular tide.  There is nothing cyclical about this financial crisis or the economic ills that have accompanied it in the conventional economic sense, unless one wishes to start looking at very long, generational cycles of human wickedness and folly.

SP 500 and NDX Futures Daily Charts - Another Down Day

Stocks continued to give it up on price as AAPL is a drag on big tech, and earnings overall appear a bit weak based on sluggish demand.

The problem is not 'uncertainty,' or 'the fiscal cliff.'

The problem with the economy is very weak aggregate demand by the large bulk of consumers who are seeing a very weak median wage, which is a structural problem that has been years in the making.

The problems in the western economies are intimately involved with the global currency war, and a rogue element in the Anglo-American financial system that has wounded the principles of market capitalism with the same old systemic frauds and a foul partnership with the political leadership.

I suspect this stock market downturn has run much of its course by historical standards of elections in which the incumbent wins re-election, but we will have to see if it can find its footing. There are some intense negotiations going on behind the scenes as the monied interests scramble to promote their policy positions.

Net Asset Value Premiums of Certain Precious Metal Trusts and Funds

Gold Daily and Silver Weekly Charts - Good To Be Back Again

“First you destroy those who create values. Then you destroy those who know what values are, and who also know that those who have already been destroyed were in fact the creators of values.

But real barbarism begins when no one can judge or know that what they are doing is barbaric."

Ryszard Kapuscinski

Sometimes one does not really appreciate what they have until it is gone.

It is good to be back again.

Gold has certainly had a volatile trade here in what appears to be the 'handle' of a cup and handle formation.

This is reflective not only of the volatility of a potential turning point ahead of a big move, but also the relative artificiality of the markets overall.

A storm has a gathered intensity within it that becomes unleashed in big events, as the northeast of the US has recently seen. The same can be said of the big changes that occur in the events of humankind.

The great events of life bring out the best and worst in people. I have seen this undeniably proven again and again, but especially in the last week.

People are the oddest mix of a strange transcendent nobility and self-denial, and a pure cussed meanness and ignorant aggressiveness, with a callous, almost brutish, disregard for others.

But even in the face of the most blindly self-destructive arrogance of a few, the goodness in life, its tender mercies, seems to appear again and again, and remains resilient. And this is what gives us hope, always.

"What keeps faith cheerful is the extreme persistence of gentleness and humor. Gentleness is everywhere in daily life, a sign that faith rules through ordinary things: through cooking and small talk, through storytelling, making love, fishing, tending animals and sweet corn and flowers, through sports, music, and books, raising kids—all the places where the gravy soaks in and grace shines through.

Even in a time of elephantine vanity and greed, one never has to look far to see the campfires of gentle people. Lacking any other purpose in life, it would be good enough to live for their sake."

Garrison Keillor

Let's see how the trade in precious metals progresses over the next few days, to see if the handle 'sets' and a cup and handle formation is confirmed with a breakout.

The area where the price swings settled today, around 1720, is a key resistance area. The breakout will be achieved if gold can break up and out through 1800.

SP 500 and NDX Futures Daily Charts - The Morning After

As you may recall, I said some time ago that if Obama was re-elected the equity markets would sell off.

That was almost a no brainer, if one looks at the historical market action after a win by an incumbent. But more importantly, the implications for tax selling this year with the reasonable expectations of higher taxes next year.

So what next? We may see a choppy, sideways market, as some things are uncertain, but again, the fundamentals of the markets are foul. The economic recovery is weak, because demand and the median wage are weak.

There will be no sustained recovery until there is genuine reform.

Daily Gold 'Cup and Handle' Chart Update

A "Cup and Handle" is a bullish continuation pattern in an uptrend.

The greatest factor working against this current gold chart as a cup and handle is that it appears during a consolidation pattern in a broader uptrend.

The 'cup' is best shaped as a "U" and the broader the bottom the better.

The 'handle' is a retracement when the right side of the 'cup' reaches its prior highs. The handle often resembles a bullish pennant.

The retracement usually does not exceed 30% of the advance of the cup to its second high, but can go as deep as 50% in a volatile market.

The cup and handle formation will not be activated until the price of gold rallies about the 'rim' of the cup which is at 1790.

If this correction exceeds 50% then we must consider that gold is in a broad trading range.

Gold Daily and Silver Weekly Charts

As I have limited access to the news of the day I will not comment on the specific market action.

The 'cup and handle' in gold still has the potential to activate.

I will hope that my access to communications will improve later this week.

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts

No comments. I have limited access to the news of the day.

The US is expecting a rather close Presidential election. It will be interesting to see how and when the markets may move in response to the final results, which may be delayed depending on the usual factors in a close race.

Gold Daily and Silver Weekly Charts - Charts Only

There will be no posts until later in the week.

Here are some updated charts only.

SP 500 and NDX Futures Daily Charts - Charts Only

There Will Be No Updates Until Monday - Update Fri Nov 2

There will be no updates until Monday, perhaps as late as Wednesday.

Thank you for your concern but I am fine, just out of pocket as they say.

Please do not email until I start posting again.

Bought some additional gold positions on Friday afternoon for my balanced hedge.

Otherwise just catching up on reading, and counting blessings.

"Lead, Kindly Light, amidst th'encircling gloom,
Lead Thou me on!
The night is dark, and I am far from home,
Lead Thou me on!
Keep Thou my feet; I do not ask to see
The distant scene; one step enough for me."

J. H. Newman

Have a pleasant weekend.

SP 500 and NDX Futures Daily Charts

The US equity markets were closed today but the electronic futures markets were open from yesterday at 6 PM until 9:15 AM today.

The volumes were very light as one would expect.

The US equity markets will be closed as well tomorrow.

The gold and silver futures were also open, which enabled a calcuation of a spot price off the front month. The volumes were so light I am not going to bother with chart updates until tomorrow.

Have a pleasant evening.