“Smart Money” BTFATH At Most Furious Pace In Over A Year, 2Y Short-Squeeze Possible

Positioning among “smart money” participants in the markets continues to show major divergences. While large speculators bought S&P 500 contracts at their strongest weekely pace in more than a year – shifting to a net long position – they also increased the net short Russell 2000 position to its ‘most short’ in five years. Large speculators also bought crude oil after eleven consecutive weeks of selling. In the rates complex, hedge funds maintained their 10Y Treasury long exposure while large speculators sold 2-Y Treasuries at the fastest weekely pace in more than three years to the biggest net short position in five years. – leaving, as BofA warns, 2Y susceptible to a squeeze pull-back. This potential squeeze extends all the way to 5Y as repo rates indicate a massive shortage into month-end.

This post was published at Zero Hedge on 09/22/2014.

Gold Daily and Silver Weekly Charts – Unchanged

“For all that has been, thanks. For all that will be, yes.”
-Dag Hammarskjld
Gold and silver finished the day largely unchanged. There were the usual overnight and early morning antics. The mining sector was taken out behind the woodshed and beaten up a bit. The Shanghai Gold Exchange is now open for business. Some are concerned because of the participation of the ‘usual suspects’ on the exchange. I am not so concerned, because China is quit to issue some fairly draconian judgments for those that engage in non-sanctioned official and business corruption. Luckily Bill Holter speaks to this issue in his latest missive, so let him say it as he does so well. This Thursday, 25 September, is the options settlement for October metals contracts on the Comex. October is not an active month on the Comex for either gold or silver, but they may find a more lively turn in overseas trade.

This post was published at Jesses Crossroads Cafe on 22 SEPTEMBER 2014.

The Geopolitical Situation In Europe

The geopolitical situation of Europe
After the end of the cold war, the United States dominated world affairs for nearly twenty years. However, the situation of a unipolar world has changed since the financial crisis of 2008 to a now multipolar world that includes China, Russia, India, Brazil and South Africa. These powers are influencing and manipulating the conflict zones we have today to their advantage. By analysing and dissecting the issues concerning the major conflict zones on our world map, as well as illustrating the parties involved, this article will explain what political and strategic interests are at play and how the development in major hotspots shape the big picture. This will identify the geopolitical forces that affect the European continent and what future concerns and worries await us.
Conflict zones in the world
There are now five conflict zones that affect the geopolitical situation of Europe:

This post was published at Zero Hedge on 09/22/2014.

SP 500 and NDX Futures Daily Charts – First Day of Fall – Nature’s Doxology

Today is the first day of Autumn. This is the season to give thanks for all, our blessings and sorrows. There was another down day on Wall Street as the post-Alibaba retrenchment set in. Late in the trading day UK retailer Tesco’s stock was knocked down on news that they have overstated their profits significantly.
“Tesco has suspended four executives, including its UK managing director, after the supermarket overstated its half-year profit guidance by 250m. That would be almost a quarter of its expected profit for the period. It has launched an investigation headed by Deloitte, and says it is now working to establish the impact of the issue on its full-year results.. The news prompted a plunge in Tesco’s share price, which closed 11.6% lower at 203p.”
Tesco trading in NY remained largely unchanged. The economic news this week is the usual, and the third revision of 2Q GDP which is dead fish now, unless there is a major unexpected revision.

This post was published at Jesses Crossroads Cafe on 22 SEPTEMBER 2014.

Death-Crossed Russell Suffers Biggest 2-Day Plunge In 5 Months

Death crosses; Hindenburg Omens; PBOC, BOJ, and ECB hinted at removing the punchbowl; crappy US housing data; and a Chinese IPO takeout hangover weighed on stocks with Russell 2000 the biggest loser (suffering its biggest high-to-low drop from Friday in over 5 months). The Dow is the only index holding post-FOMC gains (Russell down over 2%). Homebuilders are now down 4% from last week’s FOMC statement, post-FOMC high-flyer financials have tumbled red (catching down to credit), and only safe-haven healthcare is holding any gains post-FOMC (Biotech -3%). Treasury yields fell led by the short-end (3Y -3.5bps, 10Y -2bps) back under FOMC levels. The USD recovered European session losses to end almost unchanged as considerable AUD and CAD weakness outweighed GBP strength. Despite being clubbed like a baby seal in Asia, Silver rebounded through the day to end -0.3%, gold unch, oil down, and copper -1.6% as China stimulus hopes faded. S&P 500 lost 2,000; Russell is down 2.6% year-to-date (-6.8% from July highs); VIX jumped most in 2 months to ~14. BABA pinned at $90, HLF smashed -10%.

This post was published at Zero Hedge on 09/22/2014.

