As we approach December contract expiration AND the vote on The Swiss Gold Initiative, you'd better expect more volatility like we had this morning. In fact, anyone with a queasy stomach had better just shut off their computer for the next 10 days.
So here we were, enjoying the morning. The sun was shining and the birds were singing. Then, WHAM!! Whoa, wait a minute, hold on just a second. What the heck happened here?
Notice how the Comex opened at the usual hour and am otherwise sleepy, pre-FOMCminute session was unfolding. Besides the waterfall cascade on the price chart, note the surge in volume. What's the deal?
Analysts and media tell us that this drop is due to the release of a new public opinion poll in Switzerland, showing a drop off in support of passing the SGI. The most recent poll had shown support for SGI ahead by 45-38 with 17% undecided. Today's new poll shows SGI behind 44-39 with 15% undecided. That's quite the flip and it apparently spooked some of the recently added longs into selling.
Or did it? Let me offer a possible alternative. As noted last Friday in reviewing the recent CoT, the Commercial gross long position was at the highest level in months AND AS DOCUMENTED AD NAUSEAM IN THE PAST HERE AT TFMR, we know that The Cartel trading desks absolutely love to "leg out" of positions, especially as we get close to contract expiration.
Could this instead have been a simple BB dump of 5,000 to 10,000 contracts in order to slam price? Hell yes! At 10:48:31, Nanex caught 2,270 gold futures contracts trading in ONE SECOND.
A trade of that size, dumped onto the market, is not intended to achieve the most price efficient fill. It is only done to influence price. And influence it did! See the 1-minute chart below:
So, yes. I'm certain that the new SGI poll had the immediate impact of freaking out some fresh longs. However, the follow on selling is almost certainly a bullion bank trying to jam price lower, perhaps hoping to re-attach gold to the yen and engender even more selling.
As you can see below, the yen continues to be in absolute free-fall. When that Albert Edwards dude first mentioned 120, many folks scoffed, but I doubt that even Mr. Edwards himself thought that the USDJPY would get there this quickly. I have a last of 117.695 and up nearly 3/4 of a percent today. (Or looked at inversely, the yen is down in value vs the dollar by another 0.75% today alone.)
Gold, which had finally moved UP and away from the yen linkage over the past week, has today been slammed back down and in closer alignment. Will this embolden even more selling as spec algos try to fully re-link price? Maybe. As you can see below, a full link would require price to fall toward the $1140 area...the same area where it seems The Banks find it extremely difficult to find physical metal to settle trades. GOFO rates continue to "worsen" with the one-month making a new 13-year low today so it appears that The Banks will have little desire to see price make new lows. We'll see.
So, anyway, I'm not entirely certain of what happens next though I do know that I promised you a very interesting week and it is certainly playing out as such. Additionally, as I mentioned in yesterday's podcast, ALL I CARE ABOUT is a second consecutive weekly close above $1180. How we get there and the volatility in between is of no importance. I just want to see something above $1180 at 5:00 pm on Friday.
Finally, as mentioned yesterday, there won't be an A2A this week and next week we'll have a "holiday weekend" discussion with Jim Willie, instead. One of the things I'll be doing in the meantime is appearing with Kerry Lutz on a special "Liberty Mastermind Webinar" next Tuesday evening. If you'd like to join us, just click this link: https://attendee.gotowebinar.com/register/8171889638354273281