Strong Reversal Augurs for Rough September

In recent weeks we wrote about the ongoing consolidation in precious metals miners. We touched on the history of September, not as a bullish month but as an important inflection point. With the miners holding up well and Gold still holding its lows we thought a breakout could be coming. Yet we’ve been whipsawed before. Several times over the past year (and as recently as late July) we’ve written about the possibility of a final low in Gold to precede the next impulsive advance in the miners. These scenarios came to a major head this week and the nasty decline across the entire sector suggests the bears are back for one last time.
Below is our chart for Gold’s bear markets which are scaled to the 2011 peak. We exclude the two extreme bears (one lasted six years while the other was the post bubble crash). Longer bears tend to be less severe in price whereas the most severe bears in price tend to be short in time. Examples of that include the 1975-1976 and 1983-1985 bears. The 1987-1993 bear (the longest) only shed 35% while the 1996-1999 bear, which lasted three and a half years bottomed well above $1100 on the current scale. History makes a strong argument that while a new low is likely, anything much below $1100 appears unlikely.

This post was published at GoldSeek on 5 September 2014.

53 Million Temps: All You Need To Know About The “Jobs Recovery”

After years of ignoring the obvious, the Federal Reserve has been finally forced to admit that the labor force participation rate matters, and in fact has started to point it out as a clear negative when it comes to Yellen’s “dashboard” of thresholds which will allow the Fed to raise rates (for the obvious reason that the Fed is desperate to delay ZIRP as long as possible and is now highlighting all that is wrong with the economy, contrary to Obama who is still focusing on all the rigged greatness of the US recovery) and to do so is going through Zero Hedge archives to note all those things which everyone had ignored for years and which we have pointed out as structural failures of the so-called recovery.
So while we are happy to oblige the Fed with our tens of thousands of articles summarizing what is broken with the US economy thanks to, well, the Fed, here is another one: one which the Fed can use next year when the time to hike rates has come and gone, and when the Fed is once again scratching its head what to blame it on.

This post was published at Zero Hedge on 09/05/2014.

“The People On Wall Street Aren’t Seeing What’s Really Going On In America”

Today’s jobs data was almost 5 standard deviations below Wall Street’s best-and-brightest’s estimate and has already been dismissed by many as an ‘anomaly’ or ‘unbelievable’. Despite the fact that the National Retail Foundation noted over 17,000 layoffs in August “calling into question how much momentum the economy really has,” one member of the public was able to #NailTheNumber on CNBC’s great payroll-guessing game. Ronnie Squires explains to a silenced CNBC anchor the real state of America…
Apologies for audio quality…


This post was published at Zero Hedge on 09/05/2014.

Today’s Jobs Report And The Cult Of Central Banking: Counting Angels On The Head Of A Pin While Main Street Flounders

That didn’t take long. The Fed’s unpaid PR flack at the Wall Street Journal, Jon Hilsenrath, was out with hardly an hour to spare after the August jobs report – relaying word from the Eccles Building that ZIRP is in no danger of being rescinded early.
When at the July meeting our monetary plumbers saw ‘significant underutilization of labor resources’, which is code for continued zero interest rates, they were looking at an unemployment rate in June of 6.1%. So according to Hilsenrath, today’s weakish jobs report is good news for Wall Street’s free money crowd.
The fact that unemployment hasn’t fallen since the July meeting -and that job growth slowed in August – suggests Fed officials won’t make big changes to their policy statement and the signal they’re sending about rates when they meet Sept. 16 and 17.
Indeed, the Fed’s other unpaid spokesman, Steve Leisman at CNBC, had already made the point within minutes of the release. ZIRP will now last until next July, he opined. The danger that money market rates would rise, to say 40 bps, as early as March has been alleviated by the ‘disappointing’ 142,000 print for August. Whew!

This post was published at David Stockmans Contra Corner on September 5, 2014.

Quality Of Jobs Created In August Deteriorates Again

Back in January 2012 we noted that while the market, and at the time the Fed, have been focused exclusively on the quantity of jobs created each month, a far more important aspect of the US economic recovery is the quality of newly created jobs. It took the Fed about three years to catch up but it finally did, and Yellen no longer cares so much about the headline NFP print or the unemployment number but rather how good the newly created jobs are, manifesting in the quality of wages and earnings. So what was the quality of seasonally-adjusted job gains in August? In a word: disturbing. Of the 142K jobs created, just under half came from the lowest paying jobs possible: education and health; leisure and hospitality; and temp-help. The best paying jobs, finance and information, added a whopping 4K jobs between them. Finally, about that much delayed US manufacturing renaissance: stick a fork in it – in August the number of manufacturing jobs created was exactly 0.

This post was published at Zero Hedge on 09/05/2014.

