Thomas Frank on the Irony of This Presidential Election

“You can fool all of the people some of the time, and some of the people all of the time, but you cannot fool all of the people all of the time.”

Here is an interesting take on the election, trade policies, economic policy issues, political hypocrisy, and the usual suspects from Thomas Frank.

The more I think about it, the more it seems that the improbable Donald Trump is a 'molotov cocktail' that a fairly large segment of the voting public is throwing at a system they view as non-responsive and corrupt, on both sides of the aisle.

Nothing else explains the Sanders-Trump impulse for outsiders and genuine change.

Unfortunately for Sanders' supporters, the Democratic machine was better at suppressing dissent with the complicity of the establishment 'for the good of the system' that serves their narrow interests so well.

The people are clearly demanding change, meaningful reform, justice, and equal enforcement of the laws.

This year the Democrat's allure has changed from hope to fear.

And the established elite don't seem to really care, really be aware of the things happening around them.  They are too busy winning.

Fearful people are a dangerous, two-edged sword— especially when they lose hope.

Some of Clinton's pledges sound great. Until you remember who's president.
Thomas Frank

...Where this contradiction gets particularly toxic is on the issue of trade. This is the locomotive of dissatisfaction that Trump means to ride into the White House, and Clinton has tried desperately to neutralize the issue by announcing that she, too, opposes the hated TPP and that she, too, deplores the unfortunate effects certain trade deals have had. And then you open the newspaper and find that her presidential patron and protector, Barack Obama, is still pushing the TPP in order to secure his legacy.

The reform impulse just keeps short-circuiting every time the Democrats try to switch it on. They talk about healthcare – and immediately have to say things like this about Obamacare: 'It’s a heck of a lot better than starting from scratch.' They talk about getting college tuition under control – and everyone remembers that the problem is decades old and that the Dems have done virtually nothing about it all those years. What was without a doubt the worst moment of them all came at the Democratic convention back in July, when Senator Elizabeth Warren pronounced on the current state of middle America as follows:

Look around. Americans bust their tails, some working two or three jobs, but wages stay flat. Meanwhile, the basic costs of making it from month to month keep going up. Housing, healthcare, child care – costs are out of sight. Young people are getting crushed by student loans. Working people are in debt. Seniors can’t stretch a social security check to cover the basics.

It was a powerful indictment of what Warren called a 'rigged' system – except for one thing: that system is presided over by Barack Obama, a man that same Democratic convention was determined to apotheosize as one of the greatest politicians of all times..."

Read the entire article by Thomas Frank at The Guardian.

The London Gold Float Estimates Updated

Tracking the gold held in London: An update on ETF and BoE holdings

"Just over a year ago, gold researchers Nick Laird, Bron Suchecki, Koos Jansen and myself took a shot at estimating how much physical gold was accounted for in London within the gold-backed ETFs and under Bank of England custody. The results of that exercise are highlighted in September 2015 articles “How many Good Delivery gold bars are in all the London Vaults?….including the Bank of England vaults”, and “Central Bank Gold at the Bank of England”, and also on Nick Laird’s website in a post titled “The London Float” which contains some very impressive charts that visualize the data. Some of the latest updated versions of these charts from www.goldchartsrus.com are featured below.

Given that its now just over a year since that last set of calculations, it made sense at this point to update the data so as to grasp how many Good Delivery golds bars held in London is spoken for in terms of ownership, versus how much may be unaccounted for. Estimating gold held in London vaults is by definition a tricky exercise, since it must rely on whatever data and statements are made available in what is a notoriously secret market, and there will usually be timing mismatches between the various data points. However, using a combination of published sources from the Bank of England, the London Bullion Market Association (LBMA), the Exchange Traded Fund websites, and UK gold import/export data, it is possible to produce some factual numbers."

Read the entire update by Ronan Manly here.

You should also have a look at The London Gold Float.

Gold Daily and Silver Weekly Charts - Oversold

Gold and silver remained under pressure from the early New York open today, falling to the hard support trendlines, and then bouncing back a bit into the close.

There was an intraday commentary that takes a look at the basic metals technical indicators which you can see here.

Gold deliveries on the Comex continued to be robust yesterday, with 757,100 ounces 'delivered' so far this month.   Silver is sleepy on the Comex in October, but I have included that clearing report for you to see.

Gold and silver are obviously undergoing a 'flush' designed to knock down the number of longs in the open interest.

The reason for this is open for discussion, but as I have said it appears that the pressures on the physical market are bringing additional attention to the paper markets, with an eye towards discouraging a rush to take down bullion out of a highly leveraged market.  And the holiday in China makes this all the more opportunistic now, rather than later.

Whatever the reasons for these things, gold and silver are both deeply oversold in the short term.

Non-Farm Payrolls Report on Friday, heading into a three day weekend in the States.

Let's see what happens.

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - Great System, Except For the Users

As you can see on the stock charts below, the two major indices are still winding within a fairly narrow range, with big tech a little more perky than the broader SP 500.

Stocks rallied on the ISM Services number this morning which came in much higher than expected.

On the other hand, the ADP jobs added came in much lighter than expected.

The economy would be great if there weren't so many members who are not in the upper crust ruling elite.   Why is the public cluttering up our magnificent system?

It reminds me of an anecdote from my days as a boy programmer, when the systems guys had the IBM 370 stable and exactly where they wanted it.   And one of them seriously said, 'It is working great now.  If only we could keep all those users off of it.'

The states have a three day holiday weekend coming up.

Non-Farm Payrolls on Friday.

Have a pleasant evening.

A Quick Look At the Gold and Silver Technical Indicators - London Calling

These charts are from yesterday's close.

Both gold and silver are short term oversold, and have added some to that so far today.

They can become more oversold.   Or they can find some support and hang in there until the Non-Farm Payrolls report.

If this is a price manipulation designed to flush out longs in the Comex futures, I would suggest that it has just about reached its practical limits and has accomplished that.

It is not a shortage of gold bullion in NY that concerns the bullion banks, since it is largely a paper market already where claim checks are exchanged but little gold actually leaves the warehouses.

The concern is more likily the shrinking free float in the key physical bullion market of London and the refineries in Switzerland.

Let's see what happens.

Gold Daily and Silver Weekly Charts - All Hail The Recovery®

“When the system is rigged, when ordinary citizens are powerless, and when whistle-blowers are pariahs at best, three things happen. First, the worst people rise to the top. They behave appallingly, and they wreak havoc. Second, people who could make productive contributions to society are incented to become destructive, because corruption is far more lucrative than honest work. And third, everyone else pays, both economically and emotionally; people become cynical, selfish, and fatalistic. Often they go along with the system, but they hate themselves for it. They play the game to survive and feed their families, but both they and society suffer.”

Charles H. Ferguson, Inside Job

Gold and silver were hammered lower today, with gold losing 3.2% and silver 5.2%.

The dollar moved much higher as you can see from the chart below.

There was some brief intraday commentary on the premiums in some of the Trusts and Funds here.

We may move lower if you look at the charts carefully, especially since we have a Non-Farm Payrolls event coming up, that is like a ringing dinner bell cue for the bears. Having said that, I put some cash that I had taken out last week back to work today. Let's say that this move was not entirely unexpected given the setup.

The 'precipitant' for today's action was a very hawkish speech on interest rates this morning by Jeff Lacker, President of the Richmond Fed.

Given the estimates I have been getting on the state of the 'free float' of bullion in the key market in London, it seems just as likely to me that this was a trading gambit devised to dampen the offtake of gold in the October contract, knock down the leveraged bets of paper to physical bullion, and to shake some additional gold lose from the ETFs where it has been accumulating.

As it comes to the breaking point of this long running metals pool, we can expect to see more volatile movements in the price of the metals.

I personally think that Lacker may be sincere in his statements. After all, he is looking at the economy from the perspective of someone who has spent the last 27 years at the Fed, a period which is hardly distinguished by sound monetary policy and reliable economic forecasting. It is most noteworhty for the most reckless abuse of the public trust by the Banks since the 1920s.

Or as Charles Ferguson puts it so well,

"In addition to the behaviour that caused the crisis, major US and European banks have been caught assisting corporate fraud by Enron and others, laundering money for drug cartels and the Iranian military, aiding tax evasion, hiding the assets of corrupt dictators, colluding in order to fix prices, and committing many forms of financial fraud. The evidence is now overwhelming that over the last thirty years, the US financial sector has become a rogue industry.”

It beggars belief that the Fed would now feel the need to urgently raise rates.

Wages and real income are still stagnant, unemployment is greatly understated by taking the long term unemployed out of the labor pool calculations, and the evidence is that the US GDP is still going to be weak going forward, with the IMF just revising their forecasted growth in the US to 1.6%.

The majority of Americans have less then $1,000 in the bank, and retail establishments like restaurants see slowing demand and lower sales.

So the idea of going 'pre-emptive' against inflation by raising rates aggressively now seems a bit obtuse. There is no comparison between now and 1994 when Greenspan raised rates 'pre-emptively.'

The only people who would favor higher interest rates and a stronger dollar now are the financiers, and those who are already sitting on a pile of cash thanks to the serial asset bubbles policy created by the Fed.

And for those who live on the East coast of the US, you may wish to keep an eye on Hurricane Matthew. A most recent projection of its path is included below. Let's see how that one progresses, and hope that it moves more out to see as some models suggest.

Have a pleasant evening.

Update: Latest forecast shows it going out further to sea earlier.