Tuesday, April 30, 2013

Gold and Silver Mania Building as Global Currency Debasement Accelerates

Stocks were down heavy early in the session, but, thanks uncle uncle Bennie and his magic bucks created out of thin air, traders bought the dip and sent the major indices higher throughout the day.

In a few words, this is the most inane, superfluous rally ever seen in the history of mankind. It's based on nothing more than cheap money and ignorant of fundamentals. Eventually, there will be a spectacular crash.

Those who see straight through the global currency debasement regime are content to ride it out on the sidelines in cash or stable assets such as real estate, gold, silver or productive small enterprises and emergent technology, where the underground economy is flourishing.

Theft via either inflation or taxation is theft no matter what, and between the central bank - the US Federal Reserve, a private corporation, mind you - and the various levels of government, incomes are being reduced and savings eviscerated on a regular basis. Those being hurt the most are wage-earners, who have no option out of the payroll tax system, which rips away one's earnings before they even reach the hands of the workers. As the United States slides inexorably into socialism, fascism and an overt police state, those individuals wise enough to resist are turning to alternative means of subsistence via home-based businesses, backyard gardens, online sales and other avenues which supplants the tax system by keeping more money in the hands of its rightful owners: those who have earned it.

As for inflation, there are only a few protections against that ravaging discounter of money's marginal value, though as the system becomes evermore a game played by the rich and connected, average Joes and Janes are beginning to awaken and seek refuge, especially in the precious metals, which are at the nascent phase of a boom that will overthrow the fiat money systems and turn the world upside-down.

Despite the lame attempt by central banks (likely the Federal Reserve with assistance through their usual commanders in the field, the largest banks and insurance companies) to take down the price of gold and spread propaganda through their controlled media outlets that the 13-year gold bull run is over, the gold bullion market, in particular, is red-hot, and large enough ($14-16 trillion globally) to impact all markets and commerce in dramatic fashion.

It is estimated that less than two percent of people in the world own or control some quantity of gold or silver, a number which the world's central banks alternately sneer at or shiver over. An increase in the collective consciousness which levers up gold and silver holdings to a mere five percent of the global populace could easily upset the fiat currency regime, already well on its way to self-inflicted destruction.

Despite the paper (spot) prices of gold ($1470) and silver ($24), these commodities are not out of the reach of average citizens as a store of wealth and a hedge against currency debasement or default due to the wide array of products offered.

Depending on how much you are purchasing, gold on eBay (the new, de facto real market for PMs) is selling for anywhere between $1550 and $2000, per ounce, the higher number being the price paid for fractions of ounces or even fractions of grams (1/10 grams are ridiculously priced, well over $2k/oz.).

The high end on the scale - for the smallest amounts - seems to indicate that a mania is gradually forming. Small-timers with limited resources are thinking, "I MUST have some gold, no matter the cost." Many 1/10 oz. gold coins are selling for well over $200.

If the trend accelerates and gold and silver become recognized as worthwhile investments or hedges - no matter how small the amount - by just 2% of the population in the US, expect gold at $2k to be the norm, rather than the exception per small denominations.

I'm seeing plenty of 1 oz. gold bars and coins going for upwards of $1550, most at $1600 and higher. Ever-popular Krugerrands are holding pretty steady for 1 oz coins at $1525-1560, with a rare one going for right at $1500, but not often.

Since ebay is charging 10% fees to sellers, the sellers are getting premiums insufficient to compensate for said fees, making it a real buyers' market. Demand is through the roof. Any properly-priced auction sells, usually with multiple bidders. Silver is still getting roughly $28-31 per ounce over all varieties of coins, bars and denominations, at a high premium to spot or "paper" price.

It would do everyone good to at least take a small amount of time to investigate and understand the value of investing in gold and silver. Most people invest in paper products like stocks or bonds, and many also aspire to owning a home or farm or valuable real estate, yet they have no interest in owning gold or silver, the two precious metals which have been employed as currencies for thousands of years.

Those who have been invested in precious metals over the last 10 to 12 years have experienced outsize gains against all other currencies and have outpaced stocks and bonds by a country mile. Often termed dull, unexciting and relics of the past, there doesn't have to be anything exciting about safety in investments. The thrills and stresses of the stock market are easily laid to rest by the relative peace and prosperity of owning currencies which have stood the test of time and will again rise to prominence as the fiat regime grinds inexorably to its end.

Dow 14,839.80, +21.05 (0.14%)
Nasdaq 3,328.79, +21.77 (0.66%)
S&P 500 1,597.57, +3.96 (0.25%)
NYSE Composite 9,276.88, +31.66(0.34%)
NYSE Volume 3,980,642,750
Nasdaq Volume 1,943,042,875
Combined NYSE & NASDAQ Advance - Decline: 4131-2284
Combined NYSE & NASDAQ New highs - New lows: 445-36
WTI crude oil: 93.02, -1.24
Gold: 1,476.10, +8.70
Silver: 24.20, +0.078

Monday, April 29, 2013

Stocks Ramp Higher, But Gold and Silver Outshine

This is one crazy market.

Considering that there are nearly 50 million Americans on food stamps, earnings reports are showing a slowdown in top and bottom-line growth and recent economic indicators suggest the economy is shrinking rather than improving, stocks continue go up regardless of any and all warning signs, today approaching all-time highs on the S&P and the Dow Jones Industrials.

It's obviously all about the Bernanke bucks, risk-free money inserted into the market via the primary dealers with nowhere to go - since the banks haven't increased lending since 2007 - except into speculative investments, or, in a word: stocks.

The data de jure came from the Dallas Fed, which posted a sickening -15.6 on it's monthly manufacturing index, on expectations of a 5.0 reading, down sharply from last month's 7.40 number. Additionally, personal spending and personal income matched up gains of 0.2% each for March, both down sharply from February.

With $85 billion a month coming directly from the central bank, should one expect anything else? Probably not. Data simply doesn't matter any more. The issue is that the Fed's stimulative activity is only helping the top 10%, particularly those invested in stocks. Savers have been beaten nearly to death due to the record-low yields in fixed investments, so the middle class has been effectively short-changed and turned into nothing but debt slaves.

There are alternative, as has been pointed out expressly on this blog for many years. Land, gold, silver, art, and other tangible assets (especially machinery which is capable of producing products which produce income) may not show daily, weekly or quarterly gains like stocks, but neither are they taxed if held closely.

In the cases of gold, silver and real estate - if owned outright without a mortgage - these hard assets can also be used as loan collateral, to purchase even more assets, or, if one is accustomed to a bit of risk, produce leverage. Bottom line, they are preservers of wealth, as has clearly been the case over the last 10-12 years in which the precious metals have tripled, quadrupled or more, depending upon one's entry point.

Today's stock market gains, though solid, were not as good as those in the precious metals. While the major averages were up between 0.72 and 0.85%, gold gained 0.95 and silver outpaced them all with a solid 1.53% gain, not bad for one day.

But, one needs to appreciate gold and silver not for gains or falls in the market. Even with the smash-down two weeks ago, holders of physical metal haven't lost a thing. They still have the same amount of American silver eagles (ASE) or Kruggerrands, bars, coins or jewelry. And they will have them when markets implode, when the currency crisis comes full circle or when paper investments go up in flames, as they always do.

Besides the obvious notion that all of the stock indices are down sharply against gold or silver over the past 12 years, the precious metals remain the ultimate store of value. Why else would central banks - especially China, Russia and other Asian countries - and their citizens be buying in record amounts?

Hold 'em and don't fold 'em.

Dow 14,818.75, +106.20 (0.72%)
NASDAQ 3,307.02, +27.76 (0.85%)
S&P 500 1,593.61, +11.37 (0.72%)
NYSE Composite 9,237.90, +68.00 (0.74%)
NASDAQ Volume 1,458,762,250
NYSE Volume 2,954,210,000
Combined NYSE & NASDAQ Advance - Decline: 4645-1800
Combined NYSE & NASDAQ New highs - New lows: 399-25 (extreme, again)
WTI crude oil: 94.26, +1.26
Gold: 1,467.40, +13.80
Silver: 24.12, +0.364

Friday, April 26, 2013

Stocks End Week on Flat Note after 1Q GDP Miss

Stocks were in a general state of dizziness following the release of first quarter GDP, expected to come in at three percent (dreamers), but instead posted a disappointing 2.5%, most of it (2.24%) fueled by personal consumption expenditures (of which the majority was food, energy and clothing). Imports and Government were drags, showing declines of 0.9% and 0.8% respectively.

