27 March 2015

Gold Daily and Silver Weekly Charts - Non-Farm Payrolls Next Week

"We sometimes forget that central banking as we know it today is, in fact, largely an invention of the past hundred years or so, even though a few central banks can trace their ancestry back to the early nineteenth century or before.

It is a sobering fact that the prominence of central banks in this century has coincided with a general tendency towards more inflation, not less. If the overriding objective is price stability, we did better with the nineteenth-century gold standard and passive central banks, with currency boards, or even with `free banking.'

The truly unique power of a central bank, after all, is the power to create money, and ultimately the power to create is the power to destroy."

Paul Volcker, foreword to The Central Banks, 1995

Price stability is not, of course, the only priority of a central bank, depending on how narrowly or broadly one wishes to define it.  But I think that the record of the Federal Reserve over the past twenty to thirty years is abysmal enough to cast doubt on their competency and objectivity by almost any other range of metrics, considering the prolonged stagnant real wage, growing wealth inequality, massively fraudulent banking system, and serial asset bubbles interspersed with systemic crises.
Austerity and financial repression for the people, and quantitative easing and subsidized money for the Banks and financiers that caused the crises.   In what rational universe does this make sense?

What has gone wrong with our great experiment in central banking and fiat money is a good question,  but for another day.   But history does suggest that no class or organization is worthy of holding such power, without even more powerful safeguards against its abuse.
Gold and silver were capped around the round numbers for the better part of the day, and took a little cheap shot in the after hours as they did in the early open in New York.

Bubbe Yellen spoke at the San Francisco Fed near the close, basically stirring the verbal pot for the Fed's intended escape from the zero interest rate bound while hedging their bets broadly.  See Janet Yellen's Pat Paulsen Speech.

That the program has been a failure to stimulate the economy, instead fostering bubbles, speculation, and much greater wealth inequality while failing to encourage organic growth in wages and livable jobs is besides the point.

The wealthy and the Banks are doing great, and look forward to doing even better as they continue to consolidate production and acquiring income producing assets on the cheap and paying for them with inflated paper like stock and bonds.

I have included the economic calendar for next week below, because it is likely to be more of an influence on the metals. Especially so in light of Bubbe's remarks about data dependency and the categories of data which she is setting her eyes upon.

The problem is much more than the Fed. The trade deals being negotiated, TTIP and TTP, are designed to continue to erode the power of people to make choices for their nation in terms of standards of living, social justice, child labor, environment, and so forth.

The bigger picture, which so few really understand, is the ongoing currency war, and the changes that are taking place to progress the post-Bretton Woods status quo. They cannot understand it because they have really known nothing else in their lifetimes, and their knowledge of history is highly selective and often wanting. They grasp on to often self-serving, crackpot theories to reassure themselves that change is not coming, and their pampered places are secure.

Change is coming. It may be entering modestly seated on the colt of an ass, but depending on how it is received, it may be bringing redemption for those who receive it, and a stinging rebuke for the den of thieves that have distorted the courtyards of the markets.

The choice is of course ours, but all things considered, we seem to be a people generally inclined to making very bad choices and building desolate places, and painting the bones of our folly contained therein with a thin coating of whitewash and rationalization. Those who rule those foul places were better off if they had never been born.

"And when he drew near and saw the City, he wept over it, saying, 'Would that you, even you, had known on this day the things that make for peace and prosperity! But now they are hidden from your eyes.  For the days will come when your enemies will set up barriers around you, and surround you, and hem you in on every side, and tear you down to the ground, you and your children within you. And they will not leave one stone upon another in you, because you did not know the time of your judgement and redemption.'”

Have a pleasant weekend.


SP 500 and NDX Futures Daily Charts - Begin the Beguiled

Stocks largely moved sideways on the weak economic data this morning.

After the bell it was revealed that Intel would like to purchase chipmaker Altera. The consolidation of industry continues.

After a largely directionless day, there was a little bit of a lift into the close as Chairman Yellen talked about the bias to raise interest rates for the purpose of 'normalization,' but slowly and with an eye on the data.

Nothing new here. The Fed wishes to get off ZIRP at least nominally to give themselves some policy latitude for the future and to widen the spreads and bets available to the Banks.

And so they are likely to 'get her done' and not blanch from the task until they start to blow up the real economy in a manner more overtly than they have already been doing through their distortions over the past thirty years or so.

The Fed is bank-centric. They are a creature of the Banks. Unfortunately so are the politicians, so the broader public may find themselves in difficult circumstances.

I doubt that this will change or improve until there is substantial discomfort felt by the ruling elite. Nothing new there. And the more vocal portion of the public, the twenty percent I like to think of as the 'beguiled,' will be busy trying to push each other under the bus as it were, and kick the other guy off the life raft, because that is much easier than facing the real issues of reform.

At some point the beguiled will wake up, and then we will see a social phenomenon that 'no one will understand.' It is hard to get the herd moving, but once they start to move the force and momentum of their movement can be impressive and fairly durable. As a child of the 50's and 60's who was not unfamiliar with seeing armed soldiers and tanks in the streets of major urban areas, I can assure you that this phenomenon is more common in history than you probably imagine.

That is not to say it is a good thing, or a desirable thing. But it is becoming almost an inevitable thing given the inability of the upper crust to disengage themselves from the credibility trap, and their ill gotten gains from their abuses of power.

