Gold Daily and Silver Weekly Charts – The Bear Market Grinds On

There was intraday commentary here and here.
Gold in particular is hitting stiff resistance at a key resistance point. It is not the breakout point, but it does offer some threat if momentum can build to the next level. This is how I read it. You may choose to think differently.
Silver provided some support in refusing to break 16 when the metals were hit hard in a typical bear raid selloff this morning.
Bear markets and hard times can be trying. It is not unheard of for reformers to start turning on each other when the going gets tough. I have found myself shut out of a few sites whose owners and denizens apparently do not appreciate those who have different viewpoints. It almost resembles a kind of tribalism. This is to be expected in times of stress as hysteria ebbs and flows.
I have found myself accused on one side of being a ‘liberal and communist’ and on the other side of being a ‘goldbug, fundamentalist, and arch-conservative.’ It is not always easy to deal with the works and consequences of creatures from the bowels of hell, and maintain a calm and cheerful disposition. So mostly I just slough these things off. As one of my friends likes to say, ‘It is the times.’

This post was published at Jesses Crossroads Cafe on 19 NOVEMBER 2014.

Is This The Chart That The World Should Be Watching Closest?

The consensus – perhaps until today, judging by the performance of Japanese stocks relative to the Yen – is that Abe calling a snap election is bullish, enabling him to re-confirm his mandate to push ahead with uber-dovish devastation of the Japanese economy. However, what few are willing to consider is… what happens if the world’s greatest policy madman does not get elected? As the following chart shows, withonly 4.4% of Japanese households believing they are better off in the past year, perhaps an unelected Abe is the black swan no one is considering currently…

This post was published at Zero Hedge on 11/19/2014.

U.S. MINT REPORTS ON SILVER EAGLES: Huge Demand & Weekly Rationing

After the huge take-down in the price of silver on October 31st, demand for Silver Eagles skyrocketed. Then on Nov. 5th after silver was knocked down another 5%, the U. S. Mint suspended sales of Silver Eagles.
It was reported that the U. S. Mint sold 2 million Silver Eagles on Nov. 5th before they suspended sales. However, we didn’t see a huge increase in sales on their website for that day. So, I decided to contact Michael White, Public Affairs person for the U. S Mint and ask him about this issue as well as some other questions.
Mr. White provided me that actual sales figures from Oct 31st to Nov. 18th. These sales figures can be seen in the chart below:

On Halloween, Oct. 31st when Zombies knocked the price of silver down 4%, the U. S Mint sold 1,425,000 Silver Eagles that day. After the weekend, Silver Eagle sales on Monday, Nov 3rd were a hefty 625,000. As the price of silver trended lower on Tuesday, the U. S. Mint sold another 430,000 on Nov. 4th.

This post was published at SRSrocco Report on November 19, 2014.

Japanese Trade Deficit Streak Hits Record 44 Months, Yen & Stocks Decoupling

While hopes of the J-Curve recovery in the deficit are long forgotten in the annals of Goldman Sachs history, silver-lining-seekers will proclaim the very modest beat in tonight’s Japanese trade deficit a moral victory for a nation whose economic data has been nothing but abysmal for months. However, the near $1 trillion Yen deficit is the 44th month in a row as exports to US and Europe rose modestly in Yen terms but dropped to China and US in volume terms. USDJPY continues its march higher (now 118.25) but, unfoirtunately for Abe’s approval ratings, Japanese stocks continue to languish an implied 1000 points behind – unable to break back above pre-GDP levels… as faith in Kuroda’s omnipotence falters.

This post was published at Zero Hedge on 11/19/2014.

The Eurozone’s QE Problem

Over the last couple of weeks, as the Federal Reserve ended their latest round of quantitative easing, there have been many calls that the pickup of the “QE Baton” by the BOJ and ECB. The problem is that the impact of liquidity interventions in Japan and the Eurozone do not carry the same “punch” as was witnessed in the U. S due to differences in economic underpinnings. Furthermore, while Japan can easily implement QE since they are a sovereign currency issuer, the ECB is not and must rely on the generosity of its members.
As I wrote this past Monday, Japan has officially slipped into a third economic recession in as many years despite the BOJ’s efforts to stimulate a return of economic prosperity and inflation. This is not a new problem, as Japan has been fighting disinflationary pressures in their country for the last 30 years as shown in the chart below. Japan’s internal struggle with an aging population, lack of savings and accelerating debt/GDP ratios continue to plague economic prosperity.

