SP 500 and NDX Futures Daily Charts - Ship of Fools

Retail sales came in much worse than expected with Sales ex-auto dead flat.

The Empire manufacturing number came in 'better than expected.'

The equity market was in a float up mood in light volumes.

CPI out tomorrow. I doubt it will have much meaningful content.

Weekend Reading: And What Then of the Other?

And who in this story is 'the other?'

Are there more than one?   Who is not 'the other?'

And behold, a certain lawyer stood up and tested Him, saying, “Master, what shall I do to inherit eternal life?”

Jesus said to him, “What is written in the law? How do you understand it?”

And the lawyer answered Him saying, “‘Thou shalt love the Lord your God with all your heart, and with all your soul, and with all your strength, and with all your mind, and your neighbor as yourself.’”

And Jesus said to him, “You have answered rightly; do this and you shall live.”

But the lawyer, wanting to justify himself, said to Jesus, “And who is my neighbor?”

And Jesus answered him saying, “A certain man went down from Jerusalem to Jericho, and fell among thieves, who stripped him of his belongings, assaulted him and departed, leaving him half dead.

And by chance there came down a certain priest that way. And when he saw him, he passed by on the other side.

And likewise a Levite, when he was at the place, came and looked at him, and passed by on the other side.

But a certain Samaritan, as he journeyed, came to where he was. And when he saw him, he had compassion for him. He went to him and bound up his wounds, pouring oil and wine on them. And he set him on his own beast, and brought him to an inn and took care of him.

And on the next day when he departed, he took out two pieces of silver, and gave them to the host and said to him, ‘Take care of this man.  And if  you spend more, when I come back this way I will pay you.’

Which of these three do you think was a neighbor to him that fell victim to the thieves?”

And the lawyer said, “He that showed mercy to him.” Then Jesus said, “Go you, and do likewise.”

Bill Moyers: Weapons Of Mass Distraction and Bending Towards Justice

Gold Daily and Silver Weekly Charts

Intraday commentary on the German gold situation here.

There was some cross current discussion between Fed heads today, with regard to the future of quantitative easing and the state of the real economy.

It is good to note that the Banks have just slashed their estimates for US GDP for this quarter. The recovery is illusory, unless you restrict yourself to the gated communities and lofty towers of the pampered elite and ignore the state of the great bulk of your people.

Something must be done, of course, but the credibility trap is an obstacle to genuine progress. So until then, it is extend and pretend.

I see that Larry Summers is making a strong push to be the new Chairman of the Federal Reserve. It is hard to tell what is true and what has been planted by the financiers in the news, but Obama is said to view this favorably.

Proverbs 26:11 comes to mind.    'As a dog returns to its vomit, so a fool repeats his folly.'

Have a pleasant weekend.

SP 500 and NDX Futures Daily Charts - Another Record Close on the SP 500

Despite the faux exuberance from Wells Fargo and JPM earnings reports, the market action seemed 'heavy' even with the light volumes.

I thought it was notable that JPM made most of its profit from investment banking and 'trading.'

The market looks tired after a remarkably parabolic run.

NAV Premiums of Certain Precious Metal Trusts and Funds - A Rose By Any Other Name

"People always overdo the matter when they attempt deception."

Charles Dudley Warner

Just watching, and waiting.

Speaking of overdoing the matter, a reader informs me that the Fed has changed some names in their Monetary Base Report H3.

Excess Reserves are now called Balances maintained that exceed the top of the penalty-free band

Now, is that just a new bureaucratic euphemism, or is the Fed tipping its intention to start penalizing certain reserve categories held by the Banks with negative interest rates? And if penalties on reserves are enacted, what if anything does that imply for interest paid on savings deposit accounts and other savings vehicles?

Is that a calculator in Ben's pocket, or is he just glad to see us?

More On the German Gold Situation: Some Light from Deutschland and Canada

Journalist Lars Schall was kind enough to forward this excerpt from one of his articles that is printed below.

