The Current Cap

Thu, Oct 16, 2014 - 11:31am

Less than two weeks ago, gold again bounced from the same $1180 level which had supported it in the past. The "safe haven" bid has pushed gold higher since but now it seems stuck and capped at/near $1245. Why would this be? Regular readers know the answer...for the same reason gold has been capped all year!

It's not complicated. Really, it's not. Late last year, Ken Hoffman of Bloomberg Industries informed the world that "the gold vaults of London are empty". Haven't seen the clip? Well, here you go:

As Ken clearly states, the key questions for 2014 would be "what happens should Western investment demand return in 2014" and "from where will this gold come"? Having isolated the key issue facing The Bullion Banks, it became clear that their primary goal (if they fail, it threatens their very survival) for this year and going forward would be to enforce the ongoing downtrend in paper price and they would do so at all costs.

In mid-March of this year, with price having broken the down trend, price was suddenly and viciously raided for over $100 in two weeks. Later, after price broke the downtrend again in June, The Bullion Banks created nearly 80,000 new naked short contracts in just five weeks in a desperate attempt to contain the rally. This effort succeeded and price eventually fell back below the main trendline in late August.

A sample of our archived charts show you how we've been following this trend all year:

So now let's get back to the question...Why is there suddenly such a great interest in capping price at $1245?

Total Comex gold open interest has surged by more than 18,000 contracts in just the past week as price rallied $22. With prices heading higher, a surging open interest is a sign of new Spec buying coming into the "market". And which organizations were quick to supply the new naked paper to meet this demand? The Banks, of course! And they did it again yesterday when, on a price rise of over $10 in the face of tremendous financial market volatility, preliminary reports show another open interest jump of over 5,000 contracts.

Obviously, The Bullion Banks are moving quickly to once again contain and cap price. Why? Well, for your answer, all you have to do is look at the latest update of the chart we've been following all year:

As you can see, price is once again pressed up against the main, down trendline. The reason for the cap at $1245 is the same reason the aggressive capping was seen in March and in July. Price must be kept down because, as Ken Hoffman noted last December, the vaults of London are empty and there is no readily available supply should Western investment demand suddenly return to 2010 and 2011 levels.

Finally though, as you can see on the chart above, we are rapidly closing in on a tipping point where the downtrend line from May 2013 intersects with the solid floor of $1180-$1200. What will happen when this chart pattern closes off in early 2015? Will The Banks be successful in crashing/smashing price down, through $1180 and well below the cost of gold production? Or will, instead, The Banks be defeated and forced into another managed retreat to much higher prices? Time will tell but, for now, all you need to do is watch that primary trendline. The price action around it will tell you all you need to know.


About the Author

turd [at] tfmetalsreport [dot] com ()


TF Metals fan
Oct 16, 2014 - 11:32am

my attempt

to be first ;-)

Bongo Jim
Oct 16, 2014 - 11:47am


Be or not 2 be.

Oct 16, 2014 - 11:47am

Said I would never do this but 2 nd

Said I would never do this but 2 place

Oct 16, 2014 - 11:54am

You didn't

you're third wink

Oct 16, 2014 - 12:06pm

Wow, this is really cool

Click the video. WOW!

Oct 16, 2014 - 12:19pm

FED BAcking Off QE

SO here we go Bullard QE data dependent lets slide that Qe pumping to the next meeting and keep the market on edge.

It will be fun in two weeks

thurd aye
Oct 16, 2014 - 12:22pm

Are you supposed to get SIX

Are you supposed to get SIX drinking colloidal silver?

Or is it S/ EVEN sent?

Clarki Stomias
Oct 16, 2014 - 12:23pm

Bring Forth The Jawboning Cornucopia!

Let's lift this badboy!

"Surprising"? Um, to no one but the MSM copyeditor. 

And when they say "delay" that means "reverse" right?

Oct 16, 2014 - 12:24pm



edit: boo ninth


but still in the top ten


Keep stacking !


Oct 16, 2014 - 12:28pm


i have that picture from my trip there last year. China has some real interesting architecture. 

The problem is the apartments they designed and built with no occupancy. Butt ugly and until you drive by some you cannot get the feel.

I think the new building with the ball near the top is a conference center. On the riverfront this side they have a beautiful park with walls of flowers.

However, the disconnect between wealth and poverty there is incredible. But people are happy. Lot's of stories of families and when parents get sent to the big cities to work. If you ever have a chance to got there get a good tour group and do it. Fascinating.

Oct 16, 2014 - 1:03pm

On Ebola vaccine...

About a week ago, there were only two lines about it, on wiki.

They've expanded the info now. NewLink Genetics Corporation (NLNK) works on it... The rumor is that it is 100% effective and the vaccine last for one year. I didn't play this one. I was buying Serepta, SRPT, two days ago, just for the swing trade, but am watching NLNK and all the action around.

GSK is also making a vaccine, they are ahead of NLNK, as for the development stage. NLNK should be better though, they say. GSK is effective, so we could have two different vaccines one day.

Oct 16, 2014 - 1:19pm

Ebola outbreak getting linked to U.S. Army and

Department of Defense in combination with big pharma, more and more. I've seen this a few times now, first in the VT article that got the VT site taken down by the U.S. Army after 2 reads last night, and most recently in a Lew Rockwell (pretty mainstream, too) article Nana posted in DOTS forum.

There sure are some evil people roaming among us.

Oct 16, 2014 - 1:21pm


Turd, for very eloquently explaining the current situation in gold.

Question: if Comex is 99% cash settled, why do they ever have to worry about having physical metal at all?