Much like Japan, the Eurozone has also become entangled in same “liquidity trap” as member countries continue to avoid making necessary structural reforms to cure their burdensome debt, dependency and unemployment ratios. As shown, the decline rate in economic growth since 2007 shows the real problem. Despite successive rounds of monetary interventions and suppression of interest rates by the ECB, the Eurozone has only experienced fits and starts of declining economic activity.

This post was published at StreetTalkLive on 19 November 2014.

These 7 Firms Paid Their CEO Over 60% More Than Uncle Sam

Seven of the 30 largest U. S. corporations paid more money to their chief executive officers last year than they paid in U. S. federal income taxes, according to a new study by Center for Effective Government and Institute for Policy Studies. As Reuters reports, the study said the seven companies, which in 2013 reported more than $74 billion in combined U. S. pre-tax profits, came out ahead on their taxes, gaining $1.9 billion more than they owed…

This post was published at Zero Hedge on 11/19/2014.

Why Japan Needs A ‘Strong’ Yen

Unfortunately, Natixis warns, the same error is being repeated by the Bank of Japan. The starting point of their analysis is the contrarian fact that Japan needs a strong yen. Japanese exports are hardly sensitive to their prices; Japan has a large proportion of “necessary” imports (commodities) whose price rises when the yen weakens. Unfortunately, Natixis warns, the Bank of Japan has just increased the size of its quantitative easing program, which will lead to a steeper depreciation of the yen. The only benefit will be a temporary rise in the Nikkei, an automatic result of the conversion of Japanese companies’ results into yen. Nothing more…

This post was published at Zero Hedge on 11/19/2014.

Deformations On The Dealer Lots: How The Fed’s ZIRP Is Fueling The Next Subprime Bust

On any given day, Janet Yellen is busy squinting at 19 essentially meaningless labor market graphs on her ‘dashboard’, apparently looking for evidence that ZIRP is working. Well, after 71 months of zero money market rates – -an unprecedented financial absurdity – -there are plenty of footprints dotting the financial landscape.
But they have nothing to do with sustainable jobs. Instead, ZIRP has fueled myriad financial bubbles and speculations owing to the desperate scramble for ‘yield’ that it has elicited among traders and money managers. Indeed, the financial system is literally booby-trapped with accidents waiting to happen owing to the vast mispricings and bloated valuations that have been generated by the Fed’s free money.
Nowhere is this more evident than in the subprime auto loan sector. That’s where Wall Street speculators have organized fly-by-night lenders who make predatory 20% interest rate loans at 115% of the vehicle’s value to consumers who are essentially one paycheck away from default.
This $120 billion subprime auto paper machine is now driving millions of transactions which are recorded as auto ‘sales’, but, in fact, are more in the nature of short-term ‘loaners’ destined for the repo man. So here’s the thing: In an honest free market none of these born again pawnshops would even exist; nor would there be a market for out-of-this-world junk paper backed by 115% LTV/75-month/20% rate loans to consumers who cannot afford them.
Indeed, instead of the BLS concocted ‘quit rate’ and other such aggregated data noise about the nation’s massive, fragmented, dynamic and complicated complex of thousands of local and sectoral labor markets – – about which the Fed can and should do nothing – -Yellen might be gazing at the $1.6 billion in bids attracted earlier this year by Prestige Financial Services of Utah. That occurred in the junk bond market, which the Fed does heavily impact, and could not have possibly happened in the absence of ZIRP.
In a word, the $390 million offering was 4X oversubscribed – even though the bonds were issued by a newly minted financial conduit that has no operating history; and its only assets are piles of 20% interest rate loans made to people who have been in bankruptcy!

This post was published at David Stockmans Contra Corner on November 19, 2014.

SP 500 and NDX Futures Daily Charts – Trust Us

Stocks were under pressure much of the day.
There were more technical than fundamental reasons for the trades.
Stocks are at a key juncture.
The behavior of the Fed may be looked at by future historians as so bad as to be incompetent, rather than notorious, in the manner of the ‘Greenspan defense.’
After all, these are educated and responsible people. How can they not be trusted?