Those were offset by PCE, exports (0.4%), inventories (1.03%) and fixed investment (0.58%).

Noting that last number, thank Obamacare and general economic malaise for the lack of CapEx spending, which continues to disappoint and without which the USA will never escape the dregs of this low-growth environment. For the past ten quarters, GDP has grown at an annual rate of 1.9%. With inflation somewhere between two and four percent and the US population growth rate just a touch under one percent, the US economy is operating at stall speed.

With those numbers in tow, it was surprising that stocks did not decline sharply, but, as we know all too well, Wall Street believes that Bernanke has their back, to the tune of $85 billion in freshly minted cash every month.

Enjoy the weekend, because sooner or later, all the BS money-printing is going to bite the economy hard. We're doomed.

Dow 14,712.55, +11.75 (0.08%)
NASDAQ 3,279.26, -10.73 (0.33%)
S&P 500 1,582.24, -2.92 (0.18%)
NYSE Composite 9,169.89, -18.96 (0.21%)
NASDAQ Volume 1,599,216,625
NYSE Volume 3,436,212,250
Combined NYSE & NASDAQ Advance - Decline: 2495-3867
Combined NYSE & NASDAQ New highs - New lows: 256-36
WTI crude oil: 93.00, -0.64
Gold: 1,453.60, -8.40
Silver: 23.76, -0.382

Thursday, April 25, 2013

Stocks Slump Late as Gold and Silver Rebound with Gusto

Stocks erased early gains in a somewhat odd selloff late in the session, but their thunder was surely stolen by action in the precious metals markets.

Gold, since the paper price smash-down of April 12 and 15, has regained half of its losses incurred during that spectacular waterfall event. Silver, also negatively affected during the same time period, had its best day in fifteen months, with outsize gains of nearly six percent.

Whatever the intent of the paper gold manipulators, it seems to have backfired. Instead of declaring the gold rally "over," coin and bullion shops from Hong Kong to Mumbai to Shanghai to New York have experienced the briskest business in many years, as individuals rushed to secure physical supplies of the precious metals during a time of increasingly short supply.

While the physical price of gold was roughly $40-60 higher - though some reports say bulk buyers were paying close to $2000 per ounce - silver never really skipped a beat from the $29-30 range, as that was the market price on exchanges such as eBay and also via high premiums from online and brick-and-mortar dealers who reported being out of stock for many popular items such as silver eagles and bars.

The frenzied buying of the past ten days finally has drifted back to the paper gold markets on the Comex and Globex, to a point at which supply shortages are easing a little and the price has risen to more respectable levels. What remains to be seen is how customers who thought they had claims on physical gold through the LMBE and Comex but are instead getting warehouse receipts and being forced to settle in cash will retaliate.

If the paper and physical prices continue to diverge, it spells trouble for the paper exchanges, who do not have sufficient quantity of metal to meet those who wish to stand for delivery.

What is significant is how buyers seemed to pop out of the proverbial woodwork to buy quantities of gold and silver in physical form, as opposed to the speculators who trade nothing but what seems to be worthless paper and empty promises. If just five percent of the people on the planet engage in spirited gold and silver purchasing as a hedge against the currency devaluation that continues to roil world markets, the precious metals will be in extreme short supply in just a few months, sending the price through the roof and forcing the paper exchanges into default for failure to deliver.

For stocks, the incessant ramping due to non-stop easing in the form of outright money printing and de facto devaluation of currencies - especially the US Dollar, Yen and Euro - is nothing more than a function of excess capital looking for a place to go. With hedge funds and the mega-banks leveraged to the hilt, a hiccup from the gold bugs or the bond markets could trigger a selloff, complete with margin calls and scrambles for cash.

The global economy is being tested for all its Keynesian worth, though it seems the Austrian economists may be gaining an upper hand. The failed policies of the Fed, the EU and the Bank of Japan demonstrate just how desperate the central bankers are to keep economies functioning despite sure signs of a slowdown.

While it is usually unwise to fight the Fed, they themselves should be reminded that markets matter and manipulated markets and fiat currencies have an inglorious history of abject failure.

Today's fall-off in stocks could have been due to a wide range of causes, though it may just have been a front-running of tomorrow's first look at first quarter US GDP. Estimates are as high as three percent, and missing that mark may be the one peice of economic data that the stock jockeys just cannot stomach. If GDP comes in quoted at under two percent, look for a rush out of stocks and into treasuries, which have been in a state of suspended animation between 1.68 and 1.72 percent for more than three weeks.

Then again, its hard to beat a size player who keeps flooding the market with $85 billion per month and the outsize easing from the BOJ.

Dow 14,700.80, +24.50 (0.17%)
NASDAQ 3,289.99, +20.34 (0.62%)
S&P 500 1,585.16, +6.37 (0.40%)
NYSE Composite 9,188.86, +42.40 (0.46%)
NASDAQ Volume 1,971,246,250
NYSE Volume 4,198,031,000
Combined NYSE & NASDAQ Advance - Decline: 4182-2226
Combined NYSE & NASDAQ New highs - New lows: 472-29 (extreme)
WTI crude oil: 93.64, 2.21
Gold: 1,462.00, +38.30
Silver: 24.14, +1.307

Wednesday, April 24, 2013

Flash Crash Proves Individuals are OUT of the Market and Computers Run the Show

As mentioned briefly yesterday, US and European markets are a joke. They are manipulated beyond one's wildest imagination and almost exclusively, the trading is done by computer algorithms, as was made entirely too clear by the action in yesterday's hacked AP Twitter account-flash crash.

In case you missed it - after all, it was only a four minute event - stocks lost all of their gains when somebody hacked into the Twitter account of the Associated Press (AP) and posted that there were two explosions at the white House and that President Barack Obama had been injured.

The tweet was a hoax, but the computers - which cannot deduce and make value judgements - responded by selling off all stocks. Volume, as displayed in animations from nanex.net completely dried up, leaving a few computers trading with a few other computers.

In other words, there were very few, if any, human responses to the fake tweet. Welcome to the bidless US stock markets, where only the computers can get the best prices and humans are relegated to a back seat. Any wonder why individual investors are wary of the stock markets? The same conditions likely exist - though not in such a pronounced manner - in forex and commodity markets.

It's time the American people disengage from this lunacy where only the bankers, exchanges and traders profit.

Take, for instance, today's trading, in which, when all was said and done at the close, the S&P gained a penny, the NASDAQ, 32 cents, while the Dow was down 43 points and the NYSE Composite gained almost 34 points. Surely that makes sense to some master algo inside a supercomputer somewhere beneath the trading floors, but to us dumb humans, it's somewhat confounding and confusing.

CNBC's Rick Santelli astutely pointed out that the other trade impacted by the phony tweet was none other than the Japanese Yen - US Dollar cross and the Yen/Euro cross, making the point that the Yen is now also tied into US stocks by HFT algos. Lovely.

Sooner or later, there's going to be a mistake somewhere, or some purposeful key-logging or hacking that completely disrupts trading in markets nearly around the world, and by then it will be too late. Obviously, having algos that trade on the basis of tweeted information is rife with flaws and ripe for harvest by nefarious forces.

As far as today's trading is concerned, nothing really mattered, even though the US was hit with another poor economic report, this one on durable goods orders for March, which came in at -5.1% on expectations of -3.1, so it was a bad miss on an equally bad forecast.

The spate of bad economic data has been partially offset of late by fairly good earnings reports from a smorgasbord of companies, close to half the S&P 500 having already reported. Of course, the algos are all over those, programmed to buy heavily on any earnings beats and disregard most misses.

Reality seems to have evaded Wall Street on a semi-permanent basis, but, Wall Street has never purported to have been a place for well-grounded types of people in the first place.

With sociopaths running the computers which trade the world, humans are bound to get bruised, and badly.

Gold and silver got a little bit of a bid, but a good chuck of it after the COMEX trading session ended. Oil was the top-performer with a gain of more than two percent. Oil never seems to be able to stay down for long. Funny how that always seems to be the case.