In a Hyper-inflation Scenario, What Would the Value of Gold Be?

Letter from the women of Cologne, Germany addressed to the ‘Women of the British Empire’ November 12, 1914 ‘During the times of passive resistance we existed, not by industry, but through the paper money doles sent from unoccupied country. Now these have ceased and we face starvation. Industry cannot recover, and there are millions, literally out of work…tens of thousands of our leading citizens have been banished or imprisoned…our newspapers have been suppressed…armed hordes of adventurers have now been let loose on our disarmed and helpless population in the name of separatism and Republicanism… Winter is before us, and we have no coal.’
What will it take for hyper-inflation to occur? Why hasn’t it already occurred? and What would the real value of gold be in this scenario?
Americans today have never experienced the severe inflation that German citizens experienced after World War 1, but as we are bombarded with images of hip-hop artists throwing up limitless amounts of paper bills ‘in da club’ and the Federal Reserve printing trillions of dollars in financial stimulus money, known academically as Quantitative Easy, one gets the sense that there may soon come a time where we too are sweeping paper bills into the fireplace to heat our homes. Currently, there are 47 million Americans on food-stamps and 91 million people not in the labor force. These numbers are similar to the economic stagnation experience in the late 70’s when inflation was running consistently over 10%, but today we have difficulty reaching the Fed target of 2%. So what is going on?
Well, truth is, if we were to calculate inflation the way we did in 1980, then the inflation rate would actually be 10%. So inflation is running much higher than what is officially being reported.
The Fed is under-reporting inflation because they do not want to be politically responsible for causing the economic disparity and income inequality between the 1% and the 99%. This is being commented on and reported widely, but for the most part the fingers are not being pointed at the Fed so their plan is working.
So with inflation at 10% why isn’t the price of gold skyrocketing?
Turns out inflation numbers aren’t the only thing the Fed is manipulating. Even the price of gold is being manipulated.

This post was published at The Burning Platform on 22nd September 2014.

Where the long term silver cycles are now

I described certain significant political cyclic effects in precious metals prices in previous blog essays.
(If you missed them: Gold & 2nd Term US Presidents ; War Cycles and The Price of Gold ; An In-Depth look at a Major Cycle in Spot Silver ; Silver Market Cycles )
In particular for those contributions I focused on the 2 year cycle which corresponds to congressional electoral process. I also looked at and emphasized the 4 year cycle which corresponds to US Presidential elections. A third period that I looked at carefully is the seven to eight year cycle which corresponds to the cycle of duration of reelected US presidents. This cycle, in it’s eight year version may correspond to a model used by Martin Armstrong which he classifies at 8.6 years and considers to govern or to track general economic confidence.
Among large cycles which I have not covered in this series of articles is a seasonal effect in pretty much all financial markets, and that could be described alternatively as a 1 year cycle, if one wished to do so, and that would be an accurate characterization of the seasonal effect.
Another cycle which I like to keep track of is a central bankers’ cycle which tends to come in at approximately five years length. Precious metals traders will be able to come up with some of the banking organizations five year deals, agreements, or plans. It is also common for sovereign states to operate economic plans and targets with this timespan, and large corporations are candidates too.
I thought I might show a picture of this 5 year cycle today, and also put several cycles together to see how they all interact with each other during Q4 2014.
So let’s take the five year swing to see what it does:

Now in order to be straight up about this, the existence of a five year cycle is a debatable point, and statistically it has a weak score. So this is an alleged cycle, or a possible cycle in the price of silver. You take a look, do your own examination of the facts, make up your own mind. I merely provide an illustrated interesting direction in which you might focus your gaze for a while to see whatever you can see.
Of course there a a lot of possible cycles in silver, so a question that regularly comes up is what are the others saying?

This post was published at TF Metals Report on September 21, 2014.

The Federal Reserve Explains How Its Crystal Ball Works

Forecasting with the FRBNY DSGE Model
Marco Del Negro, Bianca De Paoli, Stefano Eusepi, Marc Giannoni, Argia Sbordone, and Andrea Tambalotti
First in a five-part series This series examines the Federal Reserve Bank of New York’s dynamic stochastic general equilibrium (FRBNY DSGE) model – a structural model used by Bank researchers to understand the workings of the U. S. economy and provide economic forecasts. The Federal Reserve Bank of New York (FRBNY) has built a DSGE model as part of its efforts to forecast the U. S. economy. On Liberty Street Economics, we are publishing a weeklong series to provide some background on the model and its use for policy analysis and forecasting, as well as its forecasting performance. In this post, we briefly discuss what DSGE models are, explain their usefulness as a forecasting tool, and preview the forthcoming pieces in this series.
The term DSGE, which stands for dynamic stochastic general equilibrium, encompasses a very broad class of macro models, from the standard real business cycle (RBC) model of Nobel prizewinners Kydland and Prescott to New Keynesian monetary models like the one of Christiano, Eichenbaum, and Evans. What distinguishes these models is that rules describing how economic agents behave are obtained by solving intertemporal optimization problems, given assumptions about the underlying environment, including the prevailing fiscal and monetary policy regime. One of the benefits of DSGE models is that they can deliver a lens for understanding the economy’s behavior. The third post in this series will show an example of this role with a discussion of the forces behind the Great Recession and the following slow recovery.

