Day 2 of the precious metals “liquidation” has started out with another rout. Gold is down
$66 $72 $84 $110 and silver is down $2.27. Several “reasons” and “opinions” follow below but which is correct? How do we distinguish between manipulation and market forces?
The transfer of physical gold (and silver) from Western countries to Eastern countries is important: 800 tons to China so far this year. The central banks across the world are stocking up on gold. Have you tried to buy silver coins? The supply for physical silver is the same as ammunition: out of stock. The price of precious metals is due to paper (not physical) sales. Are the prices being manipulated? Yes.
So the DHS insider stated in December that we will know when the administration is about to strike: when the precious metals are crushed:
DH: How soon do you see things taking place?
RB: They already are in motion. If you’re looking for a date I can’t tell you. Remember, the objectives are the same, but plans, well, they adapt. They exploit. Watch how this fiscal cliff thing plays out. This is the run-up to the next big economic event.
I can’t give you a date. I can tell you to watch things this spring. Start with the inauguration and go from there. Watch the metals, when they dip. It will be a good indication that things are about to happen. I got that little tidbit from my friend at [REDACTED].
I believe it is now this time. Keep your eyes open.
As Asia opens to the bloodbath that occurred in precious metals on Friday in the US, it would appear that more than a few traders got the ‘tap on the shoulder’. Shanghai futures are limit-down and spot gold and silver prices are plunging once again as we suspect forced margin-calls and the raising of cash (to cover extreme variation margin – or capital reserves) needed in JGB positions, as we explained here. Liquidation is certainly the theme of the evening – investors are selling JGBs (6th day in a row of multiple-sigma moves in long-dated Japanese bonds 30Y +56bps off its post-BoJ lows at 1.60%!), selling Japanese stocks (Nikkei -128 pts, second biggest down day post-BoJ), selling US Treasuries (futures down), selling gold and silver (gold spot down over $100 from Friday’s highs), and despite selling JPY early (retracing 30% of the weakness post-BoJ), JPY is practically unchanged (jerking lower only on the US futures open and Asian equity open) – it seems Mrs.Watanabe is struggling and unwinding some her excessively short JPY and long NKY positions.
Gold slumped below $1,400 an ounce to a two-year low after dropping into a bear market last week as optimism that a U.S. recovery will curb the need for stimulus cut demand for a protection of wealth. Precious metals declined.
This is comical to the point of being absurd. That this has been allowed to happen is breathtaking in its audacity. One day soon I hope to see the bullion bankers and their CFTC accomplices held accountable for their actions. That may seem tonight like the quixotic fantasy of a hopeless dreamer. Perhaps it is. I don’t know.
What I do know is this: Right now, right this very instant, bullion bank traders are gleefully lapping up the paper metal being created and sold by the greedy spec shorts and the pathetically-crushed spec longs. As I type, I have no doubt that by sometime later tonight or Monday, the commercial category in silver will move to net long, perhaps even substantially so. The Gold Cartel has likely seen it’s net short position fall to the lowest ever recorded. Maybe even to 1.5:1 or further. And how many of you have consistently said: Boyohboy, if/when the time ever comes that The Silver Cartel is net long, THEN THAT’S THE TIME TO BUY!
Well, it’s happening right here and right now, in real time.
The sad thing is that this late afternoon selloff was an orchestrated event by people wishing to see the gold price lower so that they could cover short positions in the paper gold markets. Proof of this is that London PM fixing on Friday was $1535. Once the London physical market closed, the orchestrated selling in the paper markets gathered momentum. By the close of the Comex paper gold market, gold had dropped $60 in just the last couple of hours on very high volume.
This is not something new. Observers of the gold market have been aware of many other occasions where similar events on a smaller scale have taken place on Friday afternoons. There is little point getting one’s knickers in a knot about this because every short sale in the paper market has to be covered by a corresponding purchase in due course. Thus if people who bought into the selling spree simply hold onto their positions, a short squeeze will eventually develop as the short sellers try to cover their positions, causing the gold price to rise.