Several Factors Suggest A Big Move Is Coming For Gold

Thank God for the manipulation. Could be collateral stress? We get to buy at lower prices.  I just wish they manipulated the price of food, clothing and shelter lower as well. – Comment from a reader

There’s no question about it – the Fed and the Government’s taxpayer-funded Exchange Stabilization Fund have all of the markets under “lock-down” control right now.  The real economic data plus the geopolitical risk becomes worse by the day.  And yet, just when it looks like the stock market is going to drop off a cliff, out of nowhere the S&P 500 futures take off straight up as if launched from an anti-aircraft missile launcher.   Similarly, every time the precious metals start to make a serious move higher, HFT-driven mini-flash crashes start to occur repetitively during the least active periods of overnight trading and always after the Shanghai Gold Exchange closes.  The engineered flash crashes serve the purpose of triggering an avalanche of selling from large hedge fund “black box” computer programs.

But the oppressive and illegal manipulation of the gold market is starting to show unintended consequences again.  At the beginning of April the LBMA (London) gold forward rate (GOFO) turned negative again.  It’s been getting more negative every day this month.  The GOFO is the interest paid on dollar/gold swap transaction.  Ordinarily, it involves a party who pays interest to borrow dollars, using gold as collateral.  But when there’s a shortage of physical bullion, it means that one party needs to borrow gold and will pay interest plus put up dollars for collateral. It means that, at the current moment in time, it is perceived to be riskier to hold dollars than to hold gold.   

Because there is a shortage of physical gold, the lender of the gold is being  given the market value of the gold in dollars as collateral plus a rate of interest to compensate him for the risk that he might not get his gold back.  Think about that for a moment.

I just published an article on Seeking Alpha which discusses the GOFO and two other significant factors which suggest the possibility of big move coming for gold something this spring/summer.  You can read it it here:  GOFO, India and China.

With respect to the frequency of a negative GOFO:   From January 1, 1989 – July 7, 2013, there were only seven days in which a negative GOFO was observed.   But since 7/7/2103, GOFO has been negative more than 55% of the time.  In other words, the market for physical gold that can be delivered into the custody of the buyer has never been tighter.

 

21 thoughts on “Several Factors Suggest A Big Move Is Coming For Gold

  1. Hi Dave,

    Enjoy your blog, thanks for timely information. In regards to GOFO rates, I noticed the last time that 1-month crossed the -0.1 was in August 2013 and stayed below there for 13 days in a row. That was also the timeframe when gold went from a low of ~$1180 in late June to ~$1420 in late August. Perhaps we will see a similar pattern this time around as well.

    -Greg

    1. LH Translated cycle AGAIN= more down.

      http://www.mcoscillator.com/learning_center/weekly_chart/golds_cycle_is_in_left_translation/

      Seeing the left-hand peak higher than the right-hand peak is called “left translation”, and it is a bearish message about the future. It says that the price ought to be expected to dip below the level seen at the mid-cycle low. The sad news for gold bugs is that this is the situation we are seeing right now.

      Gold prices peaked around the $1420/oz level back in August 2013. So the key point I have been watching for in early 2014 was to see if gold could get up above that $1420 level to give us an indication of right translation. So far, we have not seen that, and lately it is not looking good.

      Down to $1190 double-low by July, if lucky.
      that would put G:S ratio at 88, if S hits that $13.50 target.

      1. McClellan makes infinitely more money selling newsletters than trading his own money. Charts are great tool for telling me what happened. His description of what he thinks gold is doing reads like the kind of critique a review of breast enhancement surgeries would write up in a review of boob-job doctor.

      2. I agree . that top last august was 1442 in European session, but call it 1420,doesnt matter.
        This lower high at 1392, really had a resistance zone starting around 1300/1325/1345 area, and now, has topped at 1332.
        The 1300 area is a critical balance point, but I fully expect to see another one or two downwaves, first to 1275 area again, then failure at 1300, and then a return to 1230-1200 area. Summer bottom is calling already.

        the downwave remains intact and in play.

