Gold Daily and Silver Weekly Charts - Non-Farm Payrolls Tomorrow - The Fed's Serial Policy Errors

 

Gold and silver took the usual early hits and then came back a bit intraday.  As you can see, gold is pinned to support.

 

Speaking of jobs, the Cleveland Fed head Loretta Mester says that interest rates should be rising soon because of the solid labor gains.   And this from Cleveland? 

"There are accumulating signs that the economy is building momentum and that, this time, a pick-up in speed will be sustained because the underlying fundamentals have improved," Mester told a bankers' group in Columbus, Ohio.

Is this another 'green shoots' sighting?  Or a familiar phase in bubblenomics?  Victory, huzzah!  Because we say so.

 

I think maybe Fed President Mester needs to get out more often, and to more varied different venues than bankers' luncheons.   Youngstown would be a good place to stop for a Jib Jab hot dog.  Maybe not as good as the PO Lunch in Newcastle Pa., but certainly on a par with Yocco's in Allentown (or Easton if you want a beer with that dog).   And don't forget about Corporal Klinger's favorite, Tony Packos in Toledo. 

 

The working poor in her areas may not be able to afford McDonalds as much, but they still like their hot dogs when they can afford them.  Maybe while she is there, she can talk to some people about their wonderful lives in The Recovery™, compliments of the Fed's propeller heads and their serial policy errors.  

 

And while she is there, she can ask about what is going on in Europe, and factor that into her equations.   And about what the Gallup CEO recently said about the booshwa nature of the unemployment numbers.   Does she wish to make public policy based on that?    Maybe, until the real economy bleeds out.

 

God save us from the propeller heads, and the generals who are far from the field, and fighting the last war.  The carnage they inflicted in the first World War was epic.  And so was the carnage of their political peers in the terms of the peace.

 

I will try not to take what she says too seriously because the Fed has an itch to raise rates at least once, so they have room to cut them again when their latest bubble bursts.

 

Tomorrow is Non-Farm Payrolls.  I suppose they will create a good report to make us feel better.  They might even say something nice for a change about wages and labor participation. 

 

I have included a delivery report on gold below, which has sparked some real interest for the first time this month.

 

There was some intraday commentary regarding gold and the dore of war here.

I am not a 'gold bug' whatever the heck that means.  But I do think that gold and silver are important components of a solid portfolio, particularly in these times of currency wars.  I had a penchant for collecting coins from a young age, but never became interested in gold whatsoever until after 2000, when I became intensely interested in currencies. 

 

Anyone who studies currencies without appreciating the history and qualities of gold as a natural currency is ill-educated.  And people who 'hate' gold are probably the real goldbugs if I understand what they mean by it as a pejorative term, because they say the buggiest, most obsessively absurd things imaginable about it.

 

But to heck with them.  Their folly will be sifted by time.  Despite the antics which we may be in for tomorrow.

 

Tick tock.

 

Have pleasant evening.

 

 

Related: 

The Big Lie: 5.6 Percent Unemployment 

Greek economic austerity measures tied to 30 Year high in Suicides

 

 

 

 

 

 

SP 500 and NDX Futures Daily Charts - Let It Bleed

Non-Farm Payrolls tomorrow.

This stock market is priced for fantasy, and a bubble. 

 

Kudos, I imagine are in order, for the cynical pigtocrats who rode it all the up, talking it higher as they handed off to mom and pop and the managers of other people's money. 

And so we dream on.

Have a pleasant evening.

 

 

 

Ray Dalio's All Weather Fund Holding $6 Billion In Gold - The Doré of War

 

If this longer term investment allocation model became more general accepted by funds and the wealthy for their portfolios, and I believe that some day it will, then gold would have to undergo a significant price reset higher.  

 

Paper claims on gold will be redeemed in a run on the funds as the leverage unwinds, and the new demand for gold bullion far outstrips the crippled mining industry and the rehypothecated physical supply.

 

The current allocation of gold in most portfolios is minimal to none.  And when disinterest in holding that historical safe haven turns to fear and then greed, which it has done many, many times in the past, the result will be impressive given the over-leveraged and under-supplied structure of the market today.

 

Can this happen?  Are you kidding me?  What has NOT happened that the thought leaders and their financiers have assured us could not happen.  

