Well, What Now?

Several people have asked me why gold didn't hold its own or move higher in a "flight to safety" when the market went into a swan-dive.   It's a good question and the best quick answer is to say that you can't look at any one intra-day timeframe comparison of anything and think that that's the way it is.  In fact, when a broad market makes a big move one way or the other, typically there will short term correlation with that move in every market.  The simplest explanation for that is that hedge funds tend to drive market direction on a short term basis because of the way their computer models are programmed to move money in and out of markets.  That's just the way it is.  Typically hedge funds will blindly sell anything that's not nailed to the floor on days when there's a sharp sell-off in the stock market and move into Treasuries.  And today everything is down except inverse ETF's and Treasuries LOL.

But there's also another explanation for today's response in the gold/silver markets.  If you are ignorant or naive enough to believe that the Fed/Govt does not intervene in or manipulate the markets, especially the dollar anti-christ gold market, you can go back reading to Mish or Denninger or Fleckenstein.   BUT, if you have access and can pull up an intra-day trading chart of gold and silver futures, you will note that a cliff-dive in silver was initiated around 2:30 a.m. Denver time, which coincides with when Honk Kong and most of Asia closes.  Since Hong Kong primarily deals in the physical gold/silver markets, we can only conclude that an avalanche of paper silver was unloaded in London as soon as the highly supportive physical buying markets were closed.  Ditto for gold.  As most of you know, typically the anglo bullion banks, when they want to try and inflict damage on the metals, begin their paper dumping operation in London and continue in NYC at the 6:20 a.m. (Denver time) Comex open.  And of course my charts show another selling waterfall occurred leading up to, and inclusive of, the Comex open.

From this we can conclude that the big sell-off in gold was initiated by the traditional paper futures players, the bullion banks like JP Morgan, Baclays and Goldman Sachs.   This also serves to trigger the moving average sell-stop orders programmed into big hedge fund black box trading computers per my first paragraph.  I'm 100% sure this is why gold and silver sold off hard with the markets in general.

So what happens from here?   I dunno - who's John Galt?  What I do know is that going back to that day on May 6, 2010, when the Dow plunged 1000 points intra-day, gold/silver/mining stocks actually started to stage a huge rally when the Dow made the last 500 points or so of that plunge.  I also believe that the Fed would like to try and get the price of gold and silver a lot lower before it inevitably rolls out more QE.  Remember, in our system of fiat currencies, when gold moves sharply higher, it's our best warning indicator that the system is failing.  If everyone starts to move into gold because of this, all of the lies that have been promoted by the Fed and our Government over the last 40 years (and longer) will come of the closest in one big horror show.  Can the Fed accomplish this?  I doubt they can given the massive ongoing transfer of fiat currency into physical metal going on in the eastern hemisphere.

My best advice with regard to the metals and mining stocks would be to follow Jesse Livermore's best advice, which is to "sit tight and be right."  If you have been waiting on the sidelines for an opportunity to double-down or add to positions, now would be a good time to start doing that.  Don't forget, all of the variables that are driving capital into the precious metals are getting stronger by the day.  I don't how much  they can manipulate the metals prices lower, especially with the well-documented massive physical accumulation going on in India, Asia and now the Middle East, but I do know that at some point between now and 6 months or a year from now that gold and silver will substantially higher and those who own a lot of physical gold and silver will be very thankful that they do.