Audacious Gold Manipulation

194
Mon, Feb 27, 2012 - 4:13pm

Look, we all know that gold and silver have been manipulated and suppressed for years. For traders and stackers, the ongoing manipulation has just become a simple fact of life. The suppression is so regular that it can be used as a sort solunar table for those only wishing to "hunt" at the optimal hour.

However, this regularity and predictability should gall you instead. At it's core, it is sheer lawlessness or, stated differently, an absolute indifference to the rule of law or the concept of free markets. In a "normal" course of events, one wouldn't dare attempt to manipulate a market for fear of being caught. This fear would undoubtedly cause someone attempting to manipulate a market to do so in darkness, so as to avoid detection and, ultimately, prosecution.

What are we to make, then, of blatant manipulation in broad daylight? The simplest answer, I believe, is that the manipulator has no fear of being caught. If the manipulator knows full well that he is acting on behalf of his sponsor and that his sponsor will never prosecute him, the manipulator will audaciously act in bright light and open spaces for he no longer has anything to fear. As an example, if you desire to rob a bank but fear the police and potential jail time, you might rob the bank late at night or over a long weekend. If, however, you have the police and the judge in your back pocket, you could just walk in during business hours and make off with the loot.

I point out all of this because of the two charts below. I posted the one on the left back on Friday afternoon. That The Cartel would "trim" price by $7, at 2:20 pm, two days in a row was audacious enough. However, you must also check out the chart on the right. Another $7 at exactly 2:20 pm today. Sickening.

Again, only a criminal with no fear of prosecution acts this brazenly and predictably.

So, what do we make of this. As a practical matter, the suppression has worked. Without three, consecutive days of $7 Globex raids, gold would be trading at $1790 instead of $1769. Every dollar counts, whether it's taken out on the Comex, the LBMA or the Globex. However, on the bright side, how close must we be to a breakout? If The Cartel feels so threatened that they have to resort to bald-faced Globex manipulation, how desperate must they be and how worried are they about gold moving to $1800+? This is The Battle Royale, everyone. Be prepared for more dirty tricks but do not be afraid. We are winning and they know it.

Gold found support overnight where where I'd hoped it would, namely 1765 or so. Now the question becomes will it hold that area overnight tonight? It's hard to say. I wouldn't be surprised by a dip to 1750 and, if it does, I'll be looking to add some.

Amazingly, silver remains stronger than mustard gas. The area between 35.15 and 35.30 looks like pretty good support but a concerted raid could drive price all the way down toward 34.50. If that were to happen, I'd be an aggressive buyer. The only concern is the continued drop in 1-month lease rates, which appear to have fallen today to -0.46%, though I haven't seen anything "official" yet. Again, these plunging lease rates in silver are not a 100%-certain indicator of impending doom. They are just a warning flag. Additionally, while silver traded down 21 cents on Friday, open interest actually expanded by 2,300 contracts. More EE naked shorting in an attempt to keep silver below the Battle Royale level of 35.50- 36.00? I think so. Also, the March12 OI only fell by 1200 contracts on Friday and entered today at 20,160. This left today, Tuesday and Wednesday as the final three trading days where longs could be persuaded to dump March for May. Can't wait to see the numbers tomorrow!

Here are two charts of questionable value. On the left is a daily POSX but, as you know, my Forex TA ability is dubious, at best. On the right is a 2-hour crude. My TA in crude is a little better but, in a market that is primarily being driven by geo-political events, TA is almost useless. That said, if you're looking to join the crude "party", a dip toward $106 might be your opportunity.

Lastly, I traded a few emails today with Jim Quinn of The Burning Platform. I thought I'd blown a little time writing up my Saturday missive but it turns out the Jim took it even farther. He worked all day Saturday and most of Sunday on his latest post. Again, Jim does this out of passion and a genuine desire to make a difference. I encourage you to support his efforts by heading directly to his site to read his latest blog as soon as you are finished here.

https://www.theburningplatform.com/?p=29848

That's all for today. Keep an eye on things overnight and expect the usual 3:00 am London raid. Then, let's see what tomorrow brings ahead of the all-important, Wednesday LTRO expansion info. Keep the faith. TF

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BUDDHA PRINCESS
Feb 28, 2012 - 2:41pm