 

But there is so much anti-gold nonsense presented by our sophisticates so often that the average person does not know what to think.  The flow of gold from West to East is little remarked upon phenomenon of historic significance.  And yet it is little remarked upon outside certain 'circles' on the periphery of the major media. 

 

Why is that?  I suggest it is the doré of currency war, both in terms of economic thought, historical knowledge, and the quality of their bullion.  And it will all be sharply refined out in the next financial crisis, as the tide of paper recedes once again.  As for proper pronunciation, who could pass up such a nice triple pun so easily.  See the orthographic note at the bottom below the video.

 

As a fiduciary Kyle Bass seems to think so, and so does one of the world's greatest fund managers Ray Dalio.  But then again, they are not very serous and famous people who regularly appear on bubblevision.   And so what do they know.

CEO.CA

This Hedge Fund Heavyweight Could Be Holding US$6 Billion In Gold

By Travis McPherson

5 February 2015

Ray Dalio is the founder of Bridgewater Associates, the world’s largest hedge fund firm and is one of the most iconic money managers on Wall Street.

The Harvard graduate created the All Weather fund in 1996 and revolutionized traditional optimal strategic asset allocation models. Instead of balancing portfolios based on total weightings only, he included risk, inflation and growth (now referred to as ‘risk parity’) in order to match weightings with risk exposure given certain inflation and growth scenarios.

The new spin on portfolio theory helped the All Weather fund return some of the most consistent numbers in the hedge fund business and allowed Bridgewater to grow assets under management to over US$160 billion (his personal net worth grew as well, now over US$15 billion). The All Weather fund holds roughly 50% of Bridgewater’s total AUM.

Mr. Dalio is a big believer in gold as a hedge against inflation and believes every portfolio needs a gold allocation.

The All Weather fund calls for a 30% weighting in stocks, 15% intermediate term Treasuries, 40% long-term Treasuries, 7.5% gold and 7.5% commodities. This means, the All Weather fund is holding up to US$6 billion in gold or roughly 4.7 million ounces (at $1,270/oz gold price)...

Read the entire article from CEO.CA here.

 

Cultural Aside

 

Before the better educated critics and the urbane write in, I am well aware that doré is properly pronounced as 'doreh or dory' and not as 'door.'  My French has grown feeble with years of disuse, but I am not yet a complete barbarian for the world's most beautiful language (with an honorable mention to Italian).  I freely admit to a bias in this.

 

However if English orthography famously permits Lord Byron to get away with pronunciation like this for Don Juan (as Don Joo Wun) in his epic satirical poem, then I am quite comfortable talking about the dore of war as a rhyme to make my own satirical point about the quality of the current stocks of 'gold bullion' held in places like the Comex and the Fed.  lol. 

 

And thanks to my long time reader from Delray Beach Florida for suggesting it.  It is truly the little things that make life, if not worth living alone, then surely at least interesting while looking for things that do.

 

Till, after cloying the gazettes with cant,

The age discovers he is not the true one;

Of such as these I should not care to vaunt,

I'll therefore take our ancient friend Don Juan.

Dean Baker: Greek Leaders Smart To Challenge German-Imposed Austerity

I think the Greeks really have no choice.  One can argue about the causes of this.  Some believe that the Greeks, Italians, Spanish, Portugese, the Slavs, and other people of the periphery are just inherently inferior to the Aryan peoples of England, Germany, the US.   They are predestined to be  losers in any 'free market.'   They are born to serve.

This is what a major presidential candidate privately said to his one percent cronies about half the American people.  And he was still able to run for office, and not be shamed off the stage.  That is how coarse and ignorant we have been conditioned to become.

 

Or, more likely, the periphery have been shoe-horned into a rigged game in which they are destined to be exploited shamelessly, and ultimately lose except for a few who survive The Hunger Games.  There seems to be a lot of that going around these days. It is the neo-liberal economic model, here at home in the US, England, and abroad.

 

The new Greek leaders could, like the prior governments, go along with the extend and pretend that only makes the situation worse.   There is a lot of that going around these days.  No one wishes to tell the Emperors that they are barking mad.  But it is clear that the new Greek leadership has decided that now is the time for force a reckoning, and to deal with this problem realistically, 'though the heavens may fall.'  The timing is now fortunate for this play.

