Gold And Silver: Similar To 2008

In 2008, gold was taken from $1020 to $700 and silver was pounded from $21 to  $7 during the period of time that Bear Stearns, Lehman and the U.S. financial system was collapsing.  The precious metals were behaving inversely to what would have been expected as the global financial system melted down.   Massive Central Bank intervention was at play.

Currently the prices of gold and silver are being dismantled by what appears to be massive hedge fund shorting of Comex paper gold.  As of last Tuesday, the “managed money” trader category as detailed in the Commitment of Traders report showed that the hedge funds were short a record amount of paper gold.

As of yesterday the open interest in Comex paper gold was about 17,000 contracts higher than the open interest shown in last week’s COT report.  This represents another 1.7 million ozs – or 48 tonnes – of paper gold that has been dumped on the market.  It is highly probable, if not a certainty, that most of the increase in short interest is attributable to hedge fund algos chasing the paper price of gold lower.

Meanwhile, behind the scenes, the Bank of International Settlements (BIS) has been actively intervening in the physical gold market during July, as detailed by Robert Lambourne, a consultant to GATA:

Use of gold swaps and gold derivatives by the Bank for International Settlements, the gold broker for most central banks, increased by about 17 percent in July, according to the bank’s monthly report…The BIS’ July Statement of Account gives summary information on its use of gold swaps and gold-related derivatives in the month. The information is not sufficient to calculate a precise amount of gold-related derivatives, including swaps, but the bank’s total estimated exposure as of July 31 was about 485 tonnes of gold versus about 413 tonnes as of June 30.

That is an increase of about 72 tonnes or 17 percent. The increase came as there increasingly appeared to be a correlation between the gold price and the valuation of the Chinese yuan, both of which fell substantially during the month.

The BIS refuses to explain what it is doing in the gold market and for whom, engendering suspicion that it is helping one or more of its members to manipulate the currency markets through deception.  To place the bank’s use of gold swaps in context, its current exposure of 485 tonnes is higher than the gold reserves of all but 10 countries. (documentation and links: BIS gold market intervention increased by 17% in July)

While visible evidence of a declining gold price can be seen with Comex futures prices and the daily London gold price “fix,” the BIS is operating in the physical market to increase the supply of physical gold available for bullion banks on the hook to deliver physical gold to the countries buying large quantities of physical gold on a daily basis.  As long as the BIS can ensure the flow of physical gold remains uninterrupted, the demand for physical gold will not offset the effort to take-down the price of gold in the paper derivatives markets.

The effort to push down  the price of gold is to silence the alarm gold provides to signal global systemic distress. It’s not just the emerging market economies  and China. The U.S. economy, based on all the private sector data I dig up an analyze on a daily basis, hit a wall sometime between March and May.

This is most evident in the housing market nationwide, which  has been rapidly deteriorating (notwithstanding a few areas that may still have some flaming embers of activity).  Just one supporting data-point is  mortgage purchase applications, which have declined each week over the past 5 weeks. This is not a good omen for the housing market during the seasonally peak selling months. We know it’s not an inventory issue because inventory across the country in all price segments has been rising in most areas and soaring in some of the hottest areas.

While today’s headline retail sales number shows a 0.5% increase in July over June, the “increase” was manufactured for headline purposes by a large downward revision of June’s retail sales numbers. Furthermore, the headline number is a nominal number. Net of true price inflation, retail sales declined. There are other problematic inconsistencies between the Census Bureau-generated numbers and the actual numbers as reported by private-sector companies.

The bottom line is that the prices of gold and silver are being systematically taken down as a mechanism to help cover up the fact that a large-scale financial crisis is going to hit the global financial system. I don’t know the timing, but I would suggest that the EM currency melt-down that began in South America and has spread to the eastern hemisphere represents a series of earthquakes that  are generating a “tsunami.”

While I’m loathe to forecast a price-bottom for gold and the timing of the forthcoming systemic crisis, I would suggest that anyone who is shaken out of their gold, silver and mining stocks right now will regret selling when looking back a year from now.

My Short Seller’s Journal subscribers and I continue to rake in easy money shorting the homebuilder sector. Two of my short-sell picks, Zillow Group and Redfin, have been annihilated in price over the last week. In the last issue I also laid out why Tesla is technically insolvent and likely will be irrelevant as a company within 12-18 months. You can learn more about this weekly newsletter here: Short Seller’s Journal information.

16 thoughts on “Gold And Silver: Similar To 2008

      1. Another elephant in the room, just went to the Treasury Direct sight to check ‘Debt to the Penny’. For the current Fed fiscal year, we just added another $1 Trillion. However, we are being told the deficit this year will be well under that.

        With all the debt, lies and manipulation, this is will end very badly.

        Note: Been married 31 great years and she’s a better shot than I am!

  1. This definitely reeks of an operation by someone. I’m just not sure by whom this time. Certainly, in the past, the Fed and Treasury orchestrated global currency selloffs to scare overseas capital into their coffers when needed, so maybe they’ve done it again to try and bludgeon countries like Turkey into line.

    Maybe it’s the Chinese. The correlation of gold to the yuan is so high, right now, maybe they’re up to something. I have a feeling something big on the geopolitical scale is coming soon, though, that is going to rock global alliances to the core.

  2. I think we can expect prices in few months to go down to between $900 -$1045.
    The bottom of gold in January 2019 and Crush or something else same time.
    They smashing gold and same time excellent opportunity for them to accumulate more shares in gold producers. They can try anything but they can’t change my attitude towards gold.

  3. The smoothness of the decline of the gold price within the past four months is an indication that the demand for the metals is too low for prices to be sustained. The price of gold will be falling until the demand for the metal comes back.

    1. ROFLMAO. How are you in any way associated with Rutgers? Or is Rutgers essentially the equivalent of a
      matchbook school?

    2. Robert,
      Are you seriously that naive about the contract/paper/COMEX price of gold mirroring real metal demand?
      As the price goes down on the COMEX, worldwide demand INCREASES.

  4. Jim Sinclair, Bill Holter and others who said the gