28 December 2011

Gold Daily and Silver Weekly Charts - Dr. Bernanke's Imaginarium


They bombed the thin markets early on, running the stop loss orders and forcing liquidation not only in the futures but in the related markets like the miners and the ETFs.

The first chart shows this fairly well.

This permits a liquidation of certain assets to occur, profits on related plays and short positions and of course the obtaining of key assets on the cheap for the next ride up.

I hate to be a spoil sport but position limits will not really solve this. It would cramp their style of course, but it takes something like an uptick rule and market vigilance against throwing large orders into thin markets to prevent it.

I am sorry for those who are experiencing pain here. This will help you to assess any leverage you are using, which should be none. Also if you have a trading or short term focus and you have the latitude, eg. you are not a long only fund, you should be hedged or out of this until the downtrend breaks.

I have a loss on my bullion positions of about 4.6% thanks to hedging and holding no miners. I did have a few I picked up on a whim on Friday, but there were cut loose early today.

Wait for it. And never add to a losing position during a short term trend that is running against you. 'Averaging down' is for those who do not wish to remain in the game unless it is part of a hedging strategy.

I saw some definite signs of capitulation by the bulls today, but if Europe remains troubled we may not find a bottom until after the end of the year. Let's see how the overnight buying in Asia is going.





SP 500 and NDX Futures Daily Charts - Light Volumes


Watch for window dressing at the end of week unless Europe blows up.

These are just the preliminary portfolio adjustments no matter how much 'analysis' they may wish to wrap around this dead fish.




History Lesson


History Lesson by Arthur C. Clarke has been one of my favorite short stories since boyhood. It contains an allegorical lesson about the importance of context and assumptions in scientific and historical study. It has served me well throughout the years.

The story is of course an intellectual descendant of Plato's Allegory of the Cave, from Book VII of The Republic, which I also enjoyed as a boy, if you prefer to use a reference with a more high brow pedigree.

And now I would like to share an excerpt from it with you.

As the story begins, the cooling of the sun has turned the Earth into a cold world covered by ice, effectively destroying all life and preserving only a few remnants of human civilization.

But this cooling has had a beneficial effect on Venus, turning a once harsh world into a lush plant. After thousands of years, a reptilian race had arisen, and eventually become capable of interplanetary flight.

This race was intrigued by their sister planet, the Earth. A number of expeditions had retrieved fragments that showed intelligent life, but their understanding was still very limited.

As the story begins here, a recent expedition has retrieved several key artifacts, including one that is utterly unique, holding great promise.

...The warm ocean that still bore most of the young planet's life rolled its breakers languidly against
the sandy shore. So new was this continent that the very sands were coarse and gritty. There had not
yet been time enough for the sea to wear them smooth.

The scientists lay half in the water, their beautiful reptilian bodies gleaming in the sunlight. The
greatest minds of Venus had gathered on this shore from all the islands of the planet. What they were
going to hear they did not know, except that it concerned the Third World and the mysterious race that
had peopled it before the coming of the ice.

The Historian was standing on the land, for the instruments he wished to use had no love of water.
By his side was a large machine which attracted many curious glances from his colleagues. It was
clearly concerned with optics, for a lens system projected from it toward a screen of white material a
dozen yards away.

The Historian began to speak. Briefly he recapitulated what little had been discovered concerning the
Third Planet and its people.

He mentioned the centuries of fruitless research that had failed to interpret a single word of the
writings of Earth. The planet had been inhabited by a race of great technical ability. That, at least,
was proved by the few pieces of machinery that had been found in the cairn upon the mountain.

"We do not know why so advanced a civilization came to an end," he observed. "Almost certainly, it had
sufficient knowledge to survive an ice Age. There must have been some other factor of which we know
nothing. Possibly disease or racial degeneration may have been responsible. It has even been suggested
that the tribal conflicts endemic to our own species in prehistoric times may have continued on the
Third Planet after the coming of technology.

Some philosophers maintain that knowledge of machinery does not necessarily imply a high degree of
civilization, and it is theoretically possible to have wars in a society possessing mechanical power,
flight, and even radio. Such a conception is alien to our thoughts, but we must admit its possibility.
It would certainly account for the downfall of the lost race.

It has always been assumed that we should never know anything of the physical form of the creatures
who lived on Planet Three. For centuries our artists have been depicting scenes from the history of
the dead world, peopling it with all manner of fantastic beings. Most of these creations have
resembled us more or less closely, though it has often been pointed out that because we are reptiles
it does not follow that all intelligent life must necessarily be reptilian.

We now know the answer to one of the most baffling problems of history. At last, after hundreds of
years of research, we have discovered the exact form and nature of the ruling life on the Third
Planet."

There was a murmur of astonishment from the assembled scientists. Some were so taken aback that they
disappeared for a while into the comfort of the ocean, as all Venusians were apt to do in moments of
stress. The Historian waited until his colleagues reemerged into the element they so disliked. He
himself was quite comfortable, thanks to the tiny sprays that were continually playing over his body.
With their help he could live on land for many hours before having to return to the ocean.
The excitement slowly subsided and the lecturer continued:

"One of the most puzzling of the objects found on Planet Three was a flat metal container holding a
great length of transparent plastic material, perforated at the edges and wound tightly into a spool.
This transparent tape at first seemed quite featureless, but an examination with the new subelectronic
microscope has shown that this is not the case. Along the surface of the material, invisible to our
eyes but perfectly clear under the correct radiation, are literally thousands of tiny pictures. It is
believed that they were imprinted on the material by some chemical means, and have faded with the
passage of time.

These pictures apparently form a record of life as it was on the Third Planet at the height of its
civilization. They are not independent. Consecutive pictures are almost identical, differing only in
the detail of movement. The purpose of such a record is obvious. It is only necessary to project the
scenes in rapid succession to give an illusion of continuous movement. We have made a machine to do
this, and I have here an exact reproduction of the picture sequence.

The scenes you are now going to witness take us back many thousands of years, to the great days of
our sister planet. They show a complex civilization, many of whose activities we can only dimly
understand. Life seems to have been very violent and energetic, and much that you will see is quite
baffling.

It is clear that the Third Planet was inhabited by a number of different species, none of them
reptilian. That is a blow to our pride, but the conclusion is inescapable. The dominant type of life
appears to have been a two-armed biped. It walked upright and covered its body with some flexible
material, possibly for protection against the cold, since even before the Ice Age the planet was at a
much lower temperature than our own world. But I will not try your patience any further. You will now
see the record of which I have been speaking."

A brilliant light flashed from the projector. There was a gentle whirring, and on the screen appeared
hundreds of strange beings moving rather jerkily to and fro. The picture expanded to embrace one of
the creatures, and the scientists could see that the Historian's description had been correct.
The creature possessed two eyes, set rather close together, but the other facial adornments were a
little obscure. There was a large orifice in the lower portion of the head that was continually
opening and closing. Possibly it had something to do with the creature's breathing.

The scientists watched spellbound as the strange being became involved in a series of fantastic
adventures. There was an incredibly violent conflict with another, slightly different creature. It seemed
certain that they must both be killed, but when it was all over neither seemed any the worse.
Then came a furious drive over miles of country in a four wheeled mechanical device which was capable
of extraordinary feats of locomotion. The ride ended in a city packed with other vehicles moving in
all directions at breathtaking speeds. No one was surprised to see two of the machines meet head-on
with devastating results.

After that, events became even more complicated. It was now quite obvious that it would take many
years of research to analyze and understand all that was happening. It was also clear that the record
was a work of art, somewhat stylized, rather than an exact reproduction of life as it actually had
been on the Third Planet.

Most of the scientists felt themselves completely dazed when the sequence of pictures came to an end.
There was a final flurry of motion, in which the creature that had been the center of interest became
involved in some tremendous but incomprehensible catastrophe. The picture contracted to a circle,
centered on the creature's head.

The last scene of all was an expanded view of its face, obviously expressing some powerful emotion.
But whether it was rage, grief, defiance, resignation or some other feeling could not be guessed. The
picture vanished. For a moment some lettering appeared on the screen, then it was all over.

