Wednesday, July 24, 2013

The Housing "Rebound" Is Over

There is a ton of chatter today over “NAR Listed Inventory” levels being so low.  This is a red-herring.    It’s lunacy…for the life of me, I can’t understand where people get these wild haired ideas in the “new-age” housing market.  Come on…really??? One house for sale could be massive supply in a market of dead people.  [I love that quote]

Remember, one cannot compare today’s housing metrics with 7, 17, 27 or 57 years ago.   That’s because today 50% of all mortgage’d homeowners — throughout history the most influential demand cohort — are LOCKED-IN due to negative equity, “effective” negative equity, a legacy HELOC not written off preventing them from getting a mortgage, and/or insufficient income/credit needed for a mortgage loan. - Housing market consultant, Mark Hanson (LINK)
I finished the final part of my 3-part housing market series published by Seeking Alpha with my analysis of why the housing market is about head south - quickly.  In this section I focus primarily on the market for existing sales.  The combination of the big mortgage rate spike in May and June, the fact that big investment funds are largely done accumulating properties they can't rent out and a few other factors have led me to conclude that the 18 month bounce in the housing market is done and the bear market will resume:
As these factors become more apparent to a wider audience, potential home buyers will postpone purchase plans, banks will pullback on mortgage funding and those looking to take advantage of the price run-up will try to sell their home before the bottom drops out of the market again. In other words, the "negative feedback cycle" that drove the popping of the original housing bubble will exert itself, taking the market ultimately to new lows.
You can read my entire analysis here:  Housing: Look Out Below

Today's new homes sales report included a huge downward revision to the May report.  No doubt that was from the effect of much higher mortgage rates.  Although today's number looked good in the headlines, the revision next month will feel the full brunt of the higher mortgage rates, which hit 5% during the June contract-signing period.  Through the end of Q1, homebuilders were experiencing on average 25% cancellation rates.  I would bet good money that Q2 will see cancellation rates north of 30% just from higher rates.

In addition, it was reported today the use of ARM mortgages has reached the levels seen right before the housing bubble popped as the dregs of the buyers reach for homes they can't afford using dangerous ARM products:  LINK   And finally, it was reported that Obama's liberalized Government-funded mortgage "restructure" program - HAMP - is seeing 50% re-default rates for the 2009 taxpayer-funded refi's:  LINK  Just another one of Obama's "social welfare" programs funded by the middle class that transfers a little money to idiots and a lot of money to the banks.  Thanks Barack!


  1. You made a great comment, Dave:
    "One other point about the potential for future demand: there was a report out about 3 weeks ago that said 76% of all Americans are living paycheck to paycheck. We also know that real median is declining and the overall size of the full-time workforce is rapidly declining. It's not like the economy is creating a new class of wage earners who can afford to buy a home."

    people here in nevada are looking for jobs and those jobs pay around $8.25-9 a hour. That's not even enough to rent an apartment. Customers is what drives a business and there's not enough customers for all the inventory plus new homes built. The unemployment situation is getting worse and, with declining sales and taxes for county & states, it's going to be a mess downhill.

  2. Weak Q2 Numbers:

  3. The US House of Representatives has narrowly voted to continue collecting data on US phone calls, in the first legislative move on the programme.

    In a 205-217 vote, lawmakers rejected an effort to restrict the National Security Agency's (NSA) ability to collect electronic information.

  4. "After what has been called China's "Black Monday", the stock market has continued its plunge, dropping more than 20% from its February peak and taking it into what is technically known as "bear market" territory.

    The market's fall, though dramatic, won't necessarily trigger the central bank to change its mind about holding firm on issuing more cash to the banking system.

    The market has been fairly volatile during the past decade. The Shanghai Composite index is down 70% from its all-time high in 2007 and down nearly 50% since 2009.

    But if the markets start affecting economic growth, the calculus could change.

    Domestic bond sales have dropped by more than 50% from last month, according to Bloomberg. They calculate that issuance has dropped to 175bn yuan in June, which is the lowest in 17 months. Now, some of that increase in debt is what the Chinese government wants to control.

    Of particular concern are the loans issued by "trust" companies. They issue wealth management products which offer savers a higher return than the official deposit rate of 3%. But, these products are sold off-balance sheet and are higher risk. That risk and what is really being sold isn't always clear to the buyer.

