Much Ado About LTRO, or, Ben-Zero Bernanke's Attack on Gold (and silver)

As mentioned here yesterday, the turbid markets were about to get a lot more interesting with the ECB's LTRO and Ben Bernanke's testimony before the House.

What a fascinating and interesting look inside the workings of coordinated central bank policy it was.

Europe's LTRO went off, as expected, without a hitch. According to the Wall Street Journal:

The European Central Bank released the results Wednesday of the second round of its long-term refinancing operation. A total of 800 banks participated, and the ECB allotted €529.53 billion in the three-year refinancing operation.

This was more than the €489 billion the ECB loaned out to 523 banks in December on the same terms, 1% over three years. Giddy-up!

Perhaps the "struggling" banks - which will now park most of the money at the EBC for a 0.75% annual loss - thought that this was their last chance at almost-free money and more of them jumped at the chance, despite the stigma associated with suspect, "bailout" money, which is part of the reason why so many people the world over despise bankers. They will take when money's cheap, but they will not loan it out to businesses or individuals despite usurious rates of return. Rather, they will take a loss in order to retain their lofty position as worthy of "salvation."

Thus, the banks have become the scourge of the earth, keeping their wealth to themselves and impoverishing every man, woman and child on the planet in the process.

So, no big news there. More of the same by the kleptocracy.

European equity markets responded with a large yawn, finishing mixed, but mostly down, the worst hit being the UK's FTSE.

Buoyed by the success in Europe and a positive second revision to 2011 fourth quarter GDP (up to 3.0% after an intial reading of 2.8%), US stocks opened with a mild upside bias.

Then came round two, when the central bank plans really came together. As soon as Ben Bernanke started speaking, gold and silver began dropping, fast, like $3.50 in just over an hour for silver, from $37.50 to $34.00 the ounce.

Gold was off by as much as $80 in the same time span, and oil also took a hit, but - get this - oil recovered to finish the day with a gain. the precious metals, anathema to central bankers, recovered a bit, though not much.

The widely-spread rationale was that Bernanke was not his usual dovish self, as he didn't signal that any further quantitative easing (QE) was forthcoming from the Fed. Naturally, this cover story flies in the face of the Fed's lax monetary zero interest rate policy (ZIRP), Operation Twist and the ceaseless, clandestine money-pumping which the Federal Reserve has engaged in for the last three years running.

As a bonus, the central bank market interventionists even managed to take a little steam out of stocks, as all major US indices finished lower, but nowhere near the percentage losses suffered by those crazy gold and silver investors who believe - rightly - that the PMs are actually money and a better store of value than fiat money which is printed on demand by the globalists. Interestingly, trading volume today was the highest seen in weeks.

Perhaps precious metals investors should have known something bad was about to happen when Texas congressman and presidential candidate Ron Paul harangued Bernanke on inflation, monetary policy and the role of the Fed, brandishing a silver coin and telling the chairman that the Fed would eventually "self-destruct."

Here's the fascinating video:



A few more experts weighing in on today's "gold smash" included Jim Sincliar, who called today's action "window dressing" for more QE, and Sprott Asset Management's John Embry, who called out the bullion banks as manipulators.

The situation could not be more clear. Central banks will print, print, print until they've inflated away all wealth, and they will hate gold (and silver) and keep prices artificially low, until the day comes when they dump all their worthless paper assets en masse and buy up every last ounce of the yellow metal.

Until then, don't fall for the "no new QE" stories. The printing presses will run non-stop. They have to, since the global bankers, with tacit permission from the pals in government, have produced a no-win situation by trying to solve a solvency problem with liquidity, throwing more debt on top of already too much debt, as if pouring more water onto a drowning man is supposed to help save him.

Dow 12,952.07, -53.05 (0.41%)
NASDAQ 2,966.89, -19.87 (0.67%)
S&P 500 1,365.68, -6.50 (0.47%)
NYSE Composite 8,113.55, -58.00 (0.71%)
NASDAQ Volume 2,092,803,750
NYSE Volume 4,389,318,500
Combined NYSE & NASDAQ Advance - Decline: 1726-3925
Combined NYSE & NASDAQ New highs - New lows: 230-40
WTI crude oil: 107.07, +0.52
Gold: 1,711.30, -77.10
Silver: 34.58, -2.56

Rush for the Exits as 2011 Ends on Sour Note; Markets Flat for 2011; Predictions for 2012

Stocks traded in their usual tight ranges on the final day of trading for 2011, and just about every trader, investor and pundit seems to be in agreement that they year was a difficult one. At the end of the session, a rash of selling sent the major indices near their lows of the day. Volume was insignificant, but the late-day selling was an eye-opener, though possibly not materially a precursor to January, 2012.

Today's Closing Numbers:

Dow 12,217.56, -69.48 (0.57%)
NASDAQ 2,605.15, -8.59 (0.33%)
S&P 500 1,257.60, -5.42 (0.43%)
NYSE Composite 7,477.03, -8.60 (0.11%)
NASDAQ Volume 1,008,177,750
NYSE Volume 2,225,404,500
Combined NYSE & NASDAQ Advance - Decline: 2647-3004
Combined NYSE & NASDAQ New highs - New lows: 178-47
WTI Crude oil: 98.83, 0.82
Gold: 1,566.80, +25.90
Silver: 27.92, +0.60


Of the four major indices, only two - the Dow and S&P 500 - returned positive results for the year.

Here's how 2011 stacked up:

Index	Close 12/31/10	Close 12/30/11	Change
Dow	11577.51	12217.56	+640.05
NASDAQ	2652.87	2605.15	-47.72
S&P 500	1257.64	1,257.60	-0.04
NYSE Comp.	7964.02	7477.03	-486.99

Now, checking back on Money Daily's 2011 predictions, here, here and here, we can summarize the results.

We said the overriding theme would be VALUE. With the emphasis now on dividend-paying stocks, we can give ourselves a half thumbs-up, though the real word for the year, especially the second half, was VOLATILITY.

We mentioned that "US employment situation is not going to get materially better in 2011..." A+ on that call.

Housing: "The expectation is for residential housing prices to drop another 6-10% during the year, with larger decreases in the NorthEast and MidWest." Bingo.

FOREX: "The US dollar will fare well against almost all other competing currencies. Destruction of the world's reserve currency takes time, and a year is just a small part of the breaking tableau." Another spot on analysis.

COMMODITIES

Eventually, price will meet demand, or lack thereof, and some equilibrium found before riots and starvation become the norm. Your best bets for 2011 are still gold and silver, with the latter being the favored instrument as it seeks to re-establish the 15-1 gold-silver ratio. Both should appreciate well in excess of 15%, so $1500 gold should be an easy target and silver may bust right through $40 per ounce in rapid manner.

As far as oil is concerned, apart from the rigged and artificial aspects of how it is traded, crude prices cannot exceed $100 for very long, if they even reach them. Absolute price inflation will crimp demand, and, thus, set the wheel back to "go" again, so don't expect oil prices to skyrocket or decline much at all. Stable prices would be best for all parties (except those selling the stuff, short term), and that's what we may get. There's about a 30% chance oil prices actually fall on slack demand, back under $75, but not much further, though a price around $60 per barrel would go a long way toward global growth, though the supply/demand numbers simply don't add up well for that to be much more than a wing and many prayers.

Despite a serious decline in the latter months of 2011, gold and silver held up well, despite blatant price manipulation by central banks. The call on oil was pretty much correct.

STOCKS:

The following are the predicted trading ranges for the major indices in 2011:
Dow: 9250-12000
NASDAQ: 2100-2750
S&P 500: 875-1300
NYSE Comp: 5650-8100

Not a bad showing, though the predicted lows were never met.

Money Daily also made some comments regarding the bond market, inflation, social trends and politics which were generally in the right direction. They can be found here.

Now, on to predictions for 2012 (very briefly):

Stocks: At the end of 2012, after a protracted decline though to the elections, the markets should get a bounce and end somewhere around:
Dow: 10,700
NASDAQ: 2350
S&P: 1050
NYSE Composite: 6780

Overall, it's going to be another challenging year for stocks, with high unemployment, the collapsing Euro and high tensions in the Middle East among the factors that will keep investor confidence low.

Commodities: Since gold and silver fell off the cliff at the end of 2011, they should rebound smartly and be among the best investments of the year. Oil will continue to fluctuate between $75 and $100, though passage of a bill allowing the Keystone pipeline to be built or a war with Iran (very high probability) could push prices out of that range; lower in the former instance, much higher in the latter.

Bonds are going to remain in their tight ranges, since the Fed has already announced they'd keep the federal funds rate unchanged though 2013.

FOREX: Short the Euro, Long US dollar, Aussie and Canada.

Politics will keep the economy from gaining very much traction until the election. The plan by the schemers behind the candidates is to keep the economy stumbling along in order to usher in a new Republican era. Whether or not they succeed will depend on a vast sea of changing factors, though the most pressing will still be the economy, followed by Iran, Obama-care and voting right. The Republicans can't win with Newt Gingrich or Mitt Romney. A Ron Paul candidacy could make life a little too interesting for the incumbent and Paul would be a great president, exactly what's needed in the US at this time of perpetual crisis. Paul would change the nature of US foreign policy, reform entitlements and get back to the rule of law.

While it's a near certainty that the Republican party chiefs will do everything in their power to keep him from winning the nomination, he could do it. Otherwise, a third party candidacy by Dr. Paul would ensure an Obama landslide.

Unless Ron Paul is in the race, Obama will win a second term.

That's it. See you in 2012. Happy New Year!

Nothing Happening on Wall Street as Holidays Wind Down; Sears First Christmas Casualty

The three-day Christamas holiday was a welcome break, but, for the traders, bankers, swindlers and everybody who isn't a teacher or member of the US congress, Tuesday was back-to-work day.

Not that it mattered much on Wall Street. On what looks - at first glance - to be the lowest-volume full session trading day of the year, stocks were essentially flat, trading in a tight range which had the Dow down as much as 24 points and up only about 34 points.

So, advice for this week is to watch as much football as possible, don't eat too many leftovers and forget the rigged, stupid markets. If today's trading is to serve as any indication, they aren't going anywhere until January.

One noteworthy item in today's news is worth mentioning, however, that being the imminent demise of one of America's iconic store brands, Sears Holdings (SHLD), the parent company for over 4,000 US and Canadian Sears and K-Mart stores, announced this morning that it would be closing 100-120 stores due to poor performance during the holdiays season.

This is nothing new for Sears/K-Mart, but if they eventually close only 100-120 stores, that would be something of a surprise. By this time next year, we could all be reminiscing over how the Sears bankruptcy (again) and the closings of 2000 stores was one of the top stories of 2012. Their credit lines are tight and, if there's any hint of a slowdown in the first half of 2012, they could be pulled or frozen, leaving the company very thin indeed.

Shares of Sears Holding were hammered without mercy, the stock losing 27% on the day (33.38, -12.47). SHLD traded as high as 82 and change near the end of October. Obviously, this was something some people knew a bit about.

Yep, the people running Sears and K-Mart into the ground (Target, Macy's, Wal-Mart, among others) is just what the US economy needs right about now: another wave of retail layoffs.

Also making headlines and jacking up the price of oil back over $100 today was more sabre-rattling from Iran, which has been conducting military exercises around the Strait of Hormuz since Christmas Eve, and today said that they would halt the flow of oil if foreign sanctions were imposed on its crude exports because of its nuclear ambitions. Well, we all know what europe and the US thinks of that. Get ready for $5.00 per gallon gas if the morons in Washington and Brussels continue on their failed policy path. Presidential candidate Ron Paul says that US policies are what makes people around the world hate America. He has a very valid point and should be the Republican nominee on his anti-war/foreign policy stance alone.

January is already setting up to be a real loser for stocks. Start shorting selected retailers (GAP comes to mind). The Christmas season is winding down and there's nothing on the horizon to make people want to shop more. At least the weather hasn't been horrible, which is great for humans, but bad for companies which sell coats, hats and winter wear, as well as being brutal on ski resorts.

Al Gore? Paging the promoter of global warming. 2012 could be your best year yet.

Dow 12,291.35, -2.65 (0.02%)
NASDAQ 2,625.20, +6.56 (0.25%)
S&P 500 1,265.43, +0.10 (0.01%)
NYSE Composite 7,508.33, -10.33 (0.14%)
NASDAQ Volume 942,962,875
NYSE Volume 2,034,548,000
Combined NYSE & NASDAQ Advance - Decline: 2829-2797
Combined NYSE & NASDAQ New highs - New lows: 272-78
WTI crude oil: 101.34, +1.66
Gold: 1,595.50, -10.50
Silver: 28.74, -0.34

The Instant Market: Draghi and Bank of America Take It Down Two Notches

Once again, we are treated to the new reality of the "instant market" wherein news, or rumor, directs the flow of funds into or out of select equities, and today's catalysts were, as usual, from Europe (must have some news from Europe to move markets: it's the law) and oddly enough, from our old friends at Bank of America (BAC).

First, Europe. US markets opened with some hope and small gains across the indices. That was, until shortly after 10:00 New York time, when ECB President Mario Draghi commented that the ECB would not step up it's bond purchases, noting that monetary financing of states was not part of the treaty upon which the EU was formed. (Imagine, a world political leader actually sticking to what was agreed upon. A novel approach.)

That took the markets down a big notch, with the Dow, after hitting its highs of the day earlier - up 60 points - falling a full 120 points - to down 60 - in about an hour's time after Draghi's comments.

Draghi also said that any talk of the Euro-zone breaking apart were "morbid" and that the Euro was going to remain intact as a viable currency. He punted this gem:

I have no doubts whatsoever about the strength of the euro, about its permanence, about its irreversibility. But you have a lot of people, especially outside the euro area, who spend a lot of time in what I call morbid speculation.

While Draghi may be right about the morbidity part, the thought that the Euro is irreplaceable or inviolate is nothing more than CYA job protection. He's paid to oversee the ECB, and talking up the currency is part of his job. Somebody ought to hand Draghi a history book. Greece fell, Rome fell, Germany rose and fell a couple of times, at least. Nothing lasts forever, and, with only 11 years of history under its belt, the Euro is experiencing something of a severe confidence crisis, if not a complete failure by some of its constituents.

Most of those "morbid" speculators give the Euro another six to eighteen months, tops. And while it may indeed survive, and prove Draghi correct in the near term, it's another bad idea stemming from too many government bureaucrats attempting to furnish a centrally-planned socialist solution where none was needed. In many ways, the Euro resembles the Medicare/Medicade mess in the US, wherein the government stepped all over the established free market to create a system that is out of control and benefits mostly large medical insurance companies instead of real people with health care needs. The Euro was supposed to affect the entire continent in magical, positive ways. It has, thus far, produced a great deal of pain, financial inequities and sparked a world-wide crisis, even though that crisis was well underway, being all about fiat money anyway.

Stocks drifted along until about 3:00 pm ET when the PPT or whomever was hitting the bid - for hours - on Bank of America at 5.00 - 5.03, stopped, failed and rolled over. The bank that many equate with the financial collapse of 2008, hit a fresh, 33-month low, hitting 4.92 prior to closing at 4.99, an important figure, since many funds, by charter, cannot trade in stocks priced under 5.00, or must severely limit the size of their investment in such low-priced equities.

With banks under pressure the entire session, the demise of BAC took the whole market down the second notch, into the close. So much for recovery, at least by the "well-capitalized" US banks, whose ledgers are an indecipherable miasma of imaginary valuations, off-balance-sheet assets and liabilities and mark-to-model fantasies. With books so complex and confusing most CPAs don't understand them and after relentless support from the federal government (much of it in secret), is there any doubt that most stock pickers have shied away from US financial stocks as a whole?

Bank of America, along with Citigroup and JP Morgan Chase, to name just a few, should have been broken up in 2008-09, when they were insolvent (and still are, largely), though that would have ended the near-total dominance of the Federal Reserve and its constituents over all transactions in the US economy and beyond, and the rich bankers and their supporters simply could not stand for that. Instead, it was easier for them to socialize the losses on the backs of the US taxpayers.

Bank of America's recent swoon is only a small chapter in the ongoing saga that will bring down the oligarchical nature of our corrupt political and financial system. 99%ers are celebrating.

A couple of items of note:

Ron Paul, the Republican presidential candidate that the establishment loves to hate, has taken the lead in Iowa accordind to the most recent polling by Public Policy Polling (PPP), one of a handful of organizations tracking the rise and fall of candidates in the upcoming (January 3) caucuses.

The results have Paul at 23%, leading Mitt Romney (20%) and a rapidly declining Newt Gingrich (14%), even though Romney recently picked up the endorsement of the the Des Moines Register, Iowa's leading newspaper. Paul is also reported to have taken in more than $4 million over the past weekend, and now is in second place, behind Romney, in New Hampshire.

Also, a searing report on where we're headed in 2012, called the Thunder Road Report, leading with the cryptic warning, "Dear Portfolio Manager, you are leaving the capitalist sector and heading into a full-spectrum crisis."

The entire report is available at the end of this post.

Anybody seen Santa?

Dow 11,766.26, -100.13 (0.84%)
NASDAQ 2,523.14, -32.19 (1.26%)
S&P 500 1,205.35, -14.31 (1.17%)
NYSE Composite 7,142.45, -95.21 (1.32%)
NASDAQ Volume 1,591,603,125
NYSE Volume 3,659,820,750
Combined NYSE & NASDAQ Advance - Decline: 1230-4469
Combined NYSE & NASDAQ New highs - New lows: 110-290 (blowing out)
WTI crude oil: 93.88, +0.35
Gold: 1,596.70, -1.20
Silver: 28.87, -0.80

TRoad25

Stocks Ripped Lower Again; More Questions than Answers

Since US stock markets are so delightfully linked t the fates of Europe, the same old story keeps repeating itself over and over, such as today, as the Euro fell sharply (1.00 EUR = 1.30348 USD) against major currencies and the Dollar Index closed at an eleven-month high (DXY:IND 80.273 0.708 0.89%).

While those dual developments are intertwined, the parties involved - from European, US and Chinese exporters to American and European consumers - will feel the effects in dramatically different manners.

Naturally, for most of Europe, a collapsing Euro is bad for consumers, making everything imported more expensive, but great for exporters, whose goods are cheaper by comparison in importing nations.

The opposite is true for the US, which is why stocks are usually down when the Euro dips and the dollar strengthens. Americans should welcome a stronger dollar, especially at this time of year, because all those trinkets and holiday goodies - mostly from China - will be cheaper, though probably not right away.

As has been a repeatedly-held view in this space, the Euro is headed for catastrophe, and it's going to occur sooner than anyone thinks, probably before the middle of 2012. German people are sick and tired of bailing out the Southern countries, Greece has already defaulted on some debt, Italy, Spain, Portugal, Ireland and Belgium are holding on for dear life and the ECB is going to be quickly as tapped out of funds as its leaders are of ideas.

The idea of printing more money, as has been the case in the US, with dubious effect, will only make matters worse when inflation rages and dissatisfied citizens stop paying taxes in deference to feeding their families. The trouble is that sovereign debt, ridiculously rated at AAA or beyond, is about to be downgraded across the Euro-zone and beyond.

For those unfamiliar, sovereign debt is the money governments borrow to fund everything from pensions to schools to war machines (like here in the US). Most of Europe should be rated no better than A or A+, a move that is coming soon from either S&P, Moody's or Fitch, because nations have shown over time that while they may always repay on time, they are profligate spenders and tax revenues are dropping, not expanding. Balance sheets (those things nobody likes to look at) of most governments are ridiculous when compared to that of an average American or European family, who don't get the benefit of positive credit ratings, pay higher interest rates than silly governments, yet most manage to pay bills on time and keep their households in relative sanity.

With all of the monstrous debt of Europe and the US overshadowing just about all other economic realities, there are more questions than answers these days, a few of them being:

• Where's the money (over $1 billion) that MF Global took from investors?
• How soon will the ratings agencies lower the credit ratings of Italy, Spain, Portugal, France and the rest of the Euro-zone nations, and, how far down will they go?
• If US banks are borrowing at 0-0.25% from the Fed, why are credit card rates 8, 10, 15 and even 28% for US consumers who have solid track records of on-time payments?
• Can government statistics be trusted at all?
• Why would anyone under the age of 40 contribute to Social Security if not that it's automatically deducted from their paychecks?
• If the world is headed for global depression, won't all asset classes, including gold and silver, devalue?
• Why are government employees in the US paid 30-40% more than their private-industry counterparts and receive gold-plated health care and pensions, when the US population - who pays them - work for less, have fewer benefits and many have no guaranteed retirement plans?
• Why is the world's greatest criminal, Hank Paulson, still a free man?
• Where is Eric Holder, the Attorney General, and why hasn't he even investigated any of the banks or the prior administration?
• Why must Americans choose between Mitt Romney or Newt Gingrich as the Republican presidential nominee when Ron Paul and Michelle Bachmann have better positions and more consistent voting records?
• Why is President Obama opposed to the Keystone pipeline that would bring oil from Canada (our largest trading partner and a friendly one) and thousands of high-paying jobs?
• Why is 20% supposed to be a "fair" percentage one should pay in federal taxes when most people outside the middle class pay little to nothing?

Those are just teaser questions, without good answers from politicians, regulators, academics or economists. The tough ones await in the new year.

And, to those kids waiting for Santa Claus, you've got 11 days left to try being good. For the scoundrels on Wall Street, awaiting the famous, year-end Santa Claus Rally, you've been bad, so just coal (clean coal, for sure) for you, and, even if there is a rally, it will only get the indices back to where they were a week or a day or two ago, and 2011 will go down in the books as a year of near-zero (or less) returns. So much for owning stocks.

A couple of quick points on economic data. November retail sales figures were up 0.2%. There's one word to describe all the hoopla over Black Friday and the whole retail consumerism mantra. BULL---T.

The FOMC of the Fed had its last policy meeting of 2011 and did nothing. Thanks, for nothing.

Dow 11,954.94, -66.45 (0.55%)
NASDAQ 2,579.27, -32.99 (1.26%)
S&P 500 1,225.73, -10.74 (0.87%)
NYSE Composite 7,276.65, -86.84 (1.18%)
NASDAQ Volume 1,732,941,625
NYSE Volume 4,080,177,000
Combined NYSE & NASDAQ Advance - Decline: 1462-4165
Combined NYSE & NASDAQ New highs - New lows: 107-146 (more red)
WTI crude oil: 100.14, +2.37 (higher due to fears over Iran)
Gold: 1,663.10, -5.10
Silver: 31.26, +0.26

So Much for Europe Being Fixed; US Stocks Dashed over Persistent Fear of Euro Collapse

Let's face it. There's no easy way for europe to fix the mess they've created without a lot of pain, including bank failures, a massive, long-term deflationary depression, government overthrows and the near disintegration of the Euro-zone, those countries which exclusively use the Euro as currency.

After last week's up-and-down Thursday and Friday sessions, marked by trepidation over the ECB's interest rate cut and a demure stance on monetary policy by new ECB head, Mario Draghi, and Friday's euphoric rally on the umpteenth outline of a Euro solution, Monday turned just plain ugly for European bourses and US indices.

Anybody who understands the enormity of debt that's been built up by Europe and the US - not only in the government, but by the banks, financial institutions and households as well - sees no end to the crisis in Europe, and the distinct probability that their problems - being partly those of our own banks and our Federal Reserve - will become ours. The massive overhang of public debt, much of it owing to national pension funds like Social Security, has always been an albatross around the necks of European leaders and now it is quickly becoming one for whoever leads the US (Take your pick from Obama, the banks or the congress. None of them are doing a good job.).

And while Social Security is set to run in the red for another year (this being the first), what are congress and the president fighting over? Whether to cut the Social Security contribution paid by employees and/or add a tax on the wealthy. The fact that the latest boondoggle is being branded as "payroll tax" - a wholly incorrect moniker - tells exactly how deep and severe the US fiscal condition has become.

If the government big-wigs actually came clean on the issue and said they want to cut Social Security contributions so people can afford to buy food, gas and maybe the occasional iPad or plasma TV, the cat would be out of the bag, permanently.

As it stands today, Social Security is DOA. Current beneficiaries can expect payments though the next five years, maybe, but, eventually, there's not enough money going into the system to support the huge numbers of upcoming recipients from the Baby Boom generation, most of whom have less than $40,000 saved for retirement (Hint: that's not enough), and cutting contributions is going in exactly the wrong direction.

On Capitol Hill, most senior congress-people know that Social Security will have to be substantially changed in order to survive and the changes will have to be dramatic measures, like raising the retirement age to 70 or 72, means testing, so that people who don't need it won't get it, and raising the limit of contributions from the current first $106,800 of income to something more realistic, like the first $200,000 of income.

Making high-earners pay more would add more money to the SS coffers at the same time the government is cutting the percentage take from employees. Still, most of the measures even considered by congress and the White House are nothing more than stop-gap measures designed to satiate the masses until the next big election, in November, 2012.

In the meantime, the economy continues to struggle along, unless one is inclined to take their lead from the ruthless bankers on Wall Street and cheat like crazy, paying people off the books, under-reporting income and generally skirting the IRS at every turn. Hey, the big corporations do it, so why not everyone else.

At the bottom of all the financial malaise is the collapse of government, as we've witnessed in the Middle east and North Africa, is now spreading to Europe and Russia, and thanks to people actually taking change of their own lives and their own finances, is quickly gaining ground here in the USA.

There is one way to stem the crisis in the United States. Elect Ron Paul president. The mainstream media is currently dancing around Dr. Paul, whose positions have been consistent and poisonous to the status quo, but there's no doubt mainstream America is listening to the 76-year-old Texan, as he continue to gain ground in Iowa and elsewhere.

Compared to the current leaders, Newt Gingrich and Mitt Romney, a Ron Paul - Michelle Bachmann ticket is sure beginning to look like a winner.

When Americans ask themselves, "which of the Republican candidates are most like us?" the answer becomes obvious.

BTW: Volume was so low today that the markets could have closed at noon and hardly anyone would have noticed. Even fewer would have cared. That's what happens when trust flees markets. People, and money, follow out the door.

The Euro hit a two-month low against the US Dollar, below 1.32. The end of the Euro is coming, and sooner than anyone dares think.

Dow 12,021.39, -162.87 (1.34%)
NASDAQ 2,612.26, -34.59 (1.31%)
S&P 500 1,236.47, -18.72 (1.49%)
NYSE Composite 7,363.49, -139.39 (1.86%)
NASDAQ Volume 1,523,045,375
NYSE Volume 3,421,469,750
Combined NYSE & NASDAQ Advance - Decline: 1272-4386
Combined NYSE & NASDAQ New highs - New lows: 79-120 (flipped to red)
WTI crude oil: 97.77 -1.64 (head back to 80-85 range)
Gold: 1,668.20 -48.60 (deflation signal)
Silver: 31.00, -1.25

Super Committee Epic Fail; Ron Paul Weighs In; New Government in Spain; Last Days of Euro?

Despite rumors of some kind of "a new idea" from senator Max Baucus that the congressional super committee would reach some kind of deal - a rumor that boosted stocks from their midday lows - there appears to be no deal in the works before the Wednesday, November 23, deadline.

Americans should have expected no less from a congress that hasn't met the public's perception of actually doing their jobs in well over a decade, some say longer. After all, they only had three full months to reach agreement on a plan that would cut the budget deficit by $1.2 trillion over the next ten years, a paltry $120 billion per year.

The stranglehold by Republicans' refusing to authorize any kind of tax increase at all has boondoggled the entire effort, so that automatic cuts, mandated by the debt limit debate of the past summer, will take effect, though not until 2013, making cutting the budget deficit - by tax increases or program cuts - an election year issue of grandiose magnitude.

Congress' inability to get anything done caused stocks to sell off sharply, with the deadline just two days off and prospects severely limited.

Presidential candidate Ron Paul suggested that congress and the president take a few steps back and adopt the same budget that passed in 2004, on the premise that 2012 expected federal revenue ($2.3 trillion) roughly matches the budget from eight years ago. Paul's idea is brilliant in its simplicity, though probably a non-starter for most of the brain-dead congressional members who would have to vote on the idea.

Meanwhile, across the pond, European "leaders" saw the sixth change in government since the debt crisis began as Spain elected into office the conservative Popular Party. Spain follows Ireland, Portugal, Slovakia, Greece and Italy in ousting parties that could not navigate Europe's ongoing crisis.

A report by Credit Suisse called “The ‘Last Days’ of the Euro,” warns that the 12-year-old currency may be under enough excess strain that the entire currency experiment could collapse soon, as the ECB struggles to create a funding mechanism that would take some of the pressure off Germany and, to a lesser extent, France.

All of these events and ideas led to a serious drubbing in US stocks, though the main catalyst for decline was surely the inaction by congress. As it has failed so many times in the past, expect this latest fiasco of central planning to escalate into finger-pointing, name-calling and another lurch toward anarchy in the USA.

Congress, state and local governments (mostly though the fascist attacks on "Occupy" protesters) have repeatedly shown that they have a general disdain for the people of America, preferring to focus their efforts on gaining re-election. Thus, they are, slowly, but surely, losing the ability to govern. If economic conditions don't improve in a dramatic way soon, or deteriorate further, expect the wheels of government to begin the process of grind to a halt before finally falling off completely.

It's a testament to the failed politics of crony capitalism and support for only the wealthiest Americans that are causing serious dislocations and mistrust of government at all levels. Elected leaders can stop it if they so choose, but they seem all too caught up in ideology to do anything constructive.

For this market, the old fascist line, "the beatings will continue until morale improves," seems oh so appropriate.

Dow 11,547.31, -248.85 (2.11%)
NASDAQ 2,523.14, -49.36 (1.92%)
S&P 500 1,192.98, -22.67 (1.86%)
NYSE Composite 7,134.73, -147.74 (2.03%)
NASDAQ Volume 2,063,252,500
NYSE Volume 4,050,063,750
Combined NYSE & NASDAQ Advance - Decline: 908-4780
Combined NYSE & NASDAQ New highs - New lows: 45-275 (oopsie!)
WTI crude oil: 97.41, +0.11
Gold: 1,678.60, -46.50
Silver: 31.12, -1.30

Stronger Euro, Oil, US Stocks Make Wall Street a Winner

Whatever it is these Wall Street geniuses are smoking, they should be encouraged to pass some along to the rest of America, because, as Main Street struggles with high unemployment, stagnant wages, underwater housing and simply making ends meet, stocks just continue to run higher, as they did today.

Besides Italian President Silvio Berlusconi preparing to step down amid his country's burgeoning debt crisis, there wasn't much news on the European front, and even less news here in the USA, but traders saw fit to add to positions, or at least goose stocks a touch higher though still in the same range that's persisted since the end of July.

Almost all asset classes were marked up as the Euro gathered strength, pushing down the value of the dollar. That's all you need to know. Wall Street has this game figured out, like it or not, and they're not deviating from the game plan. Stocks are king no matter what happens in the rest of the world, until they're not, and we all know what happens then.

Meanwhile, the next crisis looming comes from - you guessed it - Washington, where lawmakers (yeah, that's a good term, like they make any that matter) were busy fighting with each other, as they normally do, just two weeks from the November 23 deadline for the "Super-committee" to come up with something along the lines of $2-4 trillion in budget cuts. Time is running out on the paid monkeys in congress and progress has been slow to nil.

If a deal is not reached by the deadline, some supposedly automatic cuts will take place, though it's almost a certainty that the wily legislators will find their ways around that boondoggle as well, leaving America in just about the same shape it was in before all the nonsense began over the debt limit. The free-spenders (all of them except Ron Paul and few others) got what they wanted in August: more money, and they will allow the rest of the country to burn rather than reach consensus and compromise.

They should all be kicked out of office, or, barring that, mostly ignored. As John Bogle said last evening on CBS news, "America is losing the ability to govern itself." Maybe that will be a better outcome.

Dow 12,170.18, +101.79 (0.84%)
NASDAQ 2,727.49, +32.24 (1.20%)
S&P 500 1,275.92, +14.80 (1.17%)
NYSE Composite 7,671.91, +81.48 (1.07%)
NASDAQ Volume 1,862,988,625
NYSE Volume 3,908,488,000
Combined NYSE & NASDAQ Advance - Decline: 4134-1511
Combined NYSE & NASDAQ New highs - New lows: 124-66
WTI crude oil: 96.80, +1.28
Gold: 1,799.20, +8.20
Silver: 35.15, +0.33

Precious Metals Mayhem; Gold Down $100; Silver Slammed

There are plenty of theories on what took place in precious metals markets over the past few days, but the best possible explanations really don't hold up to closer scrutiny.

Some say that there were margin calls in stocks and that traders trundled out of gold and silver, though that would not explain why the biggest hits were today, unless there were some overnight desperation calls.

Others suggest that this is all a coup by central banks in anticipation of a major monetary event, such as a Greek default or a major Euro-zone banking collapse, or possibly even the shutdown of the US government, which, if our nitwit congress-people have it in their power (and they do) may just occur as early as October 1 (nice that it falls on a weekend, too).

That maybe makes more sense, as anyone with half an interest in current geopolitics knows the central banks are working in a coordinated fashion these days, knowing that the time left for successful fiat money may be measured in days or months, no longer in years. With the Fed turning 100 in 2013, that would seem a fitting date to implode the entire global ponzi fractional reserve scheme, smack dab in the first year of a new president's term.

Of course, there is still the famous short silver position of the fabled Blythe Masters of JP Morgan, which could explain quite a bit, especially in terms of the solvency of that fine financial institution, in particular.

Whatever the case, haters of real money are having a field day, supposedly impressed that gold has fallen back to levels last seen at... hmm, the beginning of August (yes, less than two months ago) and silver is currently where it was at the start of 2011. These short-sighted individuals should bear in mind that all of the major indices of US stocks are BELOW where they began the year.

The public lovers and hoarders of silver and gold have been making "back up the truck" references all day long, seeing this latest price movement as either a liquidity or solvency event and are prepared to scale in buying at these levels while hoping the price foes even lower. With them, there is overall agreement that whatever is causing the price of the precious metals to shudder over the past 48 hours has more to do with the sustainability of current political and monetary factions rather then the intrinsic values of two metals which have stood the test of time as currencies for the past 5000 years.

Whatever the cause, it should be seen as a buying opportunity, with caution to purchase only physical metal, not ETFs or mining stocks, and to scale in according to your risk perspective. With the weekend on hand, prices should firm up in a few short hours, and the metals are currently well off the lows of the day, when gold was down my more than $100 briefly and silver had printed - for a short time - at a $29-and-change handle.

That was where all the action was today. Stocks were essentially flat, which is something of a surprise, following a day-and-a-half of vicious selling pressure.

A good idea would be to head to your local precious metal outpost and make the best deal you can on gold or silver, bars or coins, take your pick, because there is going to be a break between the paper prices of the EFTs and the physical market, which is splintered amongst thousands of coin and bullion dealers scattered around the globe. The CFTC has done nothing to protect PM investors from raids like these, allowing big outfits (like HSBC, JPM and central banks) to run naked shorts in violation of position limits without so much as a quiet "no, no." And, when the fiat currency regime ends, as have all paper currencies backed by nothing but "trust" which has now been broken a thousand times over, gold and silver will re-emerge as "real" money.

Precious metals prices may go even lower in a deflationary environment, but, as the central banks engage in more easing, money printing and currency debasement, gold and silver will take on their own lives as legitimate currencies and soar in value. Any way you look at it, this is a godsend for anyone underinvested in precious metals, because, unlike stocks, currencies or bonds, they are not debt-based instruments and there is no counter-party risk.

God Bless Ron Paul!

Happy Friday!

Dow 10,771.48, +37.65 (0.35%)
NASDAQ 2,483.23, +27.56 (1.12%)
S&P 500 1,136.43, +6.87 (0.61%)
NYSE Composite 6,770.73, +44.11 (0.66%)
NASDAQ Volume 1,987,216,125.00
NYSE Volume 5,639,933,500
Combined NYSE & NASDAQ Advance - Decline: 4195-2340
Combined NYSE & NASDAQ New highs - New lows: 11-477
WTI crude oil: 79.85, -0.66
Gold: 1655.00, -81.50
Silver: 31.15, -4.69

Currency Wars: Gold/Silver vs. US$ vs. Euro

While there wasn't much of a downdraft in stocks today (the NASDAQ was positive at the close), currency watchers had plenty to occupy their attention as the dollar appreciated against the Euro, though the big winners were Gold and Silver (the shining star of the past two months).

The Fed offered up $6.5 billion to Wall Street in the form or a POMO, but the boys said, "oh, no" and continued their selling of overpriced stocks in the face of Euro woes.

The European answer to Ben Bernanke's blind monkey monetary policy (QE2) was expressly Continental. As Ireland, Greece, Portugal and Spain teeter on the brink of insolvency, the European response was a curt, "you're not so bad; we're worse," as the race to the bottom of the currency abyss accelerated to a manic pace.

The big beneficiaries were manifested in pronounced moves in gold and silver, the former reaching new all-time highs, the latter continuing it's crusade against anything fiat. At the end of the day, owning gold, silver or dollars was the correct bet, against the wishes of Mr. Bernanke, and, at least for today, a complete repudiation of his overt, repulsive monetarism.

One outlier worth note was Bank of America (BAC), which defied all logic and sound investing strategy by posting another in a series of gains. Shares of the nation's largest mortgage lender finished up 24 cents, to $12.60, equaling its close on October 14. Shares had sunk as low as 11.16 (October 25), but have since found new life, though the stock is so heavily shorted, it may be merely a shaking out of weak hands. The stock gapped up at the open and made its best advances in the afternoon, trading as high as 12.73 before settling lower.

Oddly enough, the euphoria from last week, spurred by the Fed's announcement that it would monetize up to $900 billion in debt over the next eight months and sweeping victories in the House by the Republican party, seemed to fade in the light of the new week. Doubters of Fed policy are numerous and many have loudly decried Mr. Bernanke's QE as the wrong prescription for the US and global economies. Among them, US Representative Ron Paul from Texas, who expressed a view that the Fed would fail on its own and that gold should compete with Federal Reserve Notes as currency (see video below).

Additionally, Paul took aim at entitlements on his congressional website, calling for a rejection of the welfare state and offered a position to make Social Security voluntary.

Dow 11,406.84, -37.24 (0.33%)
NASDAQ 2,580.05, +1.07 (0.04%)
S&P 500 1,223.25, -2.60 (0.21%)
NYSE Composite 7,782.20, -18.46 (0.24%)

With the first downturn in the last seven sessions, declining issues paraded past advancers, 3437-3012. New highs led new lows, 691-53, so there's obviously still a good deal of speculation continuing. Volume, however, returned to moribund levels that prevailed prior to last week.

NASDAQ Volume 1,824,770,375.00
NYSE Volume 4,468,926,000

Oil continued to surge, despite the higher dollar, gaining 21 cents, to $87.06, on the front-end contract. The latest print on gold was up $15.30, to $1409.40, while silver amazed again, gaining 95 cents, to $27.71.

POMO + QE2 = Stocks to the Moon, Silver Soaring

One of the side effects of Ben Bernanke's $800 billion gambit - and there are many - is to send stocks directly upward, while also giving silver and gold somewhat of a boost.

A day after the announcement of $600 billion in QE2, plus another $150-200 billion more in re-allocated MBS, the Fed hit the trifecta with a 4$.5 billion POMO today and sent stocks to the their best levels since the crash of 2008.

Yes, siree! We're back on easy street thanks to Uncle Benji debasing the currency. Now all you people worried about your pension funds and 401Ks can rest easy, Uncle Ben's got ya covered.

Another side affect of QE is runaway inflation, but let's not talk about that now. Let's talk about that when gas is $4.25 a gallon, because that's where this is evidently headed. And word has it that if this round of stimulus via magic money creation isn't enough, don't worry, Ben can just conjure up some more. Isn't capitalism nice, easy, fun?

Oh, and you people who have saved diligently and are now in fixed income securities, bonds, and money markets, well, you're screwed. You'll still have money; it just won't be worth much, and, as an added bonus, it will buy even less in years ahead. Happy Retirement!

To the uninitiated, typical, dumb-ass American, they'll just see that the Dow was up AGAIN! and their stocks are doing well, so all is good in America. We've got a whole slew of newly-minted Republicans in the House of Representatives all set to slash taxes (for corporations), cut spending (on social programs) and usher in a new era of prosperity for the good old USA.

The problem with this scenario is that it's just all bunk. We're headed down the path of the Weimar Republic or, more recently, Zimbabwe, places where inflation was so out of control that restaurants asked patrons to pay in advance because by the time they'd finish their meal, it would cost more. The currency became essentially worthless in a matter of days and weeks.

Don't worry, though, we're just getting started. The fun part of hyper-inflation won't come until the dollar index hits something like 45. It's still above 75, or at least it was this afternoon. That could have changed.

Dow 11,434.84, +219.71 (1.96%)
NASDAQ 2,577.34, +37.07 (1.46%)
S&P 500 1,221.06, +23.10 (1.93%)
NYSE Composite 7,782.43, +174.02 (2.29%)

Gainers decimated losers on the day, 5265-1295. The new highs, new lows numbers were simply amazing: 1343 new highs; perhaps more amazing were the 112 new lows. From where did those come?

Volume was exceptional, for once, though considering that the Fed has only begun to pump nearly a trillion dollars into the stock market, we could see volume spikes which dwarf this in weeks and months to come. Today was a day to just pick some stocks you like and throw a bunch of money at them. They're almost guaranteed to go up. Even Bank of America (BAC) was up nearly 5%, despite the news that they may be on the hook for over $120 Billion in mortgage put-backs. In other words, the bank will be munching on those loans for years to come and, in fact, their exposure is probably more on the order of double or triple that.

NASDAQ Volume 2,533,570,750.00
NYSE Volume 6,609,444,500

The good news is that gold and silver went off like rockets today as well, because the really smart money (which gold and silver are) is into this space in expectation of enormous inflation and destruction of the dollar and other currencies. Gold was up $44.10, hitting a new all-time record high of $1392.90. Silver, in percentage terms, did even better, gaining $1.53, to $26.37, as JP Morgan and HSBC face criminal and class action lawsuits related to shorting and manipulating the silver market. Ouchie for them; great for anyone who loves silver.

It's a wild world out there; every man, woman and child for themselves.

Just a note in the wind. Keep an eye on House of Representative member Ron Paul, and his newly-elected Senator son, Rand. I'm promoting a Paul-Paul ticket for president and VP in 2012. A father-son team in the White House. Looks like a natural to me.

Oh, and never mind that unemployment claims were up 20,000 this week, to 457,000. That number will grow ever larger, likely to surpass 500,000 in December or by late January at the latest, while the stock market soars. Hey, who needs employees when you've got the Fed's printing presses on your side.

Tomorrow's non-farm payroll report for October should be a non-event, as will most fabricated economic data from now on. with money creation out the wazoo, there's no sense in measuring anything except the thickness of your bankroll.

Yippie! We're all going to be rich!