Sunday, May 26, 2013

Keiser Report: Drowning In Central Banking Abyss

The Japan Implosion Is Progressing

Remember:  Japan was using almost 25% of their tax revenue to service their national debt before this spike started.  They are in a debt trap and the noose is tightening.  Rapidly.

Japan Govt Bond Year to maturity 10 Year Simple Yield
Japan’s bond market is officially losing control.

We have definitely taken out the multi-year trendline here, making a new high higher after a higher low. This is BAD news as it indicates that Japan’s bond market could be entering a cyclical downturn.

Christine Hughes, President and Chief Investment Strategist, discusses details of Japan’s radical monetary policy.
the key part of the video, for ease of viewing:

Banking insider: The Japanese have lost control of their bond market

Japanese Bond rates, yields, and stock marketsThe Examiner – by KENNETH SCHORTGEN JR
On May 24, a financial analyst and former head trader at the Royal Bank of Scotland spoke on the Hagmann and Hagmann Report regarding the current state of the global economy. Known in the public sphere under the pseudonym of ‘V‘, and labeling himself the Guerrilla Economist, this high level insider stated that the Japanese have completely lost control over their bond market, and the threat for a collapse of the Nikkei equities market is very likely.  
V: I basically just got this hot off the press, and hot from the board rooms over here. The Japanese, and this is official… I’m going out on a limb saying this, and you can take it for all it’s worth… the Japanese have lost control of their bond market.
Doug Hagmann: V, for financial neophytes like me, what does that mean?
V: What that simply means is… see the stock market has been rising inJapan, as well as over here because of bond prices. Were in a very unique environment where, if the bond market goes bust, you’re going to see the Nikkei go bust with it, as well as real estate.
That also coincides with us. The collapse that is going to occur here, is going to be a trifecta of bonds, stocks, and real estate combined. So when the Japanese have lost control of their bond market, and the yields are getting higher and higher, and the interest rates are starting to climb on it, nobody’s buying it. So right now, the Bank of Japan has ordered all the public pension funds to begin to buy the Japanese debt. - V, Hagmann and Hagmann Report, May 24
Japan Consuming Bonds at Gluttonous Rate
The Guerrilla Economist, along with a select few analyst/forecasters who foresaw Japan as being the catalyst for the next global meltdown, predicted the current storm in Japan going back to January of this year. In fact, the roller coaster ride the world experienced in the entirety of Japanese markets this last week not only validates that volatility is out of control for Japanese financiers, but the continuous and fruitless attempts by finance ministers to correct the market chaos through QE and outright haltingof their financial systems did little to satisfy investors.
On Friday, BNP Paribas issued a similar warning as the Guerrilla Economist, only not going so far as to confirm that the Japanese bond market was out of control for the government, and central banks. BNP’s focus was on the massive Japanese debt, and what a bond collapse would do for interest rates, and the inability of Japan to deal with that debt once rates begin to skyrocket.
Japan today faces a situation very similar to the US in the 1940s. With the market becoming dysfunctional as the BoJ’s massive buying operations drain the pool of available bonds, the BoJ’s overriding presence in the market each day has increasingly made the JGB market seem like a government-made market.
But a much bigger problem is Japan’s exploding public debt. With the debt already the largest of the developed nations, it could snowball out of control if an upturn in interest rates causes interest payments to escalate. - BNP via Zerohedge
With the global economy so intrinsically tied to itself, what happens in Asia usually spreads in a day throughout Europe and the United States, and vice-versa. Japan’s butterfly is currently flapping its wings, and in a round-about way, is causing an unemployed Greek to turn toprostitution to afford food to eat. In essence, what happens in nearly every major economy now trickles down, in some form large or small, to every other economy.
The events of last week in Japan, where the stock, bond, and futures markets raged in uncontrolled chaos despite trillions of yen in quantitative easing, and an outright halting of the bond market itself, gives strong credence to V’s affirmation that Japan has completely lost control of their bond market, and will result in a detrimental outcome for the rest of their asset based markets.
You can find more financial updates by the Guerrilla Economist at Steve Quayle’s website under the Q Alerts section, and periodically on the Hagmann and Hagmann Report.

Wall Street is writing its own regulation bill

AFP Photo / Getty Images / Chris HondrosRT News
Bank lobbyists have a direct influence on financial legislation drafted in Congress, and are in some cases even writing the measures themselves. Citigroup this month drafted a regulation bill that has already passed through a House committee.
To soften financial regulations, bank lobbyists frequently ‘assist’ lawmakers in writing draft legislation that serves to benefit them at the expense of American taxpayers, according to a New York Times investigation.  
Lobbyists working for Citigroup Inc., a multinational financial services corporation, wrote 80 percent of a regulation bill that was approved by the House Financial Services Committee this month. Citigroup wrote 70 lines of 85-line bill, which exempts “broad swathes of trades” from new regulation, the Times reported based on e-mails it obtained.
Two paragraphs of the bill were copied “nearly word for word” from what Citigroup drafted. The only difference between the versions were two words, which lawmakers changed to make plural.
The Dodd-Frank Wall Street Reform and Consumer Protection Act, which was signed into law in 2010, inflicted heavy financial regulatory reform following the most recent recession. The bill was pushed into law by Democrats, but now, both Democrats in the House and Senate are siding with bank lobbyists to roll back parts of the regulation overhaul.
The bill drafted primarily by Citigroup this month was starkly opposed by the Treasury Department, but easily made it through the House Financial Services Committee, the Times reports. MapLight, a nonprofit group that analyzes campaign finance records, found that lawmakers who supported Wall Street’s legislation received twice as much in contributions from financial institutions than those who opposed such measures, which appears to indicate that lawmakers’ support can be bought.
This month, Wall Street groups also held fundraising dinners for lawmakers who co-sponsored the bills they backed and in some cases co-wrote. As a reward for siding with bank lobbyists, these lawmakers were granted a dinner in which attendees paid up to $2,500 for a plate.
When questioned by the Times, bank industry officials said that helping draft legislation was a common practice on Capitol Hill, but argued that they do not undermine Dodd-Frank.
“We will provide input if we see a bill and it is something we have interest in,” said Kenneth E. Bentsen Jr., a Wall Street lobbyist. Bentsen is a former lawmaker himself, and many financial institutions’ lobbyists have worked as Capitol Hill aides and staffers before taking on their current roles.
Jeff Connaughton, a former lobbyist and former congressional staffer, said that Wall Street has so much influence on the Hill that it “skews the thinking of Congress.”
“It’s appalling, it’s disgusting, it’s wasteful and it opens the possibility of conflicts of interest and corruption,” Rep. Jim Himes, a top recipient of Wall Street donations and a former banker at Goldman Sachs, told the Times, admitting his own faults. “It’s unfortunately the world we live in.”

President of Iceland calls for scrutiny of economic failure at Global Leadership Summit 2013 in London

The President of Iceland, Ólafur Ragnar Grímsson has called for transparent scrutiny of the fundamental economic failures amongst European institutions during the recent Global Leadership Summit 2013 (GLS2013) at London Business School, UK.
The President joined a discussion led by Richard Quest, an International Business Correspondent for CNN International, as part of the closing keynote Iceland´s Road to Recovery and Closing Remarks, which took place Monday 20th May 2013.
During the President’s keynote, he states, “Like in many other times in European history, they [European Union leaders] are victims of an ideological prison.” He continues by mentioning, “What is lacking is the honest, intellectual, political, economic examination within the European institutions, of the fundamental failure, which the last four or five years has produced.”
President Grímsson explained that he can’t understand why banks are being considered the holy churches of the modern economy, and that Europe’s primary legacy to the world is not financial markets, but democracy, the rule of law and human rights.
When speaking about Iceland’s recovery, President Grímsson explained that Iceland focused on saving the welfare services of those who have the lowest income, rather that implement the austerity measures recommended for other European countries.
“We saw a situation where our [Iceland’s] entire demographic and social fabric was breaking down; it was one of the most dramatic examples in recent history that the failure of financial markets can fundamentally threaten European and Western democracy,” explained Grímsson.
During the keynote, Quest asked for his reasons why Grímsson chose to veto the Icesave bailouts, even though Parliament passed this legislation twice. Grímsson explained that the Icelandic parliament partly passed this legislation because the “Gordon Brown government”, supported by every European government, used the board of the IMF for the most elaborate high-level financial blackmail [he] had ever witnessed.  Stating:
“If we didn’t make the ordinary people of Iceland responsible for the failure of a private bank in Britain, the IMF programme for Iceland would have been stopped, and it was for over a year. That was why the government of the time thought that they had to make a deal, but the interesting fact now is that we know, because it has been tested, that this policy that was reported by every European government was so wrong; it turned out to be financial wrong, demographically wrong and also legally wrong.“
He followed by saying, “In order to help Europe to get out of this deep crisis, they should ask themselves why they were so wrong in this case; if it was even illegal within the European Financial System to ask the people of Iceland to be responsible for the failure of a private bank.”
The Global Leadership Summit is an annual discussion held by London Business School, whereby leading figures in international politics and media insight on the future of global leadership, and about the challenges of past and modern day leadership.
To watch the keynote in full, click here – viewers will have to register first.