If it gets bad enough, and the situation becomes extreme enough, and ideology trumps common decency and sense, we might see a 'color revolution' in Greece, likely with the rise of fascism or extremism, as we are now seeing in the Ukraine and so many other countries that have submitted to Anglo-American 'nation building.'

Germany, as an attendant nation to the Empire, does not get this. They are firmly in the grip of neo-liberal financial interests and neo-con political empire building.   But I do not wish to single out Germany in this.  They are more followers than leaders.  And the 'leadership' in almost all the English-speaking countries has become uniformly appalling.  Alas, even Canada.  The tentacles of the moneyed interests and their Banks reach far and wide.

 

England? They view themselves as the power behind the throne, with dreams of recreating Empire.

Germany is making its bid to be the Empire's viceroy of Europe. Japan and a few others are vying for Asia, which would be partitioned.  Israel is calling dibs on the Middle East, and Egypt wants Africa. That is just my sense of things, and I could be wrong.  And they could be wrong as well.  Players often get played.   And the unipolar world is an amazingly unstable place, from Julius to Caligula to Nero.

 

Such are times of currency wars, which are really just the age old bid for domination and power by other means, excused by whatever rationale and necessity is convenient, from security to humanitarian intrusions to living space.

Gold Daily and Silver Weekly Charts - Pigtocracy Falling - The Field Is Won

"Sooner or later a crash is coming, and it may be terrific."

Roger Babson

"I rebel against your man-made, unjust, unconstitutional forms of law, that tax, fine, imprison and hang women, while they deny them the right of representation in the government; and I shall work on with might and main to pay every dollar of that honest debt, but not a penny shall go to this unjust claim. And I shall earnestly and persistently continue to urge all women to the practical recognition of the old revolutionary maxim, that 'Resistance to tyranny is obedience to God.'"

Susan B. Anthony

"Son Roper, I thank our Lord the field is won."

Sir Thomas More

There was a lot of pushing and shoving in the gold and silver markets today.

 

Very little was actually done at the Comex, except for the usual posturing.

 

Speaking of posturing, the ECB tried to get tough on Greece today, and cut off credit to them because of their failure to reform, and also has disallowed Greek debt to be held as collateral in its banks.

 

Greece is a very small country.  Some think that because of this they have a poor bargain position.  Nothing could be further from the truth.  They have a very powerful bargaining position, but it is a bit too binary. 

 

They can default and pull out of the EU and the euro and declare their own sovereign currency.  They can also cut trade deals with Russia for whatever imports they may need.

 

This would shake the ECB and its financial institutions to their foundations.  And it would set a pattern that has them terrified.

 

That is the long and short of it.

 

I suspect we will see a lot of posturing and jawboning, like a dance, as part of this negotiation.  This is why they make their statements public, because that is their intent.  It is noise.  Noise is no use if you intend it to be heard, but then make it in a soundproof room.

 

The really serious discussions may be non-verbal, but certainly not documented and will not be publicized before their time.  If someone has ever been involved in a very serious political or international negotiation, this is how it is done, if the parties involved are serious adults.

I have done it.  And many times I have assisted our side in assessing the moves and the thinking of the other parties, and sorting out the wheat from the chaff in any statements.  I am sure Greece and the EU have a back channel.   And if not then I may have greatly over-estimated the Europeans.

What is curious to me is where the US is on this.  And do not think for a minute they are not involved and have not expressed an opinion and preference.  With the ongoing proxy war in the Ukraine and Syria between the US and Russia, they are almost certainly keeping a close eye on the potentially pivotal role of Greece.   For now most of us only have access to US thinking through their rather clumsy propaganda they put out through their attendant news sources and organizations.

If both parties act responsibly, there will be a settlement here somewhere in between their 'positions' that allows each party to save face, and hold to whatever principles they tend to uphold.

 

And if not, it will be rather messy.

 

There is quite a bit of posturing going on in the precious metals markets now as well.  The paper tigers in New York and London are swirling the edge of the abyss, falling further behind the paper-to-physical ratio.  

 

A couple readers took me to task for saying that there might be a big reset on the price of the metals, with the exchanges having to declare force majeure.  Their point was that the Comex does not need to do this in order to compel a cash settlement. 

 

I would have to go back and read it, because I had thought I was referencing both New York AND London.   But that does not matter, because the main point was not that there would be a forced cash settlement, but rather that like MF Global the terms of the settlement would be dictated by the exchange. 