For several minutes there was complete silence, save for the lapping of the waves upon the sand. The
scientists were too stunned to speak. The fleeting glimpse of Earth's civilization had had a
shattering effect on their minds. Then little groups began to start talking together, first in
whispers and then more and more loudly as the implications of what they had seen became clearer.
Presently the Historian called for attention and addressed the meeting again.

"We are now planning," he said, "a vast program of research to extract all available knowledge from
this record. Thousands of copies are being made for distribution to all workers. You win appreciate
the problems involved. The psychologists in particular have an immense task confronting them.

"But I do not doubt that we shall succeed. In another generation, who can say what we may not have
learned of this wonderful race? Before we leave, let us look again at our remote cousins,
whose wisdom may have surpassed our own but of whom so little has survived."

Once more the final picture flashed on the screen, motionless this time, for the projector had been
stopped. With something like awe, the scientists gazed at the stiff figure from the past, while in
turn the little biped stared back at them with its characteristic expression of arrogant bad temper.

For the rest of time it would symbolize the human race. The psychologists of Venus would analyze its
actions and watch its every movement until they could reconstruct its mind. Thousands of books would
be written about it. Intricate philosophies would be contrived to account for its behavior.

But all. this labor, all this research, would be utterly in vain. Perhaps the proud and lonely figure
on the screen was smiling sardonically at the scientists who were starting on their age-long fruitless
quest.

Its secret would be safe as long as the universe endured, for no one now would ever read the lost
language of Earth. Millions of times in the ages to come those last few words would flash across the
screen, and none could ever guess their meaning:  

A Walt Disney Production.

Arthur C. Clarke, History Lesson

Whole pyramids of learned understanding, highly structured laws, and academic rules can be built on a set of false assumptions, or some principle or premise based not on context but in some intellectual misapprehension.

So it is with the efficient market theory or trickle down economics, for example. Or the idea that by feeding the 'job creators' until they are stuffed one might eventually improve the condition of the many by trickling down.

Granted, all too often these misconceptions of reality are by intent, just another facet in a general campaign of propaganda and deception. But their acceptance by the public still proves the danger of untested and unproven assumptions and building even highly ordered and intricate structures on false premises.

Whether it is in your study of the stock market, money, and economics, or of some translation and interpretation of an antique work, or in reading an essay about an idea or person in history, you may wish to keep this little story in mind.

All too often someone will make an outlandish assertion, and upon questioning it appears that their primary knowledge of the subject at hand is based upon the reading, or more likely viewing, of an essay or video by some individual or group promoting that particular interpretation of reality.  They have nothing else to judge it by, given their lack of investigation and knowledge, but it is duly enshrined in the pantheon of human thought as 'their opinion,' their private judgement.

And their position is often unassailable by reason, because it is not based in thought but in a system of belief. But it is not safeguarded by the intellectual constraints and dignified distance one must place on a religion as inherently a leap of faith beyond the limits of science.  Science and the supernatural are by definition not the same, but complementary.

When someone says, 'I do not believe that I have a soul or that there is a God,' I may pay attention on the most particular and technical of information, but how can one take someone seriously on philosophical and higher matters who is so dull and unfeeling as to consider themselves and their fellows to be apes?

One could spend a lifetime studying the stock markets trying to make sense of them and their movements, and build an impressive body of study and rules, but fail miserably despite all that work, because one has built upon the false premise that the game was honest and subject to natural laws, and not often rigged and controlled by insiders to the very extent that they can get away with it.

Or perhaps there is a belief in some economic system like 'market capitalism' controlled by an oligarchy through the manipulation of money and information for their own ends in the name of freedom,  for example.

It may be summed up in the familiar saying, 'A little learning is a dangerous thing' and perhaps, 'Beware of wolves in sheep's clothing.'

"Whereas the truth is that the State in which the rulers are most reluctant to govern is always the best and most quietly governed, and the State in which they are most eager, the worst...You must contrive for your future rulers another and a better life than that of a ruler, and then you may have a well-ordered State; for only in the State which offers this, will they rule who are truly rich, not in silver and gold, but in virtue and wisdom, which are the true blessings of life.