I think it 'frames up' the situation with regard to the repatriation of Germany's gold from the US very nicely.

How sovereign is Germany relative to the US? Indeed how sovereign are a number of the western nations vis-à-vis the Anglo-American establishment? The recent search for the elusive Snowden cast some light on the issue of sovereignty.

And as a corollary, how complacent and compliant are the western people to the Banks?  Have the Banks quietly assumed the role of government, without proper accountability to the people?

And secondly, what exactly is the problem with the gold? Is it there or gone? And if it is there, is it already spoken for, in the manner of modern banking rehypothecation? And if so, why?

Jeff Nielson casts some light on that subject of central bank leasing in his recent article here. It is finely reasoned. Short selling is legal, but like many legal things it can become illegal if it is done with an intent to manipulate prices, even with the blessing of entities who, through their association with a sovereign, hold themselves to be above the law and public accountability.

This is the excerpt of Herr Schall's interview. You may make up your own mind as events unfold, but it does seem to parse the subject quite nicely.

Lars Schall: In January this year, the Deutsche Bundesbank announced that it wants to repatriate some of its gold holdings at the NY Fed and all of its gold from the Banque de France. Do you consider it a bit strange that apparently it will take seven years to bring roughly 300 tons of gold from New York City to Frankfurt and five years to bring roughly 370 tons from Paris to Frankfurt? Moreover, the Bundesbank will leave a huge amount of its gold in New York City and London to have in the event of a currency crisis ”the ability to exchange gold for foreign currency […] within a short space of time.” Does this argument convince you?

Norbert Haering: The specifics of the plan for partial repatriation of gold seem to be designed to quash the public discussion about gold storage abroad. For many years to come, the Bundesbank will be able to answer these calls by saying: we are already working on it. And that will work well as a communication strategy. But the truth of the matter is that there is no good reason to store your national gold treasure abroad. The issue and the way in which the Bundesbank got itself tangled up in conflicting statements and justifications during these discussions makes one suspicious that either there is a problem with the gold or that Germany might not be as sovereign a state as we like to think. I do not know which one is true.

Lars Schall, Money Lies Disguise Banking Truths: An Interview with Norbert Haering

I find the refusal of the Federal Reserve to release the national gold of Germany for repatriation for seven years to be one of the most remarkable of recent developments in the world of money. And it is all the more remarkable in that so few are willing to even ask the most fundamental of questions regarding the custodial integrity of the bankers.

It is truly the dog that did not bark.

Stand and deliver. Either the bullion, or the truth.

Note:  You may click on the label 'German Gold' just below to see the other articles I have written about this subject.  In retrospect it seems rather obvious that this smash in gold price is tied to the request for the repatriation of Germany's gold, and the panic that ensued.  Just how depleted or compromised is the custodial bullion held in NY and London?

Gold Daily and Silver Weekly Charts - Curiouser and Curiouser

As you know I reported last night that there was a huge weekly drain of gold from the Brinks vaults.

This follows on a similar drain from JP Morgan's COMEX registered vaults.

There is no increase reported in any of the other COMEX vaults.

The metal bears have three weeks before the first delivery notice day in the August Gold contract.

I believe gold lease rates were negative for a fourth day, which is quite unusual.

As a point of interest, I have included a snapshot of the Café visitors map this afternoon. I think you can see this for yourself in real time by clicking on the map to the left. The clientele changes with the passing of day into night.

This is pretty much all the information that I can see as well, just some simple headcounts with basic locations. There is no need for any more, and it is certainly not worth the trouble or expense of gathering it. The numbers are not large in comparison to many internet sites, but I like to think of the regulars as being rather special, each in their own way.

The participation from around the world is remarkable, and heartening. Asia and the western Pacific will be coming along in a few hours.

The Café is always open, and we keep a light on for you.

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - A Record High Close on the SP 500

Stocks were on a tear since late yesterday afternoon when Fed Chairman Bernanke said that the Fed will have to remain accommodative for the foreseeable future.

