After dancing around the $1350 level (August futures basis) the price of gold launched in three stages after the FOMC circus was over on June 19th. The first move enabled gold to break above and hold the $1360 area of resistance that has been referenced ad nauseum for the last three years. Then, two “reverse flash crashes” later on Thursday and Friday that week, gold powered well above $1400 before a “flash crash” at the end of Friday’s trading pushed gold back below $1400 for the weekend. On Monday afternoon (June 24th) gold broke free from the shackles of official price containment and sustained a move over $1400 and ran up to $1440.
As I expected, a combination of profit-taking by the hedge funds chasing momentum higher with paper gold and official efforts to push the price of gold lower triggered a sell-off that tested $1400 successfully. Gold closed out the week (August futures basis) at $1412.
While I was expecting a move like this at some point in response to the Fed reimplementing loose monetary policy, I thought that it wouldn’t happen until the Fed signaled that it would begin printing money again. It’s not clear to me if this move is being fueled by fundamentals and a flight to safety or if it’s hedge fund algos chasing price momentum. It’s likely a combination of both.
Independent of any economic disruption that may or may not be caused by the trade war, economic activity globally is deteriorating rapidly. Every country around the world recklessly printed money and piled up debt which artificially revived economic activity after the 2008 de facto systemic collapse. Mathematically the world can’t print money and issue debt ad infinitum. We may have hit the wall in that regard over the last 12 months. The trade war is being used as a convenient scapegoat. It’s like blaming the start of World War I on the assassination of Archduke Franz Ferdinand…
I believe there’s no question that highly negative events are unfolding “behind the scenes” which are sucking liquidity out of the system. I believe these events will emerge in plain sight well before year-end. The yield curve inversions (Treasury, Eurodollar futures) are telling us there’s hidden explosives detonating that have been contained for now. I have no doubt that the troubles are connected to primarily to Deutsche Bank but also stem from the early stages of a subprime debt problem. The “secret” meeting held a couple weeks ago by Mnuchin and the Financial Stability Oversight Council concerning “alarms” in the junk bond market was a tell-tale as was the “bad bank” plan announced by Deutsche Bank, which was curiously devoid of any details on how it would be funded or what would go into it.
The systemic problems and geopolitical animosities percolating behind “the curtain” are not lost on those with an inside view of the action. I expect an aggressive attack on the gold price next week. The Fourth of July observance falls on Thursday, which means most Wall Street trading desks will be lightly staffed most of the week. Low-volume holiday periods are the favorite time for the bullion banks to stage a raid on gold. The success of this raid is crucial to maintaining the illusion that obvious systemic problems are manageable.
Any attempt to push the price of gold lower will be helped by the fact that official gold imports into India have stopped while the Indian public digests the recent surge in the price of gold. This is typical behavior by India after a sharp move higher in gold. Smuggling to avoid the import duty likely continues unabated. But the removal of India’s official bid from the physical gold market is a window of opportunity for the western gold price managers to make an effort to push bold back below $1400 using paper.
If any attempt to manipulate gold back below $1400 fails in the next week or two, it means that unhealthy quantities of brown fecal matter are connecting with the fan blades – out of sight for now except for the signal coming from the gold.
Any sustained move higher in gold and silver will ignite a fire below the mining stocks, especially the historically undervalued juniors. My Mining Stock Journal covers several mining stocks that I believe are extraordinarily undervalued relative to their upside potential. I also present opportunistic recommendations on select mid-tier and large-cap miners that should outperform their peers. In response to subscriber requests, in the next issue released this upcoming week I’ll present an initial opinion on Great Bear Resources. You can learn more about this newsletter here: Mining Stock Journal information.
I expect the attempts of the Cartel to continue to push gold below $1400. It will be a costly failure. They may be able to succeed for a few hours or a few days. At enormous cost. The demand for physical metal is huge. I came across a headline in the Economic Times of India: Gold Imports inflate UK current Account Deficit to highest since 2016. https://economictimes.indiatimes.com/news/international/business/gold-imports-inflate-uk-current-account-deficit-to-highest-since-2016/articleshow/69988135.cms
Quote: “Britain’s current account deficit with the rest of the world ballooned to its highest since late 2016 in the first three months of this year, though much of the increase was driven by hefty gold imports.” A week ago, there was a video clip in Bloomberg Markets of an interview with an AVIVA official. He mentioned rumours of physical shortages in gold.