Money Debauchery Continues

I was a small child when America’s coinage began to be debased in 1965. My dad was a coin collector who fastidiously filled blue coin books with old coins. I remember being especially intrigued by the 1943 steel penny. During World War II, my dad explained, the country was short on copper, and the Mint used steel to make pennies instead. Actually, it turns out it was zinc-coated steel.
Wikipedia tells us that the steel cent is the only coinage that can be picked up with a magnet. Not exactly a requirement for a good money. It is also the only coin in circulation that didn’t contain any copper. Even gold coins had a little copper back in the day.
Now the country is engaged in wars around the world and here at home: the war on terror, the war in Afghanistan, the war on drugs, the war on obesity. The government is constantly at war. As you might expect, valuable resources are needed, and the integrity of the coinage must be sacrificed just as it was for WWII.
To solve this problem, Congressman Steve Stivers (R-Ohio) introduced H.B. 1719 — the “Cents and Sensibility Act” — on April 24. It mandates that pennies, nickels, dimes, and quarters be composed primarily of steel, specifically U.S.-produced steel. By the way, this is the third time Congressman Stivers has pitched this legislation, and as reports, “Conveniently, Worthington Industries, a steel processor that supplies steel blanks for Canadian currency, is located in Stivers’ district and strongly supports the bill.”
We can only be thankful that a plastic button fabricator doesn’t operate in the good congressman’s district.
This sort of thing isn’t new. Kings used to “clip” and “sweat” coins constantly to pad the government treasury. Coins would be called in and filed around the edges, with the resulting loose metal coined into new currency for the government to spend. This practice has gone the way of the buggy whip, with the Federal Reserve conjuring up billions from the ether with the ease of a keystroke.
When you think about it, government would like to get out of the production of coinage altogether. The government is interested in earning what’s known as seigniorage — the difference between the value of money and the cost to produce it. It’s estimated that the cost of producing a $100 bill is 8-12 cents: Now that’s some seigniorage.
On the other hand, the government actually loses money creating pennies and nickels. According to, “As of May 8, a penny contains one-half cent worth of metal; nickels contain 4.6 cents. Factoring in production costs, the U.S. Mint reported that a penny cost 2 cents and a nickel cost 10 cents to manufacture in 2012.”
Sheesh, government manages to lose money while making money!