I believe that the SP 500 turned in a new closing high today.

Techs are appearing a bit stretched.  I would not get in front of this, since after all, its only money.

NAV Premiums of Certain Precious Metal Trusts and Funds

CME Reports That Brinks Has a Seventy Percent Decline in Registered Gold Bullion Supply

Nick Laird of Sharelynx.com informs me that Brinks is 'now being depleted' of private gold holdings.

I am following up to make sure that there has not been an error in reporting.  The CME reports these figures one day in arrears, on a weekly basis, so the chart below is dated July 9. 

I have extended the calendar axis a bit to show the nearly vertical drop in inventory of registered bullion. 

In referring to the registered supply at Brinks, Nick notes that:

"Brinks is now being depleted.   They have gone from 447,199 on July 3rd to 134,525 on July 9th which is a drop of 312,674 oz."

If this is correct, then this is a decline of 70 percent in the gold held in private accounts at Brinks in just one week.

If this is data is correct, it would not be too much of a stretch to say that this has the appearance of 'a run on the bank.'   Again, I will wait to see if the CME issues a correction for this.  It seems almost incredible.

Where is the gold going?  It was not transferred from the registered to eligible category, and does not seem to have been transferred to any other COMEX vault.  I suspect it is flowing East.  And perhaps it is being taken to replace gold that has been rehypothecated from custodial vaults somewhere.

Someone seems to know something.   Rather odd things are happening.

One looks at this and wonders, what next?  

Registered Gold On the COMEX Breaks the Million Ounce Level

Relative to the amount of contracts open the amount of gold held for delivery at these prices is somewhat 'thin' to say the least.  And relative to the global physical markets the amounts held at COMEX are almost too small to really matter.  And yet this is where prices are set.  At times it appears like a game of 'liars poker.'  How apropos.

If there is any good news for the gold bears it is that the first delivery notice for the next active August contract is three weeks away. The open interest for August is now a little more than 197,000 contracts, representing a potential 19,700,000 ounces of gold that could be called.

That a large number of contract longs would stand for delivery is highly unlikely to say the least, since COMEX is large a paper or virtual market place. But at a 20:1 leverage based on current deliverables, the possibility of a demand for delivery in excess of available supply is certainly a possibility.

That would represent an interesting situation. I don't know what would happen, and won't hazard any guesses.   I would imagine that a declaration of force majeure  and a forced cash settlement is most probable, along with hikes to 100% margins, except for privileged insiders.

Specs who get caught short may find the Big Banks, who are now largely covered,  to be rather unforgiving in their demands for any settlement.  I wonder which side the Exchange would favor. 

I am still chuckling to myself about the smirking pundit this morning who suggested that naked shorting of gold contracts on the COMEX would be a nice approach for the speculator to try and ride gold lower.  This was before gold rocketed higher later in the day.  

He who sells what isn't his'n
Must buy it back, or go to prison.

Daniel Drew

Although if you are particularly well connected politically, charges are entirely out of the question. It's nice to know the king.

The way eligible gold is fleeing the COMEX vaults, it also seems that some private holders of bullion may also be concerned about a 'bail in.'

Gold Daily and Silver Weekly Charts - Fed Minutes, Bernanke Speaking, Taper Schmaper

Bernanke will be speaking shortly in Boston. That may help to prod these thin markets.

The Fed minutes moved everything quite strongly, by introducing roughly nothing new.

Gold and silver popped for a while today, but then were beaten back into the close. I thought it was cute that during the day a trading pundit was describing what a great play it would be to short gold on the Comex futures market, shortly before gold went on a tear from the Fed minutes.

Futures on the Comex are gambling, not investing. And that goes double for options.

The market structure, including the price of borrowing, is rather bullishly set. If we get a real breakout they may be carrying some of the small specs out on stretchers. But that is a big 'if.' Taking out the 50 DMA would be a nice change of pace.

Have a pleasant evening.

