Gold Daily and Silver Weekly Charts - Dreaming of a White Christmas

Stocks continued lower, putting in their worst week since May 2012.

Oil cracked into the $50's. We paid 2.25 per gallon for regular gasoline yesterday. Supply has been healthy, but demand has been off. So this is a mixed bag. We need to keep an eye on retail sales and wages.

I have a suspicion that a lot of the stock selling is part of an end of year portfolio cleansing. We will know more if we see how it goes next week.

This is an FOMC week coming up, and I have included the economic calendar for the entire week below.

I posted an excerpt of an interview with Russian economist Mikhail Khazin last night, and included a notice from TF Metals about the CME adding 'trading collars' to the precious metals, with some fairly broad limits to protect against volatility.    If we start seeing $100 swings in gold and $3 in silver, I suspect it might be a slightly different ball game. 

 

I strongly suggest you read this as Mr. Khazin suggest a reason why this action by the CME might have been taken here.

There was late breaking news on Bloomberg that Austria is considering repatriating their gold.   It will be interesting if this move to secure gold supplies becomes a trend.

 

Next year might be rather eventful in the precious metals.  I am not sure how much action we will see for the rest of December.  The Comex warehouse action was very boring yesterday.  As Mr. Khazin said, Russia and China will not attempt to take on the gold cartel on their own turf in paper gold, given their access to leverage and hot money.  Rather, the play is to keep buying bullion on the world markets, and wait for the paper chase to run up hard into the reality of a lack of physical supply.

 

Or as I have often suggested, they will continue to drain off the physical supply, and at some point, will ask the pyramid of rehypothecated paper bullion dealers to 'stand and deliver.'

 

And I am dreaming of a real 'white Christmas.'

 

I am dreaming of a time when we pay people a fair and living wage, and do not stand idly by while they are oppressed by powerfully connected con men and thieves.  And we do not feel justified in treating God's children like animals because of the color of their skin, the cut of their clothes, or the way in which they pray to Him. 

 

I am dreaming of a day when reformers will love the truth for its own sake, and not for the power, money, and influence that they think they can gain from using it for their own selfish purposes.  Reform is a dangerous game, for we become tempted to think that we are better than we really are because we spend so much time looking at the other fellow's muddy feet.

 

I am dreaming of a Christmas in which we will stop maiming children, and torturing their parents, and destroying their homes, because we can.  I dream of a time when we see God rising up before our nation, in all His power, overwhelming our foolish 'exceptionalism' with His majesty.

 

And I am dreaming of a day when Christians will love Christ when He is all grown up, as much as they do when He is presented as an adorable infant.  And that we will see that embodiment of all that is truly human, and a call and challenge to love, when we are tempted to be harsh and judgemental, dismissive of the common people, and those who work so hard in the vineyards, and like proud Pharisees overlooking our own many shortcomings in self-righteousness.

 

I dream of the day when human lives are considered unequivocally more precious than any metals or money.

 

And most of all, I ask you to remember me in your prayers, as I will be remembering you.

 

Have a pleasant weekend.

 

 

 

 

 

 

SP 500 and NDX Futures Daily Charts - Selling Into the Close

The US equity markets were weak most of the day, and sold off into the close.

This *might* be end of year selling, taking profits and losses, dressing up the portfolio, and raising some cash for a run at the year end.

Oil continued breaking lower. It is a mix of supply and demand, more supply but at higher prices, and weakening demand. So, is this good for the economy? Well, yes, unless the demand spiral keeps going lower. I am not sure how much lower energy prices will help, given how broken the real economy has gotten.

The deal in Washington over the budget is clouding things a bit. The House passed a spending bill that was stuff with some goodies for the moneyed interests, including a section about shifting derivatives risks to the public that was written by Citigroup.

Liz Warren threw a Baby Ruth in the pool by publicly challenging this rotten deal, and taking on her own party leadership and the White House in the process. Those who said she ought not to run for office, and if she ran she could not get anything done, are completely off base. Whether she stops this bill or not, she has just made a big splash in Washington politics, and taken on the Wall Street Wing of the Democratic party, headed by the Clintons.

Next week we have an FOMC meeting. We may be getting close to a bottom in this selling *unless something happens.*  Look at the darker green lines of support on the charts below to see where stocks may attempt to find a footing.

Have a pleasant weekend.

NAV Premiums of Certain Precious Metal Trusts and Funds

Sprott Silver has gone to a negative premium (discount) to NAV which is something we have not seen in a while.

I suspect that word is getting around that they will be looking to do a secondary offering earlier than later next year.

What Is Happening With Gold: Russian Economist Mikhail Khazin - Of Volatility and Collars

There are some interesting observations contained in this excerpt of a recent interview with Russian economist Mikhail Khazin.   He is not speaking on behalf of the Russian government, so we must take his opinions as we may from a private individual observing things from a different corner of the world.

 Here is a bio of Mr. Khazin.

I found some particular interest in his views on the price of gold, and the approach of Russia and China in buying physical gold on the world markets, without attempting to break the leverage of the paper gold markets directly. 

This would of course lead to increasing volatility in the price of precious metals until a market break provides the opportunity for the paper and physical market to converge.  Mr. Khazin believe this will be triggered by the bursting of the next financial bubble. 

Whether this scenario should actually come about is a matter of some speculation.  I do not know what Russia and China will do, and how the West might respond. So we should look carefully at the accumulation of gold by Russia and China, and the general buying patterns of other central banks as well.

One might expect the speculative exchanges to take some steps to protect themselves from increasing volatility, such as establishing trading collars or limits, in the price of gold and silver.  Oh my.