Euro and British Pound at Risk, Commodity Currencies Aim Higher

By Ilya Spivak, Currency Strategist

A week packed with fundamental event risk begins with the second 3-year ECB long-term refinancing operation (LTRO). Banks will begin to tap the facility on Tuesday and the results are set to be unveiled on Wednesday. Median forecasts call for a take-up of €470 billion this time around after a €489 billion outing in December. Taken together, this would amount to a firewall of close to €1 trillion containing the market-wide impact of a sovereign default within the Eurozone. In fact, taking OECD data as a basis, it would be close to enough to offset the hit from losses incurred by defaults in Greece, Spain and Portugal to banks’ balance sheets such as to prevent a significant retrenchment in lending or an asset selloff.

While markets are far from perfectly rational – meaning some reflexive risk aversion is likely if either of the aforementioned countries actually goes into outright default – it also hints an uptake broadly in line with expectations will prompt a significant downgrade the threat of a Eurozone-driven credit crunch in the eyes of investors. Needles to say, this is net-positive for global economic growth expectations. As such, it is likely to boost the sentiment-linked Australian, Canadian and New Zealand Dollars. The impact on the Euro itself may prove more nuanced. A significant correlation with the benchmark 2-year German bond yield hints that while a larger uptake may be good for risky assets, the single currency may see it play out as a significant dilution of the money supply that produces selling pressure.

From here, the spotlight shifts to the US where the Federal Reserve will deliver its Beige Book survey of regional economic conditions while central bank chairman Ben Bernanke gives his semi-annual testimony to Congress. If Mr Bernanke appears to soften his dovish rhetoric in line with we heard from other policymakers last week against a backdrop of firmer regional growth cues and otherwise stronger data, QE3 bets will probably take a significant hit. This will pressure Treasury bond yields higher and in turn seems likely to weigh on the Japanese Yen (see chart below). It remains to be seen how risk trends respond to a reduced probability for further Fed easing.

Given a likely parallel downgrade in Eurozone-driven credit crisis risk however, we suspect it is likely to prove supportive at least in the near term as traders see the accelerating US economy as an offsetting force to the oncoming growth contraction in the currency bloc. Expectations for another broadly positive set of US data releases – most significantly the ISM Manufacturing gauge – stand to reinforce this dynamic. Needless to say, this too bodes well for commodity currencies. Meanwhile, such a scenario may weigh on the British Pound, where the focus is also returning to yields. Homegrown catalysts are fairly limited, with a relatively flat February Manufacturing PMI expected to be the only data point of note. This means UK yields will likely remain relatively steady while those in the US are pressured higher, which stands to weigh on GBPUSD.

The EU leaders’ summit closes out the week. The focus here will be on the mechanics of implementing the second Greek bailout agreement. Athens has a long checklist of requirements to complete before the sit-down, and it is not at all clear that it will deliver. EU policymakers have allowed Greece to miss ample deadlines before, the downgrade in credit market risk posed by a disorderly default there following two LTRO operations means their tolerance is far thinner than before. This opens the door for a testy outing that may reflexively spook markets and weigh on the spectrum of major currencies to the benefit of the greenback (and potentially the Yen) if the release of the first tranche of the second bailout is delayed.

EURO

Source: Bloomberg

BRITISH POUND

Source: Bloomberg

JAPANESE YEN

Source: Bloomberg

CANADIAN DOLLAR

Source: Bloomberg

AUSTRALIAN DOLLAR

Source: Bloomberg

NEW ZEALAND DOLLAR

Source: Bloomberg

www.dailyfx.com/

victorthecleanerDr G
Feb 28, 2012 - 1:49pm

no failure to deliver

Dr G,

nickel is different. It is an industrial metal, and there is no particularly large above ground sock of nickel available, and so, yes, you can have a shortage.

Gold is different. There is no shortage. There are some 130000 tonnes above ground a lot of which can be for sale at any moment (annual mine supply is 2600 tonnes). Nothing else has such a large stock/flow ratio as gold. And there has never been a failure to deliver gold - this would only be possible if the ultimate run on the bank breaks the system. There cannot be a 'little' failure to deliver one day, and then business as usual the next day, or a little premium or anything like that. When the gold market fails, the old system is gone.

