The Gold Raid of July 19

156
Sat, Aug 1, 2015 - 2:33pm

At this point, there's really no reason to discuss the "how" and the mechanics of the deliberate, manipulative Globex smash of Sunday, July 19. However, it might be worth considering the aftermath as we look for reasons "why".

As we consider "why", the first and foremost reason was price and chart manipulation. Gold had bottomed at $1130 on November 7, 2014 and had, over the next eight months, found stout support near that level. However, on Friday, July 17, gold closed just above that important level at $1132. See below:

The smash that occurred on Sunday evening, July 19, was designed to take out this important support level and trigger all of the sell-stops that were placed below there. This was accomplished through a massive contract dump of $2.7B in paper gold that not only wiped out the entire global bid stack, it actually cause the entire Globex gold market to seize up and halt for 20 seconds..twice.

Though further selling akin to the event of April 12-15, 2013 failed to materialize, the damage was done and price has yet to recover.

Now to the question of "why".

Since the CoT reports tell us that The Large Spec short position in gold was already near record levels before the raid, why was the raid allowed to happen? Keep in mind that on the other side of those short trades would be "commercial" or Cartel Bank longs. These entities rarely lose as it is nearly always that The Specs are the ones taken to the fleecing shed. In this case, though, The Specs won. Again, why was this allowed? Could the answer be found in the GLD "inventory" numbers?

On April 11, 2013...the day before the massive two-day and 0 price raid that was effectively designed to take out 19 months of price support at 25...the total GLD "inventory" stood at 1,181.42 metric tonnes. Immediately after the raid began, GLD "inventory" began to fall and by the end of April it was already down over 100 mts at 1078.54. By the June 28 price lows of 80, "inventory" was down to just 969.50 mts and though price then rallied over 0 through August, GLD was still drained and stood at 921.30 mts on 8/30/13. By the end of 2013, with price back down to near 00, the total GLD "inventory" had sunk to just 798.22 mts, a drop of a massive 383 metric tonnes from the pre-raid levels. 383 metric tonnes!!

How much gold is 383 metric tonnes? That's about 12.3MM troy ounces or about 31,000 of these:

Or, stacked 192 to a pallet, about 162 of these:

While price stabilized in 2014 and finished nearly unchanged on the year, global physical demand remained high. The clear effective result: More gold needed to come out of the GLD "inventory" and over the course of 2014, the GLD "inventory" fell from 798.22 metric tonnes to 710.81. This was another drop of over 10% and, expressed as London Good Delivery Bars, amounts to another 7,000 of these:

OK, we're almost there. Again, WHY was the Sunday evening July 19 raid allowed to occur? Could the answer be found on the chart below?

Again, as of Friday July 17, price was still above support at 30 and only down about 5% year-to-date. However, "inventory" had been stubborn to leave the GLD. As noted above, the "fund" began the year at 710.81 mts yet, on July 16, it still showed and "inventory" of 707.88 mts...down not even 3 mts year-to-date...while even the World Gold Council had to admit that global demand remains high: https://www.gold.org/news-and-events/press-releases/global-gold-market-r...

And, in the time since the raid, it appears that The Bullion Banks have once again miscalculated the effects of the raid on physical demand: https://srsroccoreport.com/fear-spreading-in-the-global-financial-system...

So, I believe we have found the answer as to "why". Why was the raid allowed even though The Banks and other "Commercials" were forced to book some paper losses as a result? Because the GLD tree needed to be shaken yet again. As a readily-accessible source of instantly-available gold, The Authorized Participant Bullion Banks are once again redeeming their 100,000 share lots for physical gold from the GLD "inventory". That this gold is then utilized to settle physical demand from around the globe is hardly arguable, given recent history.

To sum up, since the massive, illegal amd manipulative raid of Sunday evening July 19, the GLD has shed 32.18 metric tonnes of gold from its "inventory". This is about 1,131,000 troy ounces or 2,800 London Good Delivery Bars. To be more accurate, though, perhaps we should express the plundering in different terms. Since this gold is now gone for good and not returning (https://www.tfmetalsreport.com/blog/3924/gonefor-good), a better way to describe the size and scope of the withdrawals would be this...about 35,200 kilograms.

TF

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  156 Comments

Swineflogger
Aug 1, 2015 - 2:37pm
Swineflogger
Aug 1, 2015 - 2:40pm
philly
Aug 1, 2015 - 2:40pm

Saturday 2nd!