CNBC Viewership Plunges To 21 Year Lows

It’s over: whether due to the complete domination of centrally-planned markets by a few central banks, whether as a result of HFTs forcing out all human traders and investors, whether due to volatility plunging to record lows and complacency at record highs, whether viewers simply aren’t impressed by the new young, female faces that are increasingly taking over the primetime financial TV slots, because people just are tired of Cramer’s endless “caffeine” high and the attempt to justify a record disconnect between manipulated markets and a stagnant economy in which some 53 million workers are “freelancers“, or simply because video game consoles don’t watch TV, America’s interest with finance and the stock market is over.
Exhibit A: The chart below shows CNBC’s Nielsen rating for August.

This post was published at Zero Hedge on 09/05/2014.

Who Will Defend the Rule of Law in Europe?

ECB surprises markets with rate cut and purchases of private assets; Ruparel: Pressure rises on eurozone governments as ECB nears end of its policy tools The ECB yesterday surprised markets by cutting interest rates and announcing a programme to purchase private sector assets, in the form of asset-backed securities and covered bonds. In his press conference, ECB President Mario Draghi said that the decision was not unanimous, with reports suggesting Bundesbank President Jens Weidmann was opposed. Draghi reiterated his call for flexibility in fiscal policy across the eurozone, but warned that structural reforms must come first. In response to the move, the euro hit its lowest level for 14 months and equity markets across Europe hit their highest point for six years.
Here is a direct quote from the Maastricht Treaty:

This post was published at Mises Canada on September 5th, 2014.

The Great Silver Subsidization

Sep 04, 2014
Modern achievements, especially in medicine and technology (fueled by cheap energy), have made the human experience longer and easier.
Yet, at the base of it all lays the irrational man, still flinging immorality from the cages of his ongoing existential dilemma.
Despite the existence of natural governors, humans are still prone to abuse of power for the sake of power alone.
Unsound money and finance are not immune. They are fuel for the fire. They play an evermore powerful role in the rationalization of this age-old abuse.
Whatever you want to call the system that makes the modern civilization go around, there are four basic sub-systems at work here:
Finance Politics The Media/Academia Energy/Economy
These four areas are in a constant state of fluctuating overlap. We can separate them just enough to observe the interactions. I’m lumping energy in with what I see as the ‘raw economy” experienced by most people.
Finance is enormous. Way beyond anything the world has ever seen.
Finance is sector of the economy. But it is so big that it wields influence as if it were a separate entity.
Politics will always be around. It could be worse. In a real crisis, a political vacuum can lead to much worse than we see. More extremes.

This post was published at Silver-Coin-Investor on Dr. Jeffrey Lewis /.

Remember, Remember, Gold in September

In American poet W. S. Merwin’s poem ‘To the Light of September,’ the speaker calls the ninth month ‘still summer,’ yet with a ‘glint of bronze in the chill mornings.’
I agree – to an extent. Here in San Antonio, Texas, home of U. S. Global Investors, we’re most definitely still in the summer season. But in the investing world, when we talk about September, there’s a glint not of bronze but another precious metal: gold.
That’s because September is historically gold’s best-performing month of the year, returning 2.16 percent on average since 1969.
I invite you to compare the chart above, updated to reflect the most recent monthly returns, to the one published this time last year.
Drivers of Gold
There are several seasonal factors that explain why gold glitters a little more brightly in September. The most notable reason is what I call the Love Trade. In India, this month marks some of the most spirited gold-buying in anticipation of Diwali, which falls on October 23 this year. Following closely behind is the Indian wedding season, when gold is purchased for the bridal trousseau and as gifts in jewelry form. And September is normally when retailers restock their wares ahead of Christmas and after the Islamic month of Ramadan, at the end of which gold jewelry is commonly exchanged.

This post was published at GoldSeek on 4 September 2014.

The Market Reacts To Mark Zandi’s “I Don’t Believe It” Jobs Data

While Mark Zandi may not “believe the data,”
It appears the market does (for now). The dismal jobs data sparked a kneejerk bond rally, sending yields plunging from the week’s highs, and stocks and gold jumped higher (we assume on hopes that bad news is great news for assets as Yellen will have an excuse to be more dovish). The initial moves are fading (as always) but stocks are still pushing higher.

This post was published at Zero Hedge on 09/05/2014.

Gold Miners to Gold ratio rolling over

It has become axiomatic, for good reason, that the mining shares tend to lead the gold price whether they are moving higher or moving lower. For whatever reason, the connection is fairly solid and has been for many years. That being said, the combination of a deteriorating chart for the metal and the fact that the ratio ( HUI to Gold) is rolling over, does not bode well for gold at the moment. Take a look at the following chart noting the HUI/Gold ratio and comparing that to the Gold price ( dark blue line). Can you see the very close connection? You can almost lay the gold price atop this ratio and see where it is generally headed as the lines follow each other quite closely.

