Comex Gold Rises To A Near Record 107.7 Claims Per Registered Ounce

Well, here we are again.

As you may have noticed from my postings of the Comex Warehouse Gold inventories, lately there has been a significant drop in the level of 'registered' or deliverable gold held there.  And since the open interest or number of contract held by punters and investors is not dropping commensurately, the number of claims per deliverable ounce has risen.  Quite a bit actually.

As a snarky observer pointed out, somewhat presumptuously I thought, there is quite a bit of other gold stored in these warehouses.   It is called 'eligible' gold meaning that it is in the proper format for Comex trading. 

But, I retort, that which is not marked registered is not available for delivery at these prices, unless the owners change their minds.  Or the Comex starts confiscating private gold in storage. And I sincerely doubt they  follow the MF Global method of customer metals inventory management.  Although no on has yet to  pay the price for that one. 

Then again, ownership is a flexible concept in The Grift, which is what the US financial system has become.   And the exchanges are its Bucket Shops.

This can very well resolve itself neatly as it did last time, especially if a friendly possessor of physical gold, let's say a bullion bank or an official non-profit seeking agency like the IMF or the odd money printing central bank decided to lease or deliver some of their physical holdings into the market without regard to price and profit.

Then again, the players might decide to just roll over their contracts and claim checks and just keep the game rolling, taking the rigging skim from related markets and the vig.  This is perfectly acceptable behavior for The Bucket Shop.  It seems to be the new thing for stocks and even bonds as well.   Its a derivative universe.

Or, God forbid, the price of gold could rise to increase the available supply.  But that is very retro economics, certainly not modern, and so yesterday.

Musical chairs with only a limited number of seats is not a problem, if the music never stops and no one tries to sit down.  It's all just a game in The Grift.  And if they ever go cashless and purely electronic, it will be a brave new world of modern money.  Whoops, another bailout, and there went half your savings!   You won't even have to play to pay. 

So let's see what tune the carnival plays on this go round.  And a pleasant time is guaranteed for few, just a few.

These charts are from Nick Laird at sharelynx.com.

A More Ominous Note May Be Heard in the Global Bond Rout

I was only tangentially aware that there was anything that could be called a 'global bond rout' since I do not follow the bond markets much these days.

But I found this theory below to be an interesting hypothesis, because the state of global growth, and the slide into a secular stagnation in the developed Western economies in particular, is of keen interest to me. If a major market like bonds is seeing the same thing then this would indeed be noteworthy.

It would eventually result in a stagflation, as persistent money printing and competitive devaluations with no resulting organic economic growth might eventually find some inflationary traction, even if it was a break in international monetary confidence, despite the ongoing stagnation in real growth caused by policy errors.

Whatever the cause of this global bond rout, or any other trouble approaching in the gathering storm, I am sure the public will be the last to find out.

"There is a growing concern that the extreme levels of wealth and income inequality here and abroad are creating a permanent, rather than temporary, rate of tepid economic growth worldwide.  This translates into a future where governments are forced to issue ever more debt to plow into fiscal spending to prevent their economies from lapsing into deflation and, potentially, a depression.

Markets trade on anticipation of where economic data will stand three to six months down the road. The big selloff in sovereign debt is telling us that global investors see major economies mired in the hangover of the 2008 crash indefinitely with deficit spending on infrastructure soon to replace Quantitative Easing (QE) as the new monetary tool to ward off deflation...

The global rout in sovereign debt markets is a collective epiphany that we’re six years and counting from the 2008 crash and we’re still on central bank life support."

Read the rest of this at Wall Street On Parade.

Stiglitz: Why Western Capitalism Has Been Failing Since 1980

As I had written some time ago in the The Fall of the American Republic: The Quiet Coup:

"I am not so optimistic that this reform is possible, because there has in fact been a soft coup d'etat in the US, which now exists in a state of crony corporatism that wields enormous influence over the media and within the government.

To be clear about this, the oligarchs are flush with victory, and feel that they are firmly in control, able to subvert and direct any popular movement to the support of their own ends and unslakable will to power.

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.

But my model says that the oligarchs will continue to press their advantages, being flushed with victory, until they provoke a strong reaction that frightens everyone, like a wake up call, and the tide then turns to genuine reform."