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So while Stivers has failed before with his steel currency bill, its time may have come. Washington is swimming in red ink, and according to the House Financial Services Committee, the government would save up to $433 million over a decade by switching metals. Besides, carrying around a pocketful of change is as foreign to young people as reading a paper-and-ink newspaper.
It’s questionable whether the government would save money minting steel pennies, but this might be a step toward getting rid of pennies altogether, an idea that is constantly floated. To completely abandon the lowest denomination of currency is the ultimate surrender to inflation.
USD Relative Purchasing Power
According to the folks at, the average American wastes 2.4 hours a year handling pennies. This includes “the ubiquitous 30-second period we sometimes spend waiting for someone who just has to dig through their pockets or purse to find that last cent so they can pay for something with exact change (probably so they don’t get stuck with any more pennies),” writes Susan Headley at
David Owen wrote for The New Yorker back in March 2008, “More than a few people, upon finding pennies in their pockets at the end of the day, simply throw them away, and many don’t bother to pick them up anymore when they see them lying on the ground. (Breaking stride to pick up a penny, if it takes more than 6.15 seconds, pays less than the federal minimum wage.)”
The minimum wage was $5.85 in some states when the article was published. Now it’s even less worthwhile stopping for a penny with the minimum at $7.25 and more in many states. However, if the penny was minted from 1909-1982, its current melt value is 2.1 cents, so it would be worthwhile to pick up the penny. However, what are the odds that a random penny will be pre-’82?
Just like with the silver dollar, the silver certificate, silver dimes, and copper pennies, eventually Mr. Stivers (or another public servant) will have his way. Then zinc, nickel, and copper will be gone from all coinage. And when that happens, there will be an interesting, and unintended, consequence.
Government has been degrading money for centuries. It will not stop anytime soon. But hopefully, you have enough saved to help keep ahead of the government’s money machine.


The US Economic Data Performance Is The Equal Worst (With Japan) Of All Major Economic Nations And Regions
We continue to hear that the US is the cleanest dirty shirt or that the US economy is doing ‘relatively’ well as a reason for buying stocks now. Not only is this plainly incorrect (as we have pointed out rather vociferously in the recent past) it flies the face of the disconnect between macro and markets. The fact of the matter is that year-to-date, the US economic data performance is the equal worst (with Japan) of all major economic nations and regions. That is a bucket-load of hope for the second-half of the year – or, as we noted recently, is it just plain silly.
Year-to-Date move in Citigroup’s Macro Surprise Indicators…

WTF Chart Of The Day: “It’s All About The Earnings”
it would appear the ‘mother’s milk’ is souring…

(h/t @Not_Jim_Cramer)

and furthermore, since September 2011 earnings have been stagnant  - when a multitude of indicators (macro and market) began to decouple from stocks,
European Stocks Hit Post-Crisis Highs
Counterparties: Europe’s longest recession

BofA: A ‘New Berlin Wall’ Has Been Erected In Europe
There’s one in the US, too.
Michael Hartnett, Bank of America Merrill Lynch‘s Chief Investment Strategist, recently published a report loaded with unconventional charts intended to communicate how the world is changing.
In a slide titled “The new Berlin Wall,” Hartnett presented this chart showing how German bond and stock prices have surged as the young people in Portugal, Italy, Greece, and Spain have suffered.
Read more:
European stocks firm despite recession gloom

Italy’s industrial output falls back to 1970s
Italy’s president Giorgio Napolitano has called for immediate measures to combat a “dramatic crisis” after the country’s industrial output fell back to levels reached in 1979.
Economic And Employment Composites Indicate Further Weakness
The economy is amazing right now – employment is recovering… In this past weekend’s newsletter I went into significant detail in dismantling the bullish arguments with one point being the consistent weakness in the economic data.
Ceiling suspended – US takes on $300bn in new debt after hitting $16.7 trillion
Citing ‘extraordinary measures’, America’s ticking debt bomb has been reset. Washington has suspended the debt ceiling, setting a date, & not a concrete dollar sum as a deadline, an unprecedented first in US history.–510/
Are Treasurys Falling Out of Favor With China?
Reports that China may step up the diversification of its huge foreign exchange reserves is not great news for U.S. Treasurys, already under pressure from talk about an easing in the Fed’s bond-buying program.

