SP 500 and NDX Futures Daily Charts - Nearly Fearless, Into Uncharted Waters - Sustainability

The SP 500 stocks were trading somewhat weakly most of the day, on better than expected ADP employment number and other economic data that looks to provide the Fed with a fig leaf to raise rates this month.  And of course on energy market weakness.

The NDX was green much of the day, as techs are near the heart of the latest bubble valuations.  There is no good reason for it, other than 'stories' in tech carry more credibility with the gullible than pitches that are risibly unrealistic in more mundane areas of the economy.

And then Janet came out in a widely regarded speech today that strongly suggested that 'now is the time' for the Fed to increase rates.  Yellen:  Economy 'Ripe' For a Rate Increase

Nothing particularly new was said, or done, or learned, but stocks sold off a bit, and went out near the close.

Tomorrow the ECB may surprise us to some extent with QE.

Let's keep an eye on that.

Have a pleasant evening.

NAV Premiums of Certain Precious Metal Trusts and Funds - Another Gold Redemption

There was another gold redemption from the Sprott Physical Gold Trust of 16,467 troy ounces.

However one may wish to account for this, it is noteworthy that there have been no similar redemptions from the silver trust.

This is consistent with the overall experience of Western funds and trust which have been seeing the outflows of gold bullion for the past couple of years, but not of silver.

As you may recall, I have formed the hypothesis that the trading at the Comex in 'synthetic gold,' or highly leveraged paper gold claims, is creating a situation in which risk of a failure to deliver at current prices in the broader, global gold markets will be more likely to occur than in a well-managed and regulated market.

Or more bluntly, the price rigging of gold at The Bucket Shop is setting up the gold market for a severe dislocation when the artificial pricing scheme collapses.

I doubt it will be acknowledged as a 'fraud' since it involves systemically 'important' financial organizations and the acquiescence of bureaucrats caught up in a credibility trap.

The negative estimated cash balances on both Sprott funds continued to increase. One might assume that the Sprott funds have decided that now is not a good time to sell metal to raise funds.

Prior posting from the 27th of November 2015

Gold Daily and Silver Weekly Charts - Masters of the Universe Ascendant

"Think of gold as an irredeemable bond that pays no interest, but has no credit risk, where the issuer is God or the universe itself."

Charlie Morris, formerly of HSBC Global Asset Management

The economic news came in badly this morning, with the ISM Index coming in much lower than expected, following the path of the Chicago PMI.

The big tickle this month is the much anticipated Fed meeting at which they are expected to raise rates 25 basis points off zero.  There is no real economy reason for them to do this, with the US recovery wavering and parts of the world slipping into recessions with high unemployment.

But as we know, the Fed would like to get their rates off zero, so they can cut them again when their latest asset bubble collapses and we have another financial crisis.

Gold and silver had a bit of a relief rally today, as the US Dollar was off a bit.  It is still grossly overvalued to support a real economic recovery.

And, at long last, we are in the precious metals active month of December!

We saw that rare animal, a 'delivery' of gold at The Bucket Shop warehouses, with Nova Scotia tossing up 36 contracts from their house account, to be taken mostly by the house accounts at HSBC and JPM.

Do you notice how the bullion banks seem to be shepherding the scarce deliverable bullion amongst their own house accounts?

And that is a far cry from silver, which saw one of the biggest one day deliveries last Friday, in case you did not notice from the delivery report posted here last night.

And we followed that up yesterday with some customers from ABN Amro, Goldman, and Merrill puking up their bullion, to be snatched up by the house accounts of HSBC, JPM, and Nova Scotia.

The deliverable gold in the warehouses continues on the low side at about 121,000 ounces available to be delivered at these prices.  This does not mean the Comex will default.  This does not pose any particular conundrums either.  It just fits the pattern of Comex as The Bucket Shop, with its gold trading being mostly paper trades settled in cash with little actual bullion involved, in sharp contrast to silver.

If a large customer actually stood for delivery of gold bullion and would not accept cash, I would expect JPM to cover them out of their own warehouse and house account as they did a few months ago.  It only takes a phone call or some key clicks to change the status of eligible bullion.  Some people are losing the sight of this.

There is significance in these low inventories, but not always what people would make of them.
What is of serious significance, and hard for the bullion bank apologists to deny, gold bullion has been flowing in large numbers from West to East for some time now, at least since 2007 but with a growing intensity since 2013.

I am fully convinced that unless the gold market is reformed at some point it will suffer a dislocation which will be blamed on 'foreign speculators' or some rogue traders in some Asian hothouse, something risible like that.

Non-farm Payrolls on Friday.  Let's see if the markets and the Fed get the numbers they would like, each for their own purposes.

I had a less than good-natured query regarding my discussing gold and silver.  And here is how I respond.

