Gold Daily and Silver Weekly Charts - Rally Up to the 50 DMA For Option Expiration Week

Gold got an early start last night and cracked through the 1300 barrier with some energy, and moved higher into the close today.

As a reminder, this week Thursday the 25th is an option expiration for the precious metals at the COMEX.

Today was obvious short covering and a reflection of the oversold condition and the commensurate tight physical supply situation after a protracted bought of price manipulation on paper.

So what next. I think it would be too much to expect the markets to turn instantly honest.  

Next week begins the important August delivery period, and we must keep a steady eye on supply.

The chart shows the first legitimate bottom formation that we have seen in some time, with a 'slanting W' formed and working, at least so far.  There was intraday commentary on this here.

The sahibs of India are continuing to try and dampen their people's enthusiasm for buying gold. I suspect that the people will give such maneuvers the small amount of attention that they deserve.

David Stockman says he expects a financial dislocation and a flight to gold.

So let's hope for the best, but brace for antics.

And as always, fulfill your oaths.

Stand and deliver.

SP 500 and NDX Futures Daily Charts - A Drift Higher on Fumes

Earnings are certainly nothing to cheer the markets. And they are not.

One has to wonder how much these jokers have left to keep pumping this up higher. It has come quite far already, and probably a bit too far for its own good.

Market technicals (commonly known as shenanigans) can conceivably take it higher in a short squeeze if the specs come in too hard and too early, but it does not appear that the fundamentals justify the prices here.

VIX has sunk to recent lows again.  It may remain here for some time, and even drift a little lower.  But as insurance it looks a little more attractive now.

Its all the Fed, all the time.

Developing Gold Bottom: A Closer Look At a Short Term Excess of Power

"The banks have essentially been told by the Federal Reserve they're allowed a certain number of sins. Just not as many as there used to be."

Brad Hintz, Wall Street Reshapes Commodities Market to Fend Off Regulation


"The severity of the Russian winter has been greatly exaggerated."

Napoleon Bonaparte

Here is a closer look at the gold bottom that everyone and their brother was rushing to call last week, so they could claim prescience. 

As a reminder this is an option expiration week for the precious metals on the COMEX, and next week begins the August delivery period.

I have also included an update to the weekly silver chart, for inquiring minds who wish to know.   Silver is following gold on this upsurge.  A confirmation of the rally by silver is important.  If silver confirms the breakout, it will most likely gather significant momentum as its volatility engages the short squeeze.  But the physical silver supply situation is not as compelling as gold has been, although the seeds were sown when the pricing started to curtail mining activity more significantly.

Banks who take funds and guarantees from the Fed at a subsidy have absolutely no business trading the markets for their own profit without significant restraints and transparency, if at all.   The reasons for the prohibitions of Glass-Steagall should be apparent, once again, to all but the most craven servants of big money and the excesses of power.

As I have said several times over the last several weeks, every time that the COMEX dealer inventory has fallen to record lows like this, it has marked an intermediate trend change that in retrospect proved to be significant.

The drawing down of physical inventory available for delivery is one of the surest signs of a price manipulation gone too far.

And for the first time in this waterfall decline since the German people had the temerity to ask for the return of their national gold from the NY Fed, we see a legitimate chart formation that could mark a significant bottom in price.

Note the 'slanting W' which is a term I coined some years ago for a certain type of bottom in a price decline.  The most important feature was the successful retest of support at 1280, and the subsequent breakout above the top of the W today.

We could see a retest of support or two, and there is the more difficult resistance to be encountered from 1340 to 1360, which also includes gold's 50 day moving average.  This is an area of prior support where a potential double bottom failed in the face of a relentless paper selling attack some time ago. I suspect that while it achieved it's purpose, it was 'a bridge too far.'

To put it more simply, taking gold below 1340 was a terrible strategic error, most likely done with nothing but short term greed in mind.   

It may even mark the beginning of the decline and fall of the famed mistress of Wall Street derivatives and commodities manipulation, one way or another.

Sometimes there is no greater justice than when the powerful get their own way. They tend to do foolish things like engaging in a protracted winter war without arranging for adequate supplies, assuming that by their actions the supplies will become available.

The measuring objective of this particular chart formation is about 1450 or so.  There will be additional macro formations to look at on the chart which we will discuss as they develop further.

There is little doubt that the market mischief makers may have another go or two at this down the road.  It will be interesting to see how far their arrogance takes them.   

Of paramount importance is the physical supply.  The damage done to the real market structure for gold by this paper exercise should not be underestimated.   There are great things occurring, in quiet and largely unmarked, in the global markets. 