    1. fekete’s another Loser i’ve never had time for, nor would i give the time of day to.
      he’s an outright deflationist, as are his disciples.
      only now i see one of them is adding “with a chance of hyperinflation” to his articles.

      here’s something. looks like the sunday referenced was this past one, APR 13/2014. the city is near Vladivostok, about as far east as u can be in the giant russian state.

      It’s a FACT , Chinese government has allowed the usage of Russian currency, the ruble, along with the yuan, in the city of Suifenhe on the Sino-Russian border in northeast China. Suifenhe, sometimes called “the capital” of Chinese-Russian trade, will become the first site in the republic since its founding in 1949 where a foreign currency can freely circulate, Xinhua agency reported Sunday. The Chinese will be able to make bank deposits and withdrawals in Russian rubles, and also use rubles to pay for goods and services. The US-Dollar is quickly loosing its status of reserve currency…

      anyone know if google chrome browser can automatically translate chinese (mandarin) webpages like it’s claim to do with other languages?

      1. Well, the thing is that AFTER the hyper-inflationary event, the result is very similar to that of a deflationary collapse. Both get very similar results while taking a different route. PMs will protect you in either scenario through the havoc. But since the deflationary route will not be allowed by TPTB, the inflationary scenario is likely the path of least resistance and thus the most likely outcome (currency debasement) – the various QEs, operation twist and their ilk are already very clear testimony to that, and we’ll yet see much more of such “policies” IMHO.

  2. They DO manipulate food and energy prices down by way of the petrodollar. The deal with OPEC was to keep gold cheap in terms of dollars in exchange for dollar hegemony, which you can see by the gold/oil price correlation over the last 35 years. That makes oil cheap in terms of dollars. That makes virtually everything cheap in terms of US dollars. The USD has a long way down to go.

  3. Everyone is on board predicting lower gold price by summer possibly down to $1000 or at the Dec low. Dave has the nerve to go against the tide suggesting a Big Move Is Coming For Gold based on GOFO and China/India demand. Bravo. Let see who is right few months from now.

  4. MAJOR FOREIGN HOLDERS OF TREASURY SECURITIES
    http://www.treasury.gov/ticdata/Publish/mfh.txt
    Belguim is number three. Hmmmm………

    The European Central Bank and the People’s Bank of China have established a currency swap agreement, the latest in a string of moves to help encourage global use of the renminbi. (UK is also doing this as well)
    http://www.ft.com/cms/s/0/236651ca-3185-11e3-817c-00144feab7de.html

    Dave will win out on his prediction on Gold but no one can predict the timing. However, it will be very bad when things hit the roof. More Americans can’t afford food right now so they are on food stamps. Full-part-time jobs are filling the job markets. Sales jobs are the most posted because of the lack of sales at businesses.

    The International community is slowly weaning themselves off of the US breast-milk control/influence/dollar and I believe this could be a big trigger to push Gold higher as the system to rival the US system is put into place and Gold will be in that system. I think we all here tend to be too “domestic-minded” here in thinking that the “fuse” to be lit will be from within the US. It can happen anywhere globally and would give the elites in this country the excuse of “boots-on-the-ground!”. What’s happening internationally is more important as the US can control things “inside” but cannot do the same “outside” and the risks of losing control “outside” is growing.

    1. It’s amazing how many people in this country either think the reserve status of the dollar is some sort of Devine Right. It’s equally amazing at just how many people are completely clueless about the steps China – and now Russia – is taking to phase out the dollar.

      Exter’s Pyramid has more truth embedded in it than any other modern symbol of humanity

  5. The United States has constructed a financial neutron bomb. For the past 12 years an elite cell at the US Treasury has been sharpening the tools of economic warfare, designing ways to bring almost any country to its knees without firing a shot.

    The strategy relies on hegemonic control over the global banking system, buttressed by a network of allies and the reluctant acquiescence of neutral states. Let us call this the Manhattan Project of the early 21st century.