    This is why the shadow banking sector is of such concern."

  5. The Gold System Is Based On Trust & Trust Is Breaking Down

    Kaye: “Part of the reason we’ve had this smash on gold is because it was very important to the central bankers and to the BIS that gold and silver not be seen as a viable alternative currency. The reality is that the physical above ground stock of gold only increases at roughly 1% to 2% each year,whereas the amount of digital money that is printed by the Federal Reserve of US dollars greatly exceeds that by a huge factor..

    “Now the central bankers are devious but not stupid. They know that what I just said is true and they know that the market will catch on to that very quickly, so it’s very important for them to manage and suppress the price of gold, and that’s what they have done through the paper market.

    But we are reaching an important pivot. As I’m talking to you gold is actually under pressure again, but what’s going on now is the typical gaming that you see which is related to the options expiry. Options expire tomorrow. This weakness is all by design. These guys are extremely devious and very coordinated in the way they manage the price of gold.

  6. The Housing " Rebound " Is Over. Just about anything tied to the government and central banking system today falls under the category "Control the people".
    It's going to get worse before it has a chance to get better, if it ever does.

    "Freedom's just another word for nothing left to lose." Janis Joplin - Not quite -
    freedom is always attainable. It's just how far you're willing to go in order to get it. It might take effort in learning a skill like sailing that helps you to detach from "the system"...or precious metals , (hey there's an idea !) that keeps you surviving while plugged into the black market , or completely removing yourself from the system (going galt).

    Freedom , the taste of sweet cream !

    Good luck to anyone choosing and believing in that governMENTAL , central banking crap !
    A free frontal lobotomy like existence will be awaiting for you.

  7. Toilet-Tissue 'Desheeting' Shrinks Rolls, Plumps Margins
    Improved Product Means Fewer Sheets Needed to 'Get the Job Done,' Company Says

    Kimberly-Clark Corp. KMB +0.41% recently rolled out new Kleenex tissue that it says is 15% "bulkier."

    It's also stingier. Each box has 13% fewer sheets than before.

    Consumer products makers call this "desheeting"—reducing the number of sheets of toilet paper or tissues in each package while holding retail prices constant. Earlier this week, Kimberly-Clark executives told analysts that they expect the practice to benefit the company's consumer-tissue unit in the second half of the year.

    Companies, particularly in the food business, have long shrunk packages as an alternative to hiking prices in the face of higher raw-material costs. Cereal boxes and bags of chips have in many cases become lighter over the years in what the food industry refers to as taking "weight out." A regular Snickers bar now weighs 1.86 ounces, down from 2.07 ounces in the past, which Mars says was done to cut calories to 250 per bar. Tropicana Pure Premium orange juice is now sold in 59 ounce bottles, versus 64 ounce cartons prior to 2010.

    The practice also has been a tried and true strategy for makers of tissue and toilet paper, allowing companies to quietly, and effectively, raise prices per unit.

    No know what they can go wipe?

  8. Dave,

    Just stumbled upon this amusing article in Bloomberg

    U.S. 30-year mortgage rates fell to the lowest in three weeks, reducing borrowing costs for homebuyers as the residential-property market strengthens.

    The average rate for a 30-year fixed mortgage dropped to 4.31 percent in the week ended today from 4.37 percent, McLean, Virginia-based Freddie Mac said in a statement. The average 15-year rate slipped to 3.39 percent from 3.41 percent.

    Federal Reserve Chairman Ben S. Bernanke is expected to begin trimming monthly bond-buying in September, according to half of the economists in a July 18-22 survey by Bloomberg News. Mortgage rates for 30-year loans have decreased after jumping to the highest level in two years earlier this month on speculation the Fed will begin to pare its purchases. Higher rates have pushed up borrowing costs for homebuyers who are competing for a tighter inventory of properties

    Markets have become more accustomed to the idea that the Fed is going to remove the extraordinary supports that have been in place sometime soon,” Keith Gumbinger, vice president of, a Riverdale, New Jersey-based mortgage website, said in a telephone interview.

    The 30-year rate is below the average of about 5.3 percent for the past 10 years, according to data compiled by Bloomberg.