 

I am not saying that there would be a cash settlement offered at the current market price in dollars.  Rather, there would be a take-it-or-leave-it cash offer at whatever price the exchange decided.  And it could be substantially below the 'market price' for physical bullion, some pre-dated price.  And it may involve the nullification of some arrangements. 

 

When the game unwinds unexpectedly and with some violence, I have found the insiders who run the game to be rather expansive in their efforts to limit their own losses, and those of their friends, and to re-arrange the rules as they wish under some legal pretext of extraordinary circumstances, even if it was something they did that caused them. 

 

Surely you remember what JPM did with regard to customer money and physical assets in the aftermath of MF Global.  And that was just an isolated incident.

 

Have a pleasant evening.

 

 

 

SP 500 and NDX Futures Daily Charts - Stocks Ignore Bad ADP Employment, Sell off on ECB

Stocks tried to shake off some pretty bad macroeconomic numbers from this morning. I have included a chart of them below.

However, the stock market's rally was dumped hard as the ECB announced into the close that they would no longer allow banks to accept Greek debt as collateral.

 

More on this in the gold and silver commentary above.

Stocks pretty much went off on the lows. This market has the resilience of meringue, and all the character of a cotton candy soufflé.

 

Without QE I am struggling to see how stocks can keep scaling their lofty heights, especially with the wheels starting to fall off the real economy.  And they are, despite the puffery from the Fed and the sell side of the Street, the paid strategists whose primary strategy is to keep you 'fully invested.'

 

Some incident will occur, and then the truth will be revealed, and non-related parties properly scapegoated for spoiling our great and glorious Recovery.  We are the world, we are exceptional, we cannot fail.

 

The elite will lie, and the people will pretend to believe them.  Heck about 20 percent of the American public will believe almost anything if it is wrapped with the right prejudice and appeal to passion.

 

Have a pleasant evening.

 

 

 

Gold Daily and Silver Weekly Charts - Same Old Schemes, Ending Badly

Federal Reserve Bank of St. Louis President James Bullard warned Tuesday regulatory changes haven’t solved the too-big-to-fail problem in banking, adding that he’d support a break-up of the biggest banks in the U.S.

“It’s naive to think that macro prudential tools as they exist today are sufficient” to tackle new bubbles without notable help from Federal Reserve interest rate policy, Mr. Bullard said. He was referring to the suite of tools the Fed and other agencies have to intervene in a targeted fashion when authorities believe financial markets have become unstable.

WSJ, Bullard Calls For Breaking Up Nation's Biggest Banks

 

Robert Johnson recognizes that rampant inequality could be the death of us all. “People need to know there are possibilities for their children, that they will have the same opportunity as anyone else,” he said at Davos. Johnson continued, “There is a wicked feedback loop. Politicians who get more money tend to use it to get even more money.”

That’s the money they get from the plutocrats who pull their strings; in the past three elections alone, the financial sector has given $256 million to Republicans and $153 million to Democrats.

USA Today recently editorialized, “Wall Street got its swagger back not long after the bailout, which is no surprise.  Its culture is built on greed and ego.  What is more surprising is how quickly Congress again became Wall Street’s errand boy.”

Michael Winship, The Super-Rich Can't Hide From the Rest of Us

If called on their bets, the Comex cannot come up with the bullion to answer it, except at much higher prices.  And I am talking about many hundreds of dollars higher, probably into the 2,000 range, unless they can get the government/judiciary to allow them to declare some favorable sort of force majeure as they did in the case of MF Global.

 

The only real doubt in my mind is how badly leveraged the New York and London crowd are, and how many cross claims exist for each ounce of physical metal.  I suspect it is worse than I think.

 

Kyle Bass said the same thing, so let the apologists, the little Lord Haw Haw's, dismissively chew on that one. 

 

It is a scam.  It is tolerated by the kleptocracy.  Remember this when the time comes.  They know.

The regulators and the Fed and the Congress are turning a blind eye to the corruption because they can, no one calls them on it, and it suits their very personal preferences.

 

The BRICS are calling the Anglo-American banking cartel's bluff, one bar of bullion at a time.

 

That is the situation in a nutshell.

 

Tick tock.

 

Have a pleasant evening.