Dow 14,676.30, -43.16 (0.29%)
NASDAQ 3,269.65, +0.32 (0.01%)
S&P 500 1,578.79, +0.01 (0.00%)
NYSE Composite 9,147.77, +32.65 (0.37%)
NASDAQ Volume... 1,643,812,625.00
NYSE Volume 3,647,139,250
Combined NYSE & NASDAQ Advance - Decline: 4021-2343
Combined NYSE & NASDAQ New highs - New lows: 381-36
WTI crude oil: 91.43, +2.25
Gold: 1,423.70, +14.90
Silver: 22.83, +0.016

Tuesday, April 23, 2013

Tuesday Tune-up: Stocks Rally on Bad Economic News

Really? US and European markets are complete frauds.

Here's the latest Keiser Report with Max Keiser and Stacy Herbert on the gold smash-down psyop, Ireland as an open-air prison, institutionalized corruption and much more:

Dow 14,719.46, +152.29 (1.05%)
NASDAQ 3,269.33, +35.78 (1.11%)
S&P 500 1,578.78, +16.28 (1.04%)
NYSE Composite 9,113.80, +93.88 (1.04%)
NASDAQ Volume 1,642,050,375
NYSE Volume 3,962,323,500
Combined NYSE & NASDAQ Advance - Decline: 4963-1510
Combined NYSE & NASDAQ New highs - New lows: 396-41
WTI crude oil: 89.18, -0.01
Gold: 1,408.80, -12.40
Silver: 22.82, -0.507

Monday, April 22, 2013

Relative Price Inflation; Getting Off the Investment Grid; Permanent Backwardation in Gold

Since today's trading was nothing but another typical "buy the dip" on low volume type of affair, after Caterpillar (CAT) posted truly ugly first quarter results and existing home sales were likewise horrible, today's post contains some random thought and ideas about the state of the economy and a link to an article by Professor Antal Fekete, one of the few honest economists in the world.

I'll take IBM for 200, Alex... er, make that 175.

I've always been skeptical of yields on dividend stocks, because, in a market-clearing event like 2001 or 2008, these stocks all lose on a per share basis. Yes, your yield rises, but at the expense of share price. At best, you break even; at worst, you lose and the dividend gets cut, a la 2008.

I don't believe the RE market is actually improving. Where I live (upstate NY), RE prices were not greatly affected by the bubble bursting, but now they're headed south, with lots of Fannie Mae foreclosures showing up after the courts were clogged with them for years (still are).

Cash, silver, land still appear as safe havens, though the recent decline in paper silver has had the opposite effect on physical. Current premiums are now ranging from 25-35%, making the actual price for physical silver closer to $30 per ounce then the post $22 and change.

Land is still a little pricey, especially if it's good farm land, but I'll still take wooded acres because you can cut and use the wood for all kinds of useful things, like buildings, fences, and heat (burns good), and once cleared, viola, farm land. I'm thinking more in terms of small organic garden plots rather than macro-farming, enough to feed a few families. Doesn't take much. The average back yard will feed three-to four families of four.

Cash is your best defense despite the scourge of inflation. If deflation occurs, cash is king, and with a huge crown. That's when you can buy assets on the cheap, which is investing 101 - buy low, sell high - ya know.

I'm still a deflationista, because I look around a lot. You can buy tomatoes at $2.49 a pound at the popular Wegmans' grocery stores, or hit the same thing for $1.59 at Price Rite or even Wally World. Don't get me started on limes, a must for my favorite Bloody Mary, at 3 for $2 at Wegmans, but 4 for a buck at Price Rite.

The Price Rite's and Aldi's are in poor 'hoods, so the sucker middle class gets raped at the "safe" stores. The dimwits in the inner cities, though, are buying mostly Cheetos and crap rather than good food with the SNAP cards, so, they'd just die off, albeit at lower prices.

My point is, get off the investment grid. Buy local (farmers markets are awesome), horde cash, and, when and if the silver mania subsides, more shiney.

A True Small Business Success Story

Start a business. Anything. Get paid in cash, if possible. Don't become another debt slave with a shitty job.
Here's my 100% true story: I think it was about 1992. I was broke, living with my brother and he wanted rent. I had $12 in pennies, my car, a little gas and a computer and printer. I took those pennies, rolled them up, took them to the bank, got $12, bought $12 worth of stuff at the dollar store - mostly cleaning supplies - printed up some cards that said "Happy House" and took my goods door-to-door in my neighborhood (in the city, a little distance from the dollar store). I sold what I had in about an hour, went back to the dollar store twice that day to re-supply and again hit the streets.
In one day - ONE DAY! - I had $45, more merchandise and people calling me with orders and questions. My biggest seller were sponges. I was able to get a big bag of them for $1, broke them up and sold them for $50 each. People would buy six or eight at a time. Also, Old Dutch Cleanser (like Comet), which I got 2 for a buck and turned around at $1 each.
In a week, I netted over $400, and then got a huge order from a guy who ran a cleaning business for about $250. I did all this in three residential blocks, barely tapping the market.
I did this for about a month, paid all my bills and took a job with a friend as a painter, which paid extremely well, and still kept getting orders over the phone. I didn't pursue the business further, but, looking back, figure I could have made serious money had I kept at it.
So, my advice, find a service which you can handle, print up some cards or use the internet. There are opportunities everywhere for self-starters. Avoid self-pity and self-defeating attitudes and people who are negative. You have worth and if you allow yourself to overcome your fear of failure, you will succeed.
(Just a side note: When I started my "Happy House" business, I was worried that people would see that I was just buying stuff at the dollar store and turning it over. Never happened. Years later, I realized that I was providing a service: bringing those cheap goods to their doors, and that was the "value added" aspect. Add value to an existing product or service and you can't miss. I know a guy who goes to the farmer's market every morning, brings home vegetables and sells them from his front yard. His day is done by 1:00 in the afternoon, and he plays a lot of golf in good weather. There are success stories everywhere - many on ebay - of people pulling themselves out of bad situations. You are no different.)

Professor Fekete on permanent gold backwardation:

Dow 14,567.17, +19.66 (0.14%)
NASDAQ 3,233.55, +27.49 (0.86%)
S&P 500 1,562.50, +7.25 (0.47%)
NYSE Composite 9,019.90, +25.78 (0.29%)
NASDAQ Volume 1,626,128,625
NYSE Volume 3,288,661,500
Combined NYSE & NASDAQ Advance - Decline: 3644-2759
Combined NYSE & NASDAQ New highs - New lows: 225-85
WTI crude oil: 88.76, +0.75
Gold: 1,421.20, +25.60
Silver: 23.32, +0.364

Friday, April 19, 2013

Avoiding the Obvious Global Slowdown, Stocks Ramp Higher to End Week

With the nation focused on the manhunt in the Boston bombings, Wall Street types took the opportunity to bid up prices on risk assets, which is really all they know how to do.

Despite the best efforts of the insiders trading against each other and hoping with all their hearts to lure retail suckers into the market, the major indices still ended the week with losses.

For the week, the Dow lost 318 points, and was held in check today by IBM, as Big Blue missed earning and revenue estimates and was down 8% in heavy trading.

The NASDAQ lost 88 points through the week; the S&P 500 dropped 33.

The G20 meeting in Washington was nothing more than the usual gap-fest, with nothing of importance coming out of the fete.

Boston continues to be locked down as infantile efforts by our nation's security forces try to catch a lone 19-year-old kid accused of committing - with his now-dead-brother - the Boston bomb attacks.

The wall-to-wall coverage of this non-event has allowed CNBC and Bloomberg talking heads to sidestep the issue of the rapid deterioration of the US economy.

Stay tuned for further non-developments.

Dow 14,547.51, +10.37 (0.07%)
NASDAQ 3,206.06, +39.70 (1.25%)
S&P 500 1,555.25, +13.64 (0.88%)
NYSE Composite 8,994.12, +72.94 (0.82%)
NASDAQ Volume 1,710,872,500
NYSE Volume 3,876,484,750
Combined NYSE & NASDAQ Advance - Decline: 4538-1852
Combined NYSE & NASDAQ New highs - New lows: 213-68
WTI crude oil: 88.01, +0.28
Gold: 1,395.60, +3.10
Silver: 22.96, -0.285

Thursday, April 18, 2013

'A Little Off the Top, Please': Stocks Get Trimmed Again; Gold, Silver Shortages Occurring Worldwide

The weirdness engendered by the recent gold and silver smash-down will not relent. While the paper price represented by the gold and silver ETFs (GLD and SLV) is unrelenting. As soon as the central banks sent the paper prices of precious metals reeling, regular people (and reportedly some not-so-regular people) worldwide have headed to their coin shops and online outlets to purchase as much physical in coins and bars as possible, at prices 20-40% over the paper price.