This post was published at Jesses Crossroads Cafe on 19 NOVEMBER 2014.

The Next QE? Switzerland Prepares A “Living Wage” Of $2,600 For Every Citizen

With Japan planning a few trillion Yen stimulus plan of airdropping “gift cards” directly to the poor to spur spending (and the virtuous awesomeness of economic utopia), it appears Switzerland is about to go one step further. As Motherboard reports, Switzerland could soon be the world’s first national case study in basic income. Instead of providing a traditional social net – unemployment payments, food stamps, or housing credits – the government would pay every citizen a fixed stipend. The proposed plan would guarantee a monthly income of CHF 2,500, or about $2,600 as of November 2014; meaning every Swiss family can expect an unconditional yearly income of $62,400 without having to work, with no strings attached. What could go wrong?

This post was published at Zero Hedge on 11/19/2014.

China Manufacturing PMI Misses, Slides To 6 Month Lows

For the 13th month in a row, according to Bloomberg data, China Manufacturing PMI missed expectations. Printing at a 6-month low of 50.0 (against expectations of 50.2), the most notable individual component was the slump in output to a contractionary 49.5 reading for the first time since May. New export orders (umm US decoupling?) also dropped. It seems after last month’s idiocy (take a look at these charts for a good laugh), that Japan’s Manufacturing PMI is also catching down to reality having missed expectations and dropped to 52.1. Chinese and Japanese stocks are tumbling after this data (with Nikkei 225 200 points off US day session closing levels).

This post was published at Zero Hedge on 11/19/2014.

Fed Warning Sends Small Caps Red For 2014

The word “volatile” comes to mind when reflecting on today’s cross-asset class action. US equities dumped into and beyond the US open, decoupling entirely from JPY carry, only to reverse perfectly at the European close and recover all the way back to USDJPY right as the FOMC minutes hit. A kneejerk sent stocks higher but that quickly decoupled also and stocks fell. Small Caps underperformed and are back in the negative year-to-date. Treasury yields were volatile, ramping higher into the US open, rallying post, then whipsawing on FOMC minutes to close 3-4bps higher on the day. The USD was flat on the day despite the surge in USDJPY back above 118. Commodities were a mess with a big dump on Swiss Gold polls, rip higher on Russian buying rumors and dropped again on FOMC (oil and copper followed suit). HY Credit was “bidless” and continues to decouple from stocks (along with VIX). The Dow was levitated back into the green to close
On the day, Russell 2000 underperformed… and they tried their best to get The Dow green to prove how The Fed is right…

This post was published at Zero Hedge on 11/19/2014.

Even the Best Can Fall Victim To the ‘Efficient Markets Hypothesis’

The preamble to this recent column by Ted Butler (subscription but worth it for his fine work in tracking the silver market) is a discussion of how ‘gold loans’ are not really proper loans, because the collateral gets reformatted and sold off.
What sparks the discussion is the recent talk and articles in Bloomberg about the Gold Forwards rates being negative, implying that it is difficult to obtain leased gold. Ted finds this kind of discussion frustrating apparently. They disclose rates, but not the amount of ongoing transactions.
Ted explains that when you loan a tool to your neighbor, you expect to get your tool back. In the case of gold leasing, as Bloomberg points out, the gold gets reformatted and sold off to Asia. So the gold leasing really does not make sense to Ted.
Now I would beg to differ at this point, because unlike your favorite power tool monetary objects are often considered to be ‘fungible’ and in a lease you may not expectto get the exact bars back necessarily. You merely ask for the same quality, form and amount as I understand it. If this is not the case, then Bloomberg has inadvertently disclosed a massive fraud.
You don’t expect to get your bars back unless it is a custodial arrangement. But as the German people have recently discovered, good luck with that. You may get whatever the custodians at the Fed can find, because they have not merely stored the gold for you, but they have apparently utilized it.
Therefore, Ted’s reasoning goes, because they do not make sense, gold leases do not exist in any appreciable size anymore. They were just a kind of fad perpetrated by JPM and some foolish miners some years ago. That forward selling in the form of hedges blew up badly and miners like Barrick were forced to take sizable losses in a rising market.
At this point I would say the leases do not make sense, but not for the same reason Ted cites. They do not make sense to me because they both misprice the counterparty risk AND the terms and other details of the leasing are not disclosed to all the interested parties. The lenders who are central banks do not inform. the public who actually own their nation’s gold. Such leasing ought to be disclosed transparently and in real time.