 

The article which I wrote was based on the insightful and largely ignored work by renowned economist Simon Johnson called The Quiet Coup.

 

This lecture by Stiglitz below is a little 'wonky' and uses some terminology which may be unfamiliar.

Nevertheless if you listen to it and just try to capture the main points of his discussion it will be worthwhile.

 

His basic premise is to ask why capitalism has shown a tendency to stagnation since 1980 in the United States and other parts of the West.

 

I am, as you know, an adherent to the belief that there has been a soft coup d'état in the US.  One can always quibble about the exact dates, but that is of less importance.   I have said it was shortly after Greenspan's 'irrational exuberance' speech, although the stage was certainly set for this during the 1980's with the rise of the efficient markets hypothesis, the assumption of rational wealth optimizers in the markets, and of course, the laughable supply side economics which are the old trickle down canard in drag.

 

The point, rather, is to understand what has happened, to continue to shine a light on it, and to hope that Simon Johnson is correct, that the overreach of the 'winners' will eventually provoke a reaction. 

 

Quite frankly I had thought it would have come by now.  One can rarely go wrong betting on the power of apathy and momentum, and the persistent greed of the sociopaths and their enablers.

 

After all, in the aftermath of a tragic derailment of the flagship train line in the US from Washington to Boston that could have been prevented by continuing investments in fundamental railroad infrastructure, the House of Republicans have voted to further slash Amtrak funding by $260 million. 

They are instructed to hate anything that benefits the public without putting an abundant stream of income into the pockets of their corporate money masters.  This explains their virulent animosity to Social Security, public transportation, public healthcare, public education, public infrastructure, consumer protections, environmental laws, safety regulations, product safety measures, and any sort of financial regulation that inhibits the greed and power of the Banks.

And we should be ashamed for continually standing quiet in the face of such pathological incivility.

 

But I can almost guarantee that if this crash had been the result of some sort of despicable act of terrorism for example, the public coffers would already be wide open, flowing with a Niagara of funds for homeland security and the militarization of domestic law enforcement.   Millions for the corporatized state, but little or nothing for the people.

 

I am increasingly concerned that, as has happened so many times in the past, the status quo will greet this eventual reaction for reform, justice, and equality with repression and even draconian measures to maintain what they perceive as their rightful place and power. 

 

Like apathy and momentum, it is also difficult to underestimate the self-delusion and overreach of sociopaths who would be as gods, even if they are gods of the damned.

History is replete with examples.

 

Gold Daily and Silver Weekly Charts - The Coiled Spring - To Say 'No'

Gold and silver spiked higher today on the rather poor economic news that showed little monetary inflation in broad exports and imports, and also showed a slumping retail sales number that could not be blamed on the weather or a port strike.

 

So the dollar slumped, because the reality is that the US is not exceptional, and is certainly in no recovery.   The Atlanta Fed's forward projection of US GDP for the 2Q is only marginally positive at 0.7 percent, after a likely negative number on a more realistic revision for 1Q.

 

There was intraday commentary on the lack of sustainable recovery and the harvest of corruption because of the lack of meaningful reform here.

 

As the dollar slumped, the bonds also continued to slump, which is starting to frighten quite a few traders, analysts, and economists who actually watch the markets in addition to their artificial models. Something has the financial class uneasy, and given the proportions of the latest in a series of asset bubbles created by the Fed, that is what is known as 'bad news.'

 

Gold and silver therefore found purchase as 'safe havens.'   They were allowed to run back up to the top of their recent trading ranges, which are still in force, most likely backed by the Western banks and their agents of fortune in the financial sector.

 

Let's see if the metals can finally break out, or if we will have to go around another wash and rinse cycle again.   It doesn't bother me all that much if we do, since this is just the sort of thing that sets up a move higher that will be of epic proportion when the metals pricing pool finally breaks down.

 

What should concern any thoughtful person is the inestimable damage being done to our society by these caustic and malicious policies of market rigging and wealth transfer that have been undermining the strength and the moral integrity of our nation for far too long.  

 

And even worse is the allure of violence and oppression from opportunists who are only interested in plunder, an endless cycle of greed, bubble and bust, that leads only to spiritual death and madness.

 

Now is the time and the place to say 'no.'  

 

Have a pleasant evening.