Basil,

The Gold and Silver markets are tiny compared to the bond markets, FX markets, and equity markets

I don't think this is true. The London gold market (LBMA) is an FX market. They trade some 600 tonnes daily through London an probably around 2000 tonnes daily world wide. That's around $100 bn per day. Not bad, isn't it?

Victor

DharibabaBasil
Feb 28, 2012 - 12:15pm

Basil

Why gold and silver are not at 300 and 5 USD is because of physical markets. There is huge physical demand of gold and silver from India and China (absorb 50% of physical metals) ... Now these countries are growing at 10% per annum since last 10 years. The people of India loves gold and are increasing becoming wealthy to purchase more gold .... If gold trades at 1000 USD ... i can guarantee the physical demand of Gold from India alone becomes 2000 tonnes instead of 1000 tonnes in a 4000 tonne which will then force short sellers to come with physical metal ... and physical metal cannot be created in printing press. Therefore physical demand has kept the prices increasing at 20% per year over last 10 year.

Now there is China .... which has recently allowed its citizen to buy gold .. with govt. there buying all their mine's supply. China also has interest in keeping the gold prices low so that it accumulate as much as possible before the collapse of western financial structure / USD. I also have hunch that now China will also try keep prices higher just to force reduced demand from India so that it may accumulate more and reduce major demand center of physical gold as their desperation has increased to import more gold from the HongKong

Now China can just go into the market with a Bang ... buy all the contracts and force the short sellers aka US Fed to come with Gold .. but then it still have not accumulated enough gold and will not like to have a direct confrontation with US as US is the largest trading partner and they hold 3 trillion of US paper.

As Santa says ... and i fully agree with him ... that once Gold becomes play of central banks ... trading gold will become impossible for individuals ... due to volatility ... or outright ban. Due date is between 2015-17.

Also google Andrew McGuire as a whistleblower for silver.

silver foil hat
Feb 28, 2012 - 11:21am

FWIW

check out volume on SLV Jul12 59.00 Calls:

1010:

https://finance.yahoo.com/q/op?s=SLV&m=2012-07

59.00 SLV120721C00059000 0.17 0.00 0.13 0.17 1,010 1,726
silver foil hat
Feb 28, 2012 - 11:15am

another red pill / blue pill moment...

Labyrinth - Jennifer connelly David Bowie End Scene

EE, take note.

silver foil hatPatrancus
Feb 28, 2012 - 11:12am

47 signs...

silver is element #47..

coincidence?

I THINK NOT.

lol

Key Economic Events Week of 7/13

7/13 11:30 ET Goon Williams speech
7/13 1:00 ET Goon Kaplan speech
7/14 8:30 ET CPI for June
7/14 2:30 ET Goon Bullard speech
7/15 8:30 ET Empire State and Import Price Idx
7/15 9:15 ET Cap Ute and Ind Prod
7/16 8:30 ET Retail Sales and Philly Fed
7/16 11:00 ET Goon Williams again
7/17 8:30 ET Housing Starts and Permits

Patrancus
Feb 28, 2012 - 10:56am

47 signs is...

47 signs is an impressive list of Chicom economic takeovers, and I am to also understand that they do have a couple important short comings, that being they have a severe shortage of potable fresh water, which they have had to begin importing and they only operate at best a couple million flush toilets, now that has potential to be a shtf

ClinkinKYBugzy
Feb 28, 2012 - 10:39am

@Bugzy

Yes, I was being very sarcastic. Hence the /s

Joye
Feb 28, 2012 - 10:38am

Liftoff

We have liftoff

Hopefully it won't end like this

henry
Feb 28, 2012 - 10:36am

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Key Economic Events Week of 7/13

7/13 11:30 ET Goon Williams speech
7/13 1:00 ET Goon Kaplan speech
7/14 8:30 ET CPI for June
7/14 2:30 ET Goon Bullard speech
7/15 8:30 ET Empire State and Import Price Idx
7/15 9:15 ET Cap Ute and Ind Prod
7/16 8:30 ET Retail Sales and Philly Fed
7/16 11:00 ET Goon Williams again
7/17 8:30 ET Housing Starts and Permits

Key Economic Events Week of 7/6

7/6 9:45 ET Markit Service PMI
7/6 10:00 ET ISM Service PMI
7/7 10:00 ET Job openings
7/9 8:30 ET Initial jobless claims
7/9 10:00 ET Wholesale inventories
7/10 8:30 ET PPI for June