 

SP 500 and NDX Futures Daily Charts - Techs Are On a Roll, Financials Not So Much

The 'big tickle' in the markets today were the Fed minutes, which basically said nothing new, but made the markets pop, drop and pop again before setting into roughly unchanged on the day, except for the big tech juggernaut which is on a tear.

In Case You Were Wondering What Just Moved the Markets...

The Fed released their minutes from their June 19 meeting.

The headlines that flashed indicated that while some on the FOMC feel that taper can begin soon, the consensus seems to be that greater labor gains will have to be seen first before there is any tapering.

Note that 'taper' does not mean 'end.'

Some saw fiscal policy as restraining economic growth. While I imagine they mean the sequester, I would add that the maintaining of a broken and highly corrupt financial system as a tax on the real economy propagates stagnation.

I am still reading them. I did take time out to buy additional volatility off that spike as a hedge to the new silver in my portfolio.

Bernanke speaks in a bit, and market attention will likely fade from the minutes, which really said nothing new, and turn towards that latest shiny thing.

How can even casual comments by the Fed move the markets with such force? Because the Fed has become the market, so great is the confluence of policy errors and crony capitalism in the banking system and the government.

Costs To Borrow Physical Gold Rise Sharply Across All Timeframes

Squeez-alicious.

I thought this quote from a recent report by Ned Naylor-Leyland was quite to the point.

"...I find it extraordinary that investors do not notice that the Gold price is presently defined by a market which operates using around a 90:1 leverage ratio. This cannot, and will not, end well for holders of synthetic Gold, or the banking system overall.

Indeed, the recent raids on the spot price have just brought forward the day of reckoning for the present price discovery mechanism by stimulating yet further drawdowns on physical inventories."

Ned Naylor-Leyland, Cheviot Management

How can this be true? Is the market not efficient?

How do the journalists remain so indifferent? How can the vigilant economists miss something so obvious? And where are the regulators in all this? Tut tut, looks like rain.

So many questions, and so few answers. lol

As I write this, the talking heads on financial TV are touting the COMEX as a great place to go and short gold in the futures market in anticipation for further declines to $1,000. Get some. Get some.

Dave from Denver informs us in an email that in his recent search back to 1999 "there were only 4 instances when GOFO went negative: Sept 1999, March 2001, Nov 2008 and now. In all previous cases, the negative rates lasted two days AND coincided with market bottoms forming."

Thanks very much to Mr. T Ferguson for making this report from Cheviot available.  His site is a trove of information.

Chart from Sharelynx.com, the place for precious metals charts.  Also found as goldchartsrus.com

COMEX Gold Inventories - A Towering Citadel of Paper

Lower and lower, to new record lows.

Weighed, and found wanting.

Who is running this sideshow?

And where will it end?

Let's take a closer look at today's gold market action on the COMEX...

Gold Market Structure - Little Red Riding Hood

We have not seen a market structure like this since the beginning of 2009.  It appears to be tilted towards a significant trend change.

Although we have to remember that this structure is on the COMEX, which is becoming a market involved largely in the movement of paper, rather than a mechanism for the efficient discovery of price and the allocation of capital to resources.

These charts are all from Sharelynx.com, the precious metals information place.

Hey there Little Red Riding Hood....

Gold Daily and Silver Weekly Charts - The Dog That Didn't Bark

Gold and silver were rallying in the evening last night, but met some resistance today.

They are being pushed lower as usual in the off hours.

There was intraday commentary here that references some secondary information that seems to support the theory that it is the demand for German gold, rebuffed by the Fed, that is at the heart of this current market operation to loosen bullion from the ETFs.  The gold has been leased to the banks and been sold, and the physical market is so highly leveraged that it cannot be retrieved except through extraordinary market antics.

It certainly is the oddest thing that I have seen in some time, and the lack of serious coverage of this is remarkable in itself.  How can a custodian tell a sovereign people that they may not have their own property back for seven years, too bad, and that's that?   

