Comex Registered 'Deliverable' Gold Bullion Stores - Money Is All About Power To Some

"The conventional wisdom seems to be that the problems of the euro zone are, as economist Martin Feldstein once put it, 'the inevitable consequence of imposing a single currency on a very heterogeneous group of countries.'

What this commentary gets wrong, however, is that single currencies are never the product of debates about optimal economic solutions. Instead, currencies like the U.S. dollar itself are the result of political battles, where motivated actors try to centralize power.

This has most often occurred 'through iron and blood,' as Otto van Bismarck, the unifier of Germany put it, as a result of catastrophic wars. Smaller geographic units were brought together to build the modern nation state, with a unified fiscal system, a common national language that was often imposed by force, a unified legal system, and, a single currency. Put differently, war makes the state, and the state makes the currency....

European leaders weren’t stupid or self indulgent when they decided to move ahead with the euro, without fiscal union or strong Europe-level democracy. They just cared more about politics and international security than economics. They wanted to build a Europe that had transcended the divisions of the Cold War, and bind together Germany, which was reunited and much more powerful, with the rest of Europe."

Kathleen McNamara, This is what economists don’t understand about the euro crisis – or the U.S. dollar

Why is it that 'great people' always seem compelled to build their dreams of empire on the backs and broken bodies of innocents.  As always, it is for the greater good, and there will be collateral damage.

I do think some of the things that McNamara says is just a rationale for a certain philosophy of government.  The historical example of the US is almost embarrassing, revisionist, especially when she discusses the civil war, and how aimless the US had been until the creation of the Federal Reserve in 1913.

But it serves the hypothesis that the ends of pursuing 'order' justify the means including the overthrow of freedom, and that this is the lesson from history.  It certainly is a lesson, but I am not sure it is the one that she intends.

Money is indeed a medium of exchange, and a store of value. And it can also be a means of power, if it is abused and distorted to serve selfish ends.   We certainly have seen enough of that sort of thing in the first fifteen years of this century, with bailouts, and selective justice, and the abuse of regulation and monetary policy to favor a few over the many.

According to this line of thought, those who foresaw the pitfalls of the euro wanted nevertheless proceed in order to foster a unified political system which they felt would be more orderly, controlled by a collection of technocrats.

There is a similar school of thought with regard to a single world currency like the US dollar for example, that is to be controlled centrally by a cadre of technocrats that will be able to bring order, if not freedom, to everyone.   And somehow these benevolent technocrats always turn out to be merely human.  And then with time something less, much less.

After all, we must have order.  And in establishing that order, there must be collateral damage. Like Greece.

Have we forgotten the long line of thought that money and the banking system are utilities, that were put in place under state charter and regulated to provide for their function within a greater, productive economy in order to serve the public good?  And not as a tool of power and oppression by a privileged few?

Is this not the message one receives in reading of the law, and the long history of thought from the founders to the New Deal, with the usual digressions and abuses of monopoly power that will use a variety of means, including finances?  And not as an instrument primarily of state power and control over the people.

The central hypothesis of Professor McNamara seems to be that money, like most other things, is primariily an instrument of power, and that the deployment of the euro is an exercise in the centralization of power over a heterogeneous collection of nations and economies, and a means to bring Germany to its natural place at the head of a United Europe.

I am not saying that this view of public finances, banking and money as instruments of power is the intention or perspective of all economists.  Such a view of monetary theory exists as a willful distortion and abuse of economics, fostered by hubris and the will to power.

"What is good? All that enhances the feeling of power, the will to power, and the power itself in man. What is bad? All that proceeds from weakness. What is happiness? The feeling that power is increasing--that resistance has been overcome. Not contentment, but more power; not peace at any price, but war; not virtue, but competence."

Friedrich Nietzsche

It is a perspective that is shared by some of the powerful and the privileged.  It is just not normally associated with popular or democratic governments.   Just as other public utilities like the police are not intended as a force used to terrorize the people and quell any dissent, or the judiciary exists to permit and facilitate the abuses of a privileged few, while serving as an instrument of oppression over the general populace.  Such things can and do occur.  But these are aberrations, and not the norm, except in a society that has lost its conscience and moral moorings.

It is ironic that McNamara is a Professor of Government and Foreign Service at Georgetown, Carroll Quigley's old university.  I am not familiar with her body of work, and so admit I may be construing what she has written about the European Monetary Union, or was even being satirical.  But what she says calls to mind the writings of another Georgetown professor Carroll Quigley who, as you may recall, was Bill Clinton's mentor, and sponsor for his Rhodes Scholarship.

