Net Asset Value Premiums of Certain Precious Metal Trusts and Funds

Premium are back to a more 'normal' profile than they have been during the concerted selling by the funds, but are still modest by historical measures.

It was nice to see gold take out 1600 and silver 29.00. The rest of the week will tell the tale.

These round prices were around the 'max pain' figures for options expiration, so it is no surprise that this is where we ended up for expiration.

 

Goldman, Banking, Washington, and Business Ethics: Cultural Observations from Two Smiths

"I'm a very firm believer that a liar is a cheat and a thief and a crook. I don't like liars. I never lie. I always told my own child, "If you murder somebody, tell me. I'll help you hide the body. But don't you lie to me."

"We don't pay taxes. Only the little people pay taxes."

Leona Helmsley


"There is not a more perilous or immoral habit of mind than the sanctifying of success.”

Lord Acton

I wish that C-Span would permit their videos to be 'embeddable.'

Greg's talk is excellent, and thanks to C-Span the video quality is good.


Greg Smith Speaking At Stanford on His Experience at Goldman and Reasons for the Corrosive Decline in Business Ethics


Speaking of excellent essays on corruption, Yves Smith has written a wonderful piece titled, Jack Lew’s Grotesque Citi Employment Deal and the Institutionalization of Corruption.

Corruption, facilitated by the credibility trap, is the biggest problem facing the West today. That is the real subsidy, the most debilitating entitlement.

It is the belief of the elite that the power of their office is an achievement that rewards them with the right to lie, cheat and steal, both for themselves and their friends.

Although it is most important to understand that they would be shocked and insulted if one uses those words, lie, cheat and steal, to describe what they are doing.  They view themselves as exceptionally hard working, as obligated by their natural gifts and superiority.

Through a long indoctrination that starts sometimes in their families, but is most often affirmed in their elite schools and with their circle of privileged friends, they learn to rationalize selective moral behaviour not as immoral but as 'the entitlement of success.'  And they are supported by a horde of morally ambivalent enablers who will tell them whatever they wish to hear.

There are one set of rules for themselves and their friends, and another set of rules for the rest.

Few who actually do evil consciously choose to be evil.  They rationalize what they do in any number of ways, but the deceit often hinges on their own natural superiority, and the objectification and denigration of the other.  We are makers, and they are takers. Although many may work hard, they see their own work as having special value and merit, while the actions of the others are inconsequential and unworthy.

Given enough time, their rationalizations become an ideology, desensitized to the meaning and significance of others outside their own select group.  This supremacy of ideology empties their souls, and opens the door to mass privation and even murder, although rarely done by their own hands.

This is what Glenn Greenwald calls 'justice for some.' Or even earlier what George Orwell captured in the slogan, 'Some animals are more equal than others.'

And just to be clear on this, with regard to the Anglo-American political situation, the tragedy is not that just some are corrupted, which is always the case. The tragedy is that the Democrats and the Labour Party learned that they could become as servilely corrupted by Big Money as the Republicans and the Conservative Party, while maintaining the illusion of serving their traditional political base.

And it has rewarded them very well in terms of extraordinarily well-funded political power, and almost unbelievable personal enrichment afterwards.  

In such a climate of corruption,  political discourse loses the vitality of ideas and compromise for the general good, and take on the character of competing gangs and crime families, engaged in aggressive schemes and protracted turf wars, tottering from one pitched battle and crisis to another.

"A credibility trap is a condition wherein the financial, political and informational functions of a society have been compromised by corruption and fraud, so that the leadership cannot effectively reform, or even honestly address, the problems of that system without impairing and implicating, at least incidentally, a broad swath of the power structure, including themselves.

The status quo tolerates the corruption and the fraud because they have profited at least indirectly from it, and would like to continue to do so. Even the impulse to reform within the power structure is susceptible to various forms of soft blackmail and coercion by the system that maintains and rewards.

And so a failed policy and its support system become self-sustaining, long after it is seen by objective observers to have failed. In its failure it is counterproductive, and an impediment to recovery in the real economy. Admitting failure is not an option for the thought leaders who receive their power from that system.

The continuity of the structural hierarchy must therefore be maintained at all costs, even to the point of becoming a painfully obvious hypocrisy.

And you know how I feel about this.

The Banks must be restrained, and the financial system reformed, with balance restored to the economy, before there can be any sustainable recovery.

The problem which the modern world has not yet grappled is how to react to the rise of a global elite, which considers itself the children of a power which is above national restraints, and a law unto themselves.

