Efficient Markets Driven By Symmetrically Available Information - Algorithmic!

"What a piece of work is a man, how noble in reason, how

infinite in faculties, in form and moving how express and

admirable, in action how like an angel, in apprehension how like

a god! the beauty of the world, the paragon of animals."

William Shakespeare, Hamlet

Who could turn a blind eye to such obvious market abuses?   They must hate us for our efficient markets and deliberate, data-based price discovery.

 

Oh yeah, the active December delivery month is right around the corner, and their cupboards, while not necessarily bare, are packed with IOUs.  And gold is threatening to break out at a key resistance level. 

 

So volatility is not unexpected.   What is disturbing, however, is the blatant price manipulation and running of stops by big players acting with impunity, with the implicit endorsement of the exchange and regulators who can see nothing, and know nothing.

 

And both China and Russia are buying gold.  And the Western banks do not like it, because it seems like a threat to the supremacy of the Dollar.

 

So let's blame the Swiss.  Swiss Gold Poll Shows 47% Nein

"Then, of course, some 'technical levels' got triggered.”

 

Send in the clowns, with drones.

Gold Daily and Silver Weekly Charts - Close But No Cigar

Gold took an early run at breaking out, but then was held at the overhead resistance and 'psychologically important' 1200 level.  We'll have to see if gold can rise above resistance and break fee, and change this downtrend of lower highs and lower lows.

Someone asked me to comment on the notion that price manipulation is not possible in large markets like the precious metals.  I cannot believe that this canard is being taken seriously again at this late date.

 

I hope you realize that when someone says that given supply and demand there can be no price manipulation in the metals markets they are citing the 'efficient market theory' as the basis for their disbelief.

 

That is not to say that this proves that there is manipulation. There are plenty of other indications of that. But it does not mean that there can not be market manipulation.  Prices are set at the margins, and given leverage and favorable regulatory climates prices and demand/supply can become seriously disconnected.

Markets can get out of sorts with value for a long time, and years in some cases of bubbles, if enough energy and effort is put into it.  And especially in times of lax regulation and lack of transparency, there can be widespread price manipulation for a number of reasons.

 

Do we really have memories that are this selective and short term? 

 

Have a pleasant evening.

 

 

SP 500 and NDX Futures Daily Charts

Janet and her Merry Pranksters are hitting some high notes.

The best explanation I have for this rally is the continuing weakness in the yen, strengthening the dollar, and therefore US dollar paper assets.

It was interesting today that the precious metals moved UP with stocks. This suggests the possibility that the stock market rally is in a late stage for this move right here and now.

 

Almost time for another wash and rinse.

Have a pleasant evening.

 

 

 

NAV Premiums of Certain Precious Metal Trusts and Funds - Ukraine Admits Its Gold Is Gone

Cash level in the Sprott Silver Trust has dropped below the $2 million mark. This is historically low.

The Trust needs to do a secondary offering to get those cash levels up.

The discount on the Spicer Trusts and Funds continue to be around ten percent.

The Gold/Silver ratio is still elevated at about 73.6.

 

The Ukraine has apparently disclosed that its gold is 'gone.'

 

I first noted that it was being taken on a flight for safekeeping here.   If your gold is being held for safekeeping in New York or London you may as well wait for a picture postcard, because that is the only way you will be seeing it anytime soon.

 

The Western central banks do not care about gold anymore, in a pig's eye. 

 

 

Stock Valuations Outrunning Profits Growth - And the Band Played On

"We are still amazed by the chart [below], but it summarises the problem for those seeking to short stocks with fundamental weaknesses. In the last three years, the MSCI World Index has risen by 38% (11% per annum) whilst reported profits have risen by just 3% (that’s just 1% per annum!). As the events of last month attest, central bank actions–not profits–are driving equities forward."

Andrew Lapthorne, Societe General

This quote is in reference to the first chart below that shows stock prices are outrunning profit growth.   The second chart is the Shiller PE 10 Ratio for US stocks.

Beside the corrupting influence of Big Money on politics and academics, the other pervasive problem in our society is really quite banal, that is, mindlessly managing to the numbers.

Although incentives have always been an issue, in the last thirty years it has become quite fashionable in modern management theory to set a few relatively narrow metrics and judge the performance and rewards of a manager by them and them alone.

While this is not wrong in and of it self, such a philosophy provides a source of great mischief if the metrics are excessively narrow, and therefore obscure the bigger picture and the health of an organization, a company, or even a nation.

I think we are all familiar with how incentives badly designed can drive counter-productive, short term behavior that can actually be destructive of the values of an organization.  I cannot think of a better recent example, other than the widespread fraud and corruption on Wall Street, than the manner in which the Central Banks and their governments are managing The Recovery™.

If employment is a metric, let us foster an economy in which a large number of jobs are created, that are low paying and part time, in order to address the metric of unemployment.  Never mind that this ignores the real reason for concern, ie, the lack of jobs at living wages which will spur aggregate demand.   If unemployment is the only concern, why not just bring back indentured servitude and give everyone a job at below subsistence wages.  Not far off the Japan model at that.

If inflation is a metric, let us follow policies of money printing in order to raise the prices of goods.  Unfortunately this will have price inflation running ahead of the ability of the broad public to pay for the things that they need through wage and income growth.  

See, there is no deflation.  It doesn't matter to the model that the growth in prices is not only artificial, but is in fact increasing the misery of the people by diluting their already reduced incomes with which to purchase necessities.

Now, this would seem to insult common sense.  But in fact if you are a bureaucrat under pressure to please a powerful constituency, and are driven to pursue policies that really do not make sense by any reasonable estimation of 'the public good,' it is tempting to stand fast on your models, and insist that one cannot prove that you are not doing a good job of it. 

 

And it is all so easy to claim well intentioned ignorance, or a lack of relevancy to your responsibilities.  There were executives at Enron who were so incapable, who knew and did so little, that it was a marvel that they were not in nursing homes.

When pressed you can always use discredited theories and perception management to quell those who are calling out the contrariness, at times to the point of madness, of your policy actions.  Prove to me it is a bubble!  Prove to me that people are not just lazy, or incapable of doing useful work!  Prove to me that giving trillions to the Banks is not sound monetary policy.

 

What does it matter, if your bosses are happy, and the perks and prestige, and all important access to the halls of power, are ensured.  At times your conscience may be troubled by the thought that in some of your actions you may have gone too far, and committed acts that could be considered outside of the law.  But you have done it for the good of the system, after all. 

And in that you are above the law, a law maker, not a follower.  A bonus or promotion, or some other visible reward or recognition, may quiet your conscience and concerns.  You are only doing what must be done, as demanded by those who deserve to be followed and obeyed. 

 

You see the excesses, by the really bad ones, but you are not like them.  Some day when you have the power you will set things right, but you must stay within the system to obtain that power.  So you must steel yourself, and be practical, and do what must be done. 

 

And that is easier to do, when there is no metric for human misery and suffering.  The unfortunate are easy to ignore.  No one wishes to see them, or hear them.  And they have little power.

You work hard, and are only human after all.  And for this you are a very important person, well regarded in the Capitol.  You are making money for yourself and your friends, the people who really count.  You are a success!  And all is right with your world.

"When virtue is lost, benevolence appears, when benevolence is lost right conduct appears, when right conduct is lost, expediency appears. Expediency is the mere shadow of right and truth; it is the beginning of disorder."

Lao Tzu

 

No one sits down one day and decides, 'I shall become a monster, and do monstrous things.'

 

And the band played on.

h/t Zerohedge

Shiller PE Ratio

Gold Daily and Silver Weekly Charts - Knowledge Without Wisdom

“The evil effect of science upon men is principally this, that by far the greatest number of those who wish to display a knowledge of it accomplish no improvement at all of the understanding, but only a perversity of it. It serves most of them as a tool of vanity.”

Immanuel Kant


“Knowledge without wisdom is a load of books on the back an ass”

Chinese Proverb

The lesson to be learned from this imperial overreach will be hard indeed.

Madness.

SP 500 and NDX Futures Daily Charts - 溢れ - Overflowing

 

Equities are in a bubble, but the real economy continues to languish.

 

Paper money is overwhelming, and overflowing.

 

There is some thought that the US can never print too many dollars for the rest of the world to take.

 

Hubris does not even begin to describe the financial system of the Anglo-American banking cartel.

 

Who are these people?  What are they thinking?  Their ability to bully others blinds them to the balances of the real world.

 

This will end badly.

 

Have a pleasant evening.