I had to laugh yesterday when a colleague sent me a news report that the CFTC filed a civil enforecement Complaint against Kraft Foods for manipulating wheat futures. Thank GOD the Government has decided to crack down on wheat futures manipulation. Of course, I would bet that no one in the world other than wheat traders knew that the manipulation was occurring.
Contrast this to the incessant and escalating manipulation of the gold futures market by the U.S. Treasury’s Exchange Stabilization Fund in conjunction with the NY Fed and the big bullion banks like JP Morgan, HSBC, Scotia Mocatta and Citigroup. Everyone in the precious metals market knows about this manipulation. GATA has exhaustively produced evidence, including FOIA inquiries which produced information from the Fed verifying that gold is manipulated. For some reason the CFTC just can’t see it.
After spiking higher yesterday on the release of very bearish economic and geopolitical reports which signify the continued collapse of the U.S. economy and sphere of global influence (see my earlier post on the AIIB), the gold manipulation cartel took advantage of the fact that India is closed Thursday and Friday and hit the price of gold on non-event news:
The factory orders report for February was released at 10:00 a.m. It came it slighly higher than the consensus expectations BUT the previous month’s report was revised substantially lower from -.2% to -.7%. Net-net the report reflected a significantly weakening U.S. economy, which should be bullish for gold.
As you can see from the graph above, the paper gold market was smashed at 10:00 a.m. EST. 3,326 contracts were unloaded onto the Comex (both the floor and electronically. This was 15x greater than the minute by minute average volume during the previous hour of trading.
The mechanism that enabled the paper manipulators to throw this much paper onto the market was India’s absence from the physical gold market last night and tonight (India’s markets are closed today and tomorrow).
However, on balance, it appears as if India’s demand for gold significantly increased this year, including the expectation that India may have imported 100 tonnes in March. John Brimelow tracks India’s gold market in his “Gold Jottings” subscription report. The major gold dealing city of Ahemedabad is reporting that 20.73 tonnes of gold were imported into that city in March. This was vs. 5 tonnes over the previous three months. As JB says:
There was talk recently that Indian March gold imports as a whole might have doubled over the preceding month to 100 tonnes. A quadrupling of imports by this key Province is something the Bears ought to think about.
It appears to me that something fundamental has changed in the gold market. I believe it’s based on an enormous uptick in demand from China (after its Lunar New Year) and from India. At some point the physical gold market will overwhelm and “break” the ability of the United States to control the price of gold with paper. I believe that this control is beginning to fade now.