    Sales of new U.S. homes rose more than forecast in June to a five-year high, the Commerce Department said yesterday. The increase is a sign that higher rates may do little to hurt the housing recovery, according to Paul Diggle, property economist at Capital Economics Ltd. in London.

    “The strong rise in new-home sales in June means that the housing market has come through its first major test of higher mortgage rates unscathed,” Diggle said in a research note after the figures were announced.

    Prices Rise
    U.S. house prices rose 7.3 percent in the year through May, the Federal Housing Finance Agency said on July 23.

    At the same time, higher loan costs may be continuing to slow refinancing. The Mortgage Bankers Association’s index of refinancing applications dropped 0.7 percent last week to the lowest level since July 2011. The purchases gauge fell 2.1 percent, the Washington-based trade group said yesterday.

    Sales (NHSLTOT) of previously owned homes fell unexpectedly in June, the National Association of Realtors said on July 22.


  9. ....and what's not over??????????

    Memo to the Eliot Spitzer: Private Equity Firms are Scamming New York City

    There is clear evidence that private equity (PE) firms have been scamming their investors for decades. Most of these investors are public pension funds, like the funds invested by New York City on behalf of its employees. These PE investors have been largely clueless as to how their money is being stolen. When they have sensed that something is wrong, they’ve taken a collegial approach, relying on exhortation and negotiation. Not surprisingly, the “let’s handle this among friends” strategy has not been effective.

    Despite being stymied and despite ample evidence of large scale abuses, public pension PE investors have been reluctant to use their bully pulpits, band together effectively, or take PE firms to court. This broken status quo is a great opportunity for what Spitzer does best, which is to use both the law and the media to tackle powerful, predatory interests. This is one big reason why his candidacy has evoked horror and aggressive attacks from the financial elite.

    Let’s start by examining the relationship between private equity firms and the New York City Comptroller.

    Moreover, the super-secret contracts that the NYC pension funds enter into with PE firms are held at the Comptroller’s office, as are the super-secret cash flows showing what the pension funds contributed to the funds and what they got paid out in return. It’s impossible to overstate the importance of the Comptroller’s access to PE fund contracts (known as limited partnership agreements or LPAs) and cash flows. PE firms accomplish much of their investor scamming via fees that are contrary to LPA terms and that they take from portfolio companies owned by the funds they manage. The PE firms also scam by charging the funds they manage for expenses that the LPA says should be paid by the PE firm itself.

  10. Richard Wolff: Detroit a “Spectacular Failure” of System that Redistributes Pay From Bottom to Top

    Kicking off a series of speeches about the economy, President Obama told a crowd in Illinois on Wednesday that reversing growing inequality and rejuvenating the middle class “has to be Washington’s highest priority.” During his remarks, Obama failed to mention the bankruptcy filing by Detroit, where thousands of public workers are now fighting to protect their pensions and medical benefits as the city threatens massive cuts to overcome an estimated $18 billion in debt. Detroit’s bankruptcy “is an example of a failed economic system,” says economist Richard Wolff, professor emeritus of economics at University of Massachusetts. “There are so many other cities in Detroit’s situation, that if the courts decide that it is legal to take away the pension that has been promised to and paid for by these workers, you have [legalized] theft. It is class war, redistributing income from the bottom to the top.”


  11. What's Up with Inflation? (July 25, 2013)

    In my analysis, the debate over inflation misses two key points. What really matters is not the rate of inflation, which can be endlessly debated, but the purchasing power of earned income, i.e. wages.

    Instead of fruitlessly arguing over hedonic adjustments and the weighting of components, we should ask: how many hours of labor (at the average hourly rate for full-time workers) does it take to buy a loaf of bread, a new car, a gallon of gasoline, a new TV, a new house, college tuition and fees, etc., and compare that to how many hours of labor it took to buy all those goods and services in the past.

    This methodology eliminates hedonics (i.e. the computer you buy today is much faster than the one you bought 10 years ago), as this adjustment plays no part in the actual costs of manufacture or the consumer's decision: we don't have a choice to buy a computer with 1990-era specs, so the hedonic adjustment is merely a tool for gaming the CPI.

  12. JPMorgan Chase is one of the biggest hedge fund managers in the world, managing billions for pension funds. But its own pension isn't sure the asset class is worth the risk anymore.