BOJ may seek ways to calm bond market, policy on hold
Jobless ‘outnumber workers in some British neighbourhoods’
Gold Bear Bets Reach Record as Soros Cuts Holdings
Spanish debt at record high
World’s Biggest Volatility Jump Spurs Fund Outflow: Japan Credit
Junk Stocks Spur Broadest Equity Advance Since 1995
Rules meant to prevent Anadarko’s ‘flash crash’ didn’t kick in: The Tell
Recovery fantasy fades, oil breaks out, potential bottom in gold & silver
from SchiffReport:

WARNING from BIS and IMF: Loose Central Bank Policies Looking Increasingly DANGEROUS!!! Risks Include Greater Risk-Taking Behavior, Delayed Reforms and Potentially Volatile Capital Flows!!

Police swoop on the homeless taking sleeping bags and food parcels in co-ordinated raids in Redbridge

Adam Jaskowiak was one of the men targeted and said he pleaded with police to be able to keep his things but was ignored.
He was sleeping with eight other people finding shelter for the night in the former Ilford Baths in High Road, Ilford.
All of their belongings were bundled into a police car leaving the men, one in his 60s, stunned.
A police chief told the Recorder the operation was carried out to “reduce the negative impact of rough sleepers”.
But Mr Jaskowiak, 34, said: “They were just taking the sleeping bags and chucking out everything. I asked to keep it and the food, but they said ‘no’.
“I just grabbed as many of my things as possible and put them into a bag and ran.”
He was given the sleeping bag by the Salvation Army, Clements Road, Ilford, over the winter months after becoming homeless when his friend died.
John Clifton, 26, corps officer at the Salvation Army, said: “I’m shocked and disgusted. Why would you take the only form of shelter someone has from them?
“We have tried to find out why they were taken and if we can get them back.”
After the raid happened on Thursday, the men went to the Refugee and Migrant Forum of East London, High Road, Ilford, for help.
Chief executive Rita Chadha said: “I am appalled because there’s no logic in this – it’s not as though if they take someone’s sleeping bag they will automatically walk into a house.
“It’s not a lifestyle choice and becoming homeless can happen to anyone.”
She also said the action will damage relations between the police and those sleeping on the streets.
Ilford Ch Insp John Fish said: “The public rely on police to reduce the negative impact of rough sleepers, this includes the need for us to assist in the removal of temporary structures, tents, and bedding from public spaces and other inappropriate locations.”

What Detroit crisis? Pension fund trustees hang out in Hawaii

Detroit's emergency financial manager Kevyn Orr talks to members of the media outside the Detroit Newspapers building about the report he delivered to the State of Michigan about Detroit's finances, in Detroit, Michigan May 13, 2013. REUTERS/Rebecca Cook

