The western Central Banks/bullion banks have assumed a “take no prisoners” policy with regard to the precious metals market. They have been printing up and selling into the market paper gold futures contracts and other paper claims (ETF certificates, leases, gold “bullion” investment accounts, and other various sordid forms of paper derivatives) in an effort to offset the enormous amount of physical gold being accumulated by the east in order to hold down the price of gold/silver. The reason for this is to prevent these two monetary metals from going parabolic and signalling to the world the severity of the west’s catastrophic financial and economic situation.
It’s unmitigated anti-gold/financial terrorism. Here’s what that looks like:
The graph above shows the ratio of open interest in Comex gold futures to the amount of “registered” gold in Comex vaults. “Registered” is the gold that has been designated as available for delivery. As you can see, this ratio went parabolic in mid-2013. It is likely then that the enormous amount of physical gold being swallowed by China, India and Russia began to “stress” the ability of the Fed/bullion banks to keep a lid on the price of gold. It also, coincidentally or not, happens to coincide with the timeframe that I have identified as the peak of the current housing market mini-bubble (July 2013). In other words, I believe the wheels began come off our economy in the summer of 2013.
Here’s an example of the anti-gold terrorism in action last Friday, just prior to the release of the non-farm payroll report (source: TF Metals Report):
This graph shows the trading activity right before and after the release of the jobs report. You see that heavy selling started in gold futures right before 8:30 a.m. EST. But the report had not hit the newswires yet. The metals bounced a bit and paused. The report hit the tape at 8:31 a.m. and the price of gold was “flushed.”
If the fear was that the report would trigger a small interest hike from the Fed, that fear didn’t grip the stock market until later in the morning. Furthermore, the S&P 500 seemed to rid itself of that fear today, rising over 8 points while gold finished flat and silver was down 15 cents. There is a clear agenda to keep the price of gold/silver capped with paper derivatives.
Here is the commentary from MKS – an Australian broker – and John Brimelow with regard to Friday’s trading activity (sourced from Brimelow’s Gold Jottings Newsletter).
MKS also notes that on Friday: “On Friday the main flows were from macro accounts which initially prompted the move lower pre-NFP, with a number of accounts trimming long positions into the figure.”
Brimelow: Thus confirming that the payroll news was front-run. MKS notes further GLOBEX selling in the face of Asian buying this morning (Monday March 9): a Bear raid of this magnitude in likely to be defended. Friday saw a large-scale Bear raid on the precious metals.
That, in a nutshell, is anti-gold terrorism. I don’t know how much longer this can go on. Nor do I know what will cause the Fed/bullion banks to lose control of their ability to manipulate gold and silver. I do know, interestingly, that JP Morgan took delivery of over 6 million ounces of silver in its own house account last week. I also find it most curious that HSBC has told its clients that it is closing all of its non-GLD gold vaults in London (more on that soon).
I also know that history teaches us that price controls never last very long and when they fall apart the ensuing collapse is disastrous. When the Fed loses control of this scheme, it will be one for the ages…