Their success has been propelled by the dominance of Anglo-American financialization, and the rise of oligarchies in Russia, China, Latin America, and India.  Countervailing power has been co-opted and subsumed.  Any opposition has become marginalized and isolated.

The new oligarchs are supported by their fiat currencies, which together the increase of insubstantial 'cashlessness' in wealth,  provides the ability to define and allocate value at will. 

They have a penchant towards globalization and deregulation to support selective justice, to the extreme detriment of local rule, and individual choice and freedom.   Above all, they are a law unto themselves, above what they consider subhuman restraint.  Übermenschen.

“Our light-speed, globally connected economy has led to the rise of a new super-elite that consists, to a notable degree, of first- and second-generation wealth. Its members are hardworking, highly educated, jet-setting meritocrats who feel they are the deserving winners of a tough, worldwide economic competition—and many of them, as a result, have an ambivalent attitude toward those of us who didn't succeed so spectacularly. Perhaps most noteworthy, they are becoming a transglobal community of peers who have more in common with one another than with their countrymen back home. Whether they maintain primary residences in New York or Hong Kong, Moscow or Mumbai, today's super-rich are increasingly a nation unto themselves...

A multibillion-dollar bailout and Wall Street’s swift, subsequent reinstatement of gargantuan bonuses have inspired a narrative of parasitic bankers and other elites rigging the game for their own benefit. And this, in turn, has led to wider—and not unreasonable—fears that we are living in not merely a plutonomy, but a plutocracy, in which the rich display outsize political influence, narrowly self-interested motives, and a casual indifference to anyone outside their own rarefied economic bubble."

Chrystia Freeland, The Rise of the New Global Elite

Of course this tendency is not new in history, as it is a facet of the human heart, and the empires of the past. But the scope of it is something rarely seen before this. And it is supported by technologies for mass action and control that seem terrifyingly powerful and new.

And as hard as it may be to believe, this too shall pass. But as always, we have some work to do in our own time.

“The mills of God grind slowly, yet they grind exceeding small;
Though with patience He stands waiting, with exactness He grinds all.”

Henry Wadsworth Longfellow

Gold Daily And Silver Weekly Charts - Comex Option Expiration - Goldfinger

Gold and Silver had decent bounces off deeply oversold levels on this Comex expiration.

Stocks slumped hard, largely on renewed recognition that the sequester and Europe are still a problem.

There was really nothing new said, as VIX spiked, but the bubble in stocks had simply run its course for now as the last of the big caps reported their earnings.

What next? Keep an eye on the sequester in the US and on Europe in general. There are some signs of a growing problem in greatly overpriced Chinese real estate.

I am looking at this bounce to see how gold handles the 50 percent retracement level of this big waterfall decline, which was stage managed by the funds and probably the bullion banks.

Will this be a v-bottom, a multiply tested bottom, or no bottom at all?

The metals bears have come far and fast, and are paying little attention to their ability to supply the market at these prices.  This is an expedition of opportunity, intended to set up a wash and rinse.  But there are a lot of buyers out there, and they are seeking actual bullion and not a paper promise. 

The levels of open interest on the Comex during this decline, as well as who was doing the selling, were remarkably significant.  And likely to be ignored by the market 'regulators.'

SP 500 and NDX Futures Daily Charts - Risk Off, Bubble Down, Berlusconi-style

This was the worst daily sell off in US equities since last November.

The spokesmodels were blaming this on 'The Three B's: Berlusconi, Bernanke, and Boehner.'

That is of course a thin film to cover what really happened today, which is that the bubble rally of the past two months or so, led by the relentless buying of the SP futures and the market manipulation of the big funds, let some air out today as big cap earnings drew to a close.

As it turns out Mr. Boehner had absolutely nothing new to say, except to repeat the same rhetoric about no more tax revenues including the closing of loopholes.   He took a hard line on any tax increases.  Eric Cantor echoed the same thing.

And Bernanke will say very little tomorrow, unless he makes a serious policy statement mistake.

But the surprise that Berlusconi garnered more votes than expected, by appealing to the anti-austerity forces, cautioned many that their optimism of a new anschluss in Europe may not happen quite so easily and broadly. It does not matter that Berlusconi is a star of the opera buffa genre of Italian politics.  And it certainly did not justify this volatile of a sell off, except that stocks had run quite too far and therefore the underpinnings of the markets were inherently unstable.