Gold Daily and Silver Weekly Charts - Reuters Says Gold Demand Outpacing Supply

"The current dislocation indicates that holders of gold futures have begun demanding delivery. But because of the large amount of leverage in the market, participants are not able to deliver on their obligations."

Reuters, Gold Futures Hiccup Indicates Demand Outpacing Supply

This is not news to anyone who has been frequenting this café.  But it is nice to hear it from another source.

The market structure in gold and silver is truly fascinating, particularly if one is looking slightly cross market at the mining sector.

One would hope that the miners would not be driven back into hedges by short term cash requirements at this price level, as they may find it to be fairly uncomfortable in the intermediate term.

And I would not be likely to invest longer term in a miner that was hedging its future ahead of what looks to be the next leg of the bull market. 

That is almost as bad as having a money manager keeping you short into what looks like a very risky set up to the upside. Not my cup of tea.  I wonder if we will see a limit up day or two before this is over. I cannot remember the last time that occurred.

There was commentary on the levels of registered gold at the COMEX that you may find to be of interest.

The market structure indicates that someone is going to be left 'holding the bag' on the short side. But who can say with any certainty given the growing divergence between the paper pricing and the physical reality?  We are in a currency war after all.

The Gold Forwards were negative for the tenth straight day.   Listen to this, and understand what it means. 

In their article about the 'hiccup in gold futures indicates that demand is outstripping supply' for physical bullion Reuters goes on to say:

"A dislocation in the gold futures market indicating that demand for physical delivery of the metal is now far outweighing supply has intensified in recent weeks, increasing concern in the market that the change may not be a momentary blip and participants may have become over-leveraged."

I think this deserves some serious attention.   I would not care to be short the metal, and face any requirements to have to deliver on demand.  It could prove to be costly. 

But again, these markets are so twisted that I don't think it is too much to say that almost anything can happen.  A 'crash' in equities would put a dent in almost any asset sector demand.   But those tend to be less probable events that are amenable to some rudimentary insurance for those with shorter term horizons. 

Have a pleasant weekend.  See you Sunday evening.

SP 500 and NDX Futures Daily Charts - Divergence Continues While VIX Drops

"I listened carefully to yesterday's Bernanke speech. He seemed ill at ease and almost stumbling. I truly believe that Bernanke is confused and even frightened by the results of all his manipulations. But what he's most confused about is the poor results he's been getting from both the economy and the markets. Bernanke appears to me to be a man trapped and confused by his own unorthodox tactics."

Richard Russell July 18, 2013

Bernanke is bewildered by the power of the credibility trap, and the ensuing unresponsiveness and inattentiveness of the Federal government to the problems of the people and the real economy. At least that is my opinion, and I could be wrong.

The divergence between finance and the real economy continued. The SP 500 closed at another new high, even as tech floundered due to poor financial results in the leaders.

VIX has now dropped to levels in which it could once again be a productive hedge against a market decline.

Chris Hedges On the Real News

The Real News is featuring Chris Hedges to inaugurate a new series called Reality Asserts Itself.

Here is part two of a seven part series. Part one is an introduction to Hedges himself.

I don't always agree with Chris Hedges of course. If we did, one of us would probably be superfluous.

I find his ideas and observations to be thought provoking, even where I might not agree because I prefer different approaches or methods of achieving what could be similar objectives.

There is nothing wrong with that sort of divergence. Indeed, I find a diversity of thought and methods, within some fairly well established historical bounds of human decency, albeit too often violated for the sake of a false necessity or expediency, to be the most successful ways of achieving significant results in the real world.

But difference is anathema to the minds of the ideologues and true believers of whatever position on the political and social spectrum, left or right.    And this is why they almost always resort to involuntary conformity of thought, and become increasingly intolerant of the other.

COMEX Registered Gold Falls To Another New Low Ahead of Option Expiration and August Delivery

Registered gold on the COMEX falls to another new low for this bull market, to below 30 tonnes.

I enjoyed the perspective Harvey Organ put on it this evening.

"Tonight, the Comex registered or dealer inventory of gold lowers again and remaining below the 1 million oz mark to 950,441.152 oz or 29.56 tonnes.

This is dangerously low especially when we are coming up to the August delivery month.  Remember in June we had almost 31 tonnes of gold stand for delivery."

Perhaps I am missing something but one has to wonder what goes through someone's mind who is short into a market structure such as this, wherein the ability to deliver into demand appears to be increasingly impractical. Do they think that they are operating on insider information? Are they?

Or is this just another example of reckless disregard, fostered by large bonuses playing with other people's money?

