The Iron Dome
You'll be hearing a lot over the next few days about the "Iron Dome" that Israel has. Apparently, The Gold Cartel has one, too.
As reported in the morning update to the previous thread, today we witnessed an extraordinary act of blatant manipulation in the gold pit. Over the course of about 5 minutes, one single order was filled. This massive dump of about 25,000 gold contracts managed to move the price of gold down by nearly $20. To give you an appreciation of the size and scale of this deliberately criminal act, 25,000 contracts is the paper equivalent of 2.5 million ounces of gold or, roughly, 77 metric tonnes. 77 tonnes is the paper equivalent to the alleged physical holdings of Australia or Indonesia.
Now, think about that for a moment. Indonesia is the 4th largest country in the world, in terms of population. Coming in at 250,000,000 people, there exists in Indonesia about 1/10th of an ounce of gold for every person. And some prick in New York was able to dump the entire thing in a matter of seconds. Amazing. And this is what passes for free and fair markets in the 21st century!
Anyway, back to the "Iron Dome" analogy....
Having been caught with their pants down (sort of like General Petraeus), once QE∞ was announced, The Cartels sprung into action to crush the momentum of the longs and flip the algos back into sell mode. By doing so, The Forces of Darkness were able to cover roughly 23% of their net short position over the four-week period from 10/4/12 to 11/2/12. Not eager to see a rebound as they are desperate to continue covering, The Evil Ones have been employing an Iron Dome of resistance at $1730-1740. Why, you ask? It's quite simple.
- Even Ronnie Milsap could see that a move back through $1740 and toward $1755 would show the clear end of the recent pullback/consolidation and indicate an imminent move back toward the critical Cartel line in the sand at $1800.
- The 20-day MA for the Dec12 gold is near $1714. The 5-day is near $1726 and the all-important 50-day is near $1744. Keeping gold below these key technical indicators is extremely important if you want to maintain the perception of "continued weakness".
So, here is a collection of gold charts, showing the Iron Dome at various stages as well as the disgusting, criminal actions that took place earlier today.
As you might expect, silver has been brutalized, too, and is subjected to its own Iron Dome. Fortunately(?) for silver, it is not quite yet at the same critical stage as gold and has therefore been able to hold in a bit more strongly. Expect a significant fight, though, once silver moves through $33.
Now, on the bright side, we have this:
- Today's massive raid occurred before the London PM fix, which ended up coming in at $1710. This has resulted in some extremely large physical purchases and this will almost certainly have to be reflected in the paper price over the next few days.
- Additionally, some of the 25,000 contracts will need to be covered before the next CoT cutoff on Tuesday. Remember, Tuesdays are often either Happy or Terrible based upon how The Cartels need to paint the survey.
So, hang in there, fart in their general direction and take out your anger by buying some physical today. I am hopeful that, one day soon, the paper manipulation game will be compromised and the perpetrators will be exposed for the lying, thieving, despicable creatures that they are. Until then, keep smiling and continue to accumulate your personal financial protection at these deeply discounted prices.
p.s. I try to remember to post a notice to Twitter every time I make a new post. If you haven't already, you should consider "following" @TFMetals.
5:00 pm EST UPDATE:
The metals have continued to slowly improve this afternoon from the savage beating they took this morning. This is quite positive for us Good Guys. However, I feel obligated to draw your attention to something that has me concerned.
Did you see this ZH article earlier today? http://www.zerohedge.com/news/2012-11-15/gold-tumbles-same-dedicated-seller-reemerges. This "dedicated seller" thing set off some alarm bells for me as it reminded me of the period back in late September and early October when we were all similarly flummoxed by a Cartel "Iron Dome" near $1780 in gold and $35 in silver. I wrote about in several posts but summarized the problem on this post from Thursday, October 4: http://www.tfmetalsreport.com/blog/4239/deja-vuall-over-again.
Here's the problem...That week of desperate, regular Cartel capping culminated with things breaking down on October 5 and the metals have been under consistent pressure ever since. Of course, past isn't always prologue and history doesn't always repeat, but I'm the one who is paid to recognize patterns and this is clearly one we must keep watching. The main level on which to concentrate would seem to be $1705 in gold. A break there and it will become likely that gold sees at least a re-test of the lows of 11/5, near $1670-1680.
This is no reason to be scared, just cautious. Let's see what happens tomorrow. Have a good night.