Gold Driving Higher: Spec Flambé

What do you get when you add the volatile sauce of a 'flight to safety' to the hot pan of a record net short in the large and small speculators?

A short squeeze, also known as speculator flambé.

They probably caught a lot of the other peoples' money crowd as well, momentum players and the managed mayhem merchants.

But don't blame the poor beleagured goldbugs for this one.  They are just glad for a break from the pounding they have been taking.

It requires some 'juice' to get the minions in the media and the pros on the exchanges to all dance to the same tune, and lure the specs in for 'Pee Wee's Big Adventure' with their Big Bad Short, not only on the metals, but the miners, the ETFs, yada yada.

Finger lickin' good.

A lot of cool money, and a lot of powerful connections.   The grifters giveth to themselves, and the grifters taketh away, from everyone else.

Official reports will no doubt cite an excess of animal spirits in the bearish outlook that took them to an excess, and the markets, in their glorious efficiency, were merely reverting to the mean.

That might be plausible except that it took a lot of energy to drive the futures prices as low as they had gone, starting with that $50 overnight mugging in the quiet early hours of the gold markes few weeks ago.   No one sees Mackie Messer, and no one knows.

Especially with China dragging gold in by the tonne.  About 302 of them in July according to the second chart below.  Nothing to see there, move along.

No one wants a pet rock, until you have to provide the one you sold but didn't have.

And lets not forget about silver.   That's in chart three.  Plenty of tinder for a short squeeze there.

Or a bonfire of the inanities.

Let's see how far it goes.  Is it just a flash in the pan, or the first act in something different.

Must be nearly time to tighten up those margin requirements.

Gold Daily and Silver Weekly Charts - Flight To Safety - One More Silver Dollar

Gold and silver got legs today in what was clearly a 'flight to safety' led by gold to the upside.

The US dollar sold off, in a bit of a twist from its usual role as a haven, and helped the price of the gold-dollar cross.

Pet rocks. Who would have thought it?

The metals have a distance to go yet, as is clear from the charts, before they clear the bearish shoals into more bullish waters.

There was no delivery action yesterday at The Bucket Shop® .  What a surprise.

And there was little enough activity in their 'stockpiles of bullion' as noted below in the reports.

There is still room for caution as the paper markets have not suddenly become transparent or honest, or tied closely to the physical supply and demand markets in the East.

And this bear market has taken its toll, along with the steady drumbeat of drivel from the usual sources.   It is sad that so many who had ever dared to see the obvious have been pushed into despair and silent obscurity and given up.

But some are bound to keep on riding.   And the road goes on forever.

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - September Song

"...The broken wall, the burning roof and tower,
And Agamemnon dead."

W. B. Yeats, Leda and the Swan

North and South Korea were exchanging live artillery rounds over their troubled border today.

And US equities were in a Daedalian swoon, falling through support lines on the charts as if they were merely insubstantial constructs.

Surprisingly to some, so far this is just a stiff rinse, certainly to be expected to clear the floor after this choppy back and forth action.  What else is there to do after the long run up for the past few years on the back of the policy errors and malinvestments of the Banking system and their Fed.

The next moves if they go lower still will be much more significant.  And we will have to wait for that.

This is where charts prove helpful.  You can clearly see the big, big support on the SP futures chart below at about 2030.  Even if we should gap lower tomorrow, it only really counts if we break that support and stick it on the weekly close, and fail to recover that support next week.

There is a similar position on the NDX futures chart, which is the key confirmation factor since the Nas has led the way up with a narrowing phalanx of big tech names that provided a fairway for the momentum players.  The key support there is at 4340, about another 30 points lower.

At some point I expect the Fed to jawbone the markets in some manner, with the designated stooge of the day saying something essentially meaningless, but perhaps sufficient to 'whistle up a wind' in the windiness of the markets which they have blown into being.

If we break down further still, it may be a long, long time until September, and the stormy season in which the denizens of market crashes past tend to dwell.  The deadliest pattern is a market break and then a rally back up that fails to make a new high.   And then when it falls, enter the abyss.

So I would be quite careful in chasing anything here, up or down.   Our markets are like the words of our politicians and economists:  it is hard to be too cynical or too skeptical about their substance and veracity.

But if we should see a more serious break in the markets, and trouble and fear in the economy, then what rough beast, its hour come round at last, may slouch towards the November elections next year to be born?

Have a pleasant evening.

Gold Daily and Silver Weekly Charts - Golden Slumbers

Gold and silver popped higher today from early on, and then continued their rally as the Fed minutes were leaked ahead of schedule, maybe to provide some relief to the stock market.  They revealed confusion and gloom about the real economy, and cast some doubt on their move to raise rates in September.

So yields on Treasuries slumped, as did oil, while gold and silver continued on their move up to overhead resistance.

