Gold Daily and Silver Weekly Charts - Short Squeeze

"Oh what a tangled web we weave,

When first we practise to deceive!"

Walter Scott, Marmion, Canto vi, Stanza 17

Watching the trade in gold and silver last night was interesting.

Around midnight gold was smacked down seven dollars to about $1132 in the matter of a few seconds. That is customary since traders have to reset their stops after midnight, and there was a bit of the usual inexplicable 'gamesmanship' one sees in bucket shops, rigged card games, and for some reason the Comex.

But about an hour later the price rebounded back up sharply to the 1144 area and seemed to stick there for most of the trade, with a slight upward bias, until the US announced its Non-Farm Payrolls Report for October, which sucked out loud.

There is no recovery. And as that fantasy wavered, so did the dollar and both gold and silver traded higher throughout the day, as the spec who came for the usual NFP Day smackdown ate their shorts.

So what next. Gold and silver are still in bear markets. This is counterintuitive of course since in the case of gold especially there is a yawning mismatch between actually supply and real demand.

I took a look at the Sprott Physical Gold Trust and there it was, another redemption. I have not yet looked but I suspect we will see more sizable redemptions from the ETFs.

I have offerend some intraday commentary that may shed some light on this phenomenon. I encourage you to read it here.

That there is manipulation in the gold market is, in my mind and in accordance with the evidence at hand, strictly a rhetorical question now, argued by the bully boys and shills of the Banks, and those pit crawlers of the financial demimonde.

That is not to say that 'it is over.'   These things never end when you think they will end, but when the end comes, it tends to come with a vengeance.  So I don't think we will even have to ask the question when the answer is there. 

A good start would be for gold and silver to break these awful, grinding short sales and bear raids lower, and that means breaking the pattern of lower highs and lower lows.  That means taking out $1270 gold and sticking it to the bears, hard.

For now this is a big bounce off a grossly oversold condition.  So it is too soon to break out the balloons.  Even if you are a legend of the legendary legends.  Mere mortals must wait for a more solid confirmation of a sustained change in trend.  The powers that be never give up any shred of power easily, and that is what we are seeing: a shifting landscape of historic proportions. 

Have a pleasant weekend.

SP 500 and NDX Futures Daily Charts - Non-Farm Payroll Flop - FrankenFed

There was intraday commentary on the Non-Farm Payrolls report.

It was fine, if you want less jobs than expected at lower wages that can sustain anything like a recovery.

Things are not going smoothly for those required to live in the real world.

At some point, the pampered princes will have to notice that all is not well, and that the natives are growing restless. 

 

I think what we saw in the midterm elections is some disenchantment with the happy talk, and blowback on the party in power. 

 

The bloom is going to wear off the elephantine rose fairly quickly if the houses of Congress cannot do something a little more imaginative than trickle down, trickle down.

Do you think the powers that be are completely unaware?  Perhaps not.

 

It was common for people in old Russia to say, 'if only Comrade Stalin knew what was going on.'

George Carlin had a rather salty and somewhat pessimistic explanation for the lack of reform and recovery.   Caution language.

Perhaps the one percent and their burgermeisters will have a change of heart-- before the sight of villagers with pitchforks and torches comes cresting over the hill.   It might end up looking like the fall of Saigon.  Oh the bureaucracy!

Have a pleasant evening.

NAV Premiums of Certain Precious Metal Trusts and Funds - More Sprott Gold Goes Walkabout

It appears that some more gold has been redeemed from the Sprott Physical Gold Trust in this last paper push lower in price.

There were a total of 27,911 ounces of gold redeemed from the Trust with a corresponding number of units turned in for them.  

Given the pressure on physical supply in this last paper bear raid, it is not all that surprising.

No wonder the powers that be are so nervous about the 30 November Swiss referendum.

I will have to do another look at the big ETFs to see if they have been bleeding bullion.

Here is a chart showing the previous level of gold in the Sprott Physical Gold Trust

Democracy Now Interview Matt Taibbi and the JPM Whistleblower

You may read a transcript of the interview on DemocracyNow here.

