NAV Premiums of Certain Precious Metal Trusts and Funds

Flight to safety.

The prices have not yet begun to reflect the supply situation which is being extended and papered over by leverage.

When that leverage starts unwinding, the prices may go higher with somewhat impressive velocity.

It would be better for the price managers to allow the precious metals markets to go higher now, with a more controllable slope. But their fears and hubris may betray their wiser counsels.

I have this wonderful image of some Captain Bligh (as played by Larry Summers) of an economist shouting that they must 'hold the line' on the precious metals.

And the harried bureaucrats of Treasury and the Fed continue to lease out vast amounts of other people's gold, while privately shitting their pants with the thought of what will happen if their miscarried intervention is disclosed to the markets.  My career!

 

Gold Daily and Silver Weekly Charts - The Almighty Dollar

Gold and silver tried to rally on the overnight but the US market sat on the precious metals throughout the day.

Stocks managed a dead cat bounce.

The action in the Comex, both in the delivery report and the warehouses was inconsequential. That might be a good label for the Comex going forward: the Inconsequential Index.

Oil is continuing to take it on the chin, with various theories about why it is plunging. Some say it is OPEC 'putting the screws' to the US producers who need the higher marginal prices, especially for shale production.

Others say it is the US and its allies hurting Putin's Russia with de facto sanctions on Russia's oil wealth.

Personally I think it is more of a slack in aggregate demand overall that is becoming a concerning trend to anyone who cares about the real economy, mixed with a squeezing out of speculative money due to the Banks being prohibited from engaging in wholesale speculation.

The precious metals story is now in EurAsia, and those who fails to recognize this really do not know what is going on.

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - Alibaba Rang the Bell

There was a dead cat bounce off key support that took the major stock indices back up to prior support.

But that rally faded into the afternoon. The bulls were able to slow the descent and avoid a late day plunge as we had seen yesterday.

Stocks managed to finish slightly higher, holding their key support levels.

So what next. CSX and INTC reported beats on earnings and revenues after the bell. Earning *might* help if they are overwhelmingly good.

We will be getting some macroeconomic news for the week starting tomorrow. The bulls need to bounce them here and hold on to the gains.

Have a pleasant evening.

Comparing One Dimension of the Policy Responses of the ECB and the Federal Reserve

Here is a chart comparing the Balance Sheet Assets of the Fed and the European Central Bank.

It is important to recall that the Fed has been providing extensive funding to non-US, largely European, multinational Banks through their US subsidiaries.

This also does not compare the sovereign debt of the two regions, but rather just one measure of their Central Banks policy responses.  It does not indicate how those assets are being used, by whom, and to what effect.

Nevertheless there seems to be a clear divergence between the two policy responses.

 

Performance of a Number of Global Stock Exchanges Year-To-Date

Except for a few Asian countries, and special situations not pictured perhaps, it looks like a global slump from here.

There are still a select few unbroken housing bubbles out there that may find some adjustment in a future capital crisis.  Canada and Australia come to mind, among others.

Despite the billions of taxpayer funds poured into them, some if not quite a few of the troubled multinational Banks are still in trouble, and a few may be teetering.

Does anyone who is well informed not recognize that the policy errors of the Central Banks and their political cronies have failed to foster a sustainable recovery after five long years of enormous bank subsidies and public misery?

And the fruits of this selfish foolishness may likely be another crisis that is even more decisive?

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


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GolemXIV: Trouble In Bankland

In the US:

• Home Equity Loans (HELOCs) are up 20% this year. 15% of all home loans originated are home equity extraction loans.
• People are taking equity out of their homes in the reigniting housing bubble, but adding to their bank debt.
• Student loans now total $1.2 Trillion.
• Nearly 35% of student loans [I believe David inadvertently says HELOC at one point] given to people under 30 are now 90 days delinquent.
• There are $924 Billion in auto loans, with nearly one third being subprime.
• It will not take much of a downturn for the HELOCs to go underwater.
• Jobs for those servicing new student loans are often low paid and hard to find and could become scarcer prompting more defaults.

In Europe:

• Royal Bank of Scotland (RBS) has now lost ALL of the £46 Billion bailout from taxpayers
• Espirito Santo recently went bankrupt AFTER recently passing the ECB stress test.
• Not only the bank, but the entire Espirito Santo group went bankrupt, after the bank sold their associated debt to unsuspecting clients.
• This certainly does not inspire confidence in any of the ECB testing of the Banks. We would have no confidence in an agency that tested cars with these kinds of results.
• There were fifteen other EU banks that passed in the weak manner of Espirito Santo.
• The Spanish/Italian/Greek Banks were allowed to count tax credits from the government as assets.
• What if China decides to support its domestic coal production by assessing a 3 to 6 percent surcharge on imported Australian coal? It would dampen exports and GDP.
• Australia's huge housing bubble is counting on 8 to 12 percent house increase NEXT year.

If things go south, the ECB,  Fed, and other Central Banks will have to engage in another enormous bailout.





Source: GolemXIV

Gold Daily and Silver Weekly Charts - A Little Flight to Safety

Gold caught a little 'flight to safety' today as stocks fell out of bed in the last hour of trading.

Silver cannot seem to get out of its own way, but managed to post a little gain in the aftermarket.

As a reminder, this Friday is a stock option expiration, so let's be on the lookout for the games Wall Street people play.

There was no real economic news in the US for Columbus Day holiday, but we have some news later this week, and as always earnings reports.

I don't know if it is the November elections effect or what, but the commentary on American television is going from silly to absurd. The Very Serious People in New York and Washington must be living in some alternate universe.

Let's see what happens when the adults come back to work tomorrow. We will probably see some follow on selling in overseas markets, although it was not quite clear what triggered the big selloff this afternoon. Just skittish, perhaps.  And some pre-option expiration hijinks.

As J. M. Keynes observed, it is not a good policy to allow your investment allocations and price discovery to be decided by a casino.  And that is exactly what is being done in the West.

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - A Whiff of Panic - Option Expiration on Friday

Stocks were weak all day, but then turned decidedly south in the last hour of trading.

I posted the Year-To-Date stock market performance earlier today here. Jim Rickards also made a 'crash call' yesterday and I note it in this post. Marc Faber is pretty much there as well. His video is worth seeing.

I am a bit cynical, considering that there is a stock option expiration on Friday. We'll see more selling overnight most likely, and perhaps some follow through tomorrow. The NDX and SP500 futures charts don't have much room to go lower and stick a close without some technical damage. And the 200 DMA on the cash SP 500 is now shot to hell.

Let's see if the bots and the Fed can manage to turn things around later this week, and make for a happy options expiration having cleaned out the bulls, and then whipsaw the put buyers.

There will be more economic news later this week, and also earnings reports.

But as I said the markets are skittish.

Someone sent me a message last week with a link to some stock advisor who dismissed my cautions about an exceptionally edgy stock market, telling his followers to stay fully invested. After all, I am just a 'metalhead.'  Well, how did you like that VIX today? As Dr. Phil says, how's that working out for you?

I am keeping an open mind for now.   This is still a very technical market.  No crash calls here, yet.

But I own no stocks, just gold exposure. I am laying off silver until it figures out how to get out of its own way. As always, none of these comments touch upon my long term investments which are just 'there.'

Protect yourselves. 

Have a pleasant evening.