Context

Having 24 hours to consider yesterday's price smash, I feel compelled to share with you some of the conclusions I've drawn.

Remember there are two axioms in this "market witch" business:

  1. Only rarely do you use date and price in the same sentence. "$1600 by June" or "$44 by Labor Day" come to mind.
  2. Don't go around predicting the end of the world because you'll only be right once.

That said...and I say this with all sincerity...the desperation of The Bullion Bank Cartel seems palpable. I think the clue lies in that Bloomberg video I re-posted the other. In case you missed it, here it is again. All of the important information comes in the first 45 seconds or so and, remember, this guy Hoffman is a serious dude with serious, mainstream connections. Again, listen to what he says here: http://www.bloomberg.com/video/what-s-happening-to-all-the-gold-d33u1c23...

 

"If there ever is interest in gold again...and I'm not saying there is or isn't...that gold is just not there anymore."

And therein lies the crux of the matter.

The Bullion Banks and, by extension, their Central Bank Masters, are in a serious, irreversible jam. The gold is gone and the vaults are nearly empty. As the London vaults were depleted, it must have become evident that another source of gold was needed. Thus, the price raid of one year ago was ordered for two reasons:

  • First and foremost, to squash Western investment demand
  • Provide cover to drain the GLD to the tune of over 550 metric tonnes of gold.

IF THIS IS, IN FACT, THE CASE...and I believe it is...then we must expect The Bullion Bank Cartel to continue to apply as much pressure to price as they can for, as Ken Hoffman stated above, "If there ever is interest in gold again...and I'm not saying there is or isn't...that gold is just not there anymore." 

Look at the price action of just the past few months. As price rallied from The Double Bottom of 12/31/13, The Banks stood ready to cover each bid but, without readily-leasable gold to leverage into paper, they could not hold price down. Price rallied into mid-March however and, just when it seemed ready to break out and re-start "investment demand", it was crushed back lower by over $100. It rallied again this month and, just after Comex open interest finally jumped higher Monday, it was beaten lower again.

Not surprisingly, the GLD, which began the year with an "inventory" of just 798.22 mts, saw it's "investment demand" increase, too. The Banks were able to come up with a little over 20 metric tonnes to add in early 2014 and "inventory" peaked at 821.47 mts on 3/24/14. In the days since, with the assistance of falling price, "investment demand" has waned again and "inventory" has plummeted back to 806.82 mts, now up just 8.60 metric tonnes YTD even though price is up over $100 or 8.5%.

So here's what I'm driving at...

IF I'M CORRECT about all of this...and everything from the anecdotal stories of "empty vaults" to the persistently negative GOFO rates tell me that I am...then we must expect The Bullion Bank Cartel to continue to wage war upon price for, as Ken Hoffman explained in December: "If there ever is interest in gold again...and I'm not saying there is or isn't...that gold is just not there anymore."

The Banks simply MUST keep price in check for fear of renewed investment demand.

Renewed Western investment demand will finally kill the LBMA/Comex, fractional reserve system. It will:

  • Break The Banks as unallocated accounts are shown to be empty shells. Failure to deliver will destroy confidence.
  • Perhaps more importantly, shine the light of truth upon the central bankers and politicians who have shamefully participated in and stood watch over the depletion of Western gold reserves.

Therefore, we must expect more and more days like yesterday as the increasingly desperate Banks fight to preserve their system. So long as you continue to stack and prepare, it will make for great theater. If you attempt to profit from this through the use of leverage, I'll try to help you along the way but you must be prepared for extreme and unexpected volatility, like we saw yesterday.

We are witnesses to the end of an era and a global financial paradigm shift. Be grateful that you have been blessed with eyes that see and ears that hear. Understand what is happening and trust your instincts. There is still time left to prepare accordingly. Use it wisely.

TF

78 Comments

Turd Ferguson's picture

More later

MODERATOR

I've read and re-read this post and I feel like it doesn't quite articulate the point I'm trying to make. Look for more in the podcast later today.