For those not familiar with this kind of activity, it's known as decoupling, disintermediation or dislocation. The paper price, represented by the traded funds, has decoupled from the reality of the physical price, and, that's a very important, if not disruptive, development.

What it means is that buyers are now not satisfied with the published prices and the market will determine for what one buys or sells gold and silver. That's the premium, and stories are running rampant on the internet of buyers lined up in droves outside coin shops. On ebay, the current price for an ounce of silver is now closer to $30, rather than the smacked-down price of around $23. Gold, though dearer, is seeing similar premiums for physical delivery and shortages are developing worldwide.

What's at the bottom of all this - and the reason for the price smash-down in the first place - is liquidity, or, if you will, supply, and, money velocity.

Simply put, the COMEX and JP Morgan, were facing imminent supply issues, i.e., they could not stand for delivery on contracts which wished to be paid in physical metal. Rumor has it that the long-standing practice of these two titans of trade was to settle in cash, with a premium. Beyond their shortages, this is a central banking issue of liquidity and trust. In particular, the US central bank - the Federal Reserve - cannot allow the price of gold, in particular, and its cousin, silver to erode confidence in the dollar, thus the smack-down, using naked shorts, to the tune of 400 million tonnes.

A few things the Fed, the COMEX and JP Morgan did not anticipate - the unintended consequences - were a run on physical demand rather than panic selling, which actually was the first thing that happened in the paper markets, where the heavily-hedged big players were forced to cover margin calls, thus selling their shares (not their physical metals, of which they owned exactly zero) and forcing the price down further.

The rush to physical was completely unforeseen, obviously, since now, the price for paper assets are far less than that of the physical (the premium effect). So, anybody looking to settle contracts on the COMEX in physical assets will get far less, but the COMEX will have to pay more to purchase the physical asset to settle up, which, if the math is correct (and it always is), means that the COMEX will eventually default on obligations to settle in physical assets and instead pay in cash. Buyers will be quite unhappy to receive cash rather than metal, and, ka-boom, down goes the COMEX, maybe JP Morgan, and maybe even the Fed. We are witnessing the beginning of the end of the craven, evil, debt-is-money fiat system backed by nothing and the rise of real money, gold and silver.

Expect the paper price - the price quoted by the ETFs or the COMEX to become increasingly irrelevant and also expect the CFTC to do what they always do: nothing. Prices of the precious metals have been manipulated by the large players with the help of central banks for decades, and the jig is finally up. This drama will play out over the next three to nine months, but the fallout will be devastating to the global financial system, whose proponents only know how to print, print and print more to solve liquidity and solvency problems.

It can't work, won't work and has never worked, especially now that people have awakened to the rapacious ways of the money-lenders and bankers and are demanding honest currency with no counter-party risk: gold and silver and other hard assets. The global financial system is close to implosion.

This impending implosion is being reflected in stocks, which have taken it on the chin three of four days this week, and the direction of trade is beginning to seriously head in the other direction. Illiquid and insolvent banks backing companies with fudged balance sheets and earnings reports via cost-cutting, wage-shorting and stock repurchasing are beginning to appear unattractive in terms of risk. The reality is that equity investors hold nothing but paper and promises to be paid, nothing more, and those "assets" are looking shakier and shakier as the global economy grinds inexorably to a halt.

Dow 14,537.14, -81.45 (0.56%)
NASDAQ 3,166.36, -38.31 (1.20%)
S&P 500 1,541.61, -10.40 (0.67%)
NYSE Composite 8,921.18, -27.18 (0.30%)
NASDAQ Volume 1,771,593,625.00
NYSE Volume 4,382,134,000
Combined NYSE & NASDAQ Advance - Decline: 2662-3651
Combined NYSE & NASDAQ New highs - New lows: 103-128
WTI crude oil: 87.73, +1.05
Gold: 1,392.50, +9.80
Silver: 23.24, -0.062

Wednesday, April 17, 2013

Wall Street is Becoming a Falling Stock Zone

Is anyone other than the Fed governors and CNBC hosts convinced that ZIRP and QE aren't exactly working?

For the second day out of the past three, stocks suffered severe, across-the-board losses, extending the pullback that began on Friday.

The worst performing index has been the NASDAQ, which has dropped nearly 100 points since the close on Thursday (1300.18).

Dow stocks, predominated by high-yielding, dividend-producing income companies - the creme de la creme - have fared better, though the index is still down 247 points and there are still two days remaining in the trading week.

While the recent moves may be described as a precursor of the time-honored tradition of "sell in May and stay away," the directionality is troubling, because the US is supposed to be in a recovery.

Not helping matters much are the oddities coming out of Boston in the aftermath of Monday's bomb strikes, and Washington, where packages containing ricin have been showing up with increasing frequency.

Larger issues loom in Europe, where data continues to deteriorate, even in Germany, thought to be the bastion of strength.

Corporate earnings have been less-than-encouraging as well. Today's numbers from Bank of America (BAC) were notably weak, spurring the drop at the opening bell.

Still, the losses have not reached even three percent, so it may well be too early to make a call that direction has changed, though, as has been pointed out repeatedly here and elsewhere, bull markets do not last forever, and this one is heading into its 50th month.

Key data this week has included a wicked drop in the Empire State manufacturing index, from 9.2 to 3.1, a negative reading (-0.2) on CPI for March and a drop-off in building permits, suggesting that the housing sector may not be quite as healthy as the pundits have been preaching.

Volume on the day was particularly heavy, a signal not lost on both bulls and bears; decliners outpaced advancing issues four-to-one; new lows, for the first time this year, superseded new highs, and by a rather large amount, another key metric.

After the bell, both American Express (AXP) and eBay (EBAY) missed gross revenue targets and just barely beat (each by a penny) the per share earnings forecasts.

Commodities continue to be beaten down as deflationary forces appear to be winning at the present time. Depending upon which side you butter your bread, that may be good or bad news.

There is good news in oil, which hit a multi-month low. If prices for crude continue to depress and remain so, it won't be long before driving Americans finally get a break at the gas pump.

Gold and silver continue to be on sale, though shortages in physical metal are widespread and premiums over spot prices are ranging anywhere from 16 to 35 percent. If that condition persists, forget the gold and silver ETFs, they will eventually break down as the backers are unable to deliver physical metal on contracts.

LATE BREAKING: Senate votes down gun control "compromise" measure. Long live the 2nd amendment!
Europe's leading parliamentarian, Nigel Farage:

Dow 14,618.59, -138.19 (0.94%)
NASDAQ 3,204.67, -59.96 (1.84%)
S&P 500 1,552.01, -22.56 (1.43%)
NYSE Composite 8,955.47, -130.96 (1.44%)
NASDAQ Volume 1,889,783,125
NYSE Volume 4,579,846,000
Combined NYSE & NASDAQ Advance - Decline: 1382-5083
Combined NYSE & NASDAQ New highs - New lows: 87-178 (this could be huge!)
WTI crude oil: 86.68, -2.04
Gold: 1,373.10, -14.30
Silver: 23.24, -0.383

Tuesday, April 16, 2013

Global Financial Condition Cannot Be Sustained

Hyperbole aside, Monday's market events need to be taken in context with current conditions before examining the relief rally on Tuesday.

Stocks were close to record highs, advancing steadily from the November lows and putting the first three months of 2013 in frothy territory. A reversal - and not just a one-day, buy-the-dip kind of drop - was long overdue and is likely to continue because all economic data over the past three weeks have disappointed.

Eventually, stocks will coincide with reality, as they did on Monday, spurred on by China's announcement that their economy continues to slow. That news sent all Asian equity markets into a tailspin and put a negative tone on the European markets and eventually to the US as well. The slide was a global one, reflecting conditions that have even the usually-rosy IMF predicting slow global growth of around two percent, which is probably an overstatement.

Investors need to be aware of macro conditions that are causing disruptions and dislocations. China's continued courting of bi-lateral trade and currency deals with other nations - blunting US dollar hegemony - is an outlier, the impact of which should not and cannot be underestimated. The days of petro-dollar dominance are coming to an end and likely are occurring faster than those in "control" wish to consider. The ramifications of the US losing reserve currency status are deep and will put America in a non-competitive condition, not something that anyone is currently considering.