If gold starts to run, the ensuing rush to the exits could be rather impressive.

Nick of Sharelynx.com does a rough calculation of the open interest/registered or dealer's gold. The number of owners per ounce is up to a bull market high of 46 claims for every ounce registered as deliverable.  There is a chart of this below.

Granted that this is not a realistic expectation, that everyone would stand for delivery, but it is an interesting metric that shows the relative balance between paper claims and physical reality.  No wonder the Gold Forwards have been negative for the past nine days. 

Let's see what happens. Confidence in the US commodities business has been racked by scandal after scandal, from price fixing to the theft of customer accounts. Little enough effort seems to have been made to reform it, to make it more transparent and efficient in price discovery.  The attitude seems to be that if you don't trust the markets, so what?

I am not saying that they will not be able to finesse their way through August.  There are plenty of ways to do it, higher prices being the text book example.  But one has to wonder how long they can keep this up, especially if the storms in the currency markets start blowing come November.

Stand and deliver.

Gold Daily and Silver Weekly Charts - The Gold Yuan Peg - Detroit Files For Bankruptcy

Intraday commentary on the reported desire of China to back the yuan with gold here.

I have not heard anything about this in the US media yet.  How remarkable.  Not.

After the bell the city of Detroit, Michigan filed for bankruptcy.  There are a few more cards like this ready to fall.  Main street is suffering while Wall Street and Pennsylvania Avenue are coming up roses.   And what's trickling down is not prosperity.

Europe and Asia should have no fear. Jack Lew, US Treasury Secretary, informs us on his way to the G20 finance ministers meeting in Moscow that he has the answers for them on how to fix their economies, as the US has already fixed theirs.   He is coming over on the Hubris Express.

Next week is an option expiration on the COMEX for gold and silver on the 25th.

The week after the August gold contracts start coming home to roost.

I see where 'the good bank,' that paragon of natural market rationality and efficiency, JPM Chase, is about to pay another massive settlement, this time for rigging the energy markets, in the manner of Enron according to Matt Taibbi.   I hear it implicates Blythe Masters who is recently risen to their office of regulatory compliance.

Where is that silver market manipulation study that has been five years in the making anyway? 

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - Marked Divergence - Welcome to Hooverville

Even Ben's second day of testimony could not shake the equity markets out of their dog days lull.

Philly Fed came in better than expected as did unemployment claims.

There was a marked divergence as the SP 500 finished higher while the tech heavy NDX dropped almost 30 points.

Things are looking so good that Jack Lew, the new US Treasury Secretary, during an interview on his way to the G20 finance ministers meeting in Moscow, shared his plans to tell the Europeans and Asians how to fix their economic problems by following the US example. China must reform, and Europe must stimulate growth.

GOOG and Microsoft both missed after the bell and the tech sector is slumping in sympathy.  

The City of Detroit filed for bankruptcy.  There are more cities and states that will not be far behind.

But Jack Lew is quite convinced the worst is over, and that the field is won.    Welcome to Hooverville.

China Reported Planning To Back the Yuan With Gold

This is an interesting article for several reasons, not the least of which is that it is from a Russian publication and perspective, reflecting on the possible actions of China in the evolution of the global reserve currency regime.

As you know Russia is promoting a rethinking of the post Bretton Woods monetary system through their chairmanship of the G20 this year.   There are other shoes to drop yet from that.

I suspect that China is playing chess here, or perhaps more appropriately the game of 'Go,' and not checkers. So snap judgements about what they are doing and why they are doing it are probably going to be fairly shallow.  Most professionals and so-called experts are blinded by the status quo, lost in their own jargon and assumptions.  There are many mechanics, but fewer systems thinkers. 

Every action that is public masks a myriad of moves and countermoves done off the board and in quiet.  Most who comment fail to grasp this because of cultural predilections.

Thoughts about capitalists selling rope do come to mind among other things relative to the short term and self-serving, stupidly greedy nature of the markets these days.  But to borrow a phrase, economic power grows out of the barrel of a gun.  It can call most hands.

Among other things the price discovery mechanism for gold currently resides with the Anglo-American financial establishment, which has been fairly shameless of late in shoving prices around the plate using paper leverage, and fixing key prices at will whether they reflect reality or not.   That will have to be addressed.  And I suspect it is well underway.

The terms of 'redeemability,' if any, are obviously of paramount importance in such a value reference to gold, as well as currency markets that are notorious for predatory practices, whether one wishes to acknowledge the rigging or not.

I am giving this more thought and will have other things to say about it in the future.  But these are undeniably interesting times.

