20 September 2014

Upton Sinclair: The Brass Check

These quotes are from The Brass Check which was written by Upton Sinclair in 1919.

A brass check was a token purchased by a customer in a brothel and given to the woman of his choice. Sinclair saw the moneyed interests of his day holding brass checks with which to purchase politicians, journalists and their editors, and other thought leaders of the day.

For twenty years I have been a voice crying in the wilderness of industrial America; pleading for kindness to our laboring-classes, pleading for common honesty and truth-telling, so that we might choose our path wisely, and move by peaceful steps into the new industrial order. I have seen my pleas ignored and my influence destroyed, and now I see the stubborn pride and insane avarice of our money-masters driving us straight to the precipice of revolution.

What shall I do ? What can I do — save to cry out one last warning in this last fateful hour? The time is almost here — and ignorance, falsehood, cruelty, greed and lust of power were never stronger in the hearts of any ruling class in history than they are in those who constitute the Invisible Government of America today.

Imagine, if you can, the feelings of a workingman on strike who picks up a copy of the Wall Street Journal and reads:
'We have a flabby public opinion which would wring its hands in anguish if we took the labor leader by the scruff of his neck, backed him up against a wall, and filled him with lead. Countries which consider themselves every bit as civilized as we do not hesitate about such matters for a moment.' 
Year by year the cost of living increases, and wages, if they move at all, move laggingly, and after desperate and embittered strife. In the midst of this strife the proletariat learns its lessons ; it learns to know the clubs of policemen and the bayonets and machine-guns of soldiers.

Day by day the money-masters of America become more aware of their danger, they draw together, they grow more class-conscious, more aggressive. The [first world] war has taught them the possibilities of propaganda ; it has accustomed them to the idea of enormous campaigns which sway the minds of millions and make them pliable to any purpose.

American political corruption was the buying up of legislatures and assemblies to keep them from doing the people's will and protecting the people's interests; it was the exploiter entrenching himself in power, it was financial autocracy undermining and destroying political democracy.

By the blindness and greed of ruling classes the people have been plunged into infinite misery ; but that misery has its purpose in the scheme of nature. Something more than a century ago we saw the people driven by just such misery to grope their way into a new order of society; they threw off the chains of hereditary monarchy, and made themselves citizens of free republics.

And now again we face such a crisis only this time it is in the world of industry that we have to abolish hereditary rule, and to build an industrial commonwealth in which the equal rights of all men are recognized by law.

Land of Idols: Lies, Wars, Empire

"The goal has been the 'Third Worldization' of the United States:
  • an increasingly underemployed, lower-wage work-force;
  • a small but growing moneyed class that pays almost no taxes;
  • the privatization or elimination of human services;
  • the elimination of public education for low-income people;
  • the easing of restrictions against child labor;
  • the exporting of industries and jobs to low-wage, free-trade countries;
  • the breaking of labor unions;
  • and the elimination of occupational safety and environmental controls and regulations."
Michael Parenti, Land of Idols, 1993

19 September 2014

Long Term Gold Chart with Retracements

Our friend Lenny sent the patrons of the café a long term gold chart that is quite interesting  We have certainly been through the ups and downs of these markets together,

It shows the strong support at 1180, and the longer term trend line that works on a logarithmic chart.

I asked Len to include the retracement levels, because as I recalled there had been a prior big retracement earlier in this bull market, from 1030 to 681 that shook quite a few people out.

I was wondering how this current price decline compared.

Here is the chart.  We can draw lines on charts all day.  It is the action in the market, the push of supply against the pull of demand, that will set the true marks.  But these days it seems we can only count on price discovery in the intermediate term.

Russia Adds Another 300,000 Ounces of Gold To Its Reserves In August

Notice something that might be called a 'policy change' around 2007?

That is when we saw the sea change in the central banks, when they turned from net sellers to net buyers overall of gold bullion. 

The Comex moves its paper and relatively thin reserves around the around the plate. 
 Bill Holter thinks that China and the East are starting to take away the pricing mechanism from the CME and London.    Let's see how that works out.  I notice quite a few of the usual suspects on the SGE.

But by all accounts, Russia and China just keep quietly stacking.
At least based on the numbers that we know about.  They may be taking in quite a bit more from domestic sources.  I suspect that this is the case with China.
This chart is courtesy of the data wrangler, Nick Laird at Sharelynx.com

Ray Dalio: Hedging Against Fascism

"Bridgewater’s research over the past several years has focused on performance drivers, risk premiums and environments offering return opportunities.

Dalio has long been concerned with fundamental factors that could lead to the rise of a Hitler-like government, a concern that may sound sort of wacko but is supported by a number of various hedge fund managers and quantitative analysts, many of whom stay off the record. His investment products are designed to do well in more than just a rising stock market environment, which is correlated with his world view to various degrees.

A spokesperson for Bridgewater Associates declined to comment to ValueWalk."

Mark Melin, For First Time In 18 Years, Bridgewater Associates Launches New Strategy

I don't know if the above is a true representation of what Ray Dalio is thinking, or if it is just 'hyperbole for clicks.' I despise that sort of thing in general, and in instances like this it would be over the top.

I am not familiar with ValueWalk. And I am not impressed with observations about things that are based on no quotes and things that are strictly off the record.

But I thought I would pass it along, if any of you have the opportunity to ask Dalio about it, and let me know if this is true or not. This is making the rounds, I did not find it myself.

I respect Dalio and am curious about what he thinks. Otherwise I would not give this a second thought.

P.S. Actually the more I think about it, the more I will tend to give it little credibility unless I see an actual statement from Ray.