This is just a brief portion of an interview covering a number of topics. You may read the entire interview here.

 

"It had been clear to many economists for a long time that the role of gold in the world will grow and, most likely, will return to its position as a single measure of value. In particular, we wrote about the current crisis back in 2004 in our book The Decline of the Dollar Empire and the End of the Pax Americana. There's a whole chapter devoted to the role of gold and its manipulation.

However, Russian economic leaders close to the IMF ignored this position at the time. This only began to change in the last couple of years. China has been serious about gold for almost the entire last decade and is now actively preparing for a potential transition to a 'gold standard,' at least in economic relations between the so-called 'currency zones' which, in our opinion, will emerge after the single world dollar system falls apart.

But Russia and China cannot stop these manipulations, because the price of paper gold is determined on the speculative dollar markets. They can’t provide 'leverage' that would be comparable to that of major U.S. banks that have access to an unlimited issuing resource. The only thing they can do is increase the gap between the price of 'paper' and 'physical' gold by constantly buying the latter on the world markets.

Of course, this increases the instability in the global gold market and creates potential losses for the main 'gold dealers' who work with the Federal Reserve on leasing programs, but the degree of imbalances has not reached a critical value yet. It seems to me that the sharp rise in gold prices will start after the burst of the next 'bubble' in the US stock market.

With regard to the potential price of gold, as I wrote back in the early 2000's, it is determined by a 'fork,' the lower limit of which is the gold price in 1980, when it had its local peak after the dollar was decoupled from gold (USA default) in August 1971, and the upper limit of which is the purchasing power of the dollar in the early twentieth century, when gold was actual money. Today this 'fork' (in current dollars) is seen somewhere at the level of $ 4,500 - $ 15,000 per Troy ounce."

Gold Daily and Silver Weekly Charts - When the Operation of the Machine Becomes So Odious

"This is the contempt in which they hold the majority of American people and the political process: the common people are easily led fools, and everyone else who is smart enough to know better has their price. And they would beggar every middle class voter in the US before they will voluntarily give up one dime of their ill-gotten gains."

Simon Johnson

Congress is crafting a bipartisan deal to allow retiree benefits to be cut. 

"A measure that would for the first time allow the benefits of current retirees to be severely cut is set to be attached to a massive spending bill, part of an effort to save some of the nation’s most distressed pension plans.

The rule would alter 40 years of federal law and could affect millions of workers, many of them part of a shrinking corps of middle-income employees in businesses such as trucking, construction and supermarkets."

As you may recall, Congress responded to business lobbying by allowing their pension plans to make outrageously optimistic assumptions about future returns, so the corporations could divert more of their money from pension contributions to short term profits.  

 

Now that corporate profits are at record levels, someone has to take up the slack and that must be the elderly.  Let's just rewrite the contracts after the fact, and take the money from them.  

In a conversation today some were tut-tutting this decision.  But after all, someone has to tighten their belts in hard times.  It certainly can't be the privileged class, so it may as well be the pensioners.

I hope people are so sanguine when the Banks come to seize their assets to make up their derivatives losses, which emboldened they will almost certainly do.  First they come for the pensions, and then they come for the savings deposits and IRAs.  It is a sign of the times.

Speaking of a sign of the times, the Manhattan based 2nd US District Court of Appeals knocked my socks off today, with a ruling that basically overturns 80 years of securities principles, and probably does more to erode the 14th amendment than Citizens United.

2nd US District Court of Appeals Issues the Equivalent of the Dred Scott Decision for US Securities Markets

Here is the money shot in the decision that overturned the insider trading convictions of the infamous ring involving SAC and what looked like an organized conspiracy to violate securities laws. 

"Although the government might like the law to be different, nothing in the law requires a symmetry of information in the nation's securities markets."

Barrington Parker, 2nd U.S. Circuit of Appeals Judge

And I will wager that if you have not seen this here and a few other places in the blogosphere, you would not even understand what the heck was going on.   The mainstream news stories made it seem like the conviction was overturned on insufficient evidence.

 

Well technically it was.  Especially if you maintain the perspective of a servile tool of the corporate media.   To paraphrase Mario Savio, would you ever imagine a manager in a firm making a statement that is in contradiction to his board of directors?

In its attempt to give a get out of jail card to some of the particularly well-connected, the appeals court has set a precedent that is noxious and repugnant to the Constitution, particularly the 14th amendment.  Its willingness to torture the law should make us wary of what other things that the crony capitalists have in mind with regard to overturning bank reform and confiscating assets.

If this stands, there is no excuse for any foreign investor to complain when they are robbed blind by the US markets.  At least those in the US can make the case that getting all their money away from the US banks is an onerous task.   The character of this government is being writ large for all to see.

Other than this, I just don't have the words. The stench coming out of New York and Washington is getting so bad I can't breathe, whether it is from being water-boarded, or slammed to the ground and choked to death for a cigarette, or being robbed blind by white collar criminals who have friends in high places.  Don't bother to do anything.  Sit back and relax.  They will come for you and yours too, sooner or later.

To paraphrase Martin Luther King, never forget, everything they do will be 'legal.'

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - Spinning Wheel

"What goes up must come down

spinning wheel got to go round

Talking about your troubles it's a crying sin

Ride a painted pony

Let the spinning wheel spin

You got no money, and you, you got no home

Spinning wheel, spinning all alone

Talking about your troubles and you, you never learn

Ride a painted pony

let the spinning wheel turn."

Blood Sweat and Tears, Spinning Wheel

The spectacular ramp in stocks failed badly, and they went out mostly unchanged after yesterday's big drop.

The song says it all.

Have a pleasant evening.