    J.P. Morgan Retirement plans to liquidate its entire $2.3 billion hedge fund portfolio, which accounts for about 18% of its $13 billion in assets. The bank's pension is able to make the risk-cutting move—it will also pull back from equities—because it is that rarest of things: an overfunded pension system, with enough money to cover 117% of its obligations.

    Eliminating hedge funds will "immunize" the pension from the vagaries of the market, a source told Hedge Fund Alert.

    JPM Retirement's hedge fund portfolio includes about 30 managers. The pension's decision to eliminate them also calls into question the future of its hedge-fund management team, led by Renee Kelly.

    as the big boys move distribution to the general public....

  13. municipal bonds to blow up

  14. Know anyone that voted for Obama?...send them this....

    Michael Hudson Shreds Obama’s Orwellian Speech on Middle Class Prosperity

    MH: Obama did not mention the role of debt in this, increasing the cost of labor and the financial overhead of its employers.

    In this speech it is as if he thinks that telling people that he knows how squeezed they are means that he wants to solve their problems.Rather, their squeeze is the profit of his backers.

  15. "At a time when immigration reform is front and center of the national debate and the U.S. seeks to expand trade abroad, Nevada Gov. Brian Sandoval’s recent trip to Mexico is significant.

    As part of the agreement Sandoval signed with Eruviel Avila, the governor of the state of Mexico — the most populous state within the United Mexican States — Nevada is pledging to work with our southern neighbor on such issues as education, tourism, manufacturing and mining.

    “This memorandum of understanding is a step towards building upon our strong bilateral trade relationship with Mexico,” Sandoval said in a statement.

    The agreement comes at a sensitive time in U.S.-Mexican relations as the issue of immigration reform continues to dominate discussions in Washington, D.C.

    The tone of the immigration debate, and in particular tougher border security in the U.S., has left some U.S. House members worried that a crackdown will, in the words of The Wall Street Journal, “alienate a key trading partner.”

    The newspaper reports that U.S. Rep. Henry Cuellar, D-Texas, recently returned from a three-day trip to Mexico, where lawmakers and business officials were astounded by the tone of the border debate.

    “The first thing they said was, ‘What are you all up to there in the United States? What are you trying to do to us?’” he told the Journal.

    According to the Office of the U.S. Trade representative, Mexico is the third largest trading partner with the U.S., ranking only behind only Canada and China."

    More jobs going south or more new illegals coming north. This is crazy.

  16. Off the topic. Dave, does the TPTB pay fraudsters to spread disinformation over the internet? Today, fraudsters like Bron Suchecki and Mish Shedlock are trying to use the spreads on the Comex to prove that there is NO backwardation in gold and the recent rebate of the GOFO is sheer nonsense.
    What the heck! Negative GOFO means backwardation in LONDON NOT NEW YORK!. The spreads on the Comex only tell you about the gold market in New York. No backwardation in New York does NOT mean no backwardation in London.

    1. Suchecki and Mish aren't PTB's - they're just idiots and Suchecki is an idiot with an agenda

    2. Dave I know your a very bright guy,well educated etc. There may be one piece of the puzzle you may have over looked. Many people claim that the dollar is not backed by anything. I disagree, it is backed by oil and military power. As long as the Opec cartel uses the dollar for exchange of oil and the U.S. has military superiority in the Middle East the dollar is not going to go away so quickly. The current agenda is to overtake Syria and then Iran. This of course would ensure that the dollar would remain strong for quite a while. Russia and China may of course object by using their own military force. This would make the price of gold the least of any of our problems. As Einstein once said,"I dont know how world war 3 will be fought, but world war 4 will be fought with sticks and rocks".

    3. I am not certain what all this stuff about negative GOFO rates and backwardation is all about. Jesse’s Café seems to be full of confusing misinformation. So it is perhaps worth recalling the obvious.

      1. It is impossible for gold to go into backwardation (absence imminent collapse of the exchanges) as it is a readily available monetary metal. Unlike oil or copper it is not consumed in large volume and each year two thirds of mine production is added to above ground surface supply. There is no possibility of a gold deficit appearing. Backwardation can occur in oil without any risk to the exchange’s viability the same cannot be said for gold. The two commodities are not comparable; one is a monetary commodity the other is not.
      2. If gold were to go into backwardation in the same way as oil then one would expect the gold exchanges to shut in days.
      3. Negative GOFO rates tell us the same thing as the Shanghai premium that is immediate delivery is a problem and that is difficult to buy available real gold at these spot prices. The GOFO rates tell us the price it is difficult to buy gold and the Shanghai premium tells us the price it is easier to buy immediately available gold.