(Reuters) - The city of Detroit may be facing a deepening financial crisis but that hasn't stopped four trustees of its public pension funds from spending $22,000 of retirement system funds to attend a conference in Hawaii this week.
The trip 4,500 miles west to a four-star resort on the world-famous Waikiki Beach in Honolulu doesn't sit well with the top officials now running Detroit's finances under an emergency order from the state of Michigan. Emergency Manager Kevyn Orr has not ruled out a bankruptcy as the city struggles under a $15 billion debt burden, which is being strained further by its hefty pension obligations.
"It especially doesn't look good when you have city employees, police, firefighters having taken pay cuts," said Bill Nowling, spokesman for Orr. "Middle-class, blue-collar workers, their dream vacation when they retire may be a two-week trip to Hawaii - they don't associate Hawaii with a place you go to work."
The four trustees from Detroit were among hundreds of pension officials from around the country who traveled in the past week to Honolulu for the annual convention of the National Conference on Public Employee Retirement Systems. Nowling said that Orr's team did not think they had the power to prevent the trip.
John Riehl, a senior sewage plant operator and 34-year Detroit employee, is one of the four. The cost fell within continuing education guidelines set by the legislature, he said.
"It's one of these things we trustees must do to stay on top of the field," Riehl said. "It's important that we participate in these conferences. The stakes are too high."
Of the three other trustees from Detroit, one declined to comment and two others could not be reached for comment.
The two delegates from the Detroit Police and Fire Retirement System attended for business, not pleasure, the fund's spokesman Bruce Babiarz told Reuters. "These are intelligent folks there to do a job, not there to vacation."
The two trustees from Detroit's General Retirement System, including Riehl, attended because the knowledge gained "will assist them in prudently executing their fiduciary responsibilities/obligations," spokeswoman Andrea Kenski said in a statement.
Usually the conference captures little outside attention. This year, though, it has faced criticism for its choice of venue, the Hilton Hawaiian Village Waikiki Beach Resort with its five-acre salt-water lagoon, five swimming pools, and flamingos, penguins and turtles.
Some funds boycotted the event, saying it sent the wrong message, particularly at a time when many pension systems face funding shortfalls and the finances of the cities and states that sponsor them remain on shaky ground.
The criticism irks Hank Kim, the conference organizer's executive director.
"It was completely unfair," Kim said. "The coverage was, 'It's Hawaii.' It's blatantly inappropriate."
The decision to hold it in Hawaii was made before the financial crisis thrashed the portfolios of the nation's public pensions and raised continuing concerns about their long-term obligations, how to meet them and who should pay.
Last year, the group held the conference in New York, where room costs were nearly twice the Honolulu rate, Kim said.
Among those attending is Shawn Curry, a homicide detective and trustee for the $144 million Peoria Police Pension Fund in Illinois, who said it was cheaper than New York. "Our fund decided last year not to send anyone because the costs in New York were so high. When we looked at this year, there was so much of a cost savings we decided to come."
"The only negative is the airfare," said George Mitchell, chairman of Florida's Pompano Beach General Employees' Retirement System, with $139 million in assets. "The hotel is very reasonable and has everything you need, so you don't have rent a car and get everywhere in taxis."
Not everyone came on their fund's dime.
Michael Grodi, chairman of Michigan's $183 million Monroe County Employees Retirement System, attended thanks to a grant from the organizers because the fund would not cover the cost.
"The appearance was just not good," Monroe County Administrator Michael Bosanac said of the decision not to send Grodi at the fund's expense. "It doesn't conjure up the image of a hard-working conference."
"These are not junkets," Grodi countered. "We are getting educated to make decisions and have huge responsibilities."
Among the conference's sessions were panels to help reframe the pension funding debate and justify the assumptions that dictate funding levels, which have come under increasing scrutiny in recent years.
One well-attended session covered how to avoid front-page scandals. According to presenter Lydia Lee, a pension attorney from Oklahoma, the session touched on a topic familiar back in Detroit: The indictment this spring of two former city pension officials for an alleged $200 million bribery and kickback scheme, in a case that will come to trial next March.
(Writing additional reporting by Jim Christie in San Francisco; Editing by Dan Burns, Martin Howell and Claudia Parsons)

