What is a proper disposition towards life? It is to accept God as a loving father, who is full of tenderness and forgiveness for us, despite our willful blunders and hardened hearts. He yearns for us, as a father and mother yearn for the return of their most beloved child. It is to accept that we are not lost, we are not abandoned. We are wandering like a wayward child, full of our own headstrong delusions. And our father waits expectantly, calling out for us through the darkness. Jesse, 2018
The action was a bit heavy in the metals today, as the Powers-That-Be quietly attempted to restore confidence and a sense of well-being and recovery after the somewhat disconcerting equity market plunge of Monday.
There was intraday commentary here about some interesting Goldman Sachs activity in an otherwise exceptionally sleepy week at The Bucket Shop.
People often ask me for a possible motive as to why central banks might care about gold and silver. Willem Middelkoop does a decent job of briefly explaining why in the first pictorial below. It is all a part of the confidence game, when a series of bad decisions place a strain on one's full faith and credit.
The goal of the financial class is to keep the music going, and the public out there on the floor dancing so they don't have time to think.
Qualis dominus talis est servus. As is the master, so is the servant.
Titus Petronius
Stocks came in weakly, but managed to rally in the last hour to closely largely unchanged.
The GDP revision for 2Q yesterday was a bit much.
The conversation on financial tv today was replete with interviews from that moveable feast of finance, from the rarified world at Jackson Hole, where the black swans of monetary policy return every so often to molt old forecasts and acquire new ones that are certain to work better than the last seven years of the same old thing.
Mostly it is just the usual nonsense. Alan Blinder had some interesting and surprisingly realistic things to say. Most of the others were just mouth breathing the talking points about our exceptional and improving economy which will allow the Fed to raise interest rates.
The research paper from the Fed asserting that the US is relatively immune (ok they said insulated) from global currency and economic shocks because of the position of the dollar as the settling currency of choice for international invoices was-- interesting. Why is it that so many economic, and especially monetary, theories feel so comfortable inhabiting an alternate universe where trees are blue and pigs can fly?
And as a particularly astute reader observed, if this is actually true, is there any wonder why the rest of the world would resent the dollar hegemony if it grants that sort of power to the single nation that controls it? That they are able to wreak havoc on the rest of the world, exporting malinvestment and willfully fraudulent financial instruments, without having to endure any consequences?
Well it doesn't work so nicely as that, but yes they do resent it for other reasons, and they have been doing more than resenting it for some time now. And that is the basis for the 'currency war' that these jokers still do not understand. They think it is only 'currency devaluations' which, along with tariffs, was the tactic of choice in the last currency war in the 1930's.
But the one that left me gaping was the tendentious conversation this afternoon on Bloomberg about how fragile China and its markets are. And as evidence they cited the 'obvious interventions' in their stock market this week, wherein the Chinese markets slump, but then miraculously recover in the last hours of trading. They are obviously doing this so the leadership will not be embarrassed for their 70th commemoration of the end of WWII next week. Which by the way, the US is gracelessly boycotting.
Knock, knock, hello? Is self-awareness or unintentional irony at home?
Is there any doubt that we have been seeing the exact types of intervention by a powerful unseen hand in our own stock markets this week, on steroids, after the Monday flash crash? Does that mean that our economy is fragile and doomed as well?
Do these people actually believe what they are saying, or is this just some clumsy attempt to try to reassure our public that if their public gets into trouble there is no need to panic because, wait for it, we are so much better, more wisely and so much more virtuously blessed to be led by those archangels of benevolent wisdom in Washington and New York.
The receipts for another large chunk of bullion changed ownership from a JPM Customer to the Goldman 'house account' at $1,122 per ounce.
With all the usual caveats, and just taking note.
This is especially intriguing since Goldman has been publicly beating the drums for gold to drop well below $1000. Perhaps, like Rick who moved to Casablanca 'for the waters,' they are merely misinformed.
We ought not to presume anything about how naive the customer might be, or the sly cunning of any particular buyer. For all we know the 'customer' could be a large and highly competent ETF or fund, and not some naive or desperate or perhaps whimsical individual.
And as for the buyer and its motives, my friend Dave offered some possible insight on this phenomenon here.
While it is a hypothesis based on a correlation founded in possibly disparate facts, it is no more untoward than those who will simply dismiss the whole thing, and apparently ascribe no significance to almost anything whatsoever, other than the price of gold and silver must go lower. There is no truth, and there are no fundamentals, when things and their values are merely what we say that they are.
And I am sure that all of this is simply more of God's work, and not sly cunning in service to earthly greed, from such a benevolent and public-spirited institution.
Gold took a gratuitous little hit on the NY open/London PM fix this morning. It was held down most of the day.
Silver managed to perk up nicely though, regaining the midpoint to the 15 handle. Next month will be more active for silver, and not so for gold.
Lets see if sparky can carry the day.
Not much ever happens at The Bucket Shop these days, so when Goldman takes 44,200 gold ounces for its house account as they did yesterday it is at least worth of note intraday which you can read about here.
I know, it's not that great, but it's something. We're hard up for any real action here, except for the daily dump of paper to knock the prices lower in the AM with a slight recovery into the PM and then higher prices overnight. Rinse and repeat the next day.
Chart formations for the precious metals have not meant much for, oh I don't know, about a year or so now. Its just a steady knockabout lower, tap tap tap.
It may be dissipating. Way to early to say. But let's watch the chance for a rounding bottom here. No charge for looking. And after all, Summer is almost over.
The revision to 2Q GDP came in higher than expected this morning.
Even more importantly, stocks did not fall out of bed overnight, so that gave the Streeters an opportunity to 'walk the dog' back up to less threatening levels after the decline on Monday got out of hand, compliments of the HFT algos.
Both of the futures I follow, the SP 500 and the NDX, have achieved a fifty percent retracement of the big decline. I have marked it on the charts.
Lets see if the dog walkers can keep the pooches in line for the close into the weekend tomorrow.
I know at least two aficionados of this pooch parade, Jan and Stan, who would like to see stocks recover in time for their big rate soiree in September. Cannot have a paper with the dog messing the rugs.
They might well put down some heavy paper, and then go for it. They may not get a better chance this year.
"In Killing the Host, economist Michael Hudson exposes how finance, insurance, and real estate, also known as the FIRE sector, have seized control of the global economy at the expense of industrial capitalism and governments. The FIRE sector is responsible for today’s extreme economic polarization, the 1% vs. the 99%, via favored tax status that inflates real estate prices while deflating the “real” economy of labor and production.
Hudson shows in vivid detail how the Great 2008 Bailout saved the banks but not the economy, and plunged the U.S., Irish, Latvian and Greek economies into debt deflation and austerity. Killing the Host describes how the phenomenon of debt deflation imposes punishing austerity on the U.S. and European economies, siphoning wealth and income upward to the financial sector while impoverishing the middle class."
I have not yet read Michael Hudson's soon to be released book Killing the Host. However we do have some highlights of his thoughts coming out of his existing body of thought which I have followed, and also in this recent interview with Democracy Now which is included below.
I cannot agree completely with Mike Hudson's take on China in this interview. No surprise, since we are two different people with different viewpoints and perspectives. I think we also are from different economic schools of thought. However I see much merit in most of what he is saying.
There was and is still a very dangerous speculative bubble and misallocation of capital that has been going on in China, that is often due to mismanagement, regulatory weakness, a surfeit of easy money, speculative fervor, and flat out corruption. While China is working to correct many of those problems, their outlook is not all sunshine and rainbows.
And I would not say that they were just 'defending themselves' by building up enormous currency reserves that just happened to come there way. I have not gone into this recently, but China took some very aggressive policy moves, including devaluing their currency against the dollar and then controlling it, and spread quite a bit of money in the right circles with regard to trade policy around Washington, to enable a mercantilist system in which they were able to build up their economy to some degree at the expense of the American middle class. Although vast fortunes were also made by some of their all too willing partners in the West as well as their own emerging class of oligarchs.
But putting that aside, the outsized financial sector in the US, which was also enabled by a big money campaign for deregulation in Washington, marked by the overturn of Glass-Steagall, has certainly spawned a significant systemic problem of corruption and malinvestment, inequality reinforced by policy, and an eroding of democracy itself.
Until steps are taken to correct this, there will be no sustainable recovery. People are fed up, and angry, and reaching for solutions some of which appear to be some rather poor choices made in extremis.
And as for the wealthy, dumb, and distracted classes, busily keeping themselves out of any meaningful discussion with the amusing distractions of the triviata of their professions, while occasionally taking a fat stipend for spewing nonsense while nursing a steady share of the vig, the consequences of all this are going to roll over them like a tsunami at midnight.
Let us pray for those whose hearts are hardened against His grace and loving kindness by greed, fear, and pride, and the seductive illusion and crushing isolation of evil.
We pray that we all may experience the three great gifts of our Lord's suffering and triumph: repentance, forgiveness, and thankfulness. And in so doing, may we obtain abundant life, and with it the peace that surpasses all understanding.
It is available for your use at no cost, but with attribution and a link to the original posting.
I make every attempt to respect the rights of others. If you feel that something here has infringed your work please let me know and I will correct it immediately. It is not always easy to determine the status of material posted to the Internet with regard to fair use and public domain.
