WARNING

611
154
Wed, Sep 7, 2011 - 9:13am

I think it's quite clear now why gold responded yesterday in the opposite direction from what you would have expected. With central banks actively managing a debasement of their currencies, we are now seeing them also attempt to actively manage a debasement of gold, too. Be careful. Be very careful.

We all wondered yesterday why gold would plunge on the SNB news. Now we know. In an attempt to mitigate the "negative" effect on francs priced in gold, the SNB sold a massive amount of gold futures at the same time. How do we know this, because it appears that the same thing earlier today. Check out this chart that posted in the overnight comments of the previous thread (thanks, pmahler!):

Yes, that's 7,000 contracts (700,000 ounces) (nearly 22 metric tons!) dumped on the Globex while London and NY are closed! This should also raise your deja vu spidey senses regarding silver in May. The $ drop in silver was greater because the silver market is considerably smaller. However, it's the same strategy. Maximize the downward impact and collateral damage by executing the attack at a time of minimal liquidity.

This all wreaks of malicious manipulation. If you are trading, be prepared for anything. If looking to buy, throw all of the charts I gave you yesterday out the window and wait for at least 1725 in gold, maybe even a gap-filling 1650. Since silver is not the object of attack, it shouldn't drop as far but it looks almost certain to drop to the bottom of the channel we've been following, near $40.

Also, it appears likely that we are entering another 4-6 day downshaft in the Continuous Commodity Index. You'll recall we found this pattern last month and it was one of the factors that allowed me to correctly forecast $44 silver by Labor Day. I asked my pal Trader Dan to send me an updated chart and he obliged. Thanks, Dan!

Count the days between moves. Peak early April. Nine day decline. Peak early May. 9 days down. Peak mid-June. 12 days down. Peak early August. 4 days down. Peak early September. Next decline takes it back down to 620-630?

By the way, I just looked at Dan's site. Looks like he agrees with me. I suggest you read this now:

https://traderdannorcini.blogspot.com/2011/09/central-banks-waging-war-on-gold-at.html

So, look, you've been warned. If you're not trading, just sit back and enjoy the free fireworks show. Maybe use the next central bank raid to accumulate some more physical. If you are trading, my advice is to avoid being a hero. Do not try to get cute and "catch the knife". The next few days are going to be extremely volatile. Save your powder for after the dust has settled, when we can all see a bit more clearly.

TF

12:00 noon EDT UPDATE:

Turdite "Zagio" just posted this chart in the comments of this post. It perfectly explains why anyone trying to "catch the knife" should hold off for a while longer.

If you believe as I do that this current beatdown in gold is being engineered by the SNB, then why would you think they would rest before pushing gold all the way back down to the level it was before the devaluation announcement? That level is around 1500 francs/ounce. Additionally, this is a level that would correspond to my potential target buying point of somewhere between 1700 and 1750. It may take till tomorrow or Friday but confidence is high that gold is headed there.

Patience is warranted here. Also, it's now noon EDT which is the hour when follow-through selling usually materializes on the Comex. I for one, am not buying the dip....yet. TF

About the Author

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  611 Comments

raulv
Sep 7, 2011 - 10:33am

C'mon silveeer,

C'mon silveeer, goooold!!

Where's my "Dead cat bounce"?

Sep 7, 2011 - 10:35am

Gold down, Happy Chinese!

So the Chinese knew in advance of the SNB plans! Makes perfect sense why they would announce margin hikes then. The gold-hoarding nations must be loving this right now. Why not get the most gold they can for our T-bills. Our European and American bankers probably think they are clever and powerful with all this manipulation. But I think they are messing with the tail of a gold dragon. I do not foresee a happy ending for them.

OC15
Sep 7, 2011 - 10:35am

BAC

Interesting, Buffett invested $5 billion in GS right before they busted in 2008.

Buffett invested $5 billion in BAC in 2011. Hmmmm

SilverSax
Sep 7, 2011 - 10:36am

WTI Crude Oil

If you pull up 1H/4H charts on thinkorswim of WTI Crude Oil and ES..you'll see that WTI has been tracking ES almost 1:1 for the past few months...basically WTI is no longer trading on any oil fundamentals and is essentially just trading with ES (if ES goes up/down so does WTI - the correlation is obvious when you pull up the charts)..so for those out there trading WTI, just some food for thought

nathan1234
Sep 7, 2011 - 10:36am

If the Central banks in the

If the Central banks in the West wish to sell their gold- why not just call up China and have a straight sale. After all China would like to have a gold based RMB and make it a reserve currency

Governments run by crooks , along with crooked banksters don't do that because they need to manipulated prices.

These guys are Gordon Brown reincarnated.

Silver is money
Sep 7, 2011 - 10:37am

$1800

Bounce off of $1800

Submitted by DarkPurpleHaze on September 7, 2011 - 10:23am. Hat Tip! 0

I hope that's what we just saw.

Two weeks ago or so we bounced off $1700 before it rebounded. Interesting stuff.

I don't see $1800 holding. We should also see a small waterfall below it down to $1780-$1785 or so immediately before we rest. Just my 2c.

FriedEggs
Sep 7, 2011 - 10:37am

BTFD

I just twisted one up boys (and girls)

.

Puff*Puff*

...Pass!

Ahhhhhhhhhhhh

Fried(e)

SilverSax SilverSax
Sep 7, 2011 - 10:38am

Thanks for all your hard work

Thanks for all your hard work Turd, longtime lurker, first time poster, just wanted to reach out and give you some well deserved props!

Eric Original
Sep 7, 2011 - 10:40am

nibbling

nibbled on some miners, just to bring a few up to par in my accounts.

nibbled on some GTU at around 1800. Waiting for cheaper to buy more. I'll nibble some more at 1775, 1750, 1725. I'm still skeptical that we'll see those prices.

This is all long term hold stuff, not short term trades. Not doing anything with calls, etc. Yet.......

StevenBHorse
Sep 7, 2011 - 10:42am

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