Gold Daily and Silver Weekly Charts - Killing Fields

Imagine a case in which markets offer very profitable opportunities to wealthy and well-connected participants. Let's call them insiders. And let's assume that the government does little in the way of effective regulation, except for the occasional small fry or relative outsider who is caught breaking the rules.

Imagine that the insiders either directly or indirectly control the rule based governance of the exchanges, which are often supposed to be self-regulating in those areas in which the government is not able to exert the rule of law.

What is there to limit the ability of those insiders to set prices where they wish for their own benefit? What are the real world consequences such as being required to actually deliver something which they have sold, or pay a serious and personal criminal penalty when they are caught rigging the game and breaking the rules?  

In such a system, one has to ask themselves, what is there to keep this market from just degenerating into a control fraud, a type of killing field, where those in the real economy who dare to venture in, either willingly or without recourse, are led into a blind alley and robbed, and sometimes economically strangled for the benefit of a few?

And what are the likely longer term consequences to the real world of people who work and produce things, of such a corrupt and inefficient arrangement?  Some might suggest the decimation of certain industries and economic sectors, eventual systemic shortages, significant inequality of power and wealth, and a straining of the social fabric in widespread cynicism and discontent.

Who could even imagine people allowing such a dreadful state of affairs to exist, especially in a land of the free?

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

Have a pleasant evening.

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SP 500 and NDX Futures Daily Charts - Jitterbugs

Geopolitical considerations overwhelmed those peachy US economic results this morning.

China is only projected to turn in about 7.4% growth this year, and of course Russia's actions in the Ukraine, particularly in the Crimea, has everyone all twitchy.

How dare they meddle with our meddling on their borders? We are the deciders about what is meddling around the world, in consultation with our client states.

Speaking of meddlers, the Fed will be meeting next week, and this will give us more time to contemplate the tapering of the Balance Sheet, which is the fundamental engine of our growth in paper assets and the wealth of the one percent, Fed be praised.

Let's see if the jitters pass, or if tomorrow gives us another chance to test that lower trend support.

Have a pleasant evening.

Ted Butler: Why Not Just Close the COMEX

This column tonight from Ted Butler at Butler Research set me back a bit. It would be like one of the most die hard economist Fed watchers, after forty years in the business, coming out and saying that the Fed has gone so far off the rails that we ought to just shut it down.

It is a subscription only site, and so I cannot do justice to his reasoning which was far more extensive and complete than what I excerpt here.

Rather than closing the COMEX, engaging in some substantial reform and bringing it back to its original purposes would be preferable. But in the current climate of financial corruption and regulatory weakness it is not practically achievable, at least not yet.

Here is just a snippet of what Ted had to say.

"Not to be delusional, I have little expectation that the COMEX will be closed; but I think the idea has merit and should be considered. In fact, the vast majority of market participants and society as a whole would benefit from a closing of the COMEX for the simple reason that all the commodities traded there have been manipulated in price. The simplest way of ending these manipulations is to shut down the mechanism of manipulation...

Since it can be demonstrated and proven thru CFTC data that prices are set on the COMEX with no input from the real world producers or consumers, society as a whole would benefit if the COMEX didn’t exist. This is a private club that has no legitimacy in dictating to the world what prices should be.

The COMEX has undermined and replaced the free market law of supply and demand with a phony price-setting mechanism never intended when Congress authorized regulated futures trading. The COMEX is not functioning as intended and it’s hard to see what might change that. As such, it should be shut down."

Gold Daily and Silver Weekly Charts - In Search of The Yellow King

"The very banality and innocence of the first act only allowed the blow to fall afterwards with more awful effect.”

Robert W. Chambers, The King In Yellow


"History is made up of the bad actions of extraordinary men and woman. All the most noted destroyers and deceivers of our species, all the founders of arbitrary governments and false religions, have been extraordinary people; and nine tenths of the calamities that have befallen the human race had no other origin than the union of high intelligence with low desires."

Thomas Babington Macaulay

Gold 'popped' today, and took out the overhead resistance, running up to 1370 before pulling back a bit.  Now that it stuck a close, the gold bulls will have to find some level of defensible support, so we can see where the necklines really are. 

Silver really has not caught a spark yet, and when we see that we will know that gold and silver are both starting to get the bears on the run.   Those who willfully ignore the unfolding currency war are probably undervaluing their risks.

So let's see what happens, and what the days ahead may reveal.  I think there is a sickness in the valuations of things, and the ways in which money is being distributed, and wealth is quietly stolen.  There are some ugly creatures running through the underbrush and the darkness, as men make beasts of themselves to avoid the pain of being human.

Time does not always make things clear, and the truth can be hidden for long periods of time.  But there are clues, and facts enough,  for those with enquiring minds, who do not avert their eyes from the facts, fearing their implications.    Things may have seemed difficult before, but the real revelations seem as though they are yet to come.

Have a pleasant evening.

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SP 500 and NDX Futures Daily Charts - Ship of Fools

Not much in the way of news, unless you want to count the crisis in the Ukraine.

It is easy to be puzzled by the news of the world. The US president met with his fellow from the Ukraine today, the new prime ministers. You would think that the US is upholding a democratically elected government against the proposed referendum in the Crimea, and not a government put into power by a violent coup d'état, the kind which if it had occurred in the US would have been met by significant force. This is not to say that the government in the Ukraine had been a good one. It is just that the means by which it was displaced make some of the things which we are hearing seem a bit-- hollow.

Oh well, things are so cloudy these days.  The mainstream media is throwing a lot of chum into troubled waters.

The rest of the economic news is a bit thin. Not much on the plate for the US this week, except perhaps a little towards the week's end. Next week we get to hear from the FOMC, and most likely from their new leader Janet Yellen. The hearings for confirmation of Stanley Fisher at Fed vice-chair approach.

The news from China seems troubled, with all sorts of bubble talk, and dire forecasts of a collapse. Bill Ackerman has finally persuaded someone in the government to investigate Herbalife.  Huzzah!

But corporate earnings are done for now, and the recovery slogs on, with Morgan Stanley declaring that semi-stagnation and misery are the new normal, so you may as well get used to it.  Things could be a lot worse.   Think about the next Presidential election and what choices might be offered.   That is a likely appetite suppressant.

I see where it can now be a crime to attend a peaceful protest in Victoria, Australia. 

At some point, I think the ruling class  for the English speaking peoples might need to get a bigger boat.

Have a pleasant evening.

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Gold Daily and Silver Weekly Charts - Coiling, Coiling, Coiling

Gold and silver are in the sideways chop that I suggested that they would find just underneath the big overhead resistance here.

I am not going to waste time giving out the particulars of the various measuring objectives if we break out now. We can wait to see if we do get a breakout and what character it might assume.

I have included a close up of the current formation on the gold chart, which is part of three inverse head and shoulders formations, with the largest being part of a double bottom. If the neckline is broken and then survives a retest it is considered 'working' and the minimum objective is the distance from the head to neck.

In this case the necks could start falling like dominoes, although they are not considered valid necklines until they 'work.'   We are in a tough slog now, but the battle royale will be fought around 1420.

The objective of the biggest, the double bottom, is $300 from $1490.  Interestingly enough, $1790 takes gold back to where it originally failed, at the top of the current chart's big 'cup.'

Silver on the weekly is also in a big double bottom formation that targets $30+ if it works, that is, it breaks the neckline and survives any retest.

There was the usual small volume in and out of the Comex but nothing of great importance. Comex is falling back into the scenery.

Have a pleasant evening.