I wonder who Amy will interview when the currency markets go sideways, and gold and silver go rocketing higher, with Banks whining for bailouts as 'they stare into the abyss,' and the walking talking banalities called bankers are pontificating that they were merely following orders from their economic models and saving The System when they sold off their nations' wealth, and destroyed the middle class.

A Tale of Two Markets: Gold Market Manipulation in NY and London

"It is to be regretted that the rich and powerful too often bend the acts of government to their selfish purposes... There are no necessary evils in government. Its evils exist only in its abuses. If it would confine itself to equal protection, and, as Heaven does its rains, shower its favors alike on the high and the low, the rich and the poor, it would be an unqualified blessing."

Andrew Jackson, Veto Message of the Second Central Bank of the United States

Thanks to two hard working and exceptionally clever analysts, we have a clear picture of the regularity with which the world price of gold has been manipulated by paper trading in New York and London.

Nick Laird, the data wrangler of Sharelynx.com, has constructed a five year rolling average of price movements for gold throughout the day.   Given that this is five years worth of data, it would be very difficult to say that it is some sort of anomaly.

And thanks also to Dave Kranzler, of Investment Research Dynamics, who has been insightful in his markings on the chart to show the significance of the price movements.  Dave manages a hedge fund specializing in precious metals, and also offers research reports on mining companies which is his area of greatest investment interest.

I have added a few things to Dave's work, because compared to the Denver bronco I am a bit more challenged by age in reading small, pale type on charts.

As you can see on the chart below, gold almost invariably rises during Asian trading hours, where the predominantly physical trade is engage in the price discovery of bullion.

After the Asian trading markets close, gold typically begins a precipitous drop, culminating in an initial bottom around the London AM fix.

The London price fix (fix, what an ironically appropriate name in American slang) is conducted in the United States dollar (USD), the Pound sterling (GBP), and the Euro (EUR) daily at 10.30am and 3pm, London time. The fix used to be conducted in meetings on the premises of N. M. Rothschild & Sons by the members of The London Gold Market Fixing Ltd. In 2004 Rothschild exited that position in London, and sold its seat in the operation to Barclays Bank.

Since that time the AM and PM Gold Fix have been set on a private conference call by Barclays, HSBC, Société Générale, and Scotia-Mocatta.

 

Barclays, among others, played a prominent role in the recent LIBOR rigging scandal, as you may recall.  The similarities between the LIBOR fix and the Gold Fix are interesting.

 

The London regulators have been actively working to replace the London Gold Fix, which really is a holdover from the overtly government controlled gold markets of the last century.  A recent news story relates that the Gold Fix will now be managed by ICE, a US based conglomerate of exchanges backed by the major Banks among others.  You may read more about ICE here. 

"Intercontinental Exchange Inc.’s IBA will provide a price platform, methodology and administer the procedure that now takes place by phone each day at 10:30 a.m. and 3 p.m., the London Bullion Market Association and ICE said today in statements. Societe Generale SA, Bank of Nova Scotia, HSBC Holdings Plc and Barclays Plc currently conduct the fixings used by miners to central banks to trade and value metal."

There is no mention of what steps the CFTC is taking to change anything about the manner in which the US gold futures business is conducted, even though it is clearly part of the paper rigging. Perhaps they assume that whatever changes the ICE introduces in London which provide a more reliable and transparent platform for trading in New York.  Talk about foxes and henhouses.

I think it is important that we understand that the world has bifurcated into two precious metals markets, one of paper and leverage, and the other of price discovery and physical bullion.  And that this is no rogue trading operation.  It is a pool that has been established to manipulate the market.  It almost doesn't matter who believes or doesn't believe it anymore.  The die is cast, and the invisible hand is getting ready to set forth a banquet of consequences.

 

History suggests that when the price of the metals, having been long suppressed for years apparently, revert to the natural demands of the market, and rocket to the upside, that we should feel no sympathy for the manipulators' discomfort.  Or any willingness to bail them out yet again, I would hope.  

