Twilight's Last Gleaming

If you think you are disappointed in this "reformer" the next one will
probably make you want to take the gas pipe.

Next up: Stocks to Buy for Armageddon and the New Triangular Trade

SP 500 and NDX December Future Daily Charts

"But, once again, I'll get on my soapbox and shout from the top of my lungs that buying U.S. Treasuries is a Ponzi scheme that will all come crashing down on you when the Fed removes their stimulus. Sure it won't be now, or in the next 6 months, but this Treasury Bubble will pop one day, and when it does, the mass exodus to the exit door will be so jammed, that everyone will get hurt."

Chuck Butler, Everbank

Gold Daily chart

Truer words were never spoken:

"One thing I am sure of is that as this situation plays out and as gold and silver rally higher, the reasons given by some as to why the precious metals should not be doing what they are doing, rising higher in price, will become increasingly strident, insistent, and at times unintentionally funny because they are so disconnected and inappropriate compared to reality." Jesse

Gold Daily and Silver Weekly Charts

This is what triggered the selloff in silver today, but the price was rather extended above trend when the news came out. The exchange gave some relief to the short interest.

CME Group to Raise Silver Margins by 30 Percent

NEW YORK, Nov 9 (Reuters) - CME Group said on Tuesday it will raise its silver futures trading margins by 30 percent to $6,500 an ounce from $5,000 an ounce effective Wednesday.

U.S. silver futures surged as much as 6 percent before retreating, with volume rising to an all-time high on Tuesday, boosted by extreme price volatility and possible short covering, traders said.

Also read Three's Company: Silver Margin Change by Jim Rickards

I do not see this as impairing the rally unless stocks undergo a sustained selloff. I would prefer to see a steadier, non-parabolic rise that slowly roasts the big short interest on a spit of their own construction.

SP 500 and NDX December Futures Daily Charts: SP Weekly Chart At Key Resistance

Looking at the SP weekly chart at the bottom, if the Banks and the Bulls can break it out here and stick it above 1250 they could make a viable effort at another asset bubble.

Net Asset Value of Certain Precious Metal Trusts and Funds: Wall Street Takes 8 Percent of M1

Notable that the Gold/Silver price ratio has dropped below 50.

I have noticed that the Sprott Gold Bullion Fund units outstanding is fluctuating slightly. I wonder if the trust is buying and selling their units in the market on a low scale basis for purposes of cash management. The amount of bullion held is not changing.

If you click on the category name "Net Asset Values" at the bottom of this entry you can see the prior reports like this.

I expect gold and silver to meet our forecast targets of 1450 and 30 barring a meaningful correction in US equity prices. The rally is powerful indeed as people and institutions around the world flee the actions of the US banking system and the fraudulent financial activity that surrounds them. It seems intimately tied to the US dollar, in its creation, use, and distribution. The problem is not that dollars are being created but rather that they are being created and diverted over to unproductive activity including war, fraud, and speculation.

Franklin Delano Roosevelt once said,

"In politics, nothing happens by accident. If it happens, you can bet it was planned that way."

I think this same general axiom applies to certain categories of financial developments. If a firm's or trader's track record looks too good to be true, it probably is. And in my own opinion the US financial markets are rife with insider trading, confidence games, and manipulation.

Obama and the Congress has failed to reform the Too Big To Fail banks, and so this is the state the world now finds itself in with Wall Street and other big multinational banks taking record bonuses from their people. In the US alone Wall Street will be taking a record $144 billions in bonuses this year while the country suffers. To put this in context, M1 money supply is now about 1,800 billion. So Wall Street is taking about 8% of the national M1 money supply in personal bonuses this year not including subsidies both direct and indirect. That is not a financial system; that is racketeering. And any reform movement that does not address this need for systemic reform is misguided at best, and quite possibly yet another calculated diversion from the monied interests.

Here is a Chinese cartoon clip describing the US financial system as it is today.

I am holding no positions now since I am a bit distracted by personal matters, and that this will be almost full time for the next few days. I therefore closed my short term silver and gold longs and their hedges this morning so I will not be distracted by them. Gold and Silver are already so close to the targets I set so many months ago that I consider them fulfilled and would not quibble over a few dollars more. Now we will see what happens next.

In the end all things pass away, and only love endures. I will be watchful for a sign that the US equity market has topped but will resist the temptation to anticipate it. My sense it that we are not quite there yet but I have an open mind, and as I said the other day, I will not underestimate the resolve of the bankers to raise another credit bubble.

SP 500 and NDX December Futures Daily Charts

Gold Daily and Silver Weekly Charts

SP 500 and NDX December Futures Daily Charts: Possible Top in US Equities Coming

The inverse head and shoulder formation in the SP 500 has obviously 'worked' and is still active. The measuring objective is somewhere between here and 1245, possibly 1250, depending on where one marks the head and the neckline.  There is a similar formation as indicated in the NDX chart below.

If a decline does develop it could very well retest support at 1030, and close the gaps that were left on the way up. The signal that a top is in will be the confirmed break of the trendline.

We must remember that the Fed is in the markets and providing substatial monetization liquidity which can underpin financial assets at unnatural levels. The worst mistake I ever made in markets was underestimating the resolve of the Fed to create and support asset bubbles in the 2003-07 market rally. Charts are indicative of supply and demand levels. In the case of market interventions and the correction of long term distortions their effectiveness can be diminished.

But even the mighty Federal Reserve does not have perfect latitude to operate in the markets and determine their outcome. Charts are one method of obtaining insights into their success and failure and can be particularly effective when used with other, more fundamental, sources of information.