Forget the myths that the media's created about the Fed. The truth is, these are not very bright guys and things got out of hand. Follow the money...just follow the money. - My paraphrase of "Deep Throat" from "All The President's Men"
The price of gold was remarkably smashed $35 in the space of 60 seconds at 10:14 a.m. NY time this morning. 12,000 contracts hit the market almost all at once. To put this size in context, on Friday a little over 107,000 Feb contracts traded during the entire 23 hour Globex system session. In other words, today at 10:14 a.m., a little over 11% of Friday's total volume traded in the space of 1/1380th of the entire Globex session for a given period.
The hit came from nowhere and halted a strong rally in the price of gold that began last night in Asia. Concurrently, the dollar was selling off hard, as was the S&P 500. There was no apparent news or event that would have triggered the price smash:
The price of gold as write this has since recovered about 90% of the price hit. Silver, which was giving all indications of behaving like a runaway freight train before the hit, has recovered about 2/3 of its price-ambush.
Mere manipulation by desperate criminals?
This is the unmistakable sign of desperation. Desperation to keep a lid on the price of gold in an attempt to make the public believe that everything is ok in this country and with the U.S. dollar. But we all know otherwise...
I have no doubt that the hit was used by JP Morgan to get more long Comex gold futures and to induce a flood of GLD share selling. The GLD shares will be turned into the GLD Trust either today or tomorrow and used to remove more gold. I bet within the next couple of days, today inclusive, we'll see a large withdrawal of gold from the GLD Trust. For the record, selling of GLD shares does not trigger the removal of gold Gold can only be removed by the banks who exchange shares for gold.
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This still seems to be "effective" desperation. As long as they are allowed, and the crowd plays along, it will continue
ReplyDeleteNot really. The big banks on the Comex are now very net long gold. The retail trader is net short. I think the last time the retail trader was short Comex gold was like 2000 or 2001.
DeleteThe paper manipulators are getting run over by the physical demand from the east and India may be getting ready to lift its import controls. The current Govt will get overthrown in the elections this spring if they don't. The front-runner is not friendly to the West. I have it from a good source - as in, used to be a White House insider in DC - that the U.S. Govt had a heavy hand in India's decision to put the gold import controls in place.
This price capping on gold is almost over. They have to let price go up a lot in order to try and create some physical selling otherwise they'll default on Comex and LBMA forwards.
Dave, Thank you for this confirmation of the US' role in India's Gold controls.. I have read speculation, but nothing as clear as this. Thank you - this little tidbit is a really big deal IMO, and I have already referenced your comment elsewhere. Keep up the good work.. we need you to stay sane! 1Kg Lunar Dragon
DeleteLOL Happy New Year 1KLD. When the going gets weird, the weird turn pro - Hunter S. Thompson
DeleteDave, please take a look at what John Williams of Shadow Stats has to say about the timing of hyperinflation.
ReplyDeletehttp://usawatchdog.com/2014-crisis-in-dollar-will-trigger-inflation-john-williams/
The economy/financial system has a gigantic fecal impaction (TBTF). The US Govt/FED continues to stuff garbage in the front end and not allowing the crap to go out the other and be flushed where it belongs. There is only one cure and that is a golden enema. I don't believe we will see a 1920-30 gold standard but an unfixed price in gold that will determine the value of ALL global fiat currencies. Gold will become judge, jury and executioner of the value of fiat on a global level. The day of reckoning for the dollar is close at hand. TPTB know this, hence todays stunt in the gold futures. BTW great blog Dave!!
ReplyDeleteDave, do you think the dollar price of gold will be allowed to rise or will there first be default/cash settlement at the COMEX and/or LBMA?
ReplyDeleteThat's the $64k question lol. I don't know. I do think unless they pull a rabbit out of their hat, and I don't rule that out, we'll find out the answer to that question sometime this year.
DeleteIf there's a rabbit in the hat, it'll be pulled out. The game is over when the hat is empty and the audience crushes the magician.
DeleteFirst of all, I'd like to address the 64k question. Many years ago, potato magnate JR Simplot, had shorted the Maine potato contract in an all out assault to corner the potato market. He failed and defaulted. The oddest thing then happened. Whatever market making God was in place at the time- simply did away with potato futures as a trade-able commodity after that.
ReplyDeleteI believe that is the future of gold. Freegold. Unencumbered by paper claims.
Dave I want to thank you for explaining what happened today. Not that I particularly give a shit about how they are pricing my physical gold. It's not for sale. People should not get too ego involved when trying to decide whether or not to buy a rare and valuable commodity priced against some arbitrary, fiat currency without limit.
It is insane to think of gold as some dollar harbinger. My gold is not for sale at 2000, or 5000. When the grand reset occurs, I won't be one of the billions who gets priced out. When people quit thinking in terms of dollars (which are essentially worthless) and realize that one day- the world will figure this out. For now, buy when you can. In relative terms, gold has never been cheaper than it currently is.
84 month car loans, counting auto production when it ships from the factory to the dealer but is not necessarily sold to the customer yet and now this
ReplyDeletehttp://ca.finance.yahoo.com/news/couple-feel-39-robbed-39-25-interest-td-034825522.html
i have become so jaded as to the paper tag they hang on bullion every day that i almost failed to notice the flash crash that wasn't. aside from the ludicrous assertion that a fat finger keyboard stroke was the culprit (yes, that is how Kitco's Wycoff along with many others interpreted the decided anomaly) and in light of the vast dump that occurred at $1900, it seems likely that the predatory excursions by the Fed pirates into their COMEX pond are indeed coming to an abrupt and welcome end. They've simply run out of ammo and the smart money know s it as even a cursory perusal of the COT charts confirms the literal seismic shift that has taken place into long positions by the large funds. William's latest interview by Greg Hunter is extremely elucidating though John looked like he might have been recovering from a long session with one of his favorite single malts.
ReplyDeleteNanex Update - 8-Jan-2014
DeleteThe chart below shows the entire $30 drop in the price of Gold futures that occurred in just under 100 milliseconds (1/10th of a second). When we separated groups of trades by a jump in the exchange sequence number (a technique to determine the size of a larger order) we discovered there were 9 groups where the sum of the trade sizes was exactly 338 contracts! Each group is composed of widely different numbers of trades (211, 186, 120, 193, 97, 193, 137, 112 and 109 to be precise), yet the sum of the sizes of each group totals exactly 338. We show these 9 groups in the chart below. What's more, there are other trades occurring between these groups of 338 contracts.
This was not the result of a fat finger, but rather the work of a high frequency trading algorithm that would pause, and (probably) test the market before continuing. A fat finger would not have such distinguishing features.
http://www.nanex.net/aqck2/4522.html