Increasingly Blatent Attempts to Suppress Gold Prices Are Evidence Of Desperation

An interesting analysis on the recent slips in gold price from Marketskeptics:

"Here are two graphics from Kitco’s 24-hour Gold Spot Chart, one from Monday and the other from today.

Today’s 24 hour gold chart:

(Notice three separate spikes in selling in the last 48 hours, all occurring at the end of Hong Kong trading session. Notice that two of these selling spike happen right at the open of the NYMEX. Finally, notice how gold prices start moving up after the open of the Hong Kong gold market (because of Asian demand).)


Monday’s 24 hour gold chart:

(Notice the spike in selling right before the Hong Kong gold market opens. Had the selling been delayed half an hour, demand from Hong Kong could have helped absorb the selling, giving the seller(s) a much better price and preventing gold from falling as much.)


My reaction: Someone is repeatedly dumping huge quantities of paper gold onto the market over very short periods of time. No profit oriented gold investor would act this way. A legitimate investor selling gold would spread his sales out to get the best possible price and would wait for the periods of the day where there is the highest trading volumes (ie: not selling right when the market opened).

If this type of selling only happened once in a blue moon, it could be explained by some institutions being forced to liquidate its trading positions. However, the odds of four different institutions being forced to liquidate their gold holdings at suspicious intervals over a three day period are next to zero.

Finally, Since long positions are limited in size on the COMEX, these selloffs are either the closely coordinated liquidation of several dozen long positions (why would investors long gold conspire to lose money anyway?), or they involve a massive wave of short selling.

See my other entries on manipulation of gold on the COMEX for more info:

Something Going Haywire In Gold Markets

Who shorted gold after fed's announcement last week?

How Governments Manipulate the Gold Market

Conclusion: Four massive unexplained spike in (short) selling represents a blatant attempt at price manipulation (trying to scare longs and trigger stop loss selling). It is undeniably a sign of desperation on the part of those trapped on the short side of gold." Source

Bricks vs. Bars: The Housing/Gold Ratio

Another interesting article on gold, discussing the following impressive graphic (which seems to say: "it's late to sell your house to buy gold, but not yet too late"):

A dire economic prophecy and a tiny but important news

Just in from Bill Bonner. Excerpt [my emphasis]:

"...The bulls will be killed in the classic way. A strong rally on Wall Street…or a series of minor ones… will lead them to believe that “the worst is over.” They’ll get back into stocks after a 20% or 30% advance – hoping to recover what they lost last year.

Then, the stock market will make a new dramatic move to the downside. This will probably happen several times…each time leaving bullish investors with more losses. Finally, the bulls will give up. They will sell stocks…driving prices down and dividend yields up. By the time the bottom is reached, former investors will neither know nor care. P/Es will be scarcely more than 5. Dividend yields will rise above 5%. The Dow will sink to 3,000 – 5,000.

Then, it will be the bears’ turn. When stock prices go down, they’ll sit smugly with their cash, Treasuries and gold. But gold will not resist the deflationary whirlpool. It could get sucked down violently…or might just float down gently, remaining low for a long time. Either way, the gold bulls will give up. Only the gold bugs will hold on. Cash and Treasuries, meanwhile, will look smart – for a while. Then, suddenly, they will look like the stupidest investment on the planet. In a matter of days…maybe weeks…the dollar could lose half or more of its value. Savers will suffer staggering losses.

No, dear reader, the months ahead will be a challenge. The world economy is telling a story no one has ever read before. Every day we turn the page just to see what happens. We have no idea how the story might develop. It’s all guesswork.

Still, when the final chapter is read out…the moral of the story will probably be familiar to us. It always is.

China has increased their gold holdings 75% in the last six years. They recently announced that the gold holdings have been transferred from the State Administration of Foreign Exchange (SAFE) books to the People’s Bank of China. PBOC. Our intrepid correspondent, Byron King explains what this really means:

“China is monetizing its gold!

“This SAFE-to-PBOC transfer marks a profound decision by Chinese government leaders. Obviously, the Chinese government has bought gold over the past six years. But in keeping with a nation where youngsters get their Sun Tzu with their mother’s milk, the Chinese went through an internal debate over whether to add the gold holdings to the official Chinese monetary reserves. That is, if the gold was not “monetary,” then it was just another nonmonetary investment commodity like iron ore or copper or petroleum.

“But now, with the announcement by the Chinese Central Bank, it appears that the debate is resolved. The gold has been added to Chinese monetary reserves.

“This action by China is part and parcel of an under-the-radar global effort to rehabilitate gold as a monetary reserve asset. Gold has not been a factor in global trade and currency exchange since the late 1960s. But there’s a powerful movement afoot in the world to reestablish gold as part of an international monetary system. It’s because the U.S. dollar has been so badly mismanaged over the decades. No, you won’t read about it in your local newspaper, or even in the standard, mainstream business media. But that movement is out there. It’s happening.

“So now the Chinese are primed to begin using gold as a monetary asset. What’s the practical impact? I expect to see central banks worldwide start to add gold to their monetary reserves. The floodgates are opening. The PBOC and other central banks from here to Timbuktu are going to become net purchasers of gold in the years ahead. In the future, only central bank suckers and losers will be net sellers of gold. (Take note, IMF.)

“And people who own physical gold, as well as shares in well-managed mining companies, will benefit greatly. Need I say more?”..." Read all here