Turd Ferguson's picture

And read this

MODERATOR

Today's commentary from Bill Holter at Miles Franklin. It fits right in with the theme of this thread:

Live Spot Gold
SPOT MARKET IS OPEN
closes in 6 hrs. 39 mins.
Apr 10, 2014 10:36 NY Time
Bid/Ask    1320.30/1321.30
Low/High    1314.50 / 1325.90
Change    +8.00    +0.61%
30daychg    -19.20    -1.43%
1yearchg    -262.00    -16.56%
 
==============================================================

closes in 8 hrs. 15 mins.
Apr 15, 2014 09:00 NY Time
Bid/Ask    1294.60/1295.60
Low/High    1288.70 / 1322.40
Change    -32.00    -2.41%
30daychg    -87.40    -6.32%
1yearchg    -58.00    -4.29%
==============================================================

I pulled the two above graphics off of Kitco's homepage. I copied the first one last Thursday in anticipation of today.  First let me explain what they are and secondly I will explain why it will be a problem.  If you recall, it was one year ago that all of a sudden Gold dropped from the $1,600's into the high $1,200's over 3 days...for no apparent reason.  I say "no apparent reason" because the "excuse" given was that the Fed would maybe taper later in the year which was supposed to be bearish for gold and silver...even though the latest QE was not "bullish" to begin with.  Don't get me wrong, "QE" was and is bullish for gold but... the metal was capped with the sale of naked futures to "show you" that it wasn't.  In any case, let me wish you all a "Happy Anniversary" tongue in cheek.
  Please study the above graphic closely (and sorry it is not formatted better but I am a computer dinosaur).  Focus especially on the "1yr change".  You will notice that as of last Thursday, the number was a -$262.  as of today (after the $30 "forced" smash) that number is only -$58.  Without hitting the price today we would be looking at -$28.  Do you see where I am going with this?  Markets are now all about "momentum".  They always have been but they are more so now and with the use of futures and derivatives...the "momentum" can be created, aided or halted to paint a picture that "proves" the(ir) case.  Never mind earnings, supply and demand or any other fundamentals...they can be masked or hidden and then you are told ..."see?  look with your own eyes".  It doesn't matter how obvious it is that "counterintuitive" explains everything.
  So gold is now down year over year $58 today vs. $262 just 3 trading days ago, all this means is that gold was down a couple hundred bucks in 3 days last year, right?  Well yes it was but now the problems begin because "year over year" comparisons will again start to stick out in the public's eye.  For 12 years straight, gold rose and in many of those years was THE best performing asset on the planet.  I believe that the decision was made that gold (and silver) had to be smashed to break the "momentum".  By breaking momentum..."sentiment" would also get dented which was important because the bottom of the barrel was coming into view.
  But...here we are now and the "year over year's" are going to turn "up".  They are going to turn up at a time where stockpiles have been depleted AND mining supply has shrunk because of price.  Price (low) has also enticed demand from all over the world.  If you recall the exponential gold and silver price rises of the late 70's, it was U.S. centric...now it is global.  It is global and there is now wealth all over world as opposed to being concentrated in the U.S. ...which is a very big problem for the money printers.  The more that they print...the more they are putting ammunition in the hands of potential buyers... all 7 billion of them!
  In my opinion, what we have been through over the last year to 2 years should be equated to one last "haymaker" thrown by a tired and aging "ex champ".  Supply and demand does not lie.  We know (and have known for 15 years per Frank Veneroso and others) that demand was far outstripping supply.  We also logically know that the supply to meet the demand had to come from somewhere.  That "somewhere" could only logically have been from Western central bank holdings.  We also know that this supply by definition is "finite" and will one day run out.  Smashing prices one year ago did only one thing, it bought some time.  So far this "time" has equaled 1 year in duration.
  So how much time is left?  I nor anyone else knows, what I do know is that the "sting" a year later doesn't hurt so much anymore and we are entering a point where if you bought a year ago, you are a "winner" (you really shouldn't think this way but everyone does).  Here is my point, we have seen demand increase dramatically because value buyers stepped up to the suddenly much lower prices...now (soon) I suspect we will see the "momentum" buyers again step up to the plate.
  Did the big drop hurt sentiment?  Of course it did.  Did it kill sentiment dead?  No it did not because just like the Spring season when plants start to grow again, so again will sentiment.  The only way to retard sentiment and keep it from growing from this point forward is to keep knocking the price down...year after year after year.  This cannot be done as the mine supply will not come forward if prices drop further and further below the cost of production.  "They" shot themselves in the foot by smashing price because it created the unintended consequence of pulling value investors off of the sidelines in huge fashion.  Now they have the loaded gun of manipulation pointed at their other foot, they can fire it again but either way they will create more demand.  They can allow prices to move higher from here and invite the "MoMo's" to hop on board or they can retard prices further and create more value buyers to step on board.
  Since we are now very close to the year over year price turning upwards, they will soon need to figure out which "foot" to aim at.  Regards,  Bill Holter

CPE's picture

1st

I helped fund Blythe's unemployment check yesterday!  Congratz to me and all the other debt serfs!