Whereas if they go to the administration of public affairs, poor and hungering after their own private advantage, thinking that hence they are to snatch the chief good, order there can never be; for they will be fighting about office, and the civil and domestic broils which thus arise will be the ruin of the rulers themselves and of the whole State."

Plato, The Republic

As with men and rulers, so with markets and money.

Greed is an excess of desire and lack of empathy and judgement, outside of the virtues, and is therefore most decidedly not 'good.'  A system built predominantly upon unrestrained greed, anger, envy, and pride will not, by definition, be virtuous but degenerative, unstable, and ultimately self-destructive if not put down by its victims first.
"The sad duty of government is to establish justice in a sinful world."

Reinhold Niebuhr

And I suspect that history will see our generation as deluded fools for having believed otherwise, forsaking a Constitution and a legacy that is based upon first principles, actively promoting the virtues of goodness, equality, moderation, the careful distribution of power, and both freedom and justice for all.

27 December 2011

Gold Daily and Silver Weekly Charts - Comex, What Is It Good For?



The Comex. What is it good for?

Originally it provided a useful platform for buyers and producers to hedge their risks and set markets based on supply and demand.

Now it seems to have degenerated into a platform for fraudulent price manipulation and the confiscation of productive capital by those who neither buy nor produce, but merely game the system and break the rules, simply because they can.

What is it good for? About this much.





SP 500 and NDX Futures Daily Charts - Much Ado About Nothing



Very light volumes.

Lack of interest? Apparently so.

And it looked like most of that thin volume was just the wiseguys tossing the hot potatoes around.




Net Asset Value Premiums of Certain Precious Metal Trusts and Funds




26 December 2011

Franklin Roosevelt's 1936 Address



Campaign Address at Madison Square Garden, New York City.
"We Have Only Just Begun to Fight."
October 31, 1936


Senator Wagner, Governor Lehman, ladies and gentlemen:

ON THE eve of a national election, it is well for us to stop for a moment and analyze calmly and without prejudice the effect on our Nation of a victory by either of the major political parties.

The problem of the electorate is far deeper, far more vital than the continuance in the Presidency of any individual. For the greater issue goes beyond units of humanity-it goes to humanity itself.

In 1932 the issue was the restoration of American democracy; and the American people were in a mood to win. They did win. In 1936 the issue is the preservation of their victory. Again they are in a mood to win. Again they will win.

More than four years ago in accepting the Democratic nomination in Chicago, I said: "Give me your help not to win votes alone, but to win in this crusade to restore America to its own people."

The banners of that crusade still fly in the van of a Nation that is on the march.

It is needless to repeat the details of the program which this Administration has been hammering out on the anvils of experience. No amount of misrepresentation or statistical contortion can conceal or blur or smear that record. Neither the attacks of unscrupulous enemies nor the exaggerations of over-zealous friends will serve to mislead the American people.

What was our hope in 1932? Above all other things the American people wanted peace. They wanted peace of mind instead of gnawing fear.

First, they sought escape from the personal terror which had stalked them for three years. They wanted the peace that comes from security in their homes: safety for their savings, permanence in their jobs, a fair profit from their enterprise.

Next, they wanted peace in the community, the peace that springs from the ability to meet the needs of community life: schools, playgrounds, parks, sanitation, highways- those things which are expected of solvent local government. They sought escape from disintegration and bankruptcy in local and state affairs.

They also sought peace within the Nation: protection of their currency, fairer wages, the ending of long hours of toil, the abolition of child labor, the elimination of wild-cat speculation, the safety of their children from kidnappers.

And, finally, they sought peace with other Nations-peace in a world of unrest. The Nation knows that I hate war, and I know that the Nation hates war.

I submit to you a record of peace; and on that record a well-founded expectation for future peace—peace for the individual, peace for the community, peace for the Nation, and peace with the world.

Tonight I call the roll—the roll of honor of those who stood with us in 1932 and still stand with us today.

Written on it are the names of millions who never had a chance—men at starvation wages, women in sweatshops, children at looms.

Written on it are the names of those who despaired, young men and young women for whom opportunity had become a will-o'-the-wisp.