      Backwardation is not the same thing as a negative GOFO, for true backwardation to occur the gold price first needs to bubble up to reflect the need for immediately available gold. Currently, the gold price is below the cost of production and frankly the idea of gold backwardation in a bear market is bizarre.

      In conclusion I cannot see why people are conflating the two concepts. Backwardation requires negative GOFO, but negative GOFO does not necessarily imply backwardation it is as simple as that.

    4. If you think it is possible for gold to go into backwardation then go and check the gold price on Shanghai Futures Exchange on May 28 and also the current Tocom gold quotes

      On May 28 on Shanghai Futures Exchange.
      Au 1306(Jun 2013): settlement price 279.85
      Au 1312(Dec 2013): settlement price 278.70

      And currently on the Tocom
      Aug 2013 4256
      Dec 2013 4244

      I guess you are regular reader of Dan Norcini's blogspot. He is only a megalomania and momentum chaser. He has ZERO understanding of the fundamentals and gold markets in other parts of the world. And he has NO understanding of the London OTC market, where most of the global physical delivery occurs. The Comex only means the gold price in New York.

      If you like to resort to this snakeoil charlatan, have it your way.

  17. I keep waiting for housing to crash but it just keeps getting better in my area. I keep wondering how long it can go on. Got out in fall 2010 and now rent but wish I stayed in since prices are up 30% since, 20% over the last year in my area. Can't say the same for PMs. Eventually it will be our time.

    I'd be interested to hear your prediction on gold and silver prices year end, Dave. You gave your prediction earlier in the year, before the manipulated crash(es). Predictions seem to be all over the price from the experts in the industry, from current levels to "record highs" meaning 1900 and 50. Quite a range there. Care to give your input?

  18. This is the same thing I go through with someone I love: the grass is not growing, we need to get sod, the apple tree is dead, let's pull it out, this will never grow, on and on. My answer (many times just silence) is "patience, all things come in time. Nature will happen, do it's thing". Same here, you can only manipulate a market for so long against the direction natural law says it must go. We can see the cracks in the wall and the desperation. Look at things from a historical perspective: Lehman happened in '08, when you look back at things in 50 years things will have appeared to happen rapidly and obviously, use that same perspective now and have patience. Understand what is happening and position yourself wisely (wisdom is a mixture of knowledge, experience) to sit tight and be right. We now have a lawn that neighbors stop and wonder why it is so green, no sod either. And my wife does not remember any of the questions about the grass not growing or needing sod, similar to how you will not remember these questions in the future. Just get on the train and enjoy the ride, watch the scenery no matter how many stops or how many cars are switched on or off.


    1. you can only manipulate a market for so long against the direction natural law says it must go.

      Kondratieff Waves – 2nd Phase Of Winter From 2013 Onwards

  19. Legendary financier Frank Pearl left behind a huge legacy — of mystery

    Sustaining this life was Pearl’s work in private equity and Perseus, the Pennsylvania Avenue firm he created. Pearl, its founder and sole owner, was in the business of buying and selling companies with borrowed money. Perseus has directed hundreds of millions of dollars to investments such as Converse sneakers, Ritz-Carlton hotels and book publishers such as PublicAffairs.

    Now lawsuits filed by major banks that had extended him loans and his own investment firm allege fraud by the man once known for his Midas touch. Bank of America, TD Bank, Eagle Bank and Perseus have filed claims against Pearl’s estate in D.C. and federal courts.

    In all, they are seeking more than $50 million.

    The allegations and court actions have rocked a corner of Washington’s financial and social elite and have raised questions about Pearl’s actions in the final months of his life, after he was diagnosed with terminal lung cancer.

    “At times his conviction on his conclusions seemed unshakable even in the face of evidence to the contrary,” said Fred Malek, who heads his own local private equity firm. “I’ve invested with Frank Pearl and in Frank Pearl deals over several decades, and found it profitable and found Frank to be a man of soaring intelligence. The picture of court papers does not depict the Frank Pearl I knew.”