Thought I'd celebrate my 2nd place finish by staring at my stack and wondering if it will ever save my life...while it just sits there seemingly unaware of the world around it!

Aug 1, 2015 - 2:42pm

1,131,000 oz from the GLD...

...in just 10 days is also more than 3X the entire Comex registered gold vault:

Ned Braden TF
Aug 1, 2015 - 2:54pm

Marchaaasss !

Where are you ?

Fatso
Aug 1, 2015 - 3:05pm

Well worth your time to read this at least once, by J Hussman

Expert That Correctly Called The Last Two Stock Market Crashes Is Now Predicting Another One . . .just in case you missed this on silverdoctors, July 17th week of market top.

https://www.silverdoctors.com/expert-that-correctly-called-the-last-two-...

What I am about to share with you is quite stunning. A well-respected financial expert that correctly predicted the last two stock market crashes is now warning that we are right on the verge of the next one.

From The Economic Collapse Blog:

John Hussman is a former professor of economics and international finance at the University of Michigan, and the information in his latest weekly market comment is staggering. Since 1970, there have only been a handful of times when a combination of market signals that Hussman uses have indicated that a major market peak has been reached. In 1972, 2000 and 2007 each of those peaks was followed by a dramatic stock market crash. Now, for the first time since the last financial crisis, all four of those signals appeared once again during the week of July 17th. If Hussman’s analysis is correct, this could very well mean that the next great stock market crash in the United States is imminent.

It was an excellent article by Jim Quinn of the Burning Platform that first alerted me to Hussman’s latest warning. If you don’t follow Quinn’s work already, you should, because it is excellent.

When someone is repeatedly correct about the financial markets, we should all start paying attention. Back in late 2007, Hussman warned us about what was coming in 2008, but most people did not listen.

Now he is sounding the alarm again. According to Hussman, when there is a confluence of four key market indicators, that tells us that the market has peaked and is in danger of crashing. The following comes from Newsmax

He cited the metric among the indicators that foreshadowed declines after peaks in 1972, 2000 and 2007:

*Less than 27 percent of investment advisers polled by Investors Intelligence who say they are bearish.

*Valuations measured by the Shiller price-to-earnings ratio are greater than 18 times.

*Less than 60 percent of S&P 500 stocks above their 200-day moving averages.

*Record high on a weekly closing basis.

The most recent warning was the week ended July 17, 2015,” Hussman said. “It’s often said that they don’t ring a bell at the top, and that’s true in many cycles. But it’s interesting that the same ‘ding’ has been heard at the most extreme peaks among them.”

It is quite rare for the market to set a new record high on a weekly closing basis and have more than 40 percent of stocks below their 200-day moving averages at the same time. That is why a confluence of all these factors is fairly uncommon. Hussman elaborated on this in his recent report

The remaining signals (record high on a weekly closing basis, fewer than 27% bears, Shiller P/E greater than 18, fewer than 60% of S&P 500 stocks above their 200-day average), are shown below. What’s interesting about these warnings is how closely they identified the precise market peak of each cycle. Internal divergences have to be fairly extensive for the S&P 500 to register a fresh overvalued, overbullish new high with more than 40% of its component stocks already falling – it’s evidently a rare indication of a last hurrah. The 1972 warning occurred on November 17, 1972, only 7 weeks and less than 4% from the final high before the market lost half its value. The 2000 warning occurred the week of March 24, 2000, marking the exact weekly high of that bull run. The 2007 instance spanned two consecutive weekly closing highs: October 5 and October 12. The final dailyhigh of the S&P 500 was October 9 – right in between. The most recent warning was the week ended July 17, 2015.

The following is the chart that immediately followed the paragraph in his report that you just read…

When I first took a look at that chart I could hardly believe it.

It appears that Hussman’s signals are able to indicate major stock market crashes with stunning precision.

And considering the fact that we just hit a new “ding” for the first time since the last financial crisis, what Hussman is saying is more than just a little bit ominous.

