Thursday, March 24, 2011

Be Mindful Of The Cornered Rat

Clearly our CRIMEX banking cartel is very unhappy with this weeks run up in Silver and Gold out of their breakaway gaps from Bullish Flag formations.  Reaching for the fire alarm today, they pulled a fast one and once again got the CME to raise the CRIMEX margin rates for Silver.  The banking crooks my be losing control of these Precious Metals, but they still know who to call to get the rules changed to slow things down when  they can't.  It should be noted that options on futures contracts expire early next week, and what would the lead up to options expiration be without a little CRIMEX shenanigans when the market is foaming at the top?

And Like Clockwork, CME Hikes Silver Margins Halting Surge
by Tyler Durden
In tried and true fashion, just as Silver was about to viciously destabilize the global capital markets as it surged to new 31 year highs, the CME stepped in and did its usual 3-6 half life intervention by hiking initial and maintenance margins on silver futures from $11,138 and $8,250 to $11,745 and $8,700 respectively. This is merely the latest margin hike in what appears to be a neverneding series designed to reduce speculative "fervor" courtesy of endless liquidity. What it will do is merely provide a better entry point for those who by now realize that silver's next stop in the fiat endgame is $40, then $50, and so forth. Naturally, the price drop in silver caused gold to sell off too. And now that the CME accepts gold as collateral, we can't even visualize the reflexive loops that develop once the metal that is also a collateral currency becomes more and less valuable at the same time.

This latest margin hike becomes effective at the close of business tomorrow, Friday, March 25.  In effect this little "change to the rules in the middle of the game" was instigated to force contract holders to rollover their contracts into a futures month, or sell outright...and relive some of this unwanted upside pressure on the market as we head into options expiration.

We warned of a possible Bull Trap this past Tuesday.  It remains to be seen if the trap is successful however.  So far Silver has been pushed down to it's near-term uptrend after being repelled at its intermediate uptrend line as the trap was sprung at $38.  This near-term uptrend is "safe" down to $36.50 if support their holds if tested.  Keep a close eye on Monday's open gap.

Gold has key support at $1422 as it's near-term uptrend line was broken today after it was beaten back from a new all-time intra-day high of $1447.40 in the spot market.

Reaction overnight tonight to today's beat down could have a big influence on tomorrow's trade.  With the CRIMEX goons backs against the wall here once again, and options expiration early next week, be mindful of the cornered rat.

Is it just me, or are you left scratching your head everyday lately as the US and World equity markets continue to levitate higher despite all obstacles that keep falling in front of them? 

"Pay no attention to the man behind the curtain!"

And how is it that continuing debt woes in the Euro-zone no longer have any lasting negative effect on it?  It too just seems to levitate higher.  It seems like only weeks ago that the Euro was rolling downhill like an avalanche in the Rocky Mountains, and everyone was predicting it's imminent demise.  Today it's the Dollar that is on the verge of certain collapse.  How is a collapsing US Dollar supportive of it's stock markets?

I scratch and I scratch...

For the Struggling U.S. Economy, the Hits Keep Coming -Daily Ticker

As if high unemployment, huge government deficits and the weak housing market weren't bad enough, now energy prices are surging because of unrest in the Middle East and global supply chains have been disrupted by the disaster in Japan.

Applications for unemployment aid drop slightly- AP
Fewer people applied for unemployment benefits last week, evidence that layoffs are slowing and employers may be stepping up hiring.

Or it's evidence that these numbers are a lie.  I seriously doubt this drivel put a bid under the equity markets today.

World shares recoup all of Japan disaster losses
LONDON (Reuters) - World stocks rose for a sixth day on Thursday and are now higher than when Japan's earthquake and tsunami struck, while Portugal's borrowing costs soared after its premier quit, making a bailout ever more likely.

Portugal's crisis had knocked the euro but it recovered early losses to trade a touch higher, a day after its biggest one-day fall in six weeks.

How is this possible?  Seriously!  The world's third largest economy, with a 200% debt to GDP, takes a huge blow to the nation's infrastructure, economy, health and safety...and the global equity markets just keep trucking along because of a G& Yen intervention?  This just does not pass the smell test.  I am sorry....even in the game of Monopoly this is impossible.