Written on it are the names of farmers whose acres yielded only bitterness, business men whose books were portents of disaster, home owners who were faced with eviction, frugal citizens whose savings were insecure.

Written there in large letters are the names of countless other

Americans of all parties and all faiths, Americans who had eyes to see and hearts to understand, whose consciences were burdened because too many of their fellows were burdened, who looked on these things four years ago and said, "This can be changed. We will change it."

We still lead that army in 1936. They stood with us then because in 1932 they believed. They stand with us today because in 1 936 they know. And with them stand millions of new recruits who have come to know.

Their hopes have become our record.

We have not come this far without a struggle and I assure you we cannot go further without a struggle.

For twelve years this Nation was afflicted with hear-nothing, see-nothing, do-nothing Government. The Nation looked to Government but the Government looked away. Nine mocking years with the golden calf and three long years of the scourge! Nine crazy years at the ticker and three long years in the breadlines! Nine mad years of mirage and three long years of despair! Powerful influences strive today to restore that kind of government with its doctrine that that Government is best which is most indifferent.

For nearly four years you have had an Administration which instead of twirling its thumbs has rolled up its sleeves. We will keep our sleeves rolled up.

We had to struggle with the old enemies of peace— business and financial monopoly, speculation, reckless banking, class antagonism, sectionalism, war profiteering.

They had begun to consider the Government of the United States as a mere appendage to their own affairs. We know now that Government by organized money is just as dangerous as Government by organized mob.

Never before in all our history have these forces been so united against one candidate as they stand today. They are unanimous in their hate for me—and I welcome their hatred.

I should like to have it said of my first Administration that in it the forces of selfishness and of lust for power met their match. I should like to have it said of my second Administration that in it these forces met their master.

The American people know from a four-year record that today there is only one entrance to the White House—by the front door. Since March 4, 1933, there has been only one pass-key to the White House. I have carried that key in my pocket. It is there tonight. So long as I am President, it will remain in my pocket.

Those who used to have pass-keys are not happy. Some of them are desperate. Only desperate men with their backs to the wall would descend so far below the level of decent citizenship as to foster the current pay-envelope campaign against America's working people. Only reckless men, heedless of consequences, would risk the disruption of the hope for a new peace between worker and employer by returning to the tactics of the labor spy.

Here is an amazing paradox! The very employers and politicians and publishers who talk most loudly of class antagonism and the destruction of the American system now undermine that system by this attempt to coerce the votes of the wage earners of this country. It is the 1936 version of the old threat to close down the factory or the office if a particular candidate does not win. It is an old strategy of tyrants to delude their victims into fighting their battles for them.

Every message in a pay envelope, even if it is the truth, is a command to vote according to the will of the employer. But this propaganda is worse—it is deceit.

They tell the worker his wage will be reduced by a contribution to some vague form of old-age insurance. They carefully conceal from him the fact that for every dollar of premium he pays for that insurance, the employer pays another dollar. That omission is deceit.

They carefully conceal from him the fact that under the federal law, he receives another insurance policy to help him if he loses his job, and that the premium of that policy is paid 100 percent by the employer and not one cent by the worker. They do not tell him that the insurance policy that is bought for him is far more favorable to him than any policy that any private insurance company could afford to issue. That omission is deceit.

They imply to him that he pays all the cost of both forms of insurance. They carefully conceal from him the fact that for every dollar put up by him his employer puts up three dollars—three for one. And that omission is deceit.

But they are guilty of more than deceit. When they imply that the reserves thus created against both these policies will be stolen by some future Congress, diverted to some wholly foreign purpose, they attack the integrity and honor of American Government itself. Those who suggest that, are already aliens to the spirit of American democracy. Let them emigrate and try their lot under some foreign flag in which they have more confidence.

The fraudulent nature of this attempt is well shown by the record of votes on the passage of the Social Security Act. In addition to an overwhelming majority of Democrats in both Houses, seventy-seven Republican Representatives voted for it and only eighteen against it and fifteen Republican Senators voted for it and only five against it. Where does this last-minute drive of the Republican leadership leave these Republican Representatives and Senators who helped enact this law?