"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent private meetings and conferences."

Carroll Quigley, Tragedy and Hope, 1966

As old as Babylon— or Babel.

The amount of gold deliverable at these prices at the Comex seems to be a bit thin by historical standards. 

Gold Daily and Silver Weekly Charts - Whatever We Say It Is

"Obstinate ignorance is usually a manifestation of underlying political motives."

Michael Kalecki, Political Aspects of Full Employment

"The gap between what we know and what we should do about it is getting bigger and bigger."

C. K. Michaelson

"Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one."

Charles Mackay

 

The recent gold and silver smack down, which was artificial and predatory selling by any measure, was also the occasion of the largest volume ever on the GDX Gold Miners Index on the NYSE.  And through continuing abuse of the financial system, more and more productive assets fall into fewer and fewer hands.  We can see this growing inequality in our society now as a corrosive influence on the republic.

 

It will be interesting to see how this extreme modern relativism, the belief that power and might define all that is of value and right, will continue to unfold against the hard realities of other points of view, and the unyielding laws of nature, and dare I say, the moral arc of justice.

 

It is a kind of madness, and it affects to move people towards a spiral of self-destruction.   If we see that small lies work for others, then we must lie as well, but excuse it as something else, some exceptional necessity.   

 

And over time when many are lying and deceiving and distorting, then the falsehoods become greater and even greater, until a complete divergence from reality occurs.   And because of this divergence no objections or dissension from the accepted narrative can be tolerated.   

 

We will write the narrative, and we will control the source and distribution of money, because money is power.  We cannot create the vitality of organic growth, but we can deeply influence the distribution of ownership and resources.   We can be like gods, the looters and arbiters of the world.

 

And so we see the rise of the absolutist salesmen of relativism. There can be no exterior standard and no tolerance of any other belief.  Our control over the official story must become absolute, because it has become so disconnected from the reality, unable to withstand any objective examination, so fragile.

 

And then comes the deluge. 

 

Some intelligent and sensitive souls see what is happening and are appalled. 

 

Things still make sense.  You are not alone.  All of this has happened before.

 

Have a pleasant evening.

 

 

 

 

SP 500 and NDX Futures Daily Charts - Enter the Reivers

"The more I look at it, the less benign this bailout deal appears. Indeed it looks to me as if it was set up to do considerable damage to the Greek economy. Once this becomes apparent, Greeks are surely likely to change their minds about staying in the Euro. And I'm afraid I think this is the point. One way or another, Greece is on its way out of the Eurozone."

Frances Coppola, Great Greek Bank Drama: The Heist

 

After the bell Microsoft and Yahoo showed weak results and Apple was an outright miss.

The stock cheerleaders were nervously trying to find something nice to say about AAPL   All of these were getting lightly spanked after the bell.  These are our new gods of the market!

Let's see how long the illusion can be sustained.

This is not the kind of situation that lends itself to reform. Or recovery.

Have a pleasant evening.

 

 

 

Gold Daily and Silver Weekly Charts - Epitaph to a Tyrant

"Perfection, of a kind, was what he was after,

And the poetry he invented was easy to understand;

He knew human folly like the back of his hand,

And was greatly interested in armies and fleets;

When he laughed, respectable senators burst with laughter,

And when he cried, the little children died in the streets."

W. H. Auden, Epitaph To a Tyrant

The hit on the metals last night was obvious and heavy handed.

There were some additional antics during the day.

Silver was more robust against this, most likely because it is in an active month at The Bucket Shop.

I think the stock market has reached at least a short term apogee, and risk is grossly mispriced.

 

This is how it goes sometimes.

 

The commentary about the precious metals this afternoon on Bloomberg TV was laughable for the most part.

 

Have a pleasant evening.

 

 

 

SP 500 and NDX Futures Daily Charts - Roll Over Beethoven

If you have not done so already, it is probably time to take profits in US equities.

The advance is so narrow it is almost chilling, with the upward momentum in stocks down to a handful of new era tech giants.

Down volume was almost double up volume on the broader market. The wiseguys were taking profits.

The Paypal 'ipo' was brought out today in the fluffy new era atmosphere, and did well. And this was probably the greatest motivator behind this latest 'rally.'