This post was published at Zero Hedge on 09/22/2014.

Destroying the Dollar a Penny at a Time

A recent article on the Wall Street Journal’s blog draws attention to the high cost of producing a single penny – 1.6 cents each, to be exact. They blame this unsustainable price on the high cost of zinc, which makes up 97.5% of every American penny. The online publication Quartz ran with this story, giving it a new headline: ‘It costs 1.6 cents to make one penny because of the rising price of zinc’. Time for a short economics lesson.
An alternate, more accurate headline for this story would be, ‘It cost 1.6 cents to make a penny because of currency debasement.’ Rather than pondering whether or not the United States should simply stop producing pennies to save money, Americans should really be thinking about the long-term effects of currency debasement that has been going on for generations.
To debase a currency is to weaken its purchasing power. This is often done by inflating the money supply through quantitative easing, which the Federal Reserve has been practicing for years. When a currency is debased, a unit of that currency doesn’t buy the same amount of stuff that it once did. The US dollar has been seriously debased over the last hundred years or more. Just take a look at the handy infographic at the end of this blog post to see how bad it has become.

This post was published at GoldSeek on 22 September 2014.

China’s Economy Slams On The Brakes: 30% Of Coal Miners Unable To Pay Employees On Time

The thing about any debt-funded Ponzi scheme is that it is like a great white: it has to keep moving, or else it dies. The problem with China is that for the past decade, in order to fund the most rapid period of industrialization and modernization in history, it has been moving at an absolutely torrid pace. And by moving we mean creating credit, which always takes us back to our favorite chart comparing the US and Chinese financial systems, that of total bank assets in the two countries. Spot which one is poised for a horrendous crash the second credit creation slows down from the breakneck pace of $3.5 trillion in inside money creation per year…
Still, what China has successfully done in recent years, is maintaining the facade that all is well in the economy, despite ever sharper gyrations in its credit markets, gyrations which have finally put enough pressure on the economy to send China’s core driver of economic growth, fixed investment which accounts for over 50% of GDP, sharply lower, something we explained a month ago when we observed that the Chinese commodity crash is not only continuing but accelerating at a record pace, and in fact as wereported overnight, Singapore iron ore futures just tumbled to a record low.

This post was published at Zero Hedge on 09/22/2014.

Spain Mandates Public Companies “Stop the Bleeding” No More Layoffs

In a concern over votes, regional government spending is on the rise. In addition, Spain Mandates “Stop the Bleeding” No More Layoffs in Public Companies.
“Stop the Bleeding” via translation …
Nine months after the local elections, the government has begun to show signs of needing a push to overcome the electoral polls. The unemployment remains, along with public debt, macroeconomic data that further tarnishes their results. For this reason, some sources claim that the Government has called on companies possessing some control to hire staff or fail to fire.
Although the discourse of government is to “rationalize public spending” and “reduce the number of officials,” the fact is that regional governments are the largest employer in the country. Together, they have more than 2.5 million workers, and despite successive cut plans, thirteen regions have increased their spending on staff.

This post was published at Global Economic Analysis on September 22, 2014.

Barclays Fined De Minimus $60 Million For “Corzining” Client Funds

In yet another round of penalties for the British bank, Sky News reports that Barclays will pay a GBP38 million ($62 million) fine for failing to segregate clients’ funds correctly – i.e. “Corzining” its clients. The Financial Conduct Authority (FCA) will announce the small but record (higher than the $50 million fine for JPMorgan over its “corzining”) penalty tomorrow. If you are a Barclays client, have no fear, for as they explain, “losses for Barclays’ clients were theoretical rather than actual.”
As Sky News reports,
Barclays will be hit by the latest in a string of financial penalties this week when the City regulator hands out a 38m fine for failing to ensure adequate protection for clients’ funds. …

This post was published at Zero Hedge on 09/22/2014.

