Gold Daily and Silver Weekly Charts - Das Schwerste Gewicht der Außergewöhnlich

Gold and silver were relatively quiet most of the day.

The both were smacked down very late, into the New York close. It was not substantial, more gratuitously petty.

This barely qualifies as a retracement, which you may know I am looking for about here, and laid out in the overnight posting A Closer Look At the Gold Chart Formation:  Three Scenarios.

I don't think I can stress enough that the trading in gold, and to a lesser extent silver, has become 'virtual' in that it is trading almost like a stock, or an option, rather than a commodity.  The coupling with the physical market has drifted away, and the reconnection of the paper and the physical markets will be impressive.

And today I put out another thought on this notion of a paper market that has become divorced from the physical transactions, which have clearly shifted to Asia.   You might wish to read about this split markets in the precious metals here in Nova Scotia Apparently Backing the Meager Action In Comex Gold.

The more I step back and look at what the precious metals have become the more amazed I am that no one has taken this on, whether it be a big trader or a regulatory body.

Perhaps this is all a part of the unbearable lightness of being exceptional?  Uniquely one of a kind?

No, the gold market in New York and London, within the context of the greater global market, is the poster child for fragility.  It is a very old story, and lately almost cliché, about overreach, the abuse of trust, and reckless greed.

And the same goes for silver, although that market has a slightly different set of challenges and oddities of its own.

I sure that time will sort all of this out.

Have a pleasant weekend.

SP 500 and NDX Futures Daily Charts - Option Expiration - All Quiet on the Western Front

Stocks had their October option expiration today.

The antics were abundant as stocks came in lower, but drifted higher during the day, and were jammed higher into the close for a gain.

The obsessive compulsive Street has decided that all is quiet on the Western front, and VIX has dropped back down to the 'new normal.'

The meme is that the Fed will not be raising rates in the foreseeable future, and all that selling in China is done now that margin debt has been unwound.

The economy is lousy, and risks are mispriced, but why worry? The Fed can always bail us out.

Have a nice weekend.

Nova Scotia Apparently Backing the Meager Action in Comex Gold - Gresham's Law

Gresham's law is an economic principle that states that when an official market or cartel overvalues one type of money or asset and undervalues another with respect to its fair market value and risks, the undervalued money or asset will leave the country as best it can, or will disappear from circulation into hoards, while the overvalued money or assets will flood into circulation.

Let me stipulate up front that when it comes to the global gold market, the Comex has actual gold flows that are so meager compared to the amount of trading which occurs on paper that I have said it is starting to look like The Bucket Shop.

And in recognition to the disclaimer statement that appears on all of their documents, the exchange makes no claims and accept no liability that any of these numbers are accurate. They are taking the originators of these numbers at their word, some of which are Banks which have recently been shown to be serial offenders when it comes to their financial dealings, pricing, and representations.

As of Wednesday, only 171,613 ounces (5.13 tonnes) were 'up for delivery.'   In a global market where the daily deliveries are measured in metric tonnes, that is a very small amount.

In terms of overall active Comex contracts, that represents a paper to physical leverage of roughly 263 to 1, compared to a historic trend of about 24:1.

And as I looked things over, I was struck by the fact that of those meager ounces available, 101,312 (3.2 tonnes) were from the vaults of Nova Scotia, or roughly 60% of the total.

That struck a chord in my memory, so I looked over the list of deliveries for the month of October.

Of the pathetically small amount of 240 contracts, or 24,000 ounces (.75 tonnes) delivered in the entire month, 17,600 have come from the 'house account' at Nova Scotia.

And the 'takers' of those few ounces have been the 'house accounts' at JP Morgan and HSBC.

So what I am trying to prove with all this?  Nothing.   I am merely showing an interesting trend change that has gone largely overlooked, except in some notable exceptions of the 'smart money.'

And I am documenting some facts for those who have a mind to see them, and to establish a record that people can refer to when these jokers blow up yet another market through their reckless obsession with gambling large.

It shows that in a world of global gold flows, very little is moving in the Comex warehouses, and the little that is changing hands seems to be moving between the houses of three of the big bullion banks.

And it tend to support a hypothesis that the gold trading in London and New York has taken on the character of currency crosses, and lost their ties to the physical commodity nature of the product.  This divergence may be convenient for the management of the price, and for easy profits for those managing the game.

But it has longer term consequences which will eventually come back to shock the markets.  Where have we seen these types of divergences among risk, valuation, and the underlying realities before?  In just about every financial fraud and following crisis in the modern era at least.

So remember this when the next crisis comes, and the distraction, dissimulation, and duplicities are put forward, and the search for non-consequential scapegoats is underway. And you are expected to bail out these jokers once again 'to save the system.'

I am fairly confident that all of this will come to pass if things do not change, and serious reform and enforcement of the rules of the markets are not undertaken.  So far the changes we have are largely cosmetic.  In a plutocracy big money manages the government and the media;  they have bought and paid for it.  And eliminating government only serves to eliminate the middleman.  Transparency and reform are the only sustainable answer.

