03 April 2013

Net Asset Value Premiums of Certain Precious Metal Trusts and Funds - Cheating Is de Rigueur


“Our government teaches the whole people by its example. If the government becomes the lawbreaker, it breeds contempt for law; it invites every man to become a law unto himself; it invites anarchy.”

Louis D. Brandeis

Thinner.

The funds and bullion banks have a full court press on. 

Smells like teen spirit.  or desperation. 
Life imitates high school.

Jim Chanos observes that there is now A Fiduciary Duty to Cheat.

And the love of many will grow cold...




02 April 2013

Jack London: The People of the Abyss


"Woe to you, you scribes and Pharisees, you hypocrites; you are like whited sepulchres, fair in outward show, but inwardly full of dead men’s bones, and all manner of filth and corruption."

Matthew 23:27

"An' now," said the sweated one, the 'earty man who worked so fast as to dazzle one's eyes, "I'll show you one of London's lungs. This is Spitalfields Garden." And he mouthed the word "garden" with scorn.

The shadow of Christ's Church falls across Spitalfields Garden, and in the shadow of Christ's Church, at three o'clock in the afternoon, I saw a sight I never wish to see again.

There are no flowers in this garden, which is smaller than my own rose garden at home. Grass only grows here, and it is surrounded by a sharp-spiked iron fencing, as are all the parks of London Town, so that homeless men and women may not come in at night and sleep upon it.

As we entered the garden, an old woman, between fifty and sixty, passed us, striding with sturdy intention if somewhat rickety action, with two bulky bundles, covered with sacking, slung fore and aft upon her. She was a woman tramp, a houseless soul, too independent to drag her failing carcass through the workhouse door. Like the snail, she carried her home with her. In the two sacking- covered bundles were her household goods, her wardrobe, linen, and dear feminine possessions.

"Are there no workhouses? Are there no prisons?"
We went up the narrow gravelled walk. On the benches on either side arrayed a mass of miserable and distorted humanity, the sight of which would have impelled Dore to more diabolical flights of fancy than he ever succeeded in achieving. It was a welter of rags and filth, of all manner of loathsome skin diseases, open sores, bruises, grossness, indecency, leering monstrosities, and bestial faces.

A chill, raw wind was blowing, and these creatures huddled there in their rags, sleeping for the most part, or trying to sleep. Here were a dozen women, ranging in age from twenty years to seventy. Next a babe, possibly of nine months, lying asleep, flat on the hard bench, with neither pillow nor covering, nor with any one looking after it. Next half-a-dozen men, sleeping bolt upright or leaning against one another in their sleep.

In one place a family group, a child asleep in its sleeping mother's arms, and the husband (or male mate) clumsily mending a dilapidated shoe. On another bench a woman trimming the frayed strips of her rags with a knife, and another woman, with thread and needle, sewing up rents.

Adjoining, a man holding a sleeping woman in his arms. Farther on, a man, his clothing caked with gutter mud, asleep, with head in the lap of a woman, not more than twenty-five years old, and also asleep.

It was this sleeping that puzzled me. Why were nine out of ten of them asleep or trying to sleep? But it was not till afterwards that I learned. IT IS A LAW OF THE POWERS THAT BE THAT THE HOMELESS SHALL NOT SLEEP BY NIGHT.

On the pavement, by the portico of Christ's Church, where the stone pillars rise toward the sky in a stately row, were whole rows of men lying asleep or drowsing, and all too deep sunk in torpor to rouse or be made curious by our intrusion.

"A lung of London," I said; "nay, an abscess, a great putrescent sore."

"Oh, why did you bring me here?" demanded the burning young socialist, his delicate face white with sickness of soul and stomach sickness.

"Those women there," said our guide, "will sell themselves for thru'pence, or tu'pence, or a loaf of stale bread."

He said it with a cheerful sneer.

But what more he might have said I do not know, for the sick man cried, "For heaven's sake let us get out of this."


Jack London, The People of the Abyss, 1903


Gold Daily and Silver Weekly Charts - Non-Farm Payrolls Week Hit on the Metals


I was expecting a hit on the precious metals this week, and today would certainly qualify.

Non-Farm Payrolls on Friday.

Stocks and the precious metals are running inversely here which is a change from the past.

I think that is because both stocks and the precious metals were rising in a reflationary environment.

We are now past that reflation and stocks have entered bubble territory. That bubble is soaking up quite a bit of excess liquidity and funds are being created for financial paper by selling positions in commodities. And the metals are prime targets.

The lack of volume in the stock rally is a huge warning sign of trouble ahead.

IF the market expected a serious recession, would stocks be rallying so hard? No. But how does this square with the meme that commodities are falling due to decreasing demand?

I believe this is a monetary phenomenon in an unreformed market. IF that is correct we should see a rather violent reversion to the mean, or norm, sometime this year, probably in two steps. Step one is probably going to be a 'market break' that will scare the stocks bulls for a time, until the Fed calms their fears with more liquidity. The second break could be rather impressive.

I am not necessarily expecting a market 'crash' of 20+% although that is possible.  I think there will be a dislocation in the financial-political realm that will have far-reaching effects.

But no one can predict the future and that certainly includes me. 

At the same time, I am seeing a rally in paper financials and corporate profits, and at the same time increasing despair amongst consumers and the public, with very little signs of sustainable recovery. 

This divergence is being ignored by policy makers and influencers, who are taking a 'Shut Up Savers' stance towards their base of support.

So let's see what happens.




SP 500 and NDX Futures Daily Charts - New Highs and Complacency Returns.


The SP 500 tagged my intermediate chart objective of 1565 to 1570 intraday today.

Stocks are in a Fed-induced bubble now.

They are not expensive based on a multiple of earnings. However, the earnings are not sustainable.

The most illustrative chart is to compare the growth of corporate profits and the median wage.

The world is slipping into a recession, approaching depression in some errors, all due to a policy error on the part of the group think of the global elite and their hangers-on.

There will be a serious break at some point, perhaps as early as this summer.

Non-Farm Payrolls this Friday, ADP and ISM services tomorrow.