Is this some new standard for custodial management that has been aped from the likes of MF Global, to be followed now even by the central banks whose most vital asset is an unshakable confidence in their integrity?

Have the expectations of the financial sector been dragged down to the general conduct of conmen and gangsters, so that one expects them to use other people's property as their own, and then brazenly defy the rightful owners to attempt to get it back? And this is not extraordinary or notable?

This whole affair seems so straightforwardly odd that one must return to the same conclusion, over and over, that something has gone terribly, terribly wrong with the financial system.

And no one seems to raise any fuss about it, or even seriously question it?  Indeed, it almost seems to be cloaked in an unusual silence, like the dog that didn't bark.

Stand and deliver.  Either the bullion, or the truth.

SP 500 and NDX Futures Daily Charts - Drift Higher On Continuing Light Volume

It was a day thin on real economic news.

Drift higher on light volume seems to be the order of the day as we wend our way through another earnings season.

Benny speaks tomorrow, Fed minutes as well. That may move the market.

William Kaye: The German Gold Is Gone

Inspector Gregory: "Is there any other point to which you would wish to draw my attention?"
Sherlock Holmes: "To the curious incident of the dog in the night-time."
Inspector Gregory: "The dog did nothing in the night-time."
Sherlock Holmes: "That was the curious incident."

Arthur Conan Doyle, Silver Blaze

There is some speculation in this interview excerpted below, but I think it raises important issues that need to be addressed more fully and frankly to eliminate the need for speculation.

The leasing of gold, and the disposition of it by the central banks, including of course the Fed and the Treasury, is remarkably opaque considering that they do not own this gold, but merely hold it in custody for other parties, primarily the people of the nation that claims ownership.

As you know I have wondered if it was the realization that the German gold was not readily obtainable that triggered the heavy handed market operation, a stealth confiscation if you will, to free up gold from the ETFs, from the beginning of the year, when the Bundesbank presented a formal request for repatriation on behalf of, and furthermore at the insistence of, the German people.

The Fed has been resolutely and somewhat obtusely silent on this subject, even in the face of such absurd statements that the German people may have their gold back, but must wait seven years for it.  And this is a relatively nominal amount of gold given the flows in the world markets!

Also as you may recall, there were reports earlier this year of large quantities of gold leaving New York en route to refiners in South Africa for reprocessing.  They were large enough to show up in official reports.  They were attributed to slack capacity in that country because of the gold mine strikes.  And the amounts seemed to be far in excess of the normal 'scrap market.'

One might wonder if this was to change the nature of the gold from New York and London, to remove any existing hallmarks of ownership, and to convert it to the 400 oz. sizing and quality demanded by the Asian market.

This may or may not be the case. But the intransigence of the Fed, the Treasury and the Bank of England to submit to meaningful audits by independent parties in the face of such repeated claims of crony dealings with the bullion banks is almost incredible to otherwise understand.  A seven years delay to return property held in trust? 

I do not feel the need to impute a motive such as Mr. Kaye does that the leasing is intended to cap the price of gold, although it is certainly possible.  Current bank practices are sufficient.   I think making a cheap source of rehypothecated collateral available for the favored TBTF banks is fully in line with current central banking practices, even to the extent of reusing the same asset multiple times so that ownership often becomes a somewhat vaguely philosophical concept. 

When does a custodian deny legitimate and official requests from other governments and domestic bodies for an audit of assets held in custody?   Is the government imitating Bernie Madoff or Jon Corzine now in refusing to disclose the details of its transactions and potential rehypothcation of customer assets?  The lack of inquiry on behalf of the media is bewildering.

Kaye raises some serious questions in this article below which I would suggest you read in its entirety.   And they are easily addressed, if they can be done so openly and honestly. 

An answer is owed to the people of Germany at the least.  And it is a shame to their politicians that they will not ask it, and even demand it, on their behalf.  As Sophie Scholl once said, a people deserve the government which they are willing to tolerate.