Let's see if the bubble in financial assets will take a bigger pause, is done, or is merely taking profits in advance of another leg up.  Keep an eye on Europe. 

Net Asset Value Premiums of Certain Precious Metal Trusts and Funds - Afternoon Update

Rather modest still by historical measures.

This has been updated at 3:00 PM in the second chart below.

As a reminder, today is the Comex option expiration.   As you may recall, I think the real test of the metals will come tomorrow and the next two days afterward, as the US dallies on the edge once again.

One has to wonder if the manipulation of the precious metal markets by the funds in this particular leg of the market could be much more obvious.

Well it is a 'risk off' day as there is a renewed recognition of the ongoing troubles in Europe, as exemplified by the Italian elections. As if.

And as you may have heard, there is some concern about a collapsing real estate market in China.

Not to be left out of the nuttiness factor, the erstwhile Speaker of the House, Mr. Boehner, has called for a Press Conference just after the NY markets close.  One might suspect he will be discussing the Sequestration.  Wouldn't you like to know what he is going to say?  Don't you think that some market insiders do?  It is a full service kleptocracy for those who are willing to pay.

Bernanke testifies tomorrow.  It might be more effectively revealing if given under oath in front of a grand jury, rather than to his as yet unnamed co-conspirators in Congress.  Yeah, snarky. I know.  But true, don't you think?

How can such a brainy macher hope to fig leaf himself in the future with 'the CEO defense?'  Yes, it worked for Greenspan, but he was a disciple of Ayn Rand and so his plea of insanity had more substance.

On the 70th Anniversary of the Execution of Sophie Scholl, 22 February 1943

"Many people think of our times as being the last before the end of the world. The evidence of horror all around us makes this seem possible.

But isn't that an idea of only minor importance? Doesn't every human being, no matter which era he lives in, always have to reckon with being accountable to God at any moment? Can I know whether I'll be alive tomorrow morning?

A bomb could destroy all of us tonight. And then my guilt would not be one bit less than if I perished together with the earth and the stars.”

Sophie Scholl


"Love does not make you weak, because it is the source of all strength, but it makes you see the nothingness of the illusory strength on which you depended before you knew it."

Léon Bloy

As you know, I have been commemorating the anniversary of Die Weiße Rose, the Munich Students Movement, and the series of leaflets which they produced and distributed in Nazi Germany as a statement of conscience during the height of the reign of terror.

I do not think it is possible for any one of us to genuinely appreciate the courage it takes to do something like this. And I hope that we never do come to understand such an extraordinary vocation to the same degree.  But each one of us is called to act, in our own way, and in our own time.

“The real damage is done by those millions who want to 'get by.'   The ordinary men who just want to be left in peace. Those who don’t want their lives disturbed by anything bigger than themselves. Those with no sides and no causes. Those who won’t take measure of their own strength, for fear of antagonizing their own weakness. Those who don’t like to make waves—or enemies.

Those for whom freedom, honour, truth, and principles are only literature. Those who live small, love small, die small. It’s the reductionist approach to life: if you keep it small, you’ll keep it under control. If you don’t make any noise, the bogeyman won’t find you.

But it’s all an illusion, because they die too, those people who roll up their spirits into tiny little balls so as to be safe. Safe?! From what? Life is always on the edge of death; narrow streets lead to the same place as wide avenues, and a little candle burns itself out just like a flaming torch does. I choose my own way to burn.”

Sophie Scholl

What is surprising is not that we are called to do so much, but rather, so little.  Love and be grateful to God, treat people as you would like to be treated with respect, kindness, and forgiveness.  Do not lie or steal or cheat,  do not be proud and look down on your fellow creatures, and act with honor and respect for the gifts of His creation. And when we fail through weakness, we are readily forgiven. 'Can you not watch with me, for even one hour?'

But all too often we bargain away our souls, rebelling from even these slight and reasonable requests-- and for so little.

The White Rose
Second Leaflet
Munich, 1942

We will not be silent.

It is impossible to engage in intellectual discourse with National Socialist philosophy, for if there were such an entity, one would have to try by means of analysis and discussion either to prove its validity or to combat it. In actuality, however, we face a totally different situation.

At its very inception this movement depended on the deception and betrayal of one's fellow man; even at that time it was inwardly corrupt and could support itself only by constant lies. After all, Hitler states in an early edition of "his" book (a book written in the worst German I have ever read, in spite of the fact that it has been elevated to the position of the Bible in this nation of poets and thinkers): "It is unbelievable, to what extent one must betray a people in order to rule it."