I know some hedge fund pampered princes are quick to see any return to regulation and a demand they pay taxes like most people as a 'fourth Reich' but I would be disappointed if Ray was one of them.


Gold Daily and Silver Weekly Charts - Option Expiration

"The mischief springs from the power which the moneyed interest derives from a paper currency which they are able to control, from the multitude of corporations with exclusive privileges which they have succeeded in obtaining in the different States, and which are employed altogether for their benefit; and unless you become more watchful in your States and check this spirit of monopoly and thirst for exclusive privileges you will in the end find that the most important powers of Government have been given or bartered away, and the control over your dearest interests has passed into the hands of these corporations."

Andrew Jackson, Farewell Address, March 4, 1837
What a parcel of rogues in a nation.

Although it was not much discussed on bubblevision, today was the fairly important stock option expiration for US equities.   It was utterly overshadowed by the big BABA IPO.

Next week will be an option expiration for the precious metals on the Comex.

I cannot remember when sentiment was this low amongst the metals crowd since around 1999-2001 timeframe.

I do suspect we are making a bottom, and somewhat artificially low at that.  This ought to do enough damage to supply to provide for a high upside IF and WHEN markets become transparent and honest again.

But I will not say we actually have a bottom until we break this trend of lower highs and lower lows.  That is a mugs' game.  And there are plenty of mugs out there, who have called about forty of the last three or four bottoms in the precious metals markets.  Fear not, when the time comes, they will be 'right.' 

We need to maintain some discipline in our thinking and a focus on the fundamentals.  Talk is cheap.

So what does this mean?  Holding positions with NO leverage, and of a comfortable size with a longer term price horizon that do not interfere with short term cash flow needs.   To do otherwise places one at the mercy of the short term market speculators and manipulators.

If the precious metals are insurance, do you place all of your assets in insurance?  Hardly.

I know it is especially tough on those who hold the miners.  They are a leveraged form of bullion ownership.  And what is worse is the great complacency which so many mining execs act towards their own shareholders. 

Not to mention the so-called metals analysts who will unqualifiedly claim that there is NO rigging in these markets, after the many scandals of the last five years showing that if there is money to be made in any market, it will be rigged.

Have a pleasant weekend.

SP 500 and NDX Futures Daily Charts - The Error of Their Ways

“To keep any great nation up to a high standard of civilization there must be enough superior characters to hold the balance of power, but the very moment the balance of power gets into the hands of second-rate men and women, a decline of that nation is inevitable.”

Christian D. Larson

Today was the day of Alibaba, the biggest IPO ever.  Huzzah!

The great BABA ran up to $99.70 in the first hour after its open, and then settled back down into the low 90's.  This is quite  jump over the IPO which priced out last night at $68.

Is there a fat lady singing in there anywhere?   I am not sure, but I think I hear a familiar melody.

The equity market is an asset bubble.  And when it breaks, there will be another attempt to transfer the debts to the broader public, with no penalties to the perpetrators. 

And then we shall see how the cards may fall.  And who knows?  They may do it all over again after that?  What is to stop it?

Have a pleasant weekend.


18 September 2014

Gold Daily and Silver Weekly Charts - Making Room for Alibaba - For All That

The wiseguys were raising cash to participate in the Alibaba IPO tomorrow.

It should price tonight by about 5 PM Eastern US. The mid range pricing is $66 to $68 per share.

So there was little surprise that we saw a pump in stocks today and a big drop in volatility.

The metals held up well but that is not saying much after the multi-day smacking they have taken.

The vote on Scotland's Independence is today and the results should be announced this evening. The polls, for what they are worth, are 'too close to call' although they show the 'no' votes with the lead.   Whatever the results I wish the Scottish people well.

There is an impulse to freedom in the world these days, that seems to have certain select parties very nervous. They do not care for independent thinking, and individual liberty. They dislike groups that question authority or attempt to hold it to account. And they certainly shrink at the thought of gold and silver.

These are the cadres of would-be professional rulers and managers, for whom oligarchy seems to be the natural form of governance. They wish for the ascendancy of the State, the bigger and more comprehensive the better, as long as they are within the circles of its power.

Not that I am all that concerned about their motives per se, or willing to speculate upon them. But any group that believes that they have been pre-selected, whether by birth or by talent, to rule strikes me as one group that ought never to have access to an exceptional power over others. They are certainly most likely to continue on a foolhardy path of their own, despite all other evidence to the contrary. God help the common people and soldiers led by such a one as these.

Speaking of leaders pursuing an unfortunate path despite all evidence to the contrary, there was intraday commentary which you may wish to view both here and here.  I think the Anglo-American financiers have made a truly Faustian bargain, and seem to be determined to pursue it to the bitter end.

One of the greatest features of the American independence movement of 1776 was that it was founded on the assertion, however unfortunately and incompletely implemented, that 'all men are created equal. And that they are endowed by their Creator with inalienable rights to life, liberty, and the pursuit of happiness.'

From our own privileged vantage point we tend to take such a bold assertion for granted. But it was a truly revolutionary idea given that it was uttered in a milieu which was still very much ordered by class distinctions, and the divine right of kings, and the presumed natural superiority of the few.  In many ways it turned the world-that-had-been upside down.  As you may recall, this is the tune that the British army under Cornwallis played as they surrendered at Yorktown:  The World Turned Upside Down.

And that message reverberated around the world, and was echoed by the Scotsman Robbie Burns in his wonderful song written in 1791, A Man's a Man For All That.'

Have a pleasant evening.