    Others who worked with him, knew him or knew of him say privately the court claims following Pearl’s death cause them to wonder whether he really was fabulously wealthy, or just lived that way.

    It’s hard to know.

    “Frank Pearl was like the prince of smoke,” said Bill Regardie, a businessman and the former publisher of Regardie’s, a magazine that chronicled the local business scene in the 1980s and early ’90s. “He was one of the those characters that you never really knew what he was doing. You never knew whether he had any money. He was one of those characters that floated around the businesses of Washington.”

  20. Chris Hedges Answers Questions from Viewers

  21. Why Is America in Decline? Chris Hedges on the U.S. Empire & Death of the Liberal Class (2012)

  22. China orders nationwide government debt audit

    (Reuters) - China's National Audit Office will conduct an audit of all government debt at the request of China's State Council or cabinet, it said in a statement on Sunday, underlining concern over rising debt levels in the world's second biggest economy.

    The audit office, responsible for overseeing state finances, made the announcement in a one-sentence item on its website, but gave no details on the audit.

    The official People's Daily newspaper said separately on its website, citing unidentified sources, that an urgent order for the audit was issued on Friday and work will start this week.

  23. It seems almost laughable to re-read Bernanke’s speech on “Asset Prices, ‘Bubbles’ and Monetary Policy” from his pre-Chairmanship days.

    “I worry about the effects on the long-run stability and efciency of our financial system if the Fed attempts to substitute its judgments for those of the market.”

  24. Heart Surgery in India for $1,583 Costs $106,385 in U.S.

    Devi Shetty is obsessed with making heart surgery affordable for millions of Indians. On his office desk are photographs of two of his heroes: Mother Teresa and Mahatma Gandhi.

    Shetty is not a public health official motivated by charity. He’s a heart surgeon turned businessman who has started a chain of 21 medical centers around India. By trimming costs with such measures as buying cheaper scrubs and spurning air-conditioning, he has cut the price of artery-clearing coronary bypass surgery to 95,000 rupees ($1,583), half of what it was 20 years ago, and wants to get the price down to $800 within a decade. The same procedure costs $106,385 at Ohio’s Cleveland Clinic, according to data from the U.S. Centers for Medicare & Medicaid Services.

    “It shows that costs can be substantially contained,” said Srinath Reddy, president of the Geneva-based World Heart Federation, of Shetty’s approach. “It’s possible to deliver very high quality cardiac care at a relatively low cost.”

    Medical experts like Reddy are watching closely, eager to see if Shetty’s driven cost-cutting can point the way for hospitals to boost revenue on a wider scale by making life-saving heart operations more accessible to potentially millions of people in India and other developing countries.

    “The current price of everything that you see in health care is predominantly opportunistic pricing and the outcome of inefficiency,” Shetty, 60, said in an interview in his office in Bangalore.

    Cutting costs is especially vital in India, where more than two-thirds of the population lives on less than $2 a day and 86 percent of health care is paid out of pocket by individuals. A recent study by the Public Health Foundation of India and the London School of Hygiene & Tropical Medicine found that in India non-communicable ailments such as heart disease are now more common among the poor than the rich.

    One in four people there die of a heart attack and per-capita health spending is less than $60 a year. Yet the country performs only 100,000 to 120,000 heart surgeries each year, well short of the 2 million Shetty estimates are needed. The mortality rate from coronary artery disease among South Asians is two to three times higher than that of Caucasians, according to a study published in 2008 in the journal Vascular Health and Risk Management.

    imagine if we cut out administration costs in US....

  25. COMEX Gold Inventories: Every Top-200 Hedge Fund Can Buy All The Registered Gold At The COMEX

    This can create all sorts of interesting scenarios, especially if the "gold vigilantes" start to smell blood in the water and decide to challenge some of these gold shorts by demanding physical delivery. Registered gold is down to 950,000 ounces, or just over $1 billion. Out of the top 200 hedge funds registered with the SEC, every single one of them has over $1 billion of assets under management (AUM), with the smallest hedge fund having over $3 billion in AUM. That means that every one of the top-200 hedge funds has enough assets to buy every single registered gold ounce at the COMEX and have plenty of assets left over.