Japan's experiment with inflation may not be as seamless or painless as its architects will admit. The volatility since the beginning of the BOJ's massive buying spree is disrupting the carry trade of easy money. A slip-up or miscalculation - highly likely - could cause the target of two percent inflation to be overshot by a wide margin, spurring hyper-inflation and portending a worldwide financial calamity.

Thus, Monday's broad, massive, global selloff appears to be only the first volley from the forces of deflation, which, even with worldwide money-printing gone wild, is a relentless adversary.

As for the gold smack-down, the fingerprints of central bankers - especially our own Federal Reserve - are all over it. The rationale for the take-down of the precious metal can best be explained by two articles: one by Paul Craig Roberts, here, the other by Bill Downey at GoldTrends.net, here.

Broadly speaking, a dislocation between paper prices and physical metal on hand was causing a major problem which needed a creative, though underhanded and heavy-handed solution.

The timing of the bomb blasts in Boston could not have been more prescient for markets, as the tragedy put all other news on back burners, to the point that none of the three nightly network news shows even made mention of the stock market travails or the plunge in gold and all other commodities. Regular scheduling on CNBC was pre-empted by network coverage from the scene of the crime. For the ill-informed, all they'll know is that stocks staged yet anothr miraculous rally on Tuesday, and that all is well in the world at a time when the wheels of industry and finance are practically falling off, wheeling out in all sorts of odd directions.

Sooner or later, governments and their financiers simply can't fake it any more. Today's network whining over the "tax gap" of $500 billion annually being under-reported or not reported at all is only a symptom of the malady of over-taxation. People just have to "cheat" just to get by, and, with the numbers of food stamp recipients rising to all-time highs, the government is a willful participant in pushing people over the edge and into the "underground" economy, which has flourished since 2000 and especially since 2008.

Governments are bloated with debt and false promises, their central bankers morally, intellectually and financially bankrupt. The system will implode or explode. Different countries will have different results, though most will suffer deepening and discouraging depression and deflation. Central banks have printed over $25 trillion in fresh money since 2008, shoring up the balance sheets of zombie banks in the US, Europe and elsewhere, but the money has not flowed beyond the banks' vaults.

Financial repression will continue until massive dislocations can no longer be ignored. Financial reporting by major firms is mostly fraudulent, as many firms have bought back massive blocks of stock, making their earnings per share comparisons easy, but, eventually, weaker than the headline numbers being touted.

Wall Street may be waking up to the fact that revenue growth simply is not happening and that current levels will be difficult to maintain.

These are just a few of the issues facing global financial tinkerers. At some point, they will not have answers when problems confront them. Their time is running out.

Keep a close eye on the new highs - new lows. When that rolls over and there are more new lows than new highs for more than three days, it could be the first signal that the bull market is over and the bears are about to claw the market to pieces. That indicator has bee widely in favor of new highs for a long time, but recently has tightened, with the gap closing significantly on Monday and Tuesday.

Dow 14,756.78, +157.58 (1.08%)
NASDAQ 3,264.63, +48.14 (1.50%)
S&P 500 1,574.57, +22.21 (1.43%)
NYSE Composite 9,082.58, +128.63 (1.44%)
NASDAQ Volume 1,447,797,375
NYSE Volume 3,740,603,750
Combined NYSE & NASDAQ Advance - Decline: 5111-1368
Combined NYSE & NASDAQ New highs - New lows: 137-87
WTI crude oil: 88.72, +0.01
Gold: 1,366.40, +5.30
Silver: 23.34, -0.016

Monday, April 15, 2013

Stocks Globally Down, US Stocks Worst Session of Year; Bomb Blasts In Boston; Tax Day, Y'all

Well, I was going to take the day off in celebration of doing my income taxes for the 40th time, but, sure enough, events seem to be overtaking my expected holiday.

First, EVERYTHING WENT DOWN TODAY. From Asian markets, european markets, US and South American markets, gold, oil, silver, corn, wheat... everything.

The fact that the world is entering the second stage of the depression will be obscured by the explosions near the finish line of the Boston marathon which occurred about 3:15 pm EDT.

The nightly news will be all over the explosions and may give 30 seconds to the facts that gold fell by the most amount EVER in one day (probably the same with silver), and US markets had their worst sessions of 2013.

Already, CNBC has pre-empted their normal coverage will wall-to-wall coverage of the Boston blasts.

And, so it goes, we get 9/11 and September, 2008, all rolled into one.

You are welcome to draw your own conclusions. I'm taking the rest of the day off. When more normalcy returns (tomorrow), I'll post a complete column on what all this might mean.

Dow 14,599.20, -265.86 (1.79%)
Nasdaq 3,216.49, -78.46 (2.38%)
S&P 500 1,552.36, -36.49 (2.30%)
10-Yr Bond 1.70% -0.02
NYSE Volume 5,244,061,000
Nasdaq Volume 1,776,598,375
Combined NYSE & NASDAQ Advance - Decline: 868-5689
Combined NYSE & NASDAQ New highs - New lows: 142-137
WTI crude oil: 88.31, -2.98
Gold: 1,357.50, -143.90
Silver: 22.92, -3.41

Friday, April 12, 2013

Gold, Silver Smashed; JP Morgan, Wells Fargo Beat, Sell Off

More questions than answers in the jumbled mess of trading today.

Stocks opened down rather sharply and stayed in the red the balance of the session, but, as usual, the bulls came back in the late stages to push the Dow from a 74-point loss to almost unchanged.

Both JP Morgan Chase (JPM) and Wells-Fargo (WFC) posted positive first quarter results prior to the opening bell, but were sold off in the regular session.

Aside from the usual hijinks in stocks, the real story was in commodities, where gold and silver were battered, sending them to two-year lows.

The questions surrounding the gold trade are thus:
Did Goldman Sachs - which lowered their forecasts just days ago on gold - have anything to do with it or have advance knowledge? (Probably.)

Was the forced selling of gold from the Cyprus central bank the cause or an effect?

Understandable that gold was rocked down, but silver fell even more, by percentage. Why?

The best news of the day came from the oil pits, where crude traded just above $90 for a time today and closed down more than 2%. A cursory glance at oil prices over the past year show the downtrend fully in place. Consequently, gas at the pump is down 36 cents from a year ago, on average, and should drop even more in coming weeks with today's drop.

The commodities, along with the string of recent misses in US economic data (today, retail sales were a stinker), may be telling the market something which it does not wish to hear, setting up a correction that is long overdue. Leading that concept is the huge imbalance in the advance-decline line, given the smallish losses.

Of course, that's just the kind of thinking that leads to losses in this liquidity-fed environment, but, then again, how long can this bull run without a break and without breaking down? The current bull market is just over 48 months, and the general length of bull markets is somewhere between 44 and 62 weeks. Time may be running short, or , is this time different?

The word from the Fed is simple. Stay long. Stay strong.

Ah, conventional wisdom is so... simple.

Dow 14,865.06, -0.08 (0.00%)
NASDAQ 3,294.95, -5.21 (0.16%)
S&P 500 1,588.85, -4.52 (0.28%)
NYSE Composite 9,188.11, -45.91 (0.50%)
NASDAQ Volume 1,459,983,750
NYSE Volume 3,534,229,250
Combined NYSE & NASDAQ Advance - Decline: 2478-3940
Combined NYSE & NASDAQ New highs - New lows: 260-53
WTI crude oil: 91.29, -2.22
Gold: 1,501.40, -63.50
Silver: 26.33, -1.366

Thursday, April 11, 2013

New Highs All Around... Again

Can it really be this easy?

Apparently, investing has become more sport than discipline, as the major indices drove again to new highs - the NASDAQ bounding over 3300, with the Dow, the Comp. and S&P 500 setting new all-time record closes.

In addition to the Fed's constant $85 billion/month put, there are other factors at work. Money is pouring out of Japan and Europe since the Cyprus incident and the BOJ's experimental monetary policy that makes Bernanke's monetizing of US debt appear paltry.

The Japanese central bank, while openly buying all the government issued treasuries it can, is also tinkering in the open markets, buying ETFs and REITs, especially.

If Bernanke gets a whiff of this kind of action, US markets could be buffeted with even more stimulus by the Fed, openly buying stocks to levitate the equity markets higher.

When it will end is anybody's guess, but, despite some Fed officials openly saying - in yesterday's leaked February Fed minutes - that they'd like to taper the bond purchases this year and possibly end them by year's end, Friday's non-farm payroll and today's news that first quarter PC shipments fell by 13.9% globally, the worst decline since records began being kept in 1994.

While Wall Street is flying high, the real economy may not be quite so robust. Many argue that the US is still in a recession, and that the one which began in 2007 never really ended. High levels of unemployment has become endemic, a structural rather than a cyclical issue.

Nonetheless, the markets continue to roar higher, and the chances for a significant pull-back seem about as good as a chicken hatching a coyote. There hasn't been a major decline since August of 2011, and that one was caused by our congress and president nearly letting the government breach the debt ceiling.

The mountains of debt being piled up in Washington are of little concern to Wall Street, though, nor, it appears, to the millions of American who have jobs, or are collecting on one of a myriad of entitlement programs.

It wasn't supposed to work this way, but, for now, it's what we've got as an economy and there's practically nobody arguing against its continued success.

Of those groups getting murdered by the rise of stocks are retirees, who cannot make any money safely, i.e., in fixed income investments, gold and silver bugs and anyone who's not "in."

The question remaining is when these groups capitulate and join the party, will the rug be pulled from under them?

Dow 14,865.14, +62.90 (0.42%)
NASDAQ 3,300.16, +2.91 (0.09%)
S&P 500 1,593.37, +5.64 (0.36%)
NYSE Composite 9,234.62, +45.53 (0.50%)
NASDAQ Volume 1,793,031,500
NYSE Volume 3,476,424,250
Combined NYSE & NASDAQ Advance - Decline: 3663-2761
Combined NYSE & NASDAQ New highs - New lows: 563-25
WTI crude oil: 93.51, -1.13
Gold: 1,564.90, +6.10
Silver: 27.70, +0.044

Wednesday, April 10, 2013

Yes, Newer Highs. Europe. Is. Saved? America Rocks!

After a while, watching the absurdity of the markets, one wonders whether it's even worth bothering. Days like today deserve nothing but a loud "WTF?" in response.

Obama's budget, all $3.78 trillion of it, is DOA. Not even worth a look, seriously. Deficit for fiscal 2014 is only $744 billion. It will never see the light of day.

Money Daily will resume "coverage" as soon as something rational happens (actually, we'll be back tomorrow even though rationality has vanished from most of America).

Dow 14,802.32, +128.86 (0.88%)
NASDAQ 3,297.25, +59.39 (1.83%)
S&P 500 1,587.72, +19.11 (1.22%)
NYSE Composite 9,192.79, +104.42 (1.15%)
NASDAQ Volume 1,715,150,125
NYSE Volume 3,556,269,500
Combined NYSE & NASDAQ Advance - Decline: 4968-1562
Combined NYSE & NASDAQ New highs - New lows: 483-20 (imbalance?)
WTI crude oil: 94.64, +0.44
Gold: 1,558.80, -27.90
Silver: 27.65, -0.228

Tuesday, April 9, 2013

Dow Posts Record Close, Despite Market Fail in Final Hour

Well, it took a whole week, but the Dow Jones Industrials made another all-time closing high today.

The S&P was not so lucky, but, was poised for a record close until... get this.. actual selling took place in the final hour of trading, a huge departure from the general, repeating pattern of the past few days, weeks, months, years.

The Dow was up 106 points as the three o'clock witching hour approached, but went in the opposite direction of usual expectations, losing 46 points in the final hour. Likewise, the S&P failed to extend the day-long rally into the close, losing close to half of its gains in the final hour.

Odd, that's not supposed to happen with the Fed relentlessly pumping money into the system, unless... unless... somebody is gaming it. Just who those these gamers are is a matter of general speculation - as are the markets - but there's a very good chance it was the same people who were buying the same stocks in the morning that they were selling in the afternoon.

It's high-stakes day-trading at its very finest.

For the rest of us, especially those invested in gold, silver and other tangible assets, not such game-playing occurs (at least not superficially) if those assets are held closely, as in, buried in your back yard or in a wall safe.

Precious metals saw a significant boost today as the shorts were cleared out in the ponzi-style, ETF funds. It's only a matter of time before the PMs will continue their super-cycle bull run, and, the investors in metals are more than happy to wait, or buy, at what presently are bargain-basement prices, even with today's solid gains factored in.

Take your pick: tangible goods, paper or... bitcoin, a currency that is a threat to the paper, but is currently trading at levels unforeseen. The electronic currency is still in its infancy, but it's making a lot of noise of late, soaring to over $200 today. It's highly misunderstood how bitcoin works. There's maybe .001% of the world's population who really comprehend it, and, at this juncture, that's not enough to inspire confidence. It's day may come, and that day may be sooner rather than later.

The question is how seriously central bankers take it as a threat - as they do silver and gold - and what they're willing to do to defeat it.

In the meantime, President Obama releases his budget (if one can call it such) tomorrow. That ought to be worth a few laughs and plenty of blustering commentary from the do-nothings on Capitol Hill.

Dow 14,673.46, +59.98 (0.41%)
NASDAQ 3,237.86, +15.61 (0.48%)
S&P 500 1,568.61, +5.54 (0.35%)
NYSE Composite 9,086.81, +35.22 (0.39%)
NASDAQ Volume 1,466,549,375
NYSE Volume 3,296,691,750
Combined NYSE & NASDAQ Advance - Decline: 3554-2886 (thin)
Combined NYSE & NASDAQ New highs - New lows: 301-31
WTI crude oil: 94.20, +0.84
Gold: 1,586.70, +14.20
Silver: 27.88, +0.743

Monday, April 8, 2013

Stocks Advance on Lowest Volume of Year

Just in case you're one of those "converts" awaiting to Buy the Dip, you'd be best advised to do so before noon in US markets.

As has been the case for the last four+ years, stocks will simply not go down in any depreciable manner until Ben Bernanke and other central banks stop the presses printing endless amounts of cash on a regularly scheduled basis.

In the absence of any material news - or volume, for that matter - stocks nose-dived out of the gate, fell to the lows of the day around the lunch hour and then proceeded to levitate into the close, keeping alive the day-trading dream pattern of up-down-up-down through a thirteenth straight session.

That stocks rose was certainly not the story today. The headline belonged to volume, which, despite being seminally weak over the past two years, today was the lightest of 2013. That's really saying something, specifically, that this rally is nothing but vapor, because without solid volume, all rallies are entirely suspect and easily torn down.

With little invested at current levels, traders are cautious and will exit at the first signs of trouble. That line of thinking, of course is based upon years of data and research which probably doesn't apply to the current market, which is completely an apparition, a fraud, the manipulated product of excess liquidity in the system which has nowhere to go but into risk assets.

Based on the volume figures from the past six, twelve or 18 months, today's numbers indicate that not only are individual investors completely out of the market and not coming back, but even seasoned investors are fleeing from stocks in droves, leaving the algos and computers to trade against each other. Eventually, a system like this must fail, though predicting the date of such eventuality is a fool's game.

Trading in thin markets are likewise the work of rookies, speculators and pros, though nobody from any group can claim a level of expertise that would lead directly to profitable trades, except for extremely short term or hedged activity.

Today's volume figures are so horrifyingly low that one might suspect the end is near, though that end has been in the headlights for some time now and just like this market, continues to present itself as a mirage on the horizon.

A day will come when the skies clear and the end becomes tangible, touchable and irreversible. Those who have traded in honest markets in the past are patiently awaiting that day.

Dow 14,613.48, +48.23 (0.33%)
NASDAQ 3,222.25, +18.39 (0.57%)
S&P 500 1,563.07, +9.79 (0.63%)
NYSE Composite 9,046.87, +46.62 (0.52%)
NASDAQ Volume 1,294,793,750
NYSE Volume 2,927,141,000
Combined NYSE & NASDAQ Advance - Decline: 4180-2254
Combined NYSE & NASDAQ New highs - New lows: 244-44
WTI crude oil: 93.36, +0.66
Gold: 1,572.50, -3.40
Silver: 27.14, -0.082

Friday, April 5, 2013

March Payrolls Huge Miss; Economy a Pack of Lies, Rolling Over

Let's just get one thing straight: there are lies, statistics and more lies in their interpretation, and even worse prevarication when it comes to market response.

When today's March Non-Farm Payroll data was rolled out at 8:30 am EDT - an hour prior to the opening bell - the response in the futures was automatic and immediate.

On expectations that the recovering US economy was to have produced 197,000 new jobs during the month, the actual number - 88,000 - was a miss of such enormous magnitude that it begs for perspective.

The miss was the worst since December 2009, when the economy was still taking baby steps toward said recovery and it was the lowest number of new jobs since June of last year. Incredibly, the unemployment rate fell to 7.6%, though this was due to 663,000 individuals dropping out of the labor force, sending the labor participation rate to 63.3%, the lowest level since 1979, with a record 90 million Americans (aged 16 and up) out of the labor force.

Surely with numbers like these, the United States is on a sustainable path... to complete disintegration, anarchy and poverty. There simply is no way to get around how poorly the economy is performing, a full five years and three months after it entered recession in December 2007, and four years after it supposedly exited that recession (June 2009).

Whether or not one believes we ever exited the Great Recession (or, as some call it, the Greater Depression) is merely a matter of semantics, the truth is that the economy has been and is going nowhere fast. Growth is a chimera, more statistical noise boosted by inflation; jobs have been hard to come by and those that are available are mostly of the entry-level, burger-flipping variety. Meanwhile, the Federal Reserve continues to pump $85 billion into the banking system each and every month, and still, nothing.

The talking heads on CNBC and Bloomberg tried to blame it on everything from the weather to the sequester to the tax increase imposed in January to, probably, the phase of the moon, but the reality is that we have structural issues that are generational, worldwide and widely the cause of the gross inequalities between rich and poor, with the crony capitalists - in cahoots with cheap, shiftless politicians - pushing more and more debt onto a system already overburdened with it.

Anyone who purports to tell you that the economy is improving, ask them how and why, and wait for the usual non-answers that housing is improving (it's not), that there are more jobs (marginally, there are, but not enough to keep up with population growth) or, the usual, "this is America, and we are great," complete failure response.

The stock market took a huge dive at the open, the Dow losing as many as 172 points, the S&P off by 21 and the NASDAQ down a whopping 58 points before the riggers came in and bid up the whole complex - especially ramping it in the final half hour - to close down with losses erased by roughly two-thirds.

We are in a sad, sorry state of affairs, when what used to be the most efficient, dynamic markets in the world are now nothing more than a crooked casino, run by oligarchs, bankers and unseen hands that are both out of control and above the law.

Significantly, gold and silver were both up sharply on the day, as the flight to safety finally made an appearance.

This economy is rolling over, like a sick patient who hasn't received the correct treatment. We're about to go into a tailspin that will make 2008 look like a casual stroll along the beach. The bankers, politicians and the media continues to spin the happy "recovery" meme, when all data shows the economy going in reverse. Data-wise, the US was a woeful 0-for-6 the past eight days, with the Chicago PMI missing the mark, along with the ISM index, the ISM services index, the ADP employment report, initial unemployment claims and finally, today's non-farm payrolls.

How many misses and bad data points will it take for the politicians to admit their policies are failures, the media to admit they are blind and the bankers admit they've been robbing common people blind since time immemorial?

Nobody should be holding their breath waiting, that's for sure.

Dow 14,565.25, -40.86 (0.28%)
NASDAQ 3,203.86, -21.12 (0.65%)
S&P 500 1,553.28, -6.70 (0.43%)
NYSE Composite 9,000.24, -27.59 (0.31%)
NASDAQ Volume 1,608,289,875
NYSE Volume 3,788,675,500
Combined NYSE & NASDAQ Advance - Decline: 2866-3582
Combined NYSE & NASDAQ New highs - New lows: 118-81
WTI crude oil: 92.70, -0.56
Gold: 1,575.90, +23.50
Silver: 27.22, +0.453

Thursday, April 4, 2013

Money, Money Everywhere, But Not a Buck to Lend

The world is awash in liquidity, but nobody seems to have any money.

At least that is the case for the 90% of Americans - and probably 95% of the rest of the world - that don't have access to easy money from central banks around the world.

Consider today's action by the Bank of Japan's new finance minister Haruhiko Kuroda, pladging unprecedented monetary stimulus by doubling Japan's central bank balance sheet by the end of 2014 through outright purchases of government bonds, ranging anywhere from short term notes to the 40-year Japanese bond.

The move puts Japan on a par with the mad money printer, Ben Bernanke, and in the same camp as the ECB's Mario Draghi, who vowed last year to do anything possible to save the Euro.

Such policies, like the Fed's $85 billion monthly purchases of treasuries and MBS (near-worthless), would have been unheard of just ten years ago, but today they are accepted as matter-of-fact as the bank heads continue trying to prop up zombie banks that have been bankrupt since 2008 (1992 in Japan's case) and governments which made promises to their people in the form of health care and retirement benefits that are slowly but surely bankrupting their entire nations.

These policies are doomed to fail, as they inflate various economies, crushing the purchasing power of the average citizen to a point at which many are priced out of mere survival. Ergo, the 49 million Americans receiving food stamps, unprecedented numbers on disability or welfare, programs which strip away the dignity of the individual, making them wards of the state.

Governments worldwide cannot balance their budgets due to these absurd entitlement programs, yet common people go about their business like the legendary "Annie Hall," tripping through life, dismissing any pitfalls with a cheery "la-dee-da."

Wall Street and the markets in Japan, London and Europe are no different. Obvious economic headwinds, like today's massive miss on first time unemployment claims (385,000 on expectations of 345K) are simply shrugged off as investors have no other place to put money to work but in risky stocks, though the correct strategy in times of impending hyper-inflation would be to park in cash and tangible assets such as land, gold, silver and productive machinery, because today's prices will look like peanuts compared to what people will be paying once the inflation tiger is unleashed.

Thus far, central bankers have been lucky. Inflation hasn't been all that ferocious, though spikes in oil, gas, food and other commodities have already been notable. Keeping inflation in line has been the stagnant to negative growth of incomes. With less money, people simply can't afford to splurge, and if less money is chasing the same amount of goods, prices will remain relatively stable, though that certainly cannot be guaranteed with the incredible amount of liquidity being force-fed into the system.

Also aiding their efforts is the fact that most of the inflation has been in stocks, which are ridiculously priced. All this may be coming to an abrupt ending with first quarter earnings reports. Many companies are just barely making their estimates even though the bar continues to be lowered. At some point, investors will demand more, along the lines of 15% year-over-year earnings acceleration, higher dividends and better margins, all the things a healthy market economy would normally expect.

Earnings begin trickling out on Monday, but before that, Friday's non-farm payroll report for March needs to be presented, and, from the looks of the close today, nobody is really sweating that.

After the last three weeks of unemployment figures, however, maybe they should.

Dow 14,606.11, +55.76 (0.38%)
NASDAQ 3,224.98, +6.38 (0.20%)
S&P 500 1,559.98, +6.29 (0.40%)
NYSE Composite 9,027.83, +44.44 (0.49%)
NASDAQ Volume 1,470,237,625
NYSE Volume 3,566,827,500
Combined NYSE & NASDAQ Advance - Decline: 4003-2357
Combined NYSE & NASDAQ New highs - New lows: 123-65
WTI crude oil: 93.26, -1.19
Gold: 1,552.40, -1.10
Silver: 26.77, -0.03

Wednesday, April 3, 2013

Something's Up... and it's Not the Stock Market

Intuition is vastly underrated by the scientific or technological community.

Understanding that the twinge of doubt or "gut feeling" is more than just an emotional reaction but in reality a hot process of accumulated experiences - some deeply-rooted and ancestral, others from immediate life experience - raises the process of intuitive thinking to a better standing, one that can assimilate data in microseconds and respond with appropriate action.

It's something along the lines of survival instinct in animals, who will move quickly at the rustling of leaves or changes in the flow of a stream. Humans, plugged into cell phones, iPods and a dizzying array of self-created distractions often don't have access to their own intuitiveness in the way other creatures do, but, sometimes, the clues are just too obvious to miss.

Such was the case with today's market action.

First, the ADP employment report for March, released prior to the opening bell, offered the second of three straight data point this week that was of a negative nature. The creation of 158,000 new jobs in the month was well short of the anticipated 197,000, and a precursor to Friday's "all-important" Non-farm payroll data from the BLS.

The other two data points on the negative side were the drop in the ISM index on Monday and the ISM Services index drop at 10:00 am EDT, that showed a slowdown to 54.4 from 56.0 in February.

