Gold Daily and Silver Weekly Charts - Slow Bleed in Quiet Times - Treasury Antics

Gold and silver had some nice follow through today, while the dollar showed weakness within a recent trading range.

We have some potential formations on the charts, but so far nothing seems to complete its development and 'work' as we might normally expect.

Let's see if the metals can keep their price rally going.

The Bucket Shop was quiet, and the warehouses continue their slow loss of bullion.

Here is some knowledge from Lee Adler about the short term 'buying panic' in Treasuries that took the yield on the 3 month down to zero.  He suggests it was a case of Primary Dealers with too much cash and too little supply, and I think it has merit.

Basically with the Fed having QE'd the Treasury debt market, and with the Treasury paying down maturities as they play with the debt ceiling, banks had ended up with too much cash and not enough Treasuries on their books.   This may not be a problem for some banks, but for the Banks who are also Primary Dealers that is a slightly different problem.

This can create some distortions in the bills and notes.  It was also exacerbated by the financial sector's end of quarter balance sheet window dressing antics.

I suspect some of the Fed's recent reverse repo activity, in which they loan Treasuries from their inventory to the Primary Dealer Banks in return for a loan of cash with interest (paid to the Banks) might have been related to this.

Certainly there are stresses in the financial sector, and the Fed's lack of conviction in its policy on stimulus versus raising rates doesn't help.  Bubbles are fun when they are on the rise, but having passed their zenith, they can quickly become a source of concern and instability.

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - Earnings Kickoff On Thursday

The economic news continues to come in weakly.

Alcoa will kick off the 3Q earnings reports on Thursday, October 8 after the bell.

We have been getting some advance notice of changes in earnings forecasts.  The overall picture of the economy is not particularly good.

So far we have seen a noticeable divergence between corporate results and the incomes of the median American citizen.

Let's see how things progress.

Have a pleasant evening.

Gold Daily and Silver Weekly Charts - Silver Rallies, Gold Capped

Silver led the way higher for the precious metals today as gold was capped at the 1140 level.

The Gold/Silver ratio has dropped a bit but is still quite high at 72.

There was little action at The Bucket Shop except for the usual slow bleed of bullion out of the warehouses as is shown below.

The Sprott Gold and Silver Trusts lost a little more bullion to redemptions as discussed in the intraday commentary here.

If there is a major disconnect between the Western and Eastern paper and physical metals markets, one might wonder what will happen to the available bullion in ETFs like GLD and SLV and the trusts that have redemption features.

After today's rally my own trading account is all cash.  Some times I like to do this, and just kick back and watch where the market seems to be going at what feels like a pivotal area.  Long term holdings remain unchanged as my general view of where things are going continues to be supported by unfolding events.

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - 3Q Earnings Season Starts This Week

US corporations will begin announcing their 3Q numbers shortly.

The economy continues to flounder, so the earnings may obtain additional attention.

I am sitting largely in cash after today's rally.

Have a pleasant evening.

NAV Premiums Of Certain Precious Metal Trusts and Funds

Since the last time I had updated their statistics on September 30, both of the Sprott Precious Metals Trusts lost a little bullion, presumably to redemptions. If they were bullion sales to raise cash, then they have no yet updated the cash levels with it.

Sprott Silver declined by 10,800 ounces, and Sprott Gold by about 2,231 ounces. There was a commensurate reduction in shares outstanding.