US Dollar: The Last Hurrah

End of empire is a difficult time for two groups, investors and patriots. A hundred years ago the U. S. took the economic baton from England to become the most important economy in the world. No doubt some loyalists refused to recognize the shift that was taking place. From then on the world began to denominate economic activity in U. S. dollars. Holding British pounds might have been the loyal thing to do, but it was not a wise investment decision. Today, a similar situation exists for the dollar. Dollar-based investors may now be facing the ‘last hurrah’ for the dollar, and should not ignore that possibility.
In the chart below is portrayed an index of the value of the U. S. dollar versus sixteen(16) important currencies. As such, it is more representative of the global value of the dollar than popular dollar indices which are generally poorly constructed. The widely used dollar index is composed of 77% European currencies. It has no African, South American, or Asian currency beyond the Japanese yen. The Chinese Renminbi is not included.

This post was published at Gold-Eagle on September 22, 2014.

One Giant Cluster Ponzi

‘The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary.’ -H. L. Mencken
Recently, The U. S. Treasury ramped up war games via financial sanctions aimed at Russia. The EU is part and parcel to the operation. These interventions are a continuation of the age old warfare referred to as the ‘currency wars’. Jim Rickards’ recent book on the topic chronicles the use of this tactic.
In many ways, the U. S. Federal Reserve was spawned in the spirit of interference and intervention before and during World War I.
The more things change the more they stay the same.
Technology has made large financial trusts both more efficient and more fragile. However, electronic security infrastructure has never been tested in true world sovereign crisis.
And we know that there is a massive lack of redundancy underlying the systems that fuel our just in time ‘modern’ existence. From basic price discovery in securities of all types to the card machines that run fuel pumps and the credit lines that pay the tankers
We are indeed skating over the thin ice.
Of course, lurking further below the surface is the ability and willingness – from academia across the political spectrum – to print what it takes to keep the banks alive – in the spirit of the domestic popular good.
At a certain point war creates enough anxiety that panic becomes part of the narrative. Many believe that can’t happen because the system has become too adept at protecting the true hidden story, the real interests. Or that the rules can be changed – perpetually.
Think about the events leading up to Lehman…

This post was published at Silver-Coin-Investor on Sept 22, 2014.

Where The Housing “Recovery” Is, In One Chart

Janet, we have a problem. The Fed’s main policy transmission channel, since stock ownership is not widespread enough to affect the real economy’s expectations, is via home equity wealth creation and animal spirit exuberance-based borrowing and leverage. As the following chart shows, the much-touted “housing recovery” pillar of the economy – that is set to take off and lift growth to escape velocity – is only evident in one place…

This post was published at Zero Hedge on 09/22/2014.

US Stocks Give Up “Dovish FOMC” Gains As Russell 2000 Completes “Death Cross”

The narrative just a few short days ago was how ‘dovish’ the Fed was (despite their apparent hawkishness) and that clearly they would not act unless they were highly confident of future US economic growth (which they have shown almost perfect ineptitude in forecasting). The savior of any weakness in this meme was ‘well the rest of the world will take up the money-printing mantle’… but that narrative broke this weekend. Only The Dow (for now) is still holding gains post-FOMC with the Russell 2000 down over 2% since then having completed its ‘death cross’ today.
Stocks have given up their post-FOMC gains…

This post was published at Zero Hedge on 09/22/2014 –.

BITCOIN, GOLD & SILVER LIQUIDATED FOR ALIBABA?

Alibaba Group had a huge debut with its shares beginning to trade at $92.70, up over 36% from its IPO price of $68. That increase on the New York Stock Exchange raised the company’s total market value from $168 billion to over $220 billion. Alibaba had raised $21.8 billion in its hotly anticipated IPO, the largest in US history, dwarfing Facebook Inc’s IPO.
The price of bitcoin has fallen from its $513 price of one month ago to as low as $381.17 on Friday. This week alone the crypto-asset fell from $513 to $381.
Alibaba’s US IPO May Have Crashed the Bitcoin Pricevia @CryptoCoinsNews
– Richard Hobbs (@KenmalBusiness) September 19, 2014

This post was published at GoldSilverBitcoin on 22 SEP , 2014.

California Or Ethiopia? “Families Dream Every Night About Water”

It’s worst and getting worst-er. Hundreds of domestic wells in California’s drought-parched Central Valley farming region have run dry, according to AP, leaving many residents to rely on donated bottles of drinking water to get by. With government set to regulate deeper drilling, hope is plunging that a solution to California’s drought will come anytime soon as groundwater levels plunge. The stories of struggle are simply stunning, especially given they are coming from America with Governor Brown signing an executive order that provides money to buy drinking water for residents statewide whose wells have dried up. “We need water like we need air,” exclaimed one charity leader trying to raise money for water tanks, “Families every night dream about water,” said another. And ripped from the famine-headlines of East Africa, “every day [Californians] thinking about how they’re going to deal with water.”
As AP reports,

This post was published at Zero Hedge on 09/22/2014.