If at the start this cancerous growth in the nation was not particularly noticeable, it was only because there were still enough forces at work that operated for the good, so that it was kept under control. As it grew larger, however, and finally in an ultimate spurt of growth attained ruling power, the tumor broke open, as it were, and infected the whole body.

The greater part of its former opponents went into hiding. The German intellectuals fled to their cellars, there, like plants struggling in the dark, away from light and sun, gradually to choke to death.

Now the end is at hand. Now it is our task to find one another again, to spread information from person to person, to keep a steady purpose, and to allow ourselves no rest until the last man is persuaded of the urgent need of his struggle against this system. When thus a wave of unrest goes through the land, when "it is in the air," when many join the cause, then in a great final effort this system can be shaken off.

After all, an end in terror is preferable to terror without end.

We are not in a position to draw up a final judgment about the meaning of our history. But if this catastrophe can be used to further the public welfare, it will be only by virtue of the fact that we are cleansed by suffering; that we yearn for the light in the midst of deepest night, summon our strength, and finally help in shaking off the yoke which weighs on our world.

We do not want to discuss here the question of the Jews, nor do we want in this leaflet to compose a defense or apology. No, only by way of example do we want to cite the fact that since the conquest of Poland three hundred thousand Jews have been murdered in this country in the most bestial way.

Here we see the most frightful crime against human dignity, a crime that is unparalleled in the whole of history. For Jews, too, are human beings - no matter what position we take with respect to the Jewish question - and a crime of this dimension has been perpetrated against human beings.

Someone may say that the Jews deserve their fate. This assertion would be a monstrous impertinence; but let us assume that someone said this - what position has he then taken toward the fact that the entire Polish aristocratic youth is being annihilated? (May God grant that this program has not yet fully achieved its aim as yet!)

All male offspring of the houses of the nobility between the ages of fifteen and twenty were transported to concentration camps in Germany and sentenced to forced labor, and all the girls of this age group were sent to Norway, into the bordellos of the SS!

Why tell you these things, since you are fully aware of them - or if not of these, then of other equally grave crimes committed by this frightful sub- humanity? Because here we touch on a problem which involves us deeply and forces us all to take thought.

Why do German people behave so apathetically in the face of all these abominable crimes, crimes so unworthy of the human race? Hardly anyone thinks about that.

It is accepted as fact and put out of mind. The German people slumber on in their dull, stupid sleep and encourage these fascist criminals; they give them the opportunity to carry on their depredations; and of course they do so.

Is this a sign that the Germans are brutalized in their simplest human feelings, that no chord within them cries out at the sight of such deeds, that they have sunk into a fatal consciencelessness from which they will never, never awake?

It seems to be so, and will certainly be so, if the German does not at last start up out of his stupor, if he does not protest wherever and whenever he can against this clique of criminals, if he shows no sympathy for these hundreds of thousands of victims. He must evidence not only sympathy; no, much more: a sense of complicity in guilt.

For through his apathetic behavior he gives these evil men the opportunity to act as they do; he tolerates this "government" which has taken upon itself such an infinitely great burden of guilt; indeed, he himself is to blame for the fact that it came about at all...

Please make as many copies of this leaflet as you can and distribute them.

Thankfully few are called to the martyr's crown.  But we are all called to take up our cross and follow, each day, in each of our own small ways. That is all most of us can do-- be still, and faithful, and wait on the Lord in our calling. 

And above all do not add to or assist, in any way, the evil in the world, especially by condemning or harming those who stand up against its onslaught.  That is Pilate's sin, to ask 'What is truth' and turn away and lie, if only to ourselves, while looking truth in the face, for the sake of expediency. It is a sin against the Spirit, and one that will not be easily forgiven.

We may believe what we will.   But we will be held accountable for our beliefs.

"I was satisfied that I wasn't personally to blame and that I hadn't known about those things. I wasn't aware of the extent of the crimes. But one day I went past the memorial plaque which had been put up for Sophie Scholl in Franz Josef Strasse, and I saw that she was born the same year as me, and she was executed the same year I started working for Hitler. And at that moment I actually sensed that it was no excuse to be young, and that it would have been possible to find things out."

Traudl Junge,  Im toten Winkel - Hitler's Sekretärin

The saddest words in any language are those of irreparable regret, that come to haunt us in our last hours, 'If only...'