"...once JP Morgan and Goldman Sachs get the gold they sell it into the market. So these bullion banks then become net-short gold. And the Fed says, ‘Well, we still have a contract where in theory we can claim the gold. So we’re going to report that we still own it in the official documents.’

But in reality the gold has been sold into the market. That gold winds up in places like Beijing. But before it gets to Beijing it frequently goes through Hong Kong. And when it goes to Hong, it goes to our refiner, the same people we use...'"

Read the entire interview with William Kaye at KWN here.

Gold Daily and Silver Weekly Charts - Fasten Your Seat Belts

Bernanke speaks on Wednesday, and the banks report earnings on Friday.

Let's see how this progresses. The inventory levels on the Comex are quite interesting.

I am holding both gold and silver from last week.  I did pick up a bit of volatility today.

Mr. TFerguson has some interesting comments to make tonight on the Bank Participation Report and the 'big short' held by the Banks.

Expert market structure analyst Ted Butler also notes that the banks have covered their big gold short from November last, and gone net long. He adds:

"Making the gold report even better was that speculators in the managed money and other reportable trader category did all the selling, both long liquidation and new short selling (as opposed to the non-reportable traders). The tech funds’ gross short position grew to a new record, as did the total speculative gross short position. This should provide more than ample fuel when we turn up and violate the moving averages to the upside."

The current structure of the precious metals market is interesting.   What is considered to be the smart money is flush, and the momentum money is caught hanging out rather short.  It does remind one of The Reeve's Tale.   Or as George Takei would say, 'Oh my!'    

As you know I also have been watching gold's 50 DMA for some confirmation that a bottom to this selling is in.  I do not wish to presume, but it does seem rather likely, if not now then soon.  After all, this is a currency war, with betrayal and deception as the order of the day.  And that is from your own side.

Stand and deliver.

I found a rather nice illustration of the credibility trap today in a BBC panel discussion that includes Russell Brand. You may wish to take a look at the whole thing in addition to the short clip.

In times like these, only comedy can dare to speak the truth to power.

SP 500 and NDX Futures Daily Charts - Earnings Season Begins

Earnings season began tonight with Alcoa 'beating by a penny' after the bell.

Bernanke will speak on Wednesday.

The banks report on Friday.

The real economy languishes.

Credibility Trap: When Only Comedy Can Dare Speak the Truth

Here is a link to the entire show from which this clip has been excerpted.

The credibility trap is a means by which the perpetrators co-opt, and essentially attempt to hold to blackmail, the entire power structure of the status quo. Note too how the CEO defense and other gross generalizations of culpability and the law are such an instrumental part of the aftermath of this type of widespread corruption.

These financial con men do not rely on loyalty, trust, and the truth, because they have no part of it. Instead they use deception, threats and blackmail to achieve their ends, always, no matter in what patriotic or ideological wrappers they may seek to cloak their perfidious means.




As a bonus, here is a clip of Russell Brand completely unhinging the spokesmodels and poseurs on MSNBC. I found it to be almost embarrassingly hilarious. These consider themselves to be serious  journalists of the highest order, and look down upon those who struggle on in bringing truth to light without the high pay and reassuring cocoon of corporate sponsorship.

NAV Premiums of Certain Precious Metal Trusts and Funds

Premiums are negative to thin.

There is little optimism in the precious metals market as of yet.

Both Registered and Total Gold Fall To New Lows At the Comex

Prior lows have marked meaningful market trend changes.

Stand and deliver.

Weekend Viewing: Quo Vadis, Domine?

Memories of a Walk on the Appian Way, Some Years Ago




Epub: Quo Vadis: A Narrative of the Time of Nero by Henryk Sienkiewicz

Gold Daily and Silver Weekly Charts - Bear Raid as Expected for Non-Farm Payrolls Day

The expected bear raid showed up right on cue.

Scroll down for intraday commentary on the Non-Farm Payrolls Report and the precious metals action.

See you Sunday evening.