Key Economic Events Week of 6/29

6/30 9:00 ET Case-Shiller home prices
6/30 9:45 ET Chicago PMI
6/30 10:00 ET Consumer Confidence
6/30 12:30 ET CGP and SSHW to Capitol Hill
7/1 8:15 ET ADP Employment
7/1 9:45 ET Markit Manu PMI
7/1 10:00 ET ISM Manu PMI
7/1 2:00 ET June FOMC minutes
7/2 8:30 ET BLSBS
7/2 10:00 ET Factory Orders

Key Economic Events Week of 6/22

6/22 8:30 ET Chicago Fed
6/22 10:00 ET Existing home sales
6/23 9:45 ET Markit flash PMIs for June
6/23 10:00 ET New home sales
6/25 8:30 ET Q1 GDP final guess
6/25 8:30 ET Durable Goods
6/26 8:30 ET Pers Inc and Spending
6/26 8:30 ET Core inflation

Key Economic Events Week of 6/15

6/16 8:30 ET Retail Sales
6/16 8:30 ET Cap Ute and Ind Prod
6/16 10:00 ET Chief Goon Powell US Senate
6/16 4:00 pm ET Goon Chlamydia speech
6/17 8:30 ET Housing Starts
6/17 12:00 ET Chief Goon Powell US House
6/18 8:30 ET Initial Jobless Claims
6/18 8:30 ET Philly Fed
6/19 8:30 ET Current Account Deficit
6/19 1:00 pm ET CGP and Mester conference

Key Economic Events Week of 6/8

6/9 10:00 ET Job openings
6/9 10:00 ET Wholesale inventories
6/10 8:30 ET CPI for May
6/10 2:00 ET FOMC Fedlines
6/10 2:30 ET CGP presser
6/11 8:30 ET Initial jobless claims
6/11 8:30 ET PPI for May
6/12 8:30 ET Import price index
6/12 10:00 ET Consumer sentiment

Key Economic Events Week of 5/25

5/26 8:30 ET Chicago Fed
5/26 10:00 ET Consumer Confidence
5/27 2:00 ET Fed Beige Book
5/28 8:30 ET Q2 GDP 2nd guess
5/28 8:30 ET Durable Goods
5/29 8:30 ET Pers Inc and Cons Spend
5/29 8:30 ET Core Inflation
5/29 9:45 ET Chicago PMI

Key Economic Events Week of 5/18

5/18 2:00 ET Goon Bostic speech
5/19 8:30 ET Housing starts
5/19 10:00 ET CGP and Mnuchin US Senate
5/20 10:00 ET Goon Bullard speech
5/20 2:00 ET April FOMC minutes
5/21 8:30 ET Philly Fed
5/21 9:45 ET Markit flash PMIs for May
5/21 10:00 ET Goon Williams speech
5/21 1:00 ET Goon Chlamydia speech
5/21 2:30 ET Chief Goon Powell speech

Key Economic Events Week of 5/11

5/11 12:00 ET Goon Bostic speech
5/11 12:30 ET Goon Evans speech
5/12 8:30 ET CPI
5/12 9:00 ET Goon Kashnkari speech
5/12 10:00 ET Goon Quarles speech
5/12 10:00 ET Goon Harker speech
5/12 5:00 ET Goon Mester speech
5/13 8:30 ET PPI
5/13 9:00 ET Chief Goon Powell speech
5/14 8:30 ET Initial jobless claims and import prices
5/14 1:00 ET Another Goon Kashnkari speech
5/14 6:00 ET Goon Kaplan speech
5/15 8:30 ET Retail Sales and Empire State index
5/15 9:15 ET Cap Ute and Ind Prod
5/15 10:00 ET Business Inventories

Key Economic Events Week of 5/4

5/4 10:00 ET Factory Orders
5/5 8:30 ET US Trade Deficit
5/5 9:45 ET Markit Service PMI
5/5 10:00 ET ISM Sevrice PMI
5/6 8:15 ET ADP jobs report
5/7 8:30 ET Productivity
5/8 8:30 ET BLSBS
5/8 10:00 ET Wholesale Inventories

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