Saving the Banks and Fabulously Enriching a Few On the Back of the Real Economy

"Give a small number of people the power to enrich themselves beyond everyone's wildest dreams, a philosophical rationale to explain all the damage they're causing, and they will not stop until they've run the world economy off a cliff."

Philipp Meyer


"Wall Street is not being made a scapegoat for this crisis: they really did this."

Michael Lewis


"My daughter asked me when she came home from school, “What’s the financial crisis?” and I said, it’s something that happens every five to seven years."

Jamie Dimon


"The greatest tragedy would be to accept the refrain that no one could have seen this coming, and thus nothing could have been done. If we accept this notion, it will happen again."

Financial Crisis Inquiry Commission (2009–2011)

The US has been in a cycle of bubbles, busts, and crashes since at least 1995, and more likely since Alan Greenspan became the Chairman of the Federal Reserve in August, 1987.

The cycle is the same, only the depth and duration seems to change in a continuing 'wash and rinse' of the public money and the real economy.

It has become a machine for transferring income, wealth, ownership, and power to the very top.

This is not 'the new normal.'   This is financial corruption and the erosion of systemic integrity.

Are there any markets that have not been shown to have been systematically manipulated, for years?

This is just institutionalized looting.

Gold Daily and Silver Weekly Charts - Gold Resists, Silver Holds, Northeast Braces For Snow

Gold was hit early on in a general 'stocks are good, gold is bad' move that fizzled into the late afternoon. Despite all the misinformation to the contrary, gold is still a safe haven asset.

Silver held its ground.

There was intraday commentary on the increasingly 'insubstantial' nature of the NY gold trade, and the relative robust purchasing of physical gold in Asia. You may scroll down to see it.

There are those who continue to deny this, with a varying degree of arguments ranging from cleverly deceptive to nonsensical. Look at the facts and make up your own mind.

There are some potential formations on the charts, especially gold, but I am waiting to see something develop that gives us a higher degree of probability.

Have a pleasant evening.

And meanwhile, the Northeastern US prepares for snow...

SP 500 and NDX Futures Daily Charts - Hanging On

Stocks were wobbly once again, as the international markets remain jittery, and there are indications out of Europe of problems in the banking sector once again.

The markets are trying to stabilize and find a footing in the US.

Let's see if they can do it.

I doubt very much that the Fed will be raising rates again anytime soon. The first raise was a calculated risk for the reasons that I outlined when I forecast it. To do it again in this environment would be reckless.

Have a pleasant evening.

Another Year of Insubstantial Gold Trading in the New York Market

Looking back, it is evident from the charts below that 2015 was another year of decline for physical gold deliveries in New York.  This is thought to be a benign phenomenon by some.

And one might certainly question how much of that 'stockpile' of gold held in storage is unencumbered, and not subject to multiple hypothecation.

As you know I think that such a decline in the connection to the fundamental flows of a physical commodity creates a potentially dangerous situation, especially in a climate in which most of the major markets have shown themselves to have been systematically rigged by corrupt trading institutions.

The second chart shows how dramatically the physical gold market has moved to the East, leaving both New York and London as influential to price while becoming increasingly insubstantial.

Finally the third chart shows that the New York market still maintains a strong physical delivery function for silver. This is largely thanks to CNT, which is a major supplier of silver to the Mint among other things.

Related:  In China Everyone Can Buy Gold at the Shanghai Gold Exchange - Koos Jansen

Gold Daily and Silver Weekly Charts - Flight To Safety

"Make no mistake about it, just as Lehman Brothers was set up to take the fall for triggering the 2008 collapse, China is being groomed as the new scapegoat for the coming crisis. But China’s economic slump is only a symptom, not the disease...

The reality is that the repeal of Glass-Steagall ushered in the greatest wealth transfer scheme in the history of America, allowing six mega banks in America to control the vast majority of insured deposits, use those taxpayer-backed deposits to gamble for the house, loot the bank from the inside by paying billions of dollars to select employees and customers and then hand the gambling tab to the taxpayer when the casino burns down. This model is a staggering headwind on both U.S. and global growth because it has created the greatest wealth and income inequality since the Great Depression.

Pam and Russ Martens, The Real Reason Global Stocks Are Flashing Red this Morning

The quote above is from last October, but it serves today just as well as it did then.

Gold benefited from a fairly obvious 'flight to safety' today, even though it was clipped a bit in the afternoon as stocks rallied back in what felt like a technical bounce.

Silver had a little upside but not nearly as much. It is not a flight to safety metal in the same manner as gold, in part because of its dual nature as both monetary and industrial.

When things really fall apart you will know it, because gold, real gold, will go to an absolute scarcity that may be shocking.

Sooner or later, everyone sits down to a banquet of consequences.

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - Consequences Being Served

Stocks sold off very hard today and set some new recent lows.

There was a technical oversold rally into the close led by Big Tech that brought stocks back up to near even or lesser lows, holding support around the prior lows from the end of last year.

So what next?

Clearly we have a major adjustment happening to a chronic mispricing of risk and a financial asset bubble. I mean, how many times have I said this was a bubble, and that there was little strength underpinning it?

I am expecting a short term capitulation low. We *might* have seen that today, or we might have to go back down again and flush the market out and retest today's lows. It depends on how much of the rally back this afternoon was short covering and the resurgence of the mo-mo dip buyers.

But at some point we set a low, and then we should rally back, maybe as much as thirty to fifty percent of the recent declines and then, if nothing much changes on the global scene, we will go back down and retest the lows and set some new ones. I am looking at 1770 on the SP 500 futures chart.

Until there is reform, there will be no recovery. And I see little moral high ground with many people on it still standing.

Have a pleasant evening.