On 22 February 1943, Scholl, her brother Hans and their friend Christoph Probst were found guilty of treason and condemned to death. They were all beheaded by executioner Johann Reichhart in Munich's Stadelheim Prison only a few hours later, at 17:00 hrs. The execution was supervised by Walter Roemer, the enforcement chief of the Munich district court.

Prison officials, in later describing the scene, emphasized the courage with which she walked to her execution. Her last words were:

"How can we expect righteousness to prevail when there is hardly anyone willing to offer themselves up individually for a righteous cause?

Such a fine, sunny day, and I have to go."

The White Rose
Fourth Leaflet
Munich, 1942

We will not be silent.

"...It is the time of the harvest, and the reaper cuts into the ripe grain with wide strokes. Mourning takes up her abode in the country cottages, and there is no one to dry the tears of the mothers. Yet Hitler feeds those people whose most precious belongings he has stolen and whom he has driven to a meaningless death with lies.

Every word that comes from Hitler's mouth is a lie. When he says peace, he means war, and when he blasphemously uses the name of the Almighty, he means the power of evil, the fallen angel, Satan. His mouth is the foul maw of Hell, and his power is at bottom accursed. True, we must conduct a struggle against the Nazi terrorist state with rational means; but whoever today still doubts the reality, the existence of demonic powers, has failed by a wide margin to understand the metaphysical background of this war.

Behind the concrete, the visible events, behind all objective, logical considerations, we find the irrational element: The struggle against the demon, against the servants of the Antichrist.

Everywhere and always demonic powers lurk in the dark, waiting for the moment when man is weak; when of his own volition he leaves his place in Creation, as founded for him by God in freedom; when he yields to the force of evil, he separates himself from the powers of a higher order; and after voluntarily taking the first step, he is driven on to the next and the next at a furiously accelerating rate.

Everywhere, and at times of greatest trials, men have appeared, prophets and saints who cherished their freedom, who preached the One God and who with His help brought the people to a reversal of their downward course. Man is free, to be sure, but without the true God he is defenseless against the principle of evil. He is a like rudderless ship, at the mercy of the storm, an infant without his mother, a cloud dissolving into thin air..."

Please distribute this as widely as possible.

"Isn't it a riddle and awe-inspiring that things can be so beautiful, despite the horror? I've seen something wondrous peering through my joy in the beautiful, a sense of its creator...Only people can be truly ugly, because they have free will to separate themselves from this song of praise.

It often seems they will drown out this hymn with cannon thunder, curses, and blasphemy. But I have realized they will not succeed. And so I want to throw myself on the side of the victor.”

Sophie Scholl

Gold Daily and Silver Weekly Charts - Life During Wartime - Moody's Downgrades UK

After the bell Moody's tarnished sterling by downgrading UK debt from its treasured AAA rating. I suspect that this is in advance of fresh downgrades for Europe, and perhaps the US if the sequester rocks the corporatist boat. Spending cuts are for the little people.

The currency wars continue. I have intra-day commentary on Financial Dreadnoughts in Times of Currency Wars, among other things.

The idea of 'financial dreadnoughts' comes from an idea I had in about 2002, when I considered how I might wish to arrange things if I wanted to give the Fed and Treasury the latitude to act economically in the aftermath of a financial crisis while engaging in a currency war to support the Anglo-American petro-dollar.

I should add the significant caveat that incompetence, careerism, and corruption explain all the same things, much more simply, and with a certain experiential credibility. I hate to attribute to Machiavellian intent what can be attributed to unprincipled self-serving stupidity. And by the way in which these graspingly inept jokers have been blowing things up, in perfectly avoidable crisis after crisis, that might be a very good bet indeed.

Comex Option Expiration next week. I will be watching the action after expiration to try and get a better sense of where we are in this cycle of market monkey business.

The COT shows that as of Tuesday the hedge funds had deepened their short position in gold quite a bit in the combined futures/options categary, in preparation for a takedown. Next week's report should give us some idea of how things went into the expiration.

Have a pleasant weekend.

SP 500 and NDX Futures Daily Charts - Damn the Sequester, Full Speed Ahead

Stocks managed to totter into the weekend while holding support.

Excelsior!

And yes, a pun.

In watching the video below, Galton and Eugenics, I am reminded of some of the recent things which I have read, and the general current of policy talk, about the natural supremacy of the elite in Europe and America, and their entitlement to the spoils in return for their leadership through crisis.

See you Sunday evening.