The choke hold put on the precious metals the past several days has been relentless, Eric. It was so forceful, it might even have been unprecedented…the selling is being driven by the paper-gold market and the central planners no doubt have had a hand in it. The paper-gold they sell needs to be matched from day to day with a show of force, and the only way to do that is being able to deliver physical metal when the buyer of your paper promise asks for physical metal rather than cash settlement. – James Turk on King World News
The price of gold pushed through its 200 dma and hit a high of $1191 on October 15. It appeared ready to assault $1200 (click to enlarge):
But over the next 17 trading days 36 tonnes of gold was removed from the GLD Trust. Most of the gold – 29 tonnes – was removed in the last 9 trading days to facilitate manipulating the price back below 200 day moving average (red line in the graph above).
There’s unquestionably something wrong behind the “curtain.” With the increasing meltdown in various areas of the global financial system (energy, commodities, high yield debt, leveraged loan portfolios, biotech stock, Glencore/Lonmin, emerging market currencies, etc) the OTC derivatives market must be littered with train wrecks.
At a time when the price of gold should be soaring to reflect the increasing financial, economic and political turmoil brewing, the western Central Banks/banks are relentlessly manipulating the price. Without a doubt they have had to resort to raiding GLD in order to make the deliveries referenced at the top by James Turk.
Now we have to endure another round of the “we’re going to raise rates this time, we promise” game. How many times can the Fed get away with hammering Wall Street’s calcified brain trust and the financial media over the head with this farce?
With the level of systemic debt in the U.S. (Federal, State, corporate, individual and pension debt in the form of underfunding) going parabolic, economic activity quickly fading, financial landmines going off behind the scenes and geopolitical risk escalating, the only way the Fed can maintain any level of credibility is to prevent the price of gold from engaging in bona fide, market-determined price discovery.
At some point the Central Banks will lose their ability to contain the price of gold. We’re already starting to sense their level desperation in this endeavor as reflected in the paper gold to deliverable ratio on the Comex, the gold being drained from the Fed’s vaults and the removal of gold from GLD.