As long as the price of gold is set on COMEX it will never rise much above $1400 unless the Fed and bullion banks want to set a bull trap. Once they get as many longs into the trap, they will spring it by smashing the price down by unrelenting selling of massive amounts of paper gold on COMEX. Do not kid yourself: the last thing the Fed wants is a rising gold price as it starts QE and cuts interest rates. The Fed learned its lesson in a rising gold price in early 1980 when it went parabolic. Even Volker regretted not intervening in the gold market on the COMEX and Greenspan stated before Congress that the central banks will mobilize gold reserves and lease them out to cap the price. But now, they simply use the COMEX to control the price.
john,
The question is can the COMEX actually do that this time? There will come a time they can’t do what they have done since 2012 or so. The COMEX has no defense against record physical demand for actual delivery, and no defense against massive increase of investors buying physical through dealers other that the COMEX.
I am posting this Sunday 6/30; last day of the month. With gold at around $1,410 I suspect they would like to see it close the month [midnight] below $1,400. Regardless, it hasn’t closed a single month above $1,360 in over 5 years. I sincerely doubt they have the ability to drop it below $1,360 by midnight. If they can’t that is bullish, as conscious-decision traders and algos may start more buying with the 1st monthly close above $1,360 in over 60 months. From another blog:
“Each candlestick in the monthly chart represents ONE MONTH OF TRADING. So, traders, hedge funds, and institutions are looking for a monthly close for gold above $1,360… best to be $1,380 or higher. If it does so, then it has BROKEN A KEY 5-YEAR level. Again, these levels are very important to those who participate in the market.
If they see a close above $1,360, at say $1,400 by the end of JUNE.. then we could see HUGH BUYING COME In from market participants. “
Monday is the end of the month. Do you expect an overt effort make gold close below $1,400 on Monday?
Since gold hasn’t closed out a month above $1,360 since 2013, even closing above that is a good step in the right direction.
Let’s see what this upcoming July 4th week brings for god & silver futures prices. Heavyweights like Paul Tudor Jones, Jim Druckenmiller and Sam Zell have made public comments on investing in gold. I’m sure other heavyweights have also entered the gold game but just have not publicly vocalized it. We need all these heavyweights and more with China, India, Russia and all other Central Banks buying gold to defeat the Basel Western Cabal.
$13T of negative interest rate yielding sovereign bonds certainly helps make gold an attractive investment.
Bitcoin can rise from $3,500 to $13,000 but gold rises from $1,270 to $1,412 and all the spineless internet blog morons come out and say gold needs a breather because it has run up too much. These beaten up vocal gold blog idiots are BRAINDEAD !!!!!!!!!! But it’s OK for Bitcoin to go up several thousands but their stupid mind can’t handle those charts so they don’t comment. They are just a bunch of trained monkeys and a Pavlov dog to boot. Since Paul Tudor Jones says gold will be the best investment for the next 12-24 months, then hitch a ride and forget what the spineless fearful have to say.
How do we know that the published bitcon “prices” are not virtual numbers conjured up by the fraudulent “exchanges” with no real volume?
These digital nothings are fraudulently represented as glossy pictures of golden metal discs with B$ for bull***t embossed on them to sucker in the marks.
Myriad stories have appeared online of people being unable to sell and take profits at the advertised “price”. Or being ripped off by commissions.
Exchanges suddenly go offline for inexplicable reasons or will simply steal customers’ crypto.
I have yet to see a *fully documented* round-trip purchase and sale of bitcon with/for fiat either on one of the “exchanges” or via the highly lauded “cold wallets” and a private transaction.
What to do when you plug your TREZOR(R) thumb drive, on which $200000 of bitcon that you purchased with legal tender are “stored” (the noncoins are not stored, only the private keys) into the internet and get an error message?
Who controls the magical “blockchain”? Or is it a fantastic democratic entity freely available to all?