    What if one, or a group of hedge funds, decides to take delivery of gold and test to see if the shorts can acquire the physical gold to back up their contracts? Yes position limits could prevent a large one-time delivery of all the gold stocks, but there really would be nothing stopping this from happening over time. In addition, registered gold stock levels are so low that this may become a very feasible strategy - there could be a lot of money made if contract longs could force shorts to buy physical gold on the open market. Could this be why we are seeing COMEX gold stocks plummeting?

  26. Michael JacksonMonday, 29 July, 2013

    The cracks are beginning to show:

    "The mainstream media would have us believe that the U.S. economy must be in great shape since the stock market (NYSEARCA:DIA) has been setting new all-time record highs this month. But is that really true? Yes, surging stock prices have enabled sales of beach homes in the Hamptons to hit a brand new record high. However, the reality is that stock prices have not risen dramatically in recent years because corporations are doing so much better than before. In fact, the growth in stock prices has been far, far greater than the growth of corporate revenues. The only reason that stock prices have been climbing so much is because the Federal Reserve has been flooding the financial system with hundreds of billions of dollars that it has created out of thin air. The Fed has created an artificial stock market bubble that is completely and totally divorced from economic reality.

    Meanwhile, everything is not so fine for the rest of the U.S. economy. Economic growth projections have been steadily declining over the past two years, and the growth rate of personal income in the United States has been on a huge downward trend since 2008. The U.S. economy actually lost 240,000 full-time jobs last month, and the middle class continues to shrink.

    So welcome to the “new normal” where most Americans struggle at least part of the time. According to one recent survey, “four out of 5 U.S. adults struggle with joblessness, near poverty or reliance on welfare for at least parts of their lives”. Things are tough out there, and they are steadily getting tougher.

    Yes, the boys and girls up on Wall Street are doing great (for the moment), but most of the rest of the country is really struggling. We have never even come close to recovering from the last major economic crisis, and now another one is rapidly approaching."

    (some good charts are here)

    "A year ago, Wall Street pundits and prognosticators were busy marking the 25th anniversary of the great stock market crash of October 1987, and speculating whether it could happen again to a market that had doubled over the prior three years, despite a weak underlying economy.

    While October 2012 ultimately saw the Dow Jones Industrial Average 2 Minute(INDEXDJX:.DJI) decline by about 2.5%, that was nothing compared to the 22% one-day wipe out that crushed the market two-and-a-half decades earlier.

    Today, with the Dow up more than 2,000 points since last October and trading at record highs, fears are rising that the red hot stock market could be setting up for something sinister once the summer slow season is over."

  27. Forget growth, China is contracting, experts say.

    According to the video, if you take the top ten trading partners with china and you add up their exports to china, you have -4% year-over-year.

  28. GOFO & Gold Backwardation, by Andrew Maguire

    I received some more good questions this week regarding backwardations that need clarifying especially after a series of recent blogs claiming there are no backwardations in Gold. I would first like to say that one of these assertions came from Trader Dan, a person I do not know personally but respect as a good technician and very likely a good trader, too. This response is not an attack upon him or any others who I know have no vested interest in trying to debunk what is clearly the most important signal of physical shortages historically ever seen. In a nut shell, he is comparing apples to oranges. By isolating the real global cash market for gold and then only comparing Comex futures contracts in series out several years, I agree they are largely in contango. But this is a purely US centric Comex paper market phenomenon and has nothing to do with the divergence between the futures market and REAL CASH PRICE of bullion as determined by London fixes each day.


  30. Want to retire with plenty of savings? Consider running for office.

    Members of Congress receive retirement benefits that are far more generous than those earned by the average worker, according to a recent Bankrate analysis.

    Not only do congressional representatives and senators earn the guarantee of a monthly pension check -- a benefit that has become increasingly rare for most U.S. workers -- they also receive Social Security payments and can opt to pay into the federal Thrift Savings Plan, a 401(k) style-plan with fees that are far lower than most retirement plans.

    As a result, longtime members of Congress can easily retire with six-figure annual incomes for life.

    "If you can get elected to Congress and stay there, you can retire pretty well," said Chris Kahn, a Bankrate analyst, who conducted the research.

    Related: Are you worried your public or private pension will be cut? Share your story

    Few workers enjoy such generous benefits. While most public workers still receive pension benefits, payments for retired state, county and city workers average around $26,000 a year, according to the U.S. Census Bureau.