Oct 16, 2014 - 1:24pm
Oct 16, 2014 - 1:27pm

My guess

"What will happen when this chart pattern closes off in early 2015? Will The Banks be successful in crashing/smashing price down, through $1180 and well below the cost of gold production? " It wouldn't make too much sense to drive the price much lower than $1180. To keep gold capped you need the miners able to producer and encourage volume to make profits. More likely would be to allow gold to rise to the $1400 level then cap it there and start a new downtrend. This could take months to occur buying more time for the monetary policy gods to work things out. Just a possibility IMO.

Oct 16, 2014 - 1:28pm

Fox in charge of henhouse . . . MS now PM market maker

"Morgan Stanley & Co. International Plc was reclassified as a spot and options market-making member of the London Bullion Market Association, effective Thursday, the LBMA says. “In order to qualify as a LBMA market maker, a company must offer two-way quotations in both gold and silver to the other market makers throughout the London business day,” the LBMA explains."

"(Reuters) - Morgan Stanley (MS.N) will pay $4.4 million to settle a class-action lawsuit with brokerage clients who bought precious metals and paid storage fees, according to a court filing.

The proposed settlement, which must be approved by the federal court in Manhattan, includes a cash component of $1.5 million and economic and remedial benefits valued at about $2.9 million, according to a court filing on Monday.

The suit, filed in August 2005, alleged that Morgan Stanley told clients it was selling them precious metals that they would own in full and that the company would store.

But Morgan Stanley either made no investment specifically on behalf of those clients, or it made entirely different investments of lesser value and security, according to the complaint."

Oct 16, 2014 - 2:02pm

Cap update

Clearly seen on this 30-minute chart. "None shall pass!"

Oct 16, 2014 - 2:18pm

Looks like

Some shorts in Crude just panicked while silver just yawned :-) 

Oct 16, 2014 - 2:41pm


Does anyone know if SPXS track S&P index or S&P Futures? These two differ a lot during market hours. Anyone who trades using this vehicle please let me know.

Oct 16, 2014 - 2:51pm

That was quite the little

That was quite the little squeeze and now look how quickly crude came back down!

Had just mentioned yesterday that the inevitable bounce in crude would hit resistance at the old support of $84-86. The high today was $84.79 but now it's already back to $82.64. 

Oct 16, 2014 - 3:08pm
Oct 16, 2014 - 3:23pm
Oct 16, 2014 - 3:34pm

Link to Lew Rockwell Nana posted . . .

Lew Rockwell is pretty mainstream. Even he thinks that the U.S. Army/Dept. of Defense is behind this Ebola outbreak.

Duff at Veterans Today said the U.S. Army attacked and shut down his site after the latest ebola-related article he posted there. He figures he got too close to the bare truth for someone's comfort.

It sure looks like the government, shadow or real, does want to kill Americans, and makes no pretense otherwise.

They must feel secure that they will not be discovered as individuals, and can hide behind "plausible deniability" or a wall of government obstructions to justice.

Oct 16, 2014 - 4:04pm

Something big coming?

"Something nasty is going on behind the scenes in the financial system that is not yet apparent.
Treasury futures opened in the early evening and the 10-yr traded down to 2.25%
Something has the market incredibly spooked and I find it interesting that the U.S. Treasury Secretary and the UK’s equivalent will be running a big bank fail simulation test next week.
The movement in 10-yr Treasury yields AND the blatant smashing of the gold price since mid-July is exactly what occurred in 2008 before Lehman collapsed.

Is another TBTF mega bank on the brink of insolvency??"

Just before 9/11, some people knew enough to short certain airline stocks big-time. Certain people just always are "lucky" I guess.

Oct 16, 2014 - 4:18pm

TBTF bank in trouble?

Citigroup Inc. (C) is diving deeper into derivatives.

In the past five years, the firm that took the largest U.S. bank bailout of the financial crisis increased the total amount of derivatives on its books by 69 percent, surpassing most U.S. peers and closing the gap with the market leader, JPMorgan Chase & Co. (JPM) At the end of June, Citigroup had $62 trillion of open contracts, up from $37 trillion in June 2009, company filings show. JPMorgan trimmed its holdings 14 percent to $68 trillion

Oct 16, 2014 - 4:27pm


"I find it interesting that the U.S. Treasury Secretary and the UK’s equivalent will be running a big bank fail simulation test next week".

On 9/11 there were simulated war and hijacking exercises going on in the skies above the USA ...and something 'slipped through' that was the real thing.

Ok, this bank-fail simulation will be kept quite separate from the banking system. Just something worthy of note, perhaps.

Oct 16, 2014 - 4:29pm

Capping the Comex

Capping the Comex PM prices is clearly going to continue until the whole current Fiat system collapses IMO, at which point the Big boys will simply settle in the old worthless paper by printing whatever they need, followed by a quick bail in con-fix-catch-one as per Cyprus to take their paper back! Add in a 1933 hand in order for all the physical on the grounds it's needed for vaccine and you've got a good book basis.

ancientmoney Bollocks
Oct 16, 2014 - 4:30pm



It may make sense to pull all cash out the big banks except maybe $100 to keep account open.

Just in case this is a "banking 9/11 drill."

Oct 16, 2014 - 4:32pm

On Ebola vaccine 2...

Well, you could make some money with NLNK and GSK today, because -- when the Director of CDC named these two companies today, that they are testing their vaccines for ebola, both stocks have exploded. NLNK is up 26% right now...

Oct 16, 2014 - 4:35pm
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