No-one will answer these questions, because Buttcon is a con game to drain the suckers’ cash away from tangible assets in exchange for “ownership” of a few electric charges in a digital computer memory backed by nothing.
Collective insanity.
Hi Dave … do you have New Gold Inc. on your Juniors list? … they just got a key approval last week for their Environmental Certificate on an 8.2 million oz. deposit in Canada
Thanks for the heads up on the permit – it’s not in the news section of their
website yet. Yes I presented it as as turnaround idea after the stock
fell to 80 cents. I guess that permit issuance is why the stock was up so
much last week.
Correct … it’s not on their web site – which is odd, considering it’s such a material event … my guess is they are keeping it quiet for as long as possible to let their friends load up while the market is still valuing the project at nearly zero.
Plus they’ll get RR turned around. They wrote the value down massively. I did a full
review in my newsletter about 2 months ago.
Do you think the recent announcement that the CME will be trading gold futures contracts based off the Shanghai physical price will make it more difficult to manipulate the price? Is it a desperation move on the part of CME because they are running short of physical, or is it a crafty way to extend the manipulation?
https://www.cmegroup.com/media-room/press-releases/2019/6/20/cme_group_and_shanghaigoldexchangetolaunchnewgoldfuturescontract.html
I don’t know – we’ll find out once the new contract starts trading and
is “seasoned.”
As expected by many, the Cartel hammered gold down when trading resumed on Sunday evening. Within four minutes, it smashed the Gold Continuous Contract price down to $1387. One hour later it was back at $1400. Billions thrown out of the window by the Cartel but it does not matter. The money is stolen anyway, by diluting the value of currency issued. The Cartel has lost because the manipulation is so obvious. And without deception there is no effective market manipulation. What do criminals do when they are cornered? They get nasty. The next step will be the slaughter of the public.
A look back in time sometimes helps. The last Great Depression is instructive because we will soon experience an even bigger depression.
Roosevelt first confiscated the monies of the people. The next step was to devalue the paper dollars he paid for the confiscated gold by 40 per cent. He then deliberately starved six million impoverished Americans to death because he refused to collect 10 billion gold dollars of US taxpayer money to feed them. This was money borrowed by Britain and France to wage World War One. That money went to his mates, the so called Merchants of Death. Their business plan was World War Two. Whilst the oligarchs amassed the gold, the US people were fobbed off with funny money.
The coming Depression will be worse than anything modern society has ever experienced. When the flow of credit stops, all debts come due. But there won’t be enough cash since almost everybody depends on borrowing.
Bill Holter has talked about this many times. The collapse of the global debt mountain will destroy the world economy. What is paper money worth without an economy? Nothing. What will pay for food? Gold and silver. Owning precious metal is not just an investment. It will save your life.
Check out volatility this morning, where gold briefly touched $1,490. See the bar chart.
Like here:
https://www.providentmetals.com/
Trump knew he had to give the markets a bone in Osaka. Trump/Mnuchin Sunday Night slam on gold with so called truce. Hard to win when they control the levers.
Dear Fred, they will not win. In fact as I said in my post, they are already losing. This smash is like arranging deck chairs on board the Titanic. The ship is sinking and precious metals are the only life boat left. Problem is: they will come for anybody who owns gold, the Roosevelt style.
Here is some music that goes well with the subject. Everybody knows – Leonard Cohen. https://www.youtube.com/watch?v=Lin-a2lTelg
Shocking to see silver at 92:1! The actual physical ratio is about 17:1. So gold should be $262 or silver should be $82!
Todd,
It costs about 70 times as much to mine and refine gold to .999 as compared to silver
Thanks David. I didn’t realize that. But I remember a few years back the ratio hit 30:1. Hoping it happens again.
Bruh… It’s, OPEN SOURCE CODE.. You can look at ON CHAIN volume transactions to get a better picture of how many BTC are actually being PHYSICALLY moved.You can see exactly where every BTC is stored & when the last time they were moved. It’s a trust less truth machine. Don’t trust verify. Don’t be married to one ideology. Physical Gold/Silver/BTC (with private keys in your possession same as u don’t hold it u dont own it) mining shares /cash. Weather the coming storms.