Have a pleasant weekend.


26 March 2015

Gold Daily and Silver Weekly Charts - Ship of Fools

Gold and silver caught an overnight flight to safety on the war breaking out between Saudi Arabia, Egypt, and Yemen on the overnight.
Gold hit a high around 1218 or so on the spot price, but was pushed back down towards 1203 during the New York trading hours.
The miners were hit rather hard, which sometimes portends a hit on the metals the next day.  Let's see how that works out.  These mechanisms and influences are not linear.
It would be in the manner of the bucket shop to give a gut check on a price drop to those new holders of futures contracts from today's precious metals option expiration.  But since I cannot see into all the players hands, to know who is holding what with any confidence, it is too hard to say.
I do think that the US Fed will raise rates this year by some token amount, unless the wheels completely fall off the economy for two quarters in a row.  The first quarter is looking increasingly dismal, but it is easy to dismiss that as a one-off due to the weather.
The pampered princes and princesses of the Feds would like to raise rates for the benefit of their Bankers.  And they will perform as required.  Like the politicians, this is why they are there, to give plunder the appearance of legitimacy. 
But at the end of the day, they are, for the most part, a collection of willful, self-deceiving fools who are plunging madly forward without a clear vision or care for what is just across the horizon, whether it be a shoal or an iceberg.   They are now operating on necessity, defined by their own selfish needs.  Just following orders.  Whose orders, what priorities, well, that is another question altogether.  But not yours. 
If you want someone to tell you exactly what will happen or what to do next you can find plenty of people who are willing to do it, for a price, generally denominated in money and power. Just look for the wild claims, self-promotion, and screaming headlines. 
If they knew, they would not tell you. 
There are so many big changes happening behind the scenes.  No one can really predict exactly which way they will go.  But I am increasingly confident that we have the lay of the land mapped out correctly.  And I think that the signs are knowable.
The currency war is the pivotal event of our time.  If you do not yet understand what is going on there, you will be tossed around like a small boat, directionless in a tempest, because you cannot see beyond the nearest waves.
Keep an eye on China and Russia.  This does look like a pivotal year, but we have been close before, and the can keeps getting kicked further down the road.  The longer we wait, the greater the break.
If someone knows which way the Chinese leadership will finally go, I should like to know it.  But I don't think even they know that yet.
What you can do, above all, remember what is truly important, what lasts.  And now is a very good time to sort that out, because when the time comes, there will be no time.
Have a pleasant evening.

SP 500 and NDX Futures Daily Charts

"O Jerusalem, Jerusalem, you who murder your prophets, and persecute those whom God has sent as messengers to you. How often I have longed to gather your children together, as a hen gathers her young under her wings. But you would not let me.

As you have willed, your house is now yours— but will be made desolate.”
The 'Yellen put' kicked in about where it might have been expected.
Have a pleasant evening.


25 March 2015

Gold Daily and Silver Weekly Charts - The Tyranny of Round Numbers, Functionaries, and Factotums

“Look back over the past, with its changing empires that rose and fell, and you can foresee the future too.”

Marcus Aurelius, Meditations

Gold is being stalled here at 1200 and silver at 17.  These have no real significance except that they are 'headline numbers.'  
But since the Comex price discovery mechanism is now a bucket shop, the punters may enjoy playing around these headline levels, especially since we are coming into an option expiration.  Who the heck that isn't an insider is still bellying up to buck the tiger at that twisted faro table on the Hudson?
I think we may be nearing an extreme in bearish metal sentiment because the shills and trolls for the funds are throwing out some ridiculously scatological 'analysis' on gold again.  Well, water finds its level, and not only hope floats.  This is why we can't have nice things.
Speaking of the scatological, someone shared a study with me showing that an increase in interest rates is almost necessary to insure the continued good financial health of JP Morgan in the near term. This zero interest rate policy is putting a serious squeeze on their officially subsidized  vigorish.

And the Fed, having fostered yet another bubble in financial assets, and yes it is a bubble, need to give themselves some room to cut rates to 'fix it' once it fails as it most likely will again.  There is a purpose to their 'wash and rinse' of the real economy, as more useful assets are transferred to the top.

So I do think we will have a lot of happy talk about recovery from very serious people, the Fed drones who have gotten into some fairly nice sinecures by going along with the financial flow for most of their careers.  Insiders don't talk badly about the mistakes and follies of other insiders.
They won't be talking about the inferior and unlivable part time jobs that people are actually getting, the stagnant real median wage that is strangling organic demand, or the enormous concentrations of capital that they fostered which is increasingly enabling enormously abusive monopolies that will most likely take a generation of struggle to root out and overturn.
Keep an eye on China, and Russia.  They have some big cards to play this year, and it will be interesting to see what they throw down.  Not that they are any better, not under the rule of oligarchs as well.   But history always seems to have a turn when least expected.
The glory that was Greece, the grandeur that was Rome.   Ubi sunt?
Where were you when I laid the earth’s foundation?
Tell me, if you know.
Who marked off its dimensions?
Who stretched a measuring line across it?
On what were its footings set,
or who laid its cornerstone –
while the morning stars sang together
and the angels shouted with joy?

 Have a pleasant evening.