Euro Rallies Versus Dollar on Summit Views, ECB Rate Increase Speculation
The euro advanced against the dollar for the first time in three days as European Union leaders began a two-day meeting on measures to contain the region’s sovereign-debt crisis.

The 17-nation currency gained against the yen as speculation the European Central Bank is poised to raise borrowing costs outweighed fiscal turmoil. The euro rose even as Fitch Ratings cut Portugal’s credit rating after the nation’s Prime Minister Jose Socrates resigned yesterday. Currencies with above-average economic growth, such as New Zealand and Canada, advanced as raw material prices and equities rallied.

“What we’re doing now is buying the rumor on an ECB rate hike and then we’ll sell the fact when it materializes,” said Marc Chandler, global head of currency strategy at Brown Brothers Harriman & Co. in New York. “The euro is still going to make new highs.”

How can the ECB seriously consider raising interest rates with so many of their member nations already facing problems financing their debt rollovers as interest rates rise?  Wouldn't an ECB interest rate hike only exacerbate the problem?  I guess we'll find out in early April when they meet to put up or shut up.

The Insidious Effects of Japan's Disaster
By: John Browne, Senior Market Strategist, Euro Pacific Capital, Inc.
After the EU, US, and China, Japan has the fourth largest economy in the world. Japanese industry provides many of the high-tech systems that are essential for producing relatively low-tech products such as automobiles. Already the US computer industry is being affected by shortages of vital parts manufactured in Japan.

But the financial fallout from the crisis looms even larger than the health, energy, or industrial issues. The Japanese people are stoic, disciplined, and very hardworking. Recovery in Japan is likely to be faster than many expect. However, in order to repair the flood, quake, and nuclear damage, Japan will likely need to spend trillions of dollars (hundreds of trillions of yen). This is the crisis that may sink the developed world.

For decades, Japan has deeply indebted itself through central banking strategies pioneered by America and Europe. Faced with successively deeper recessions, it has prevented industrial restructuring by funding industrial failure. By reducing interest rates to near zero and boosting government spending, Japanese governments have progressively transferred the unserviceable debts of the country's private sector to the public ledger. The result is that Japan's debt, currently standing above 200 percent of GDP, is heading for 300 percent by 2020, or some 20 times its tax revenues. Facing such statistics, the rating agencies have placed Japan on "credit watch." This leaves Japan with few options for raising the money to repair its industry and infrastructure.

If the Japanese start to draw on their national savings by selling part of their $882 billion of US Treasuries, they risk igniting a dollar-selling stampede and a damaging spike in US interest rates. To avoid this, it is highly likely that Japan will yield to American pressure not to sell any of its Treasury holdings. It is likely Japan has already been assured covertly, by the Fed and other G-7 central banks, of massive currency swap arrangements to come. This technique would allow for a more orderly repatriation of funds but would send many confusing signals into the financial markets - and lead inevitably to dangerous speculations.

For a world awash in debt, the Japanese destruction comes at an inopportune time. Unfortunately, authorities on both sides of the Pacific are as dishonest about these debt problems as Tokyo Electric Power has been about the severity of the crisis at Fukushima Daiichi.

And I just keep scratching my head...why do these equity markets keep going up? 

Toyota tells U.S. plants 'prepare to shut down'

Ships avoiding Tokyo port on radiation fears

Worst Texas Drought in 44 Years Damaging Wheat Crop, Reducing Cattle Herds

Fed posts income of $82 billion in 2010

NEW YORK (CNNMoney) -- The Federal Reserve made $82 billion in income in 2010, the central bank said Tuesday.

The Fed turns over most of its profits to Treasury in weekly remittances from the 12 regional Federal Reserve Banks to the government.

I wonder if that's how it's done?  $82 BILLION would buy a lot of stock index futures

1 comment:

  1. Be ready for one more smackdown attempt by Blythe and gang on Monday before options expiry!
    We can fight back though...

    Crash JP Morgue, Charge Silver! (Using JP Chase's Freedom 0% APR Card!)