    “It is a new kind of war, like a creeping financial insurgency, intended to constrict our enemies’ financial lifeblood, unprecedented in its reach and effectiveness,” says Juan Zarate, the Treasury and White House official who helped spearhead policy after 9/11.

    http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/10771069/US-financial-showdown-with-Russia-is-more-dangerous-than-it-looks-for-both-sides.html

    This is a good article on what the US is doing on the “outside”. It may also explain the global community strong desire to get rid of our control over them.

  6. Dave,
    The reason not many people know about the petrodollars destruction is that the main stream media reports ZIP on it…nada, zilch, nothing. And the only way that information gets out is from the alternative media such as your site and others like it. Thank you for all your time and diligence to make us aware of what is actually going on in the world so that we don’t get blindsided by it. Also hoping my SRS pays off bigtime in the future…

      1. Hello Dave,

        Houses in nice areas appear to be overvalued based on fundamentals, but we don’t live in that world anymore. Based on the fundamentals such as unemployment, job quality, etc. you would expect housing prices to decrease relative to consumer purchasing power. However, if you believe in currency debasement I would expect investors to purchase perceived stores of value. Some people consider homes to be tangible investment. I believe the housing market is being driven by baby boomers and foreigners looking for fixed income streams. What do you think will be the catalyst for home prices to significantly adjust downward? More importantly, are there any signs that indicate the adjustment process has begun?

        1. Take a look at the list of articles I’ve published on Seeking Alpha (link to that list at the top of the blog) on the housing market.

          Sure maybe the baby boomers represent possible housing market demand, but if they want to sell and move up, who do they sell to? First time buyers are dying quickly. Inventories are much higher than reported. I’ve discussed that in Seeking Alpha articles as well.

          Home, contrary to the common belief, are not “stores of value.” That can proved if you look at the value of homes over the last 120 years. Robert Shiller has that graph is you want to google it. The data he uses does not take into account annual maintenance, taxes and cost of insurance.

          Foreigners? The demand data doesn’t show foreigners buying other than at the very high end, mostly to launder to money. That ship has sailed now too as other countries have the same bad economic problems that we have here.

          Housing has been pumped up by a couple trillion in Fed and Govt stimulus. That’s being removed. The market is getting ready to drop – hard.

  7. McHugh article free part is up today 20th at safehaven.com

    he’s got a new book out, so maybe he needs some extra play dough for the markets, since his subscription is only $5000+ LOL.

    Says:
    grand stupidcycle in major indexes could be in early March, else 1 more 2% push up. then, greater depression worldwide not seen since South Seas bubble burst.

    weird he’s got dollar going UP 2014, despite its horrible technicals, yet bonds up also (he says lower rates forever ahead–maybe he drank some of Old Yeller’s free koolaid), yet he’s got crude going UP to $170 very soon here?
    HUH?
    hui to 170
    gold to 1150
    silver $16

  8. Yes Dave, a big move in gold is telegraphed by those factors and many more. For foreigners and US pension and fund managers in cash or risk holdings, exiting such corporate or municipal bonds, global equities or sovereign debt for hard assets will be even more attractive as they look at little Belgium’s pathetic defense of the dollar, Saudi Arabia’s defection to the East and Russia as more and more deals materialize, as traditional war hawks war drums to the tune of saber rattling smother songs of hope and change.
    Besides their contagion of public pant-crapping, TPTB have nearly run dry of bank liquidity, manipulation of perception economics/MOPE and head spinning false moves and head fake statistics.
    In fact, singing ‘as the spirit moves them’ they think they can move heaven and earth by their twisted ceremonies and regressive rituals:
    http://www.youtube.com/watch?v=jTyCiGPWA0I
    “Published on Apr 19, 2014
    Listen Close, You can hear Illuminazi, Illuminati, Luchifer, King Lucifer. This is whom they Really Worship!”

Leave a Reply

Your email address will not be published. Required fields are marked *


+ two = 9

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>