Gold And Silver – Markets Provide Us The Best Information


We cannot control the markets, but we can control how to respond to what they are saying. The paper market has been turned into a circus, thanks to JP Morgan, and abetted by the exchanges, COMEX and LME. Focus has to remain on the physical market, for it is where one can expect to find true value for price. What everyone has learned is that as price has declined, demand has disproportionately skyrocketed.
We have written extensively on the acquisition of physical gold and silver, regardless of price, because no one can know when the central bankers will lose control and price will erupt like Eyjafjallajökull. The world is in the middle of a huge central bank bubble, of which there are many sub-bubbles, as it were. [Anyone who pretends to believe whatever information is being disseminated by NWO-owned mainstream media, none of which makes any economic sense, and those who do not fully believe, (or at all), what is being said but do not know where else to turn, stay away from all central banks and central planners news or information.]
In addition to creating bubbles that will fail, the Western central bankers, and their puppet governments, are also doing battle with Eastern countries, mostly BRICS, but more and more countries are aligning with them and against the impending demise of fiat regimes. Western central banks are on the losing end, as their fraudulent rehypothecation of gold, several times over, and the virtually depleted reserves now rest comfortably in the hands of Russia, China, India, Turkey, et al, none of which will tolerate any more of the reckless mismanagement of the West. It will not end well for those of us in the Western sphere of influence.
The most coveted of all assets around the world has been gold, on a grand scale, and silver, on a smaller scale, but grand relative to diminishing supply. As we asserted last time, it does not matter what the fundamental picture says, for now, the moving forces are those in control of the paper market, and the populations of Western countries. The power will not be ceded willingly nor readily, so one cannot rely upon the known demand factors, no matter how bullishly presented. That information is already in the market, and it has not created the large mark-up most have been anticipating. It ain’t happening, yet.
The paper markets, however much manipulated or disconnected from the physical, are the only barometer available, for now. Under normal circumstances charts, which reflect the market forces, are the most reliable source of information. Here is what they are saying, at this point in time.
In our last article, we said that time was on the side of those currently in control, and it would take longer than most expect before gold and silver will reach previous highs and yet higher, after that, The True Story Is About Time. In another previous article, we explained how wide range bars can lead to range control for several more bars to follow, and longer, It Could Get Uglier And Take Longer, and we will give more examples of why any recovery will take more time.
The one caveat would be a V-type bottom, when price takes off from a low. Because Anything Can Happen, and no one knows in advance how a market will unfold, it is mentioned as a possibility.
Trading Range, [TR], – A, shows the wide range bar from April, and the close is mid-range the bar. Very often, that bar’s range will contain price behavior for several bars into the future. TR – B is pointed out to demonstrate that an ensuing TR can take quite some time. Going into the last week of May, the range has been under the close of April, telling us the attempt to rally has been weak.
Even with the sharp decline from last month, and the overall decline since September of 2011, there is still bullish spacing. It occurs when the current swing low is above the last swing high, from 2008. It tells us that buyers have been willing to buy into the market without waiting to see how the last swing high will be tested, an overall bullish condition.
gold price chart monthly 24 may 2013 price

The importance of a wide range bar is that it tells us of the likelihood of a trading range. One can either sell the top of the range and buy the bottom of the range, or wait, knowing that the market is unlikely to rally higher or break lower, for an unknown period of time and then follow the breakout.
You can see how price has already spent five weeks within the wide range bar with a close in the middle. The high of the range has provided resistance, and the lower portion has been support. Last week’s close was in the upper portion of that range, telling us buyers were in control at lower price levels.
Keep in mind, however, that the trend remains down, and the onus is on buyers to show a change in strength. We do not see that, yet, but this is the paper market. Buyers have amply demonstrated demand in the physical market, but it is no avail, for now.
gold price chart weekly 24 may 2013 price
The wide range bar scenario is uniformly persistent over all three time frames. The daily activity looks weakest of all, but still within the range parameters described. Using the “knowledge of the market,” from the low of the range, we did use it to advantage to make a short-term trade off the lows, with success. It was an against-the-trend-trade, but we used the smaller time frames and the knowledge that the lower end of the TR would be support, as a basis for it.
gold price chart daily 24 may 2013 price
Silver tells a more interesting story. It has been weaker than gold, but the current developing market activity shows promise within a weakened environment. Bullish spacing has been eliminated, and the swing high from 2008 has proven to be support, at least for now.
We drew down sloping channel lines, and interestingly, silver is holding above the 50% of the channel range, not going to the bottom demand line. The underlying implications are bullish, within the context of a prevailing downtrend. It does not mean one should be buying futures, based on this, just that price is holding relatively well in a bear market.
Entering the last trading week for the month, at this late date, the range is relatively small, which tells us that buyers are meeting the efforts of sellers, preventing sellers from moving price lower. It does not mean price will not go lower before month’s end, but based on the facts available, it is a positive sign. It could take more time for buyers to turn the futures market around, but it has to start from somewhere.
silver price chart monthly 24 may 2013 price
Wide range bars are not inviolate, evidence by the weekly chart. Price did go under the low of the wide range bar, but note the location of the close, at the high of the bar and just above the last week’s low-end close of a selloff week.
silver price chart weekly 24 may 2013 price
The chart comments relate the current daily activity. Just like TRs reveal important high/low information, failed probes also provide clues about the character of the market. The 3 points made explain what the clues are. The lack of continuation higher speaks to the overall trend being down, weighing on attempts to rally.
We continue to recommend buying the physical, regardless of price, and be very selective if/when trading the futures.
silver price chart daily 24 may 2013 price