The reason I enjoy watching the precious metals here follows from my premise, based on both theory and observation,  that we are in an historic sea-change in the international monetary regime that has been in place since the end of WW II.  It was set in the Bretton Woods Agreement, and was then unilaterally revised by Richard Nixon in 1971 into a fiat dollar reserve currency regime which some call Bretton Woods II.

That change has been happening slowly but surely, picking up some steam in the late 1990's with the Asian and Russian currency crises.  The world's central banks became net buyers of gold around 2006, and the pace of the flow of gold and silver bullion from the West to the East gained considerably around 2013, and continues today.

Forgive me if I choose not to ignore these sorts of things.  Gold and silver have something to tell us about that, if we will just look at those markets and the flows of bullion with an open mind.

I know that it is fashionable these days, in the ascendancy of the self and personal will, to pick and choose and create our own realities, and facts to support them.  But, alas, history suggests that people who do so will ultimately be served a banquet of consequences.

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - Blue Skies, Unicorns, and Santa Claus Rallies

"Unhappy events abroad have retaught us two simple truths about the liberty of a democratic people.

The first truth is that the liberty of a democracy is not safe if the people tolerate the growth of private power to a point where it becomes stronger than their democratic state itself. That, in its essence, is Fascism—ownership of Government by an individual, by a group, or by any other controlling private power.

The second truth is that the liberty of a democracy is not safe if its business system does not provide employment and produce and distribute goods in such a way as to sustain an acceptable standard of living.

Both lessons hit home.

Among us today a concentration of private power without equal in history is growing. This concentration is seriously impairing the economic effectiveness of private enterprise as a way of providing employment for labor and capital and as a way of assuring a more equitable distribution of income and earnings among the people of the nation as a whole."

Franklin D. Roosevelt, On Curbing Monopolies

The economic news was fairly awful this morning.

I doubt this will be enough to stay the hand of the Fed, since they wish to raise rates for their own policy purposes, and not to quell any growing pressure on wages from our imaginary full employment economy.   They would like to raise rates above zero to give themselves some room to move in cutting rates in the future when their current financial assets bubble breaks.

And so stocks were on a tear higher, with visions of Santa Claus bonuses dancing in fund managers' heads.

The VIX dropped as it was all good in the Pax Americana.

Stocks need to hit that higher high to keep this algo-driven wilding to the upside from turning into yet another 'wash and rinse.'

Non-Farm Payrolls on Friday.

Have a pleasant evening.

Gold Daily and Silver Weekly Charts - The Unsustainable Power of Cheap Money and Omnivorous Greed

"Cæsar was swimming in blood.  Rome and the whole pagan world was mad. But those who had had enough of transgression and madness, those who were trampled upon, those whose lives were misery and oppression, all the weighed down, all the sad, all the unfortunate, came to hear the wonderful tidings of God, who out of love for men had given Himself to be crucified and redeem their sins.

When they found a God whom they could love, they had found that which the society of the time could not give any one,—happiness and love. And Peter understood that neither Cæsar nor all his legions could overcome the living truth, —that they could not overwhelm it with tears or blood, and that now its victory was beginning.

He understood with equal force why the Lord had turned him back on the road. That city of pride, crime, wickedness, and power was beginning to be His city."

Henryk Sienkiewicz, Quo Vadis: A Narrative of the Time of Nero

Blues riff in B, watch me for the changes, and try to keep up.

And so we begin the delivery month of December.

The Bucket Shop is leaking, slowly but steadily.

Non-Farm Payrolls on Friday.

What is unsustainable will not be sustained: cheap money, and even cheaper grace.

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - The Great Emptiness

"Every sin is an attempt to fly from emptiness."

Simone Weil, Gravity and Grace


"I see dead people. Walking around like regular people. They don't see each other. They only see what they want to see. They don't know they're dead."

Cole Sear, The Sixth Sense


"The man who lies to himself and listens to his own lie comes to a point that he cannot distinguish the truth within him, or around him, and so loses all respect for himself and for others. And having no respect he ceases to love...

What is hell? I maintain that it is the suffering of being unable to love.”

Fyodor Dostoyevsky, The Brothers Karamazov


"Every century is like every other, and to those who live in it seems worse than all times before it... thus much of comfort do we gain from what has been hitherto, not to despond, not to be dismayed, not to be anxious, at the troubles which encompass us. They have ever been; they ever shall be; they are our portion."

John H. Newman

Economic news came in weakly this morning with a shocking miss in the Chicago PMI.

The major US stock indices were waffling about today at the end of November, with an undercurrent of weakness, but with prices somewhat sustained by a lack of conviction and therefore without the substance of genuine volume to take them much higher or lower.

The US electoral and political process is becoming almost compelling to watch, not out of any enjoyment or intellectual enrichment, but with a macabre fascination of a natural disaster or a train wreck.

What follows the emptying of oneself, the impulse to give over to the void so as to escape the burden of thought and compassion, the pain of being human?   History suggests that it is an occasion of grace, or a slow descent into madness.

More bread, circuses, and cowbell.

Have a pleasant evening.