"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat

Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput


Thursday, November 29, 2012

Silver and the Risk Trade

I have posted the following composite chart without any easily discernible labels to illustrate why I analyze the silver market in the manner that I have been doing for some time now.

Both charts use last November 2011 as the starting point and carry on through the present trading session. See if you can pick out which one is the Continuous Commodity Index and which one is the Silver price.

Surprised? You should not be. As I have stated repeatedly, silver is moving in near perfect tandem with the RISK TRADE. When risk assets are in vogue, silver will move higher; when risk aversion is the play, silver will move lower along with the rest of the commodity complex.

There are occasional deviations from this pattern but as the chart clearly demonstrates, the connection between the two is undeniable.

The Fed is basically doing everything within its power to keep Wall Street happy and the hedge fund crowd pouring loads of hot money into risk assets (equities and commodities) to drive a stake through any sort of deflationary expectations. Heaven help us all if the VELOCITY OF MONEY ever begins to seriously uptick.

But what they are also attempting to do at the same time is to prevent the bond markets from signalling the least bit of inflationary pressures. So far they have been able to pull off this stunt. One wonders how long the game will continue without any measurable ramifications.

What you can definitely say that they have done however is to destroy the ability of seniors to live off their life's savings seeing that they have killed any hope of them getting a decent rate of interest for the next 3 years on savings accounts. Simultaneously, they are also setting up the commodity markets for another surge higher should the hedge fund crowd become completely convinced that the Fed has killed any deflation fears.

If we see silver break out into a strong uptrend move, watch the buying power of the middle class drop into the toilet as the cost of the essentials of life will be rising right along with it.

This article in the Wall Street Journal detailing Costco's end run around next year's tax increase on dividends is too interesting a read to ignore.

It continues to prove the disconnect between those big monied interests and the average small business owner who ends up bearing the brunt of their "go ahead and raise taxes" BS.

  • November 29, 2012, 7:39 p.m. ET
  • Costco's Dividend Tax Epiphany

    Obama's fans in the 1% vote to beat Obama's tax increase

    When President Obama needed a business executive to come to his campaign defense, Jim Sinegal was there. The Costco COST -0.68%co-founder, director and former CEO even made a prime-time speech at the Democratic Party convention in Charlotte. So what a surprise this week to see that Mr. Sinegal and the rest of the Costco board voted to give themselves a special dividend to avoid Mr. Obama's looming tax increase. Is this what the President means by "tax fairness"?


    I commend the following article to my readers....


    Welcome to Soviet America

    By: Lev Navrozov
    Welcome to Soviet America!

    “Lev, this is Julie. Do you remember me?” The voice on the phone sounded familiar. She went on: “Almost 40 years ago, I believe the year was 1975, I went to see your play ‘Welcome to Soviet America!’ at Carnegie Hall. It was a one-actor play, in which you played all the roles, while my husband was helping you to set the stage and change the lighting, which was part of the script.”


    Trader Dan interviewed at King World News

    Please be sure to check in over at King World News to read my upcoming written interview with Eric King this afternoon.

    In that interview we are discussing the ramifications of today's report issued by Goldman Sachs discussing their expectation to come out of December's policy meeting of the FOMC.