Those were the catalysts to some pretty serious selling in equities, but also in gold, silver, oil, copper, corn, financial stocks, and a boost in bonds that sent yields lower, a trend that seems to be quite well-entrenched of late.

By midday, it was fairly obvious that everything was falling at the same time, which is not normal. On top of the usual market issues, the North Korean nut case keeps ramping up the rhetoric - the US responding with ongoing escalation - and the vision of depositor funds being vanished from bank accounts in Cyprus still fresh, the notion that things were fast unraveling was hard to miss.

Analysts of various stripes have been warning about a downturn in the markets for weeks, if not months, and the 100+ point decline on the Dow may serve notice that the top is in and everything from here to October (if we're lucky) is going to be downhill. The more obvious evidence comes in the form of the crumbling US economy, boosted with easy money, welfare checks, food stamps, disability payments and other government transfer payments that still cannot produce a GDP growing at faster than a two percent clip.

All the evidence is out there, in front of everyone's eyes, but it seemed that only today, the buzz-heads and stock jocks in equity la-la-land finally took the bait and took a big chunk out of the normalcy bias that pervades trading desks and the floors of the exchanges.

There was actual fear in the air, rather than the usual blather that the "Fed has our back," that has been conventional wisdom for the past four-plus years.

In effect, it's the Fed that has caused, in large part, the continuum of crisis that continues unabated, their easy money policies creating distortions of immense proportions, so that almost everything is mis-priced, mis-allocated and misinterpreted, the result being one massive, global mistake of monetary mismanagement that threatens the entire financial and social fabric of the planet.

It didn't take a genius to figure all of this out, just a feeling, that when everything began falling, the tumbling would not stop, the last time this happened (our minds reeling and whirring like the great analytical tools they are) was September of 2008, when Lehman Brothers was about to go under and the world changed - not for the better.

Mark this date, because it may be one for the history books, noted as the beginning of the end, when the tsunami of financial events, forestalled since the extraordinary measures of the Fed and other central banks in 2008-09, finally came rushing onshore, all at the same time, with a force and a fury that's been building since those well-embraced days of Hank Paulson putting a $700 billion gun to the head of the government and threatening to pull the trigger.

We may have weathered the storm of the past four years, but the backlash may be even worse, and it's coming faster than most people can anticipate or prepare for.

It's a funny thing about predicting disasters. You're humored or ignored or laughed at all the way up to the actual event. And then, people ask you what to do, when you've been telling them just that, all along.

Stocks may be up again tomorrow, or for the next week or month, even, but there's trouble coming, you can just feel it.

Dow 14,550.35, 111.66 (0.76%)
NASDAQ 3,218.60, -36.26 (1.11%)
S&P 500 1,553.69, -16.56 (1.05%)
NYSE Composite 8,983.40, -109.50 (1.20%)
NASDAQ Volume 1,813,335,250
NYSE Volume 4,418,003,000
Combined NYSE & NASDAQ Advance - Decline: 1499-4977 (huge)
Combined NYSE & NASDAQ New highs - New lows: 182-92 (tighter)
WTI crude oil: 94.45, -2.74
Gold: 1,553.50, -22.40
Silver: 26.80, -0.451

Tuesday, April 2, 2013

Stocks Rise on Vapors

Strange as it may seem, today's gains by the three most closely-watched indices - Dow, S&P, NASDAQ - were accompanied by a loss in the index with the widest representation, the NYSE Composite.

The drop was a small one, but it also pointed to the imbalance in the day's advance-decline line, which finished slightly in the red (see below), the point being that while stocks were up in a general sense and the headlines will scream that Dow and S&P reached new all-time closing highs, the truth is that breadth has deteriorated, as was the case on Monday, when the indices all dripped lower.

There wasn't much for the market to get excited about other than the unexpected boost in Medicare Advantage payouts, which will not be cut by the previously expected 2.2%, but will actually increase by 3.3%. That boosted shares of medical insurers, including United Health (UNH), which was the best performer on the Dow and accounted for much of the day's advance.

Wednesday will offer the first peek at employment when the ADP Private Payrolls report is issued prior to the opening bell. Expectations are that the economy created 197,000 new jobs in March.

Gold and silver were smashed lower, as pressures from Cyprus appear to be easing (out of sight, out of mind) and a sense of normalcy has returned - for now. At least there's only one David Stockman writing op-eds about how the rich are among the very few beneficiaries of the stock market rebound pointing out that the whole turnaround in stocks is due to massive, unconventional easing by the Federal Reserve.

Dow 14,662.01, +89.16 (0.61%)
NASDAQ 3,254.86, +15.69 (0.48%)
S&P 500 1,570.25, +8.08 (0.52%)
NYSE Composite 9,092.90, -14.86 (0.16%)
NASDAQ Volume 1,588,906,625
NYSE Volume 3,609,905,750
Combined NYSE & NASDAQ Advance - Decline: 3039-3378
Combined NYSE & NASDAQ New highs - New lows: 412-53
WTI crude oil: 97.19, +0.12
Gold: 1,575.90, -25.00
Silver: 27.25, -0.696

Monday, April 1, 2013

April's Fools? 2nd Quarter Off to Poor Start; David Stockman Op-Ed on the Money

US stocks got ramped pretty hard in the first quarter of 2013, with the Dow up 11% and the S&P tagging along with a 10% gain.

In more normal economic times, those first quarter returns would equate into a rather solid year of gains, but in the "new normal" of Fed pumping of $85 billion monthly into the economy, through treasury and MBS purchases (both probably losing investments), it's just more of the same: profits for Wall Street traders and bankers, crumbs for the American public.

Stocks struggled right from the opening bell and traded in fairly narrow ranges on the major indices, with the NASDAQ being the hardest hit, oddly, since the NAZ is home to some of the more speculative darlings which Wall Street loves to pump (and dump).

So, the Dow and S&P set all-time highs at the close of the first quarter, but cascading headlong into earnings season, some investors are apparently not so sure those levels can be maintained.

Now that Cyprus is out of the headlines but not out of the memories of bank depositors worldwide, there's reason to believe the skeptics are correct, especially if one was to read the scathing op-ed by former congressman and budget director under Ronald Reagan, David Stockman, which appeared glaringly in Easter Sunday's New York Times, an oddity for the newspaper so beloved by liberals and adherents of Obama-nomics.

The opinion piece, aptly titled, "Sundown in America" detailed a litany of statistics and trends that protray America as a failing economy headed by a flailing Federal Reserve, which has embarked upon, in Stockman's words, "a radical, uncharted spree of money printing."

It's a must-read for anyone who doesn't believe the stats trotted out by the usual bullish analysts and government mouthpieces, because it debunks the myths surrounding unemployment figures, growth projections, the sustainability of enormous government deficits and the inevitable end-game of a bond market bubble of massive proportions.

For those who wish to remain soothed by willful ignorance (99% of the population), skip it and just go shopping, cell phone in hand, of course, believing that everything is under control and those problems we hear about in other countries simply can't happen here, because we're America, damn it.

However, those who believe what their own eyes see and their own ears hear, might want to ponder the long-term ramifications of more than a decade of easy money, electronically printed into existence by the Federal Reserve and dutifully sucked up by the thieving class of politicians and bankers that have profited handsomely while the rest of the country suffered and continues to wallow in a slow-to-no-growth environment.

Additionally, the one statistic of note today was the March reading of the ISM index, which fell to a ten-month low of 51.3 on a forecast of 54.0, after positing a splendid 54.2 in February. One of the more closely-watched numbers on Wall Street delivered what may be the first of many blows to confidence of market gain continuity this week.

Whatever the case, the double whammy of Stockton's searing indictment of US fiscal and monetary policies and a poor reading on manufacturing, was net negative for equities today.

Beyond that, volume fell to it's lowest level of the year and the advance-decline line was the worst in weeks, prompting concerns that those who were eating well in the first quarter may become the meal in the second three months of the year.

Dow 14,572.85, -5.69 (0.04%)
NASDAQ 3,239.17, -28.35 (0.87%)
S&P 500 1,562.17, -7.02 (0.45%)
NYSE Composite 9,057.65, -49.39 (0.54%)
NASDAQ Volume 1,446,869,375
NYSE Volume 3,019,881,750
Combined NYSE & NASDAQ Advance - Decline: 1900-4482
Combined NYSE & NASDAQ New highs - New lows: 357-60
WTI crude oil: 97.07, -0.16
Gold: 1,600.90, +5.20
Silver: 27.94, -0.379