China reportedly planning to back the yuan with gold
July 17, 2013 special to RBTH Asia Pacific

Recent media reports suggest that Beijing is considering backing the yuan with gold. This decision, if taken, will likely affect China's economy and may trigger a new wave of the global economic crisis. For Russia, however, such a scenario may have its benefits.

According to media reports of early July, the People's Bank of China is mulling the possibility of phasing out the dollar as the reference currency for the yuan exchange rate, and to start using gold as the reference point.

The reports have not been confirmed officially, but analysts are warning that the step, if taken, will weaken the yuan and destabilise China's already troubled economy, ultimately provoking a new bout of the economic crisis worldwide.

Beijing's possible move to back the yuan with gold would not be meant as a strategic measure to strengthen the national currency and increase its attractiveness as an investment medium. Rather, it would be a flaunt aimed at demonstrating to the world (and to the USA in particular) that China is capable of taking the risks associated with a departure from the dollar standard. Experts warn however that, apart from benefiting no-one, such a decision may actually have catastrophic consequences.

Separating the yuan exchange rate from the US dollar may further weaken the American currency in the long run; in addition, China's monetary policy would become very much restricted, believes Evgeny Nadorshin, chief economist at AFK Sistema.

"The yuan will start fluctuating severely against the dollar and other major reserve currencies. This will affect the Chinese economy, which currently has serious problems as it is: the export revenues are falling, and the statistics for freight traffic and electricity consumption indicate a significant slowdown in business activity," says Aleksandr Golovtsov, head of the research department at UralSib Asset Management.

Given the current economic recession in China, backing the yuan with gold may further worsen the situation. In essence, China is running the risk of launching a new wave of the global economic crisis, experts concur...

Read the rest of the article here.

Der Spiegel: Ex-President Jimmy Carter Condemns Surveillance State, Praises Snowden

This is a rough translation of an article that appears in Der Spiegel.

NSA affair: Ex-President Carter Condemns U.S. Snooping
By Gregor Peter Schmitz, from Atlanta
17.07.2013 – 13:59 Uhr

Ex-President Carter: "The invasion of privacy has gone too far"

The Obama administration has tried to placate Europe's anger over their spying programs. Not so ex-President Jimmy Carter: The Democrat Carter sharply criticized U.S. intelligence policy. The disclosure by the whistleblower Snowden was "useful."

Former U.S. President Jimmy Carter was in the wake of the NSA spying scandal criticized the American political system. "America has no functioning democracy," Carter said Tuesday at a meeting of the "Atlantic Bridge" in Atlanta.

Previously, the Democrat had been very critical of the practices of U.S. intelligence. "I think the invasion of privacy has gone too far," Carter told CNN. "And I think that is why the secrecy was excessive."

With regard to the NSA whistleblower Edward Snowden, Carter said his revelations were "likely to be useful because they have informed the public."

Carter has repeatedly warned that the moral authority of the United States has declined sharply due to excessive curtailment of civil rights. Last year he wrote in an article in the "New York Times" that new U.S. laws have allowed "never before seen breaches of our privacy by the government."

The entire article in German can be found here.

Here is the only article I was able to find in English that discusses the same interview I believe.  There were some others but they only talk about Carter's comments on the Zimmerman trial.

Gold Daily and Silver Weekly Charts

Benny made it perfectly clear in his Humphrey Hawkins testimony today that QE, in whatever forms and permutations, is here to stay at least for this year. And when the Fed expands its Balance Sheet, it is most certainly 'creating money,' although as I have said often enough 'printing' is a colloquial expression of the same sentiment.

Thank you very much for clarifying that for all the learned economists Ben.  Your occasional honesty in Congressional testimony is a nice change of pace for a disgraced profession.

• Q: Are You printing money?
• Bernanke: Not literally.

and

• Bernanke: If the Fed were to tighten policy, the economy "would tank."

Ben tended to point a finger at the inept and ideologically purblind Congress for the obstacles to growth.  And in addition to a hearty 'hear, hear,'  I would certainly include the Obama Administration.  The lack of genuine reform is appalling.  But what else can we expect from those stewards of bad governance caught up in a credibility trap which they helped to create.

Gold and silver were obviously hit with a bear raid in honor of Bernanke's testimony. What else would we expect from a thoroughly corrupted financial system? Intraday commentary on that here.

SP 500 and NDX Futures Daily Charts - Earnings With Revenue Misses

After the bell Intel and Amex and IBM all hit their earnings but missed on revenues.

Look for that to be a recurrent theme given the lax accounting standards and weak aggregate demand in the US economy.

I think we are in for some downside in stocks, but perhaps not yet.