This post was published at Trader Dan Norcini on September 4, 2014.

A Lie that serves the rich – Roberts, Titus, Kranzler

The labor force participation rate has declined from 66.5% in 2007 prior to the last downturn to 62.7% today. This decline in the participation rate is difficult to reconcile with the alleged economic recovery that began in June 2009 and supposedly continues today. Normally a recovery from recession results in a rise in the labor force participation rate.
The Obama regime, economists, and the financial presstitutes have explained this decline in the participation rate as the result of retirements by the baby boomers, those 55 and older. In this five to six minute video, John Titus shows that in actual fact the government’s own employment data show that baby boomers have been entering the work force at record rates and are responsible for raising the labor force participation rate above where it would otherwise be. It is not retirees who are pushing down the participation rate, but those in the 16-19 age group whose participation rate has fallen by 10.4%, those in the 22-14 age group whose participation rate has fallen by 5.4%, and those in the 24-54 age group whose participation rate is down 2.5%.

This post was published at Paul Craig Roberts on September 4, 2014.

President Obama’s Post-NATO, Putin-Punishing, ISIS-Igniting Press Conference – Live Feed

After two solid days of ‘discussions’ at a gold course in Wales, President Obama is ready to make some new comments this morning. With a cease-fire agreed in Ukraine, and no ISIS beheadings yet today, we wonder where his ire will be pointed (or perhaps it’s back to the Republicans’ fault we had such a weak jobs print?)…
CLICK HERE TO WATCH

This post was published at Zero Hedge on 09/05/2014.

Market Report: Short-sellers driving prices

Gold and silver had a bad week, with gold falling $25 to a low of $1262 by the Comex close yesterday, and silver by $0.50. This morning UK-time prices opened a little better on overnight physical demand, no doubt stimulated by those lower prices. The background to this poor performance was dollar strength relative to weak currencies, with the yen, euro and pound all declining sharply. It feels like the market is drained of all positive sentiment, which is reflected in the very low level of open interest in the futures market. These conditions are more consistent with a market that is bottoming out than one that is about to fall sharply. Meanwhile retail demand seems to be stabilising, with growing interest for coins in the west, and weekly physical deliveries in Shanghai have quietly doubled over the last two months. Demand for physical gold has the stealthy effect of increasing the gearing of the shorts in the paper markets.
However, it looks like the short sellers have returned in some force, with good Comex volume last Tuesday and healthy turnover again yesterday (Thursday). Open interest in gold rose, which with a falling price confirms futures are being driven by an increase in short positions, most probably in the managed money category. This is shown in the chart below, and is particularly noticeable since 27th August, the start of the current decline.

This post was published at GoldMoney on 05 September 2014.

The Fed Just Imposed Financial Austerity on the States

The Federal Reserve Board of Governors, together with the Federal Deposit Insurance Corporation and Office of the Comptroller of the Currency – the top regulators of Wall Street’s largest banks – finalized liquidity rules yesterday that make absolutely no sense to anyone with a historical perspective on how Wall Street operates in a crisis.
The Federal regulators adopted a new rule that requires the country’s largest banks – those with $250 billion or more in total assets – to hold an increased level of newly defined ‘high quality liquid assets’ (HQLA) in order to meet a potential run on the bank during a credit crisis. In addition to U. S. Treasury securities and other instruments backed by the full faith and credit of the U. S. government (agency debt), the regulators have included some dubious instruments while shunning others with a higher safety profile.
Bizarrely, the Fed and its regulatory siblings included investment grade corporate bonds, the majority of which do not trade on an exchange, and more stunningly, stocks in the Russell 1000, as meeting the definition of high quality liquid assets, while excluding all municipal bonds – even general obligation municipal bonds from states with a far higher credit standing and safety profile than BBB-rated corporate bonds.
This, rightfully, has state treasurers in an uproar. The five largest Wall Street banks control the majority of deposits in the country. By disqualifying municipal bonds from the category of liquid assets, the biggest banks are likely to trim back their holdings in munis which could raise the cost or limit the ability for states, counties, cities and school districts to issue muni bonds to build schools, roads, bridges and other infrastructure needs. This is a particularly strange position for a Fed that is worried about subpar economic growth.

This post was published at Wall Street On Parade By Pam Martens and Russ Marte.