I am sure the vast majority of law-abiding businessmen who are not parties to this propaganda fully appreciate the extent of the threat to honest business contained in this coercion.

I have expressed indignation at this form of campaigning and I am confident that the overwhelming majority of employers, workers and the general public share that indignation and will show it at the polls on Tuesday next.

Aside from this phase of it, I prefer to remember this campaign not as bitter but only as hard-fought. There should be no bitterness or hate where the sole thought is the welfare of the United States of America. No man can occupy the office of President without realizing that he is President of all the people.

It is because I have sought to think in terms of the whole Nation that I am confident that today, just as four years ago, the people want more than promises.

Our vision for the future contains more than promises.

This is our answer to those who, silent about their own plans, ask us to state our objectives.

Of course we will continue to seek to improve working conditions for the workers of America—to reduce hours over-long, to increase wages that spell starvation, to end the labor of children, to wipe out sweatshops. Of course we will continue every effort to end monopoly in business, to support collective bargaining, to stop unfair competition, to abolish dishonorable trade practices. For all these we have only just begun to fight.

Of course we will continue to work for cheaper electricity in the homes and on the farms of America, for better and cheaper transportation, for low interest rates, for sounder home financing, for better banking, for the regulation of security issues, for reciprocal trade among nations, for the wiping out of slums. For all these we have only just begun to fight.

Of course we will continue our efforts in behalf of the farmers of America. With their continued cooperation we will do all in our power to end the piling up of huge surpluses which spelled ruinous prices for their crops. We will persist in successful action for better land use, for reforestation, for the conservation of water all the way from its source to the sea, for drought and flood control, for better marketing facilities for farm commodities, for a definite reduction of farm tenancy, for encouragement of farmer cooperatives, for crop insurance and a stable food supply. For all these we have only just begun to fight.

Of course we will provide useful work for the needy unemployed; we prefer useful work to the pauperism of a dole.

Here and now I want to make myself clear about those who disparage their fellow citizens on the relief rolls. They say that those on relief are not merely jobless—that they are worthless. Their solution for the relief problem is to end relief—to purge the rolls by starvation. To use the language of the stock broker, our needy unemployed would be cared for when, as, and if some fairy godmother should happen on the scene.

You and I will continue to refuse to accept that estimate of our unemployed fellow Americans. Your Government is still on the same side of the street with the Good Samaritan and not with those who pass by on the other side.

Again—what of our objectives?

Of course we will continue our efforts for young men and women so that they may obtain an education and an opportunity to put it to use. Of course we will continue our help for the crippled, for the blind, for the mothers, our insurance for the unemployed, our security for the aged. Of course we will continue to protect the consumer against unnecessary price spreads, against the costs that are added by monopoly and speculation. We will continue our successful efforts to increase his purchasing power and to keep it constant.

For these things, too, and for a multitude of others like them, we have only just begun to fight.

All this—all these objectives—spell peace at home. All our actions, all our ideals, spell also peace with other nations.

Today there is war and rumor of war. We want none of it. But while we guard our shores against threats of war, we will continue to remove the causes of unrest and antagonism at home which might make our people easier victims to those for whom foreign war is profitable. You know well that those who stand to profit by war are not on our side in this campaign.

"Peace on earth, good will toward men"—democracy must cling to that message. For it is my deep conviction that democracy cannot live without that true religion which gives a nation a sense of justice and of moral purpose. Above our political forums, above our market places stand the altars of our faith—altars on which burn the fires of devotion that maintain all that is best in us and all that is best in our Nation.

We have need of that devotion today. It is that which makes it possible for government to persuade those who are mentally prepared to fight each other to go on instead, to work for and to sacrifice for each other. That is why we need to say with the Prophet: "What doth the Lord require of thee—but to do justly, to love mercy and to walk humbly with thy God." That is why the recovery we seek, the recovery we are winning, is more than economic. In it are included justice and love and humility, not for ourselves as individuals alone, but for our Nation.

That is the road to peace.


23 December 2011

Gold Daily and Silver Weekly Charts



Today was hardly worth the time and energy expended to watch them fluff the markets to suit their year end bonuses.

Have a Merry Christmas everyone.