This is a particularly important resistance level for gold which is in an active month, although you would not know it by look at the action, or lack thereof, at The Bucket Shop®.

You will not see any breakout coming at the retail level, or in the paper trade in New York and London where leverage of paper to bullion is already at historically high levels.  It will be too easily hidden and explained away.

But there will be a reckoning between willfulness, the will to power, and reality.

And if and when it does become obvious, it will almost certainly be too late to act.  

This is likely still to be a long and rough ride.  We are in a period of historic change, which some have called a 'currency war.'  A lot of people don't get it, or do not want to admit it.

Get right, and sit tight in a durable portfolio, and let's see what happens.

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - Takin' It To the Street

Stocks were slumping hard today, in the general theme of the global recession in the real economies.

The Fed minutes were leaked thirty minutes early this afternoon, and so the Fed released them. They cited downside risks to GDP and confusion amongst the members.

This sent the Treasury yields crashing and gave a boost to stocks off their bottom.

The risks in this market are grossly underpriced.

At some point this global recession in the real economy is going to be taking it to The Street.

And then there will be some type of reckoning of the divergence between financial fantasy and hard reality.

Have a pleasant evening.

Wilkerson: Who Makes US Foreign Policy

Part of what I teach is how since World War II and the acquisition of this enormous power by what in essence is the new Rome in the world, the United States, part of the shift that takes place in manipulating and managing that new power is a centralization of foreign policy away from the old cabinet places where it used to take place, most prominently through the Foreign Service and through the secretary of state, to the White House and to the creation of the 1947 National Security Act, the National Security Council.

So if you ask me pro forma where does it exist today, it exists more in the National Security Council and its staff than it does anywhere else, certainly anywhere else in the cabinet. So what I'm saying is it's centralized in the White House.

But what does that mean in terms of, I think, your real question, who's behind the White House, and who's therefore behind U.S. foreign policy, more or less? I think the answer today is the oligarchs, which would be the same answer, incidentally, ironically, if you will, for Putin in Russia, the people who own the wealth, the people who therefore have the power and who more or less (and I'm not being too facetious here, I don't think) buy the president and thus buy American foreign policy. So that's as succinct an answer as I can give you and touch on a few historical points...

And you could say in some respects this shadow behind the power that makes money off war, period, no matter who's the belligerent, makes money off that volatility now, especially with computers that are able to assist them in doing so, like currency manipulation, for example, or just general speculation. With computers you can do it at lightning speed and you can do it in a nanosecond, and you can make billions in that nanosecond, and you don't care about what you're doing to the real economy, because you're raking in the dough.

Lawrence Wilkerson

You may watch the entire three video interview here.

Letter to Edward M. House
Warm Springs, November 21, 1933

My dear Friend:

...I had a nice talk with Jack Morgan the other day and he and he seemed more worried about Tugwell's speech than about anything else, especially when Tugwell said, "From now on property rights and financial rights will be subordinated to human rights." J.P.M. did not seem much troubled over the gold purchasing, and confessed that he had been completely misled in regard to the Federal expenditures.

The real truth of the matter is, as you and I know, that a financial element in the larger centers has owned the Government ever since the days of Andrew Jackson— and I am not wholly excepting the Administration of WW [Woodrow Wilson]— The country is going through a repetition of Jackson's fight with the Bank of the United Stated - only on a far bigger and broader basis.

I am having a grand rest and am catching up on much needed sleep. Take care of yourself and do write me soon.

Franklin Roosevelt

War is a racket. It is possibly the oldest, easily the most profitable, surely the most vicious. It is the only one in which the profits are reckoned in dollars and the losses in lives.

I spent thirty-three years and four months in active military service as a member of this country's most agile military force, the Marine Corps. I served in all commissioned ranks from Second Lieutenant to Major-General.

The trouble with America is that when the dollar only earns 6 percent over here, then it gets restless and goes overseas to get 100 percent. Then the flag follows the dollar and the soldiers follow the flag.

I helped make Mexico and especially Tampico safe for American oil interests in 1914. I helped make Haiti and Cuba a decent place for the National City Bank boys to collect revenues in. I helped in the raping of half a dozen Central American republics for the benefit of Wall Street. I helped purify Nicaragua for the International Banking House of Brown Brothers in 1902-1912.

I brought light to the Dominican Republic for the American sugar interests in 1916. I helped make Honduras right for the American fruit companies in 1903. In China in 1927 I helped see to it that Standard Oil went on its way unmolested. Looking back on it, I might have given Al Capone a few hints. The best he could do was to operate his racket in three districts. I operated on three continents.

There are only two things we should fight for. One is the defense of our homes and the other is the Bill of Rights.

Major General Smedley Butler, USMC