 

 

 

 

 

SP 500 and NDX Futures Daily Charts - History Repeats - Grapes of Wrath

Export-Import prices this morning came in weakly, showing little upward pressure on monetary inflation.  

 

Retail sales however came in badly and that gave the markets the shakes.

 

The Atlanta Fed's model of forward GDP is showing 2Q at about 0.7 percent.   Hardly the kind of number favoring a policy of tightening.

 

And so the dollar slumped and stocks initially soared along with gold and silver, because although the Fed would still like to throw a token rate increase our way, the fundamentals of the economy are starting to not only deny the recovery story, but are starting to signal a recession.

 

In addition to the consternation about where to invest, the leadership elite of the West needs to start considering why their policy of the last twenty years or so has been such an abysmal failure.

 

I think they know why, in the odd moments when they actually care about such things since the public good is such a low priority in their busy day.

 

They just do not wish to acknowledge it, because they are culpable, and not in a convenient position to do anything about it, because it would interfere with the flows of private plunder that are now some of the most significant economic trend in the economy.

 

I doubt anything will change unless we see a major economic dislocation that causes a large number of people in their desperation to march on Washington and demand the political class finally decide to do the right things for the people.  

 

The last time that happened was the Bonus Army, and the military burned them out, and chased them with horses, tanks, and machineguns.  

 

The final change came when the people, in a major revulsion against the status quo, voted in a genuine reformer who had actions and experience, more than just well spoken words.  He could not be bought because he was already wealthy, and yet understood the notion of suffering and compassion because of a long time personal disability.  

 

American history:  to most Americans it's a mystery.

 

Have a pleasant evening.

 

 

Why There Has Been No Recovery In One Simple Chart - A Harvest of Corruption

"The money was all appropriated for the top in the hopes that it would trickle down to the needy."

Will Rogers, Nov 26, 1932

“Trickle-down theory - the less than elegant metaphor that if one feeds the horse enough oats, some will pass through to the road for the sparrows.”

John Kenneth Galbraith

"It is no exaggeration to say that since the 1980s, much of the global financial sector has become criminalised, creating an industry culture that tolerates or even encourages systematic fraud."

Charles H. Ferguson

“It is difficult to get a man to understand something, when his salary depends on his not understanding it.”

Upton Sinclair

"In regards to the price of commodities, the rise of wages operates as simple interest does, the rise of profit operates like compound interest. Our merchants and masters complain much of the bad effects of high wages in raising the price and lessening the sale of goods.  They say nothing concerning the bad effects of high profits.  They are silent with regard to the pernicious effects of their own gains. They complain only of those of other people.”

Adam Smith, The Wealth of Nations

"What we have are asset PRICES being whipped up as median real wages deflate."

Anthony Sanders, Whip It! Real Median Wages Down 3.4% Since Q1 2010

"The problem of the last three decades is not the 'vicissitudes of the marketplace,' but rather deliberate actions by the government to redistribute income from the rest of us to the one percent.   This pattern of government action shows up in all areas of government policy."

Dean Baker

If the people have no money, they may buy no goods, even essentials, without falling ever more deeply into debt.

That is not so difficult to understand.  Unless your paycheck demands that you not only cannot understand it,  but not even see it, or talk publicly about it. 

And so we have this sad spectacle of Our Great Reformer desperately trying to ram two trade deals through the Congress, without a real examination and debate, in the waning days of his office. 

And we see the continuing attempts by the Congress itself to thwart and undo financial reform under cover of rhetoric and canards, so that they too might get paid by the moneyed interests.

The harlots of finance and economics will say, 'You laymen simply do not understand the mysteries of our science.  Wages always lag in a recovery.'

Seven years is some lag.   Unfortunately economics these days has less in common with a natural science than it has with marketing.   And at its worst, it has become a carney sideshow.

But we might feel better about all this uncertainty if the corruption and distortion that have become embedded in our laws and economic theories, that preceded this and led to a long term secular stagnation in median incomes, had been changed in any meaningful way since the financial crisis. 

And they have not.    But yet we marvel that our condition seems intractable, unsolvable.

This is the root of our problem.  It is old as Babylon, and evil as sin.  If we sow greed to the worst of our desires, we will reap a harvest of corruption.