Gamble's picture

I'm nervous

Have to say I'm worried

silver66's picture

Third

had to do it

Silver66

nadgeskaul's picture

But Turd, why...?

Why would western central/bullion banks allow physical to disappear?  What is up their sleeve as an alternative?  Are they duping the Chinese and have some elaborate plan with another form of reserve, therin by crushing gold in the end?...The very gold they care not to hoard any longer?

My greatest concern.

Gamble's picture

The mini dump yesterday

The mini dump yesterday reminds me of the mini dump last year rite before the two day smash. 

Turd Ferguson's picture

Looks like Denver Dave agrees

MODERATOR
Turd Ferguson's picture

Because they don't value gold

MODERATOR

They never have valued gold. In fact, the HATE gold. That's why Ferdinand Lips' book is called "GOLD WARS".

The banks have fought against gold for decades. If it's gone, they don't care. They simply want to promote and maintain their current fiat system. They have no idea that they are undermining themselves. It's like all the podcast talks I've had about Woody, Cameron et al foolishly thinking they hold all the cards. THEY DON'T.

The fear they have is not that the gold is gone per se, it's that the promises they've made regarding gold will be broken. This opens them up to HUGE losses and bankruptcies. This also further compromises confidence in their system and their ability to maintain the status quo.

Response to: But Turd, why...?
Turd Ferguson's picture

Maybe

MODERATOR

But, last year's $1525 is this year's $1180 and we are still a great distance above that level. Gold needs to first drop 10% before the major stops could be run again, therefore, I don't think that yesterday was a precursor of something larger. Just a reset to tamp down demand again.

AIJ's picture

Nixon

Turd

if Nixon closed the gold window to stop gold from leaving the vaults why now would the USG facilitate gold reserves to diminish?  They can't be so stupid not to realize the inevitability of their actions. If santa is  correct they know and are planning for the gold reserve standard.  Contradictions abound. What say you?

Turd Ferguson's picture

Fellen giving a speech

MODERATOR

And this headline just crossed:

YELLEN SEES LABOR MARKET SLACK FOR `MORE THAN TWO YEARS'. but, wage inflation?

— zerohedge (@zerohedge) April 16, 2014

So...two more years of "labor market weakness". That takes us to 2016 or eight years after The Collapse. Yet, LIESman et al will continually assure the masses that recovery is right around the corner.

 

CPE's picture

RE: Nixon

You ask for reason?  I give you Obozo.

tmosley's picture

Turd: You need to call Andrew

Turd:

You need to call Andrew and get a new read on what is happening in London.  This move must have increased the drain rate.

CPE's picture

BREAKING NEWS

* YELLEN SAYS PAPER RULES, GOLD SUCKS

* YELLEN SAYS DESTROYING PURCHASING POWER IN REAL TERMS TO CONTINUE

* YELLEN SAYS WE HAVE NO IDEA WHAT WE ARE DOING BUT THIS IS BY NO MEANS A CHANGE OF POLICY

* YELLEN SAYS I HAVE BECOME DEATH DESTROYER OF WORLDS

* YELLEN SAYS EAT IT DEBT SERFS

* YELLEN SAYS I LIKE TO WEAR GOLD WHILE STEALING FROM YOUR CHILDREN

* YELLEN SAYS WATCH MY SAGGY BAGS FOR TRADING SIGNALS

Icarus's picture

National Security

The price of gold.  This is no longer an issue of blatant manipulation.  It is no longer an issue of JPM fleecing the sheep.  It is no longer an issue of supply-demand.  It is no longer an issue of CFTC corruption.  IT HAS BECOME AN ISSUE OF NATIONAL SECURITY!

We are no longer fighting the FED, JP Morgan, the CFTC, The SEC, the london monkeys.  WE ARE FIGHTING the entire United States of America, with it's entire intel apparatus and deep state behind them.

Gold will not rise, gold cannot rise, UNTIL the dollar and the state collapse first.

Simple,

Icarus

Clarki Stomias's picture

@tmosely regarding getting Andrew Maguire's drain rate take

I heartily second that request!  Can we get a third, a fourth and then a Turdville quorum agreeing to that?  