NAV Premiums of Certain Precious Metal Trusts and Funds

Just another Humprhey-Hawkins day.

Interesting comments from Ben.

• Q: Are You printing money?
• Bernanke: Not literally.

and

• Bernanke: If the Fed were to tighten policy, the economy "would tank."

I particularly enjoyed that first comment, in the light of all the economic sophists who keep insisting that 'the Fed is not printing money.'

With regard to the second, it is QE as far as I can see. And the hedge funds are wriggling on the precious metals hook.

The Gold/Silver ratio is back to 65.

 

Gold Chart Intraday - The Bernanke Dipsy-Doodle and Germany's Gold

As you know Ben Bernanke is giving what is likely to be his last testimony to Congress today as the Chairman of the Fed.

So we see gold doing the old 'wax on, wax off.'

The wiseguys need bullion going into a key delivery month of August at the COMEX. Their registered for delivery inventories are at record lows for this leg of the bull market. Overall inventories are getting thin as well.

Every time this has happened, there has been a marked change in the direction of price, higher.

I found this transcript of Lars Schall's interview with William Kaye to be informative.

The decline in the price of gold coincided with the Bundesbank's request for repatriation as I have shown in the past. I would not be surprised if this gold market operation, which is facilitating the removal of large amounts of gold from the ETFs which I have also documented, is serving the purpose of replenishing the missing gold stocks.

Stand and Deliver: How Germany Disrupted the World Gold Market

It may also take the form of a 'stealth confiscation' which will allow the TBTF bullion banks to get long the metals, and ride them higher.

As some commentators have pointed out, there are big drains of physical metal in the gold ETFs, and comparatively little from the silver.  That is not a mark of 'silver strength,'  but more a sign that the physical gold is in very short supply, whereas silver has a more systemic and longer term supply problem.  This is what I think if one looks at the total picture.  Silver supply on the COMEX is not under immediate pressure.

It will be interesting to watch the hedge funds, who are quite short, try and wriggle out of this one.  They deploy their dependents in the media quite well, but that does not help them provide what they have already sold.  It will be bought back at higher prices.

The wiseguys and their water carriers in the media will try to blame China, which indeed is a recipient of much of this gold, because they are a willing buyer, seeking to trade paper for metal as part of their reserve's plan. But I think they are just a contrarian player in a market managed by the Anglo-American banking establishment. 

As I have noted many times before, there is a 'currency war' underway as the international monetary regime evolves and changes.  And it appears that the wealth of the German people in the form of gold may be serving as cannon fodder as it has been conscripted and deployed.

Change in the monetary system status quo is being resisted by the elite that it has enriched, as it always has been and does still.

So for today, time to shake the ETF tree. Tough times ahead so better sell that gold.

Tut tut, looks like rain.

COMEX Registered Gold Falls To New Record Low

COMEX Registered Gold fell to a new low even as prices rebounded off the recent bottom.

Total Gold remained steady at just over 7 million ounces.

Included are the key dates for the August Contracts for both gold and silver.

Gold Daily and Silver Weekly Charts

Gold is holding a key support level so far in its recent rebound off the lows.

The 50 Day Moving Average remains a formidable overhead obstacle.

Physical supply in the west remains tight with two weeks before the August delivery period.

SP 500 and NDX Futures Daily Charts

Gold Daily and Silver Weekly Charts - A Sharknado of Mass Distractions

One of the top stories on Bloomberg TV today was a made for TV science fiction movie called 'Sharknado' which caught some Twitter buzz over the weekend because it was so outrageously bad, what they used to call 'campy' in the manner of badly made movie icon Ed Wood.

It was about a tornado that had picked up sharks, and artfully went about dropping them on unsuspecting people, in full frenzied attack.

During one of the two interviews with the people who made this Syfy shlock show, the Bloomberg anchors got so over the top in their praise and speculation about a sequel and Broadway musical that Tara Reid, an actress not noted for her Solomon-like wisdom, dismissed the anchor's ebullient praise somewhat embarrassedly. She looked pretty wise compared to those frivolous knuckleheads.

Alix Steel did some commentary on the gold market later on that was a veritable Sharknado of misunderstanding about what is happening in the commodity world. Perhaps she can star with Ms. Reid in the sequel.

I was saddened to see the news today that Finance is about to overtake Tech as the most profitable sector in the US economy. This speaks volumes to the foul partnership between Wall Street and Washington that is consuming the real economy with fees and frauds.

The New York - Washington Metroplex reminds me of the Capitol District in the The Hunger Games: removed, intellectually inbred, and increasing irrelevant, like a modern day Versailles.

And may the odds be ever in your favor.