Mornings With Andy

105
Tue, Apr 17, 2012 - 11:15am

As luck would have it, I had something I needed to run by our new pal Andrew Maguire this morning. Without looking at the time, I rang him up at about 9:45 EDT...15 minutes before the London PM fix. What fortuitous timing!

Today's raid commenced shortly thereafter. Andy and I are visiting and catching up when suddenly I hear him say "Whoa. Would you look at that!". I didn't even have my quote screen up so I had no idea what he was seeing. Gold had been sliding lower on relatively light volume into the fix when, suddenly, there was a dumping of 6,000 contracts. This caused a $7 drop in price inside of one minute. See chart below:

This prompted a very fun discussion after we watched this play out. First and foremost, the sheer lunacy of the method through which we currently "discover" the day-to-day price of gold.

So, we are supposed to believe that someone or something somewhere suddenly decided at 9:55 EDT to sell 600,000 ounces (almost 19 metric tonnes!) of their physical stash of gold. This is inconceivable! The dumping of 6,000 contracts is an entirely paper, manipulative event and yet it's allowed to happen and physical price is subject to this nonsense. Doesn't it just strike you as amazing that this is even possible? The world's oldest form of money can be devalued (in fiat terms) at the whim of a WOPR and a few keystrokes? Simply ridiculous.

Then, even more fun ensued as I got to explain to him the chart formations FUTF and FUBM. I wasn't sure how our rather unconventional way of charting the metals would go over with such a respected trader. He loved it! Said he thought it made perfect sense and agreed that, with the CoT survey pending this afternoon, we would most likely see FUBMs play out today. So far, so good! As I type, gold is now about $12 off its lows and silver has reversed about 30 cents. Let's hope this continues.

The charts would suggest that they will. In gold, today's low came in right at the 10:00 am EDT London PM fix time, near 1636. This is exactly where it should have stopped as you can see on the chart below. From here, let's see if we can continue the FUBM all the way back to at least the 1655 area, where we were before the 30-minute shenanigans began.

Silver was, of course, whacked alongside gold. The good news is that it, too, stopped right near solid support of $31-31.35 and has since rebounded. Our target for a full FUBM is $31.80. Let's see if we can get back there later this morning.

Anyway, I just want to thank you all again for giving me this opportunity. Two years ago, I simply sat here by myself, watching The Cartel's antics in disgust. Today, I sat here and watched while getting real-time play by play from Andrew Maguire. How crazy is that?!?! The surrealness continues...

More later. TF

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