And maybe get Andy on an A2A (post haste)?

Turd Ferguson's picture

I'm not saying that the US

MODERATOR

I'm not saying that the US gold is completely gone, though it might be.

In this instance, the gold pledged/leased by the Western CBs (US, England, Germany, Switzerland etc) and the gold rehypothecated from Saudi and all the other countries who foolishly stored it at the BoE...that's what appears to be gone.

To your point, US reserves declined by over 40% from 1945 through 1971, which caused Tricky Dick to close "the window". Comex paper derivatives were introduced on 12/31/74 so that price suppression could occur without using physical reserves. This has worked for almost 40 years but, like any other scheme, it will only work until it doesn't. Without continued leasable central bank gold, the bullion banks have no physical to leverage.

Why do you think every single bank has a current price target of $1050 or less? They are desperate to scare/coerce as many miners as possible to sell their gold forward! Without leased CB gold and w/o miner forward gold, the jig is up. No physical means no paper creation.

Response to: Nixon
lakedweller2's picture

LIESman

I thought he said we recovered like a thousand times in the past.  I thought we had recovered for 5 years and "now" it is around the corner.  Also around the corner might be a whole neighborhood group of "bloods" that desire your possessions.  Maybe the recovery was only for the elites.  Ah...now I get it.  Wealth transfer has been recovering our property for the elites for 5 or more years.

We just needed a more detailed explanation.

Turd Ferguson's picture

OK

MODERATOR

I'll give him a ring in the morning as he's surely sipping a martini by now.

Nick Elway's picture

Gold's run since 1929 is over

Curious at 50 seconds in the Bloomberg clip..paraphrasing "Gold's run since 1929 is over" and Ken Hoffman's  "Yes, it will end this year"  

I wonder if Ken Hoffman's "it" was (choose one)

  • The COMEX/LBMA gold market
  • The increasing valuation of gold as measured in US Dollars
  • The ability to buy gold with US Dollars
CPE's picture

3RD

I 3rd the request, I would like to hear Andy on an A2A much more than watching saggy bags for trading signals.
 

Berk's picture

Coming American Tax change maybe related?

I am Canadian so please do not think I have any authority on this.

I was reading the most recent article by Jeff Berewick this morning about tax changes in America that come into affect on July 1 for Americans that are going to make it much more difficult to transfer money out of America, and he was recommending gold.  I don’t know if there is any truth or connection, but it might make sense that if true, that we should expect pressure on gold prices until then so that gold is held as cheap as possible so that TPTB can get converted for maximum gain and offshore.

WTF do I know. What I do know is this is getting unbearable.

Turd Ferguson's picture

We'll do this soon

MODERATOR

Andy has promised to come on for A2A but I don't badger him about it. He's a very busy guy and I value his friendship so I'm not going to beat him to death by asking him every other day like some other websites do.

Response to: 3RD
Turd Ferguson's picture

Another demand element

MODERATOR

Don't forget about the Indian elections which will conclude sometime in May. It's expected that the new PM will relax the import duties and actually encourage gold buying. (If we're correct about the BRICs, then he most certainly should/will.)

CPE's picture

Thanks!

Wow, look at http://drudgereport.com/ headline:  "WWIII"

Also, Turd are you gonna vote for the Wicked Witch of Healthcare? http://www.nytimes.com/2014/04/17/us/politics/kathleen-sebelius.html?_r=0

jezfry's picture

No physical to leverage

It seems to me the question is whether prices can continue to be suppressed when there is no physical? Can they dump a load of shorts and gradually cover while sentiment is still fragile? Can they roll their shorts using the same technique?

If so it's a total confidence trick and I think they tried their luck for the first time yesterday.

Turd Ferguson's picture

As mentioned in yesterday's podcast

MODERATOR

Palladium is recovering today and appears set to close back above $800. I've got a last of $801.30

Turd Ferguson's picture

Exactly

MODERATOR

And that's why it was so interesting yesterday that they did not get their follow-on selling.

Standard Cartel Operating Procedure is to:

  1. Drop a bunch of naked shorts
  2. Stand back and let a cascade of spec selling drive price considerably lower
  3. Cover (buy back) your original shorts into this new Spec selling, after a much-lower price has been accomplished.

Yesterday, the lows were made ON the Cartel smash. All of the shorts applied below $1300 are currently underwater.

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