This post was published at Jesses Crossroads Cafe on 19 NOVEMBER 2014.

Senior Citi Banker Found Dead In Bathtub With Slashed Throat

The dust has barely settled on the latest high profile banker suicide in which Deutsche Bank’s associate general counsel, and former SEC regulator, Charlie Gambino was found dead, having hung himself by the neck from a stairway banister, and here comes the latest sad entrant in the dead banker chronicles of 2014 when earlier today, the Post reports, a Citigroup banker was found dead with his throat slashed in the bathtub “of his swanky downtown apartment, authorities said Wednesday.”

This post was published at Zero Hedge on 11/19/2014.

Central Bank Intervention In Gold Strikes Again

I woke up this morning with a gut feeling that the precious metals market was about to be hammered on. After all, we had 3 pretty good days in a row, something which must have horrified the Central Planners. Gold was up over $1200 overnight until just after London a.m. ‘price fix.’ Have a look:

As you can see, from 10:30 a.m. (EST) to 10:45, 2.8 million ozs of gold were dumped onto the Comex. This forced a rapid $20 price plunge. There were no apparent news or event triggers. Zerohedge attributes the hit to the possibility that the Big Banks got ahold of the FOMC minutes early or the latest results from the Swiss gold referendum were leaked

This post was published at Investment Research Dynamics on November 19, 2014.

Gold Seeker Closing Report: Gold and Silver Fall Slightly With Stocks

The Metals:
Gold gained $5.35 to $1202.15 in London before it dropped back to $1175.26 at about 10:50 AM EST and then bounced back towards unchanged in early afternoon New York trade, but it then fell back off again into the close and ended with a loss of 1.15%. Silver slipped to as low as $15.897 and ended with a loss of 0.49%.
Euro gold fell to about 943, platinum lost $17 to $1185, and copper climbed 3 cents to about $3.03.
Gold and silver equities fell about 5% by late morning before they rallied back higher at times, but they then fell back off again in late trade and ended near their lows of the session.

This post was published at GoldSeek on 19 November 2014.

Pettis: Spain Needs to Debate Leaving the Euro; Tooth Fairy Economics

Michael Pettis has a very interesting article on the Spanish news site ABC regarding a possible default of Spain and the eventual breakup of the eurozone.
Pettis Three Ways
His article El exceso de deuda impide el crecimiento in Spanish. His article Debt Overhang Prevents Growth as translated by Google. His article Excess Debt Hampers Growth as translated by Microsoft Bing (Much, much slower than Google translation). I used both translators in a verification process. What follows is my heavily modified translation of key portions of Pettis’ article after reading both of the above translations.
In the Panic of 1837, two-thirds of the US, including several of the richest states, suspended payment of external debt. The United States survived. If the European Union is to survive, it will have to find a solution to the European debt.
The more hope instead of action, the more likely there’s a permanent breakdown of the euro and the European Union.
In a gesture more of faith than economic or historical data, Madrid assures us that with the right reforms, it will eventually be able to get out of debt.
Other countries in debt crises have made the same promise, but the promise is rarely fulfilled. Excessive debt itself impedes growth. Even without the straitjacket of the euro, Spain probably cannot afford its debt.

This post was published at Global Economic Analysis on November 19, 2014.

USDJPY Hits 118 – Abe’s Worst Nightmare: Weaker Currency, Weaker Stocks

Having kneejerked higher, stocks read the most important section of the FOMC Minutes – that they will not be rescued next time – and decided it was time to take some off. This is clearly not acceptable and so USDJPY was leveraged ever higher and just broke 118.00. The problem is… US and Japanese stocks are entirely decoupled from this surge in the momentum igniter…
The JPY ignition is not working…

This post was published at Zero Hedge on 11/19/2014.