The big action in the precious metal bullion markets is in Asia.

And gold and silver bullion are steadily flowing from West to East because of a mispricing of valuation and risks.   And the reason for the stunning drop in physical trading activity in the West is because in a manifestation of Gresham's Law,  the hypothecated paper metals are driving out the bullion out of the market.

This is a trend, and it has significance to those who are willing to see it.

A Closer Look At An Evolving Gold Chart Formation - Three Scenarios - Time

"Le temps mûrit toute choses; par le temps toutes choses viennent en évidence; le temps est père de la vérité."

François Rabelais


“Hubris calls for nemesis, and in one form or another it's going to get it, not as a punishment from outside, but as the completion of a pattern already started.”

Mary Midgley, Myths We Live By

As we have seen so many times, the nature of a chart formation is revealed at key moments when the chart action approaches a critical decision point, especially after a sustained move higher or lower.

In this case gold is struggling hard to break a multi-year bear market and form a successful bottom off the big 1080 support.

The gold bulls can hope for a retracement that finds support fairly quickly, and mounts another assault at making a higher high than the last failed breakout attempt that was stopped at 1230.

The gold bears are quite confident, to the point of overconfidence in their ability to smash the price lower with an avalanche of paper sells in quiet hours after two years of having their way with this market.

And all the while they have been setting themselves up for an eventual confrontation with the physical consequences of their actions.  By now this should be a very familiar theme for a willful generation on any number of fronts.

A bullish interpretation can hold with declines even down to the bottom of a new bullish uptrending channel.

A break to the downside of 1120 negates this formation.

So in summary there are three general outcomes.

The first is a shallow retracement and a breakout that takes some greater momentum higher towards the 1300 level and makes the bottom with some decisiveness.

The second is a deeper retracement, with support found somewhere above 1120, with another assault mounted for a breakout higher from there.

And lastly, we must keep an open mind about a possible breakdown below 1120 setting up a retest of support, perhaps down towards 1080, or the establishment of a trading range.

I am not applying the normal probabilities to this evolving chart formation because of the obvious price manipulation that has been occurring in the paper gold markets, justified in the minds of the ringleaders no doubt by 'the currency war' and the flexing of monetary muscles.

In this environment gold and silver are being traded more like currency crosses, and less like commodities with a real basis of physical supply and demand underlying the transactions.

Perhaps the money masters may take their cue from the platinum coin, and declare a pile of sand to a thousand tonnes of bullion, of whatever variety they wish.

And you might be suprised at how many true believers will gratefully rise to praise this, drinking deeply of the madness of the will to power.  If only all would believe, it would be true! But alas, they never do.   There are always a stubborn few who fail to follow the dream into the abyss.  And so the world divides into the enlightened and the spoilers, between us, and them.

To the truly relativistic mind, nothing is impossible if you apply enough conviction and power, at least in the musings of the modern and, at the lingering last, the high walled bunkers of the few.  Their pipe bowls waft out familiar dreams, of freedom from restraints, and from their own mortality, and in the end perhaps, the last of their humanity.

All will be revealed with time.  We cannot presume to know exactly when.

Till human voices wake us, and we drown.

Gold Daily and Silver Weekly Charts - Pause At Resistance

Gold and silver paused today, after bumping their heads for most of the New York trade against overhead resistance.

The dollar rallied back a bit today, at least as measured by the DX index. Why? Because the euro was lower, based on the European stance towards additional easing and a weaker currency to aid German exports.

The Bucket Shop was deadly quiet on deliveries, and the gold warehouses continue to look like wax figures in Madame Tussauds'. See how paper gold used to be hypothecated and traded in the 20th century.

There was the usual slow leakage of silver bullion.

Let's see if the metals can form a new base here and consolidate their recent gains.

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - Bad News Is Good For Paper Assets - Option Expiration

The economic news this morning was simply awful.

You can skip over the unemployment claims figures, and take them with a grain of salt.  They do not show a 'strong labor recovery' to anyone who has an open, reasoning mind.  They show an economy of low paid stagnation with a sizable portion of the labor force laid out with exhaustion and giving up the pursuit of jobs.

But the Empire Manufacturing and Philly Fed numbers were chilling.

And that is why stocks rallied so hard today, because except for the inimitable servant of the New York Banks first and foremost, Bill Dudley, there won't be any rate increases from the Fed anytime soon.

However, the Fed's presumed lack of further action, caught as it is in a credibility trap of policy error, does not do much for the rest of the world, particularly China.

And in that we may find a scapegoat, but no respite or relief from the mismanagement of the economy by the kleptocratic elites and their minions.

Where to next?

Let's see if hope floats.

Especially since tomorrow is an option expiration for equities.

Have a pleasant evening.