Here’s Why the Market Could Crash–Not in Two Years, But Now

Markets crash not from “bad news” but from the exhaustion of temporary stability.
Yesterday I made the case for a Financial Singularity that will never allow stocks to crash. We can summarize this view as: the market and the economy are not systems, they are carefully controlled monocultures. There are no inputs that can’t be controlled, and as a result the stock market is completely controllable.
Today I make the case for a crushing stock market crash that isn’t just possible or likely–it’s absolutely inevitable. The conceptual foundation of this view is: regardless of how much money central banks print and distribute and how much they intervene in the markets, these remain complex systems that necessarily exhibit the semi-random instability that characterizes all complex systems. This is a key distinction, because it relates not to the power of central banks but to the intrinsic nature of systems. One of the primary motivators of my work is the idea that systems analysis can tell us a great deal about the dysfunctions and future pathways of the market and economy. Systems analysis enables us to discern certain pathways of instability that repeat over and over in all complex systems–for example, the S-Curve of rapid growth, maturation and diminishing returns/decline.

This post was published at Charles Hugh Smith on THURSDAY, SEPTEMBER 04, 2014.

The return of the stock market bubble: In a world with clear risk, investors are acting as if the market is completely risk free.

Some investors tend to believe the stock market is a perfect and balanced barometer of the underlying economy. Even with the recent bubbles in technology stocks and real estate, some still have this misguided assumption that stock values are always priced right. Most of the movement in the market is being driven by institutional investors since roughly half of Americans own absolutely no stocks outright. It should be rather obvious to those that read a few newspapers outside of the country that there are some major risk factors hitting the world right now: the Ebola outbreak, the conflict between Ukraine and Russia, and the Middle East. You also have anemic economic growth in Europe. In the US 92 million Americans have dropped out of the labor force. Yet somehow, the stock market is making new highs. Why? A large part of profits have come from firing workers, slashing wages, cutting benefits, and using cheap QE funding to juice up stocks. The market cares only about profits, not long-term sustainability. Yet if you were looking at the volatility index you would think that there was absolutely no risk in the current market. This market is looking very bubbly.
Bubble trouble
Bubbles are hard to define and spot. Bubbles are largely driven by psychology and emotions and move in an eradicate fashion. A bubble occurs when an asset, commodity, or stock for example moves up in price with very little economic fundamentals to support it. For example, real estate moving up with no actual income growth but people using leverage to go deep into debt. Some tech companies today are looking very bubbly based on their earnings.
The stock market is looking extremely frothy at the moment:

This post was published at MyBudget360 on September 5, 2014.

August Jobs Tumble To Only 142K, Lowest Monthly Print Of 2014 And Below Lowest Forecast; Unemployment Rate 6.1%

So much for the latest recovery: with not a single analyst expecting a NFP print below 190K, the BLS just reported that August payrolls tumbled from a revised 212K to only 142K, which was not only below the lowest Wall Street estimate of 190K, but it was also the the lowest monthly jobs print in all of 2014 and the biggest miss to expectations since the “polar vortex”! The Unemployment rate dripped modestly from 6.2% to 6.1% confirming yet again it has become a completely meaningless metric.

This post was published at Zero Hedge on 09/05/2014.

Goldman Sachs is the world’s worst gold forecaster so go long when they say short

Thank you to our friends in the London gold trading community for reminding us this summer that Goldman Sachs has one of the worst records as a forecaster of the gold price, so when they say to short gold like today it is almost always a time to go long.
The Ukraine-Russia crisis and economic weakness in Europe and Japan have been supporting gold somewhat, but prices are being pressured by Federal Reserve policy, said Jeffrey Currie, head of commodities research at Goldman Sachs. That’s why he sees the precious metal falling 17 per cent from current levels by year end.

This post was published at Arabian Money on 04 September 2014.

The Truth About Where Gold Price Is Headed

I will be honest, it has been a long time since I have been excited about gold, but I am starting to like gold once again. I had grown too bored to care what gold did. With the bull market top in 2011, and four years later price continues to founder can you blame me?
Let me start out by painting a picture for you. This is my technical analysis overlaid on the price of gold. This simply gives you a visual of were the price of gold is trading.
But first, if you have not yet seen this ‘Gold in the USA’ infographic you must check it out… it shows the history of gold in a visual format, and you will likely learn something from it – Click Here
GOLD HOLDS LONG-TERM BEARISH PATTERN Gold peaked around 1900 in September 2011 and quickly fell to the 1550 area. The metal then consolidated for 18 months before it broke support. The sharp decline triggered a drop in price to $1200 in April 2013. Since then gold has been in another consolidation, which is a bearish continuation pattern.
The lower highs in 2013 and 2014 reflect weakening demand and increasing selling pressure at lower price levels. A break down in price below support would trigger further weakness and a drop to roughly $900 oz. If you want more of a bearish visual; see my August gold report – Click Here

This post was published at Gold-Eagle on September 4, 2014.