According to Hussman this is not just a recent phenomenon either. Even though advisory sentiment figures were not available back in 1929, he believes that his indicators would have given a signal that a market crash was imminent in August of that year as well

Though advisory sentiment figures aren’t available prior to the mid-1960’s, imputed data suggest that additional instances likely include the two consecutive weeks of August 19, 1929 and August 26, 1929. We can infer unfavorable market internals in that instance because we know that cumulative NYSE breadth was declining for months before the 1929 high. The week of the exact market peak would also be included except that stocks closed down that week after registering a final high on September 3, 1929. Another likely instance, based on imputed sentiment data, is the week of November 10, 1961, which was immediately followed by a market swoon into June 1962.

Of course the past is the past, and what has happened in the past will not necessarily happen in the future.

So is Hussman wrong this time? With all of the other things that are happening in the financial world right now, I certainly would not bet against him.

Other financial professionals are concerned that a market crash could be imminent as well. The following comes from a piece authored by Andrew Adams

More than 13% of stocks on the New York Stock Exchange are at 52-week lows, which is about 6 standard deviations above the average over the last three years (1.62%) and an extreme only seen one other time during said period (last October when the S&P 500 was percentage points away from a 10% correction).

This dichotomy has created what I believe to be the biggest question about the stock market right now – have we already experienced a stealth correction in the majority of stocks that will soon come to an end or will the market leaders finally succumb to the weight of the laggards and join in on the sell-off? The answer to this could end up being worth at least $2.2 trillion, which is how much money would essentially be wiped out of the stock market if we finally get the much-discussed 10% correction in the overall market (the total U.S. stock market capitalization was $22.5 trillion as of June 30, according to the Center for Research in Security Prices).

Sometimes, a picture is worth more than a thousand words. I could share many more quotes from the “experts” about why they are concerned about a potential stock market collapse, but instead I want to share with you a “bonus chart” that Zero Hedge posted on Tuesday

Do you understand what that is saying?

In 2007 and 2008, junk bonds started crashing well before stocks did.

Now, we are witnessing a similar divergence. If a similar pattern holds up this time, stocks have a long, long way to fall.

Like Hussman and so many others, I believe that a stock market crash and a new financial crisis are imminent.

The month of August is usually a slow month in the financial world, so hopefully we can get through it without too much chaos. But once we roll into the months of September and October we will officially be in “the danger zone”.

Keep an eye on China, keep an eye on Europe, and keep listening for serious trouble at “too big to fail” banks all over the planet.

The next several months are going to be extremely significant, and we all need to be getting ready while we still can.

Barfly
Aug 1, 2015 - 3:30pm

So....

The bullion banks let/ made price drop below support at 1130$ so they could redeem shares of GLD in order to fill orders for physical gold? I'm confused? I fail to see how they could profit by doing so, as all said physical gold was bought at a higher price.

infometron
Aug 1, 2015 - 3:57pm

@Barfly Re: So....

Out of desperation? To prevent a physical default? The attack was so blatant, no other way of explaining it I can think of. Fiat profits be damned if the whole fiat ponzi scheme is at risk...

How to keep the flight to safety away from precious metals? Must do so at all costs!

Edit: As pointed out many times by many turdites, the on-going price suppression in precious metals will make the rebound all the more spectacular if there is a failure to deliver. The average official propaganda narrative kool-aid sipping financial so & so with an IQ above 100 would have to ask, why has price been going down all these years if supply has been drying up?! Oops!! That's one massive wake-up call!

Goes without sayin' but I'll say it: Craig, I think you've nailed it!

Grey Mare
Aug 1, 2015 - 4:08pm

Turd???

I'm with Barfly on this...trying to figure it out. I thought the bullion banks were the 'authorized participants' in GLD, allowed to redeem shares for physical And it was already their job to make sure there was enough gold to keep up with delivery requirements on the LBMA and elsewhere. If so, why did they have to smash price to 'free up' gold from the GLD - surely they knew this would just increase eastern demand for physical after their previous experiences? Did they need investors to sell some shares so they could plunder the physical inventory? They didn't seem to need to add physical back in (except for brief spells) when the price of GLD was going up earlier this year.

GM

Barfly
Aug 1, 2015 - 4:11pm

Infometron has it

Please read the article closely. The raid was not done by Bullion Banks for paper profit. Instead, The Banks allowed a Bank, a single Spec or collection of Specs to do it with the plan that breaking $1130 would engender enough GLD liquidation (recall all of the MSM gold hit pieces that followed) that The Banks would therefore find the physical metal needed to settle a very tight London delivery. Extremely critical to keep in mind that the custodian of the GLD is the proven-criminal HSBC and most/all of the gold is vaulted in London.

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