Setting The Table
We've been watching gold be pressured all week in anticipation of a lower rigging on Friday if the BLSBS "exceeds expecations". The process continues today as gold is down even though every single headline I can find could be construed as gold positive.
- The continuing Greece-ECB saga: http://www.zerohedge.com/news/2015-02-05/greece-refuses-back-down-government-will-do-promised-tsipras-says
- A soaring US trade deficit that will negatively impact GDP: http://www.reuters.com/article/2015/02/05/us-usa-economy-idUSKBN0L91UE20150205
- A plummeting Baltic Dry Index, though Forbes of course says it's nothing to worry about: http://www.forbes.com/sites/timworstall/2015/02/05/why-you-shouldnt-worry-about-the-baltic-dry-index-hitting-a-29-year-low/
- Surging layoffs and jobless claims: http://www.zerohedge.com/news/2015-02-05/layoffs-surge-176-yoy-shale-state-joblessness-soars-initial-jobless-claims-rise
- US Secretariat of State Horseface placing all of the blame for Ukraine Crisis on the Russians: http://www.cnn.com/2015/02/05/europe/ukraine-conflict/
And yet, gold is off more than 1% from it's overnight highs.
In case you haven't been able to follow along all week, here's what the deal is...
As of Tuesday January 27, The Cartel Banks were gross short a whopping 323,486 Comex gold contracts or slightly more than 1000 metric tonnes of paper gold. Roughly the paper equivalent of Switzerland's supposed physical hoard.
This is up from 206,873 contracts short back in October of last year. This 56% increase in under four months has been entirely caused by a flip of bearish Spec sentiment and a return of Spec long interest. Rather than allow price to rise to find a natural, buy/sell equilibrium, The Banks have simply issued new paper short contracts in the hopes of:
- containing the rally
- eventually buying back and covering the shorts at minimal loss or even a profit
Stated again...From early October to late January, The Gold Cartel Banks added 116,613 naked short Comex gold contracts. If forced to deliver the actual metal, this would equate to 11,661,300 troy ounces. Problem is, the entire Comex registered AND eligible vault only holds 8,109,244 troy ounces.
Hmmm. Since this is somehow all considered "legal" and "fair", it falls to The Banks to somehow rig prices lower so that they can cover these shorts back up and perpetuate the current scam/charade. This is what they are doing this week.
Regardless of the headlines. Regardless of the continued stories of extreme Asian physical demand. Regardless of the fiat currency devaluation. Regardless of the looming Euro crisis. Regardless of the potential of nuclear-armed Hot War in Ukraine. Regardless of the moribund US economy. Regardless of negative interest rates around the globe. Regardless of the cost of mine production.
All that matters is that 8 largest Banks are collusively rigging prices lower in the hope that they can get some of the 60 largest Spec funds to liquidate. The Banks' clear goal has been to breach the 200-day moving average and, as yet, they've been unsuccessful. For the ultimate, headline-grabbing bang for their manipulative buck, they're hoping to use tomorrow's BLSBS to inspire the selling needed to finally break down and close price below this important technical indicator. Let's see if we can write the Yahoo Finance or Marketwatch story right now:
"Following today's surprisingly strong US jobs report, gold fell over 1% and closed below the technically-important 200-day moving average for the first time in three weeks. Analysts interviewed by (insert media here) noted that today's close likely indicates more selling to come and foreshadows an end to the nacsent rally in the yellow metal that seemed to begin in January."
See how that works?
Anyway, this is what The Banks and the sycophant media are hoping will happen. Will it actually come to pass? That is the question.
Below is a reprint of the chart I've posted several times this week. Since I believe that:
- Gold found a final, physical bottom back in November and December AND
- Physical demand is unrelenting AND
- News flow is supportive to continued buying of paper metal derivatives
I'm looking instead for a bounce and rally tomorrow or early next week. The area in which I'd like to buy an AGE or perhaps even a call option is designated by the red circle on this chart. Will price get there? Probably.
So, don't get frustrated by the seemingly nonsensical price action. Understand what's going on and why, and then use this knowledge to your advantage.
Have a fun day and then let's have even more fun tomorrow.