IBM beat EPS estimates but missed revenues after the bull. IBM is, alas, a once great company that is now a dead man walking, sustained by accounting theatrics at these price levels.

These jokers are financial TV are incredible. I watched CNBC this afternoon and I could almost feel my IQ declining. They could, and probably should, be selling blenders on the Home Shopping Network.

Have a pleasant evening.

Thousands of Gold and Silver Futures Contracts Dumped at Market Open

This calculated slamdown was a little enthusiastic even by current market standards, or lack thereof.

About seven thousand gold futures contracts, representing 21.8 tonnes of paper gold, were dumped at market in less than one minute driving the price down to $1,080.

Several thousand contracts were bought back in the following two minutes.

No legitimate profit-oriented sellers would operate in this manner, since they are selling against themselves.  You do not dump large volume without limit into a quiet market unless you are trying to disrupt the price.

A similiar operation happened in silver.

Who would suspect a thing?  Certainly not the regulators, or even some market 'reformers.' Not when something is so obvious.

Oh, well done.

Zerohedge thinks that it might be another HFT inspired 'flash crash.'

I think this is another conveniently timed, clumsy attempt to clear out more of the August open interest and give a nice shot to the gut for any foolish enough to still buy options on the Comex. The next precious metals option expiry is on the 28th July.

Shanghai Gold Exchange Sees 61.8 Tonnes Withdrawn In Eighth Largest Week Ever - Talk To the Hand

"Gold has worked down from Alexander's time. When something holds good for two thousand years I do not believe it can be so because of prejudice or mistaken theory."

Bernard M. Baruch

Asia continues to add significant amounts of gold bullion to their wealth reserves.

Wall Street and its sycophants would like us to consider gold to be just 'a pet rock' or 'like trading sardines.'   And yet central banks have turned to be net buyers, and Asia and the Mideast continue to buy bullion in record amounts.   Talk to the Chan.

One of the few coherent things Alan Greenspan said was that statists of all persuasions, both right and left, have 'an almost hysterical antagonism towards gold.' This is because gold resists their will to power over others.

So why isn't gold 'working' at this moment in history?

"We hypothesize that, having learned from the misadventures of the 1960s, the policy elites, well-versed in the practice of financial engineering and market manipulation, would have seen no need to dump stocks of government gold reserves onto the market, 1960s style, to keep the price in check.

Instead, synthetic gold, sourced in pyramids of credit extended to bullion bankers by central banks with little or no claim on physical substance, have provided a more efficient, better-camouflaged form of intervention. COMEX synthetic gold and related over-the-counter derivatives are traded in macro strategies implemented by hedge funds, high-frequency trades, and commodity funds in pair trades with interest-rate, currencies, equity futures, or even more exotic offsets. The volumes traded are huge, and bear little resemblance to actual flows of physical metal.

We suspect that shorting gold has come to seem like a riskless proposition as long as there is confidence in the Fed. Synthetic gold is the perfect substance for a carry trade: an easy borrow with very low carrying cost and little upside basis risk. Such a hypothesis, in our opinion, does much to explain the incongruity of a declining gold price while fundamentals for paper currency, and the U.S. dollar in particular, obviously deteriorate; while demand for physical gold has exceeded new mine supply for several years running; and while above-ground 400-ounce .995-gold bars located in London, New York, and other financial capitals (in cohabitation with speculative trading activity in paper markets) have steadily dwindled and disappeared into Asian financial centers reformulated as .9999 kilo bars."

Tocqueville Gold Newsletter 2Q 2015

The dumping at market of very large amounts of paper assets into quiet market hours has been well documented in many places. It is a well worn market manipulating strategy abused by some very large trading desks, often playing with other people's money. Citi privately called it their 'Dr. Evil Strategy.'

It is funny how the systematic rigging of so many financially related markets has been revealed, but the blatant manipulation of the precious metals market, which is certainly knowable by anyone with a basic knowledge of the markets and a computer terminal, is so willfully ignored. A love of money, lust for power, and a lack of integrity will alloy to make people hypocrites.

When we see such trash articles being written, and passed along mindlessly by those who yearn to warm themselves by the fires of the oligarchs, we know that gold has cast a cold fear into the hearts of those who would be kings, and their privileged servants.

And considering the long, cynical rally in paper assets that culminated in the financial crisis of 2008, when people start believing in the power of fraud and willful distortion of markets, we can only say as we did then, this will end badly.

A man cannot serve two masters. He will love the one and come to hate the other.  You love what you serve.