Gold Daily and Silver Weekly Charts - Pop Go the Weasels - Thank You To Zerohedge et al.

Stocks dumped hard on post end of quarter selling, even though the economic news was not too hot and not too cold.

The metals came roaring off their oversold conditions with gold leading the push higher.

There was little activity in the Comex gold warehouse, and a few more traders stood for delivery.

I explained again the other day that not all those who stop a futures contract for delivery actually end up taking the physical gold. And further, if they do take it, that may not be reflected immediately in the warehouse report, because they take the title to the gold if you will, but may not move it or change its status right away. So we can see a lag, or even nothing.

But again, as I seemingly have to say again and again, the Comex setting gold prices is the tail wagging the dog. It is just that the tail is easier to see.

Gold is moving from West to East, and the glimpses we get of that trade confirms its size. And I think we understand why it is moving, because a great change is taking place in the world's thinking on international currencies.

It appears that the currency war may be heating up on a number of fronts:  Russia Prepares To Attack the Petrodollar. If someone is going to attack something, why would they preannounce it? Most likely in response to the threat of increased sanctions I would imagine. The US has expressed its displeasure that Russia is crafting a bilateral trade deal with Iran, and has threatened additional sanctions if they break the embargo on that country.

There are some increased international tensions certainly, and some of the most recent movement in gold, which is outpacing silver, *might* be due to a flight to safety or supply pressures in the markets where physical supply really makes a difference. 

This is playing out and we have to be patient in watching it, and try not to fill in the blanks too aggressively with what can be or might be. But as for what is, I think we have a decent idea of the longer term reasons why things are happening the way that they are.

I have included a special thanks to Zerohedge and the other bloggers in my stock market commentary today.  I started to thank ZH for publishing an interesting stock valuation chart from JPM, and then I started thinking about all the other sites I look at every day, and felt a need to just say 'thank you.'  They are included in my blogroll, and there are quite a few.  You can scroll down or simply click here for the stock market comments. 

It is easy for us to criticize each other, and find those areas where we might disagree, often on details and interpretations.   But I think we can all agree that without the internet, and the bloggers and columnists who work long hours for relatively little reward, the void created in the news by the mainstream media would be even more intimidating and daunting than it already is.

Have a pleasant weekend.  Spring is in the air.

SP 500 and NDX Futures Daily Charts - And Here Comes the Rinse

On Wednesday in the stock market commentary I said that "the wash cycle is almost done."

And indeed is was, as on little weak economic news today the stock market took a serious nosedive, led by the momentum stocks. Stocks peeled off much of the paint that was applied to the tape just recently for the end of quarter.

Live by the scam, die by the scam.

So what next? Overall the market is going to continue feeding on hot money and thin volumes. Also on Wednesday I said that the exchanges would be embarrassed if they stopped all the HFT hot potato trading, because the lack of participation in stocks would be all too apparent.

The market is a bit lofty and will remain vulnerable to exogenous shocks and news, which are difficult to predict. There are certainly plenty of tensions in and around eastern Europe and the Mideast. Today we saw a newsflash about US objections to a Iran-Russia deal that some saw as motivated by an attack on the petrodollar. I was watching this develop since February, and it looks more like the US is objecting to Russia ignoring the sanctions designed to bring Iran to the negotiating table over their nuclear program.

I include a valuation chart put out by JPM that likens this market valuation to some others including those that preceded that last two big market selloffs.   I picked this chart up at Zerohedge.  

While I may not always agree with their interpretation of some things, and certain some policy preferences,  I cannot help but thank them for all the hard work that they do in supplying the latest news, and acknowledge their often very valuable insights and context to the financial news and economic developments.  I use their site every day and I am glad for it.  I am glad and grateful for the work that all the bloggers provide, in addressing the yawning void in the financial news that is left by the mainstream media.   I try to give them any exposure and encouragement that I can.

Have a pleasant evening.

 

NAV Premiums of Certain Precious Metal Trusts and Funds

Gold is still outperforming silver by quite a bit with the ratio at 65 to 1.

I think that is either the sign of a developing bottom, with the high beta of silver not yet having kicked in with the return of positive sentiment, or possibly that this is more of a 'flight to safety' phenomenon.

A third possibility is that gold is starting to show the effects of a squeeze on physical supply. 

Sales of silver eagles are certainly robust. 

John Ralson Saul: Re-evaluating the Current Approach To Trade and Globalisation

Does globalization actually deliver what we thought it would?

There are a range of choices between free trade and protectionism.  Ideological commitments and purity may prevent a meaningful discussion of the situation.

Is there really a surplus of goods, or is trade organized around a plutocratic economic model that is providing a scarcity of wages for labour?

When local laws are leveled by the economic realities of globalization, can nations retain their own character and choice of government and guiding principles?

Can there be genuine 'free trade' in a world in which only the US is a major military and monetary superpower, owner the world's reserve currency, with Russia and China alone presenting some effective counterbalance, while many other nations, among them much of Europe and Japan, have become essentially incapable of exercising enough military power to defend themselves and preserve order in their own regions except for minor police actions?    Are the assumptions about the benefits of free trade founded on assumptions as unrealistic as those that drove domestic free market policies?

Is global free trade 'lifting all boats,' or merely spawning a proliferation of oligarchs because of its inherently lawless and borderless character?

Although the title of the video is in German, the presentation by JRS is in English.

Senator Bernie Sanders: The Supreme Court Campaign Funding Decision Undermines Democracy

Gold Daily and Silver Weekly Charts - Non-Farm Payrolls Tomorrow

There was intraday commentary about a 'collapse in the international monetary system' here.  There are also some words about worrying too much to the point of near hysteria.  Granted there are some things to watch closely and are cause for concern.  The theory that a major sovereign currency cannot fail because it defines itself and its own value is not consistent with some of the things that we have seen happen with our own eyes..  

It reminds me of the old story about a boxer who comes slowly to his corner between rounds.  His manager encouragingly says, 'Don't worry, kid, he hasn't laid a glove on you.'  And the boxer says, 'then you better have a talk with the referee, because someone is beating the hell out of me.'

Someone asked me if all of the ounces of gold that are claimed in the futures clearing process are actually 'delivered,' and the answer as I have given it before is 'no.'

A party may stop or stand for a futures contract warrant, that is gold in the deliverable category, but that does not mean that they actually have to take that physical gold. They have other methods of settling in kind. And they may also 'take' that gold, but leave it where it is, depending on their intentions for it.

So I would take the clearing report as indicative, rather than the final word which is told by the warehouse stocks, with a lag. And I do not know if that sort of thing is still going on, but I recall a scandal where certain brokers were selling silver and charging storage for bullion that never really existed at allexcept on paper.

But I am sure that sort of thing does not happen anymore, and certainly not on the Comex. Who can imagine that major Banks and prestigious firm rigging prices and selling things that are not on the up and up. That is the talk of malcontents and those who do not give the system the proper amount of blind trust.

But it is a bit moot as I have more recently said. Precious metals and their trading are on the move from West to East. And the Comex is sometimes of the character of theater, where players move objects and money around to provide the appearance of reality, rather than the reality itself. One bigger change is that now one can also say that about the LBMA in London perhaps, with its hot potato trading and paper leverage to physical supply.

Have a pleasant evening.