And as for the semi-official participants, such as former central bankers, politicians, and regulators, I suspect that they will tell the usual lies, and seek to rewrite history to save their own highborn skins.  Some of that appears to be going on already, by those of them who are more astutely aware that the jig may be almost up.

And we will continue to pretend to believe them. 

 

Non-Farm Payrolls Report for October - Birth Death Model to the Rescue

As you may have already heard there was a 'miss' in the new jobs added in the October Non-Farm Payrolls Report.

There were some other troubling aspects in that report that I will discuss in the stock commentary tonight, but I did wish to point out an outlier in the way in which the number was constructed.

As you can see in the first chart below, the number of jobs added in the BLS Birth-Death Model was higher than the usual number we have seen for the past six years. 

This is certainly not the worst outlier.  As you can see, April 2008 was a banner month for imaginary jobs, with which to welcome the new President.

This number is the estimate of how many jobs were added or subtracted by new or small businesses not captured in ordinary reporting.   In my mind, it is such a creature of estimation as to just be a 'plug.'

In the second chart I show the 'headline number' of jobs added with the seasonalized number of imaginary jobs from the Birth Death model subtracted out.

As a reminder, the month to month variations in the headline number are of primary interest to politicians and the stock markets, and will likely be changed and revised quite a bit in the future, when no one seems to care. A more meaningful number is the twelve month moving average. But that gives less opportunity to game stocks and grab headlines.

And as an aside, the headline unemployment rate, which continued 'to improve' is a disgraceful indicator that ought to be ashamed to go out in public, as it so grossly misstates the underlying economic reality of things.  It is like the Dow Jones Industrial Average of economic indicators.  They both throw out all that they define as 'losers' to make their numbers look better.

It does add some volatility which is why I think that the Birth-Death estimate is just a plug created by the BLS statisticians.

And in this report, it appears they were very generous in assuming the number of jobs that were added.  I wonder how they justify this?

Gold Daily and Silver Weekly Charts - Pity the Swiss

"England may as well dam up the waters of the Nile with bulrushes as to fetter the step of Freedom, more proud and firm in this youthful land than where she treads the sequestered glens of Scotland, or couches herself among the magnificent mountains of Switzerland."

Lydia Maria Child, The Rebels, or Boston before the Revolution

Pity the poor Swiss. 

The Bankers and the power brokers are frightening them with dire consequences if they should exercise their freedom and politely request that their gold be returned to them, to be kept within their national borders.

Why should they resist?  This is not done in the well developed, sophisticated nations.  Why should anyone wish to hold their own wealth?  Better to give it to someone else to hold, someone who is more intelligent and capable.

And why stop at gold?   The Swiss must be foolish, to trouble themselves with keeping the arms with which to defend themselves in their own homes, with heavier weapons such as planes and artillery tucked away here and there in their cantons.  What inefficient nonsense.

Wouldn't it make more sense to send all this weaponry overseas, let's say to New York, for safekeeping?   If they wish to sell, replace, or repair it, it would be much cheaper to do it in one of the countries that are major arms suppliers to the world.

What else do the Swiss cherish?   Perhaps they should sell their children into indentured servitude, so they do not have to trouble their minds about educating and caring for them.   The Banks and the State can surely do a better job than they.  Or perhaps they should sell them to the nation builders in New York or London, where the management of population is done more efficiently and effectively.

Freedom is a burden.  And wealth just creates more worries.  Better to hand it over to one of the world's great powers for safekeeping.    Change is too risky.

You will surely never have to think again of it, or even see it, for a very long time.  It will be as though it is not even there.

Say yes to servitude.   Vote no on repatriating your nation's wealth.  Do not make the same mistake as the Germans.

All the English speaking countries are doing it.   Look how well the centralization of wealth in fewer and fewer hands is working for England and America, in Australia and Canada.  Their people sleep extraordinarily well.  In fact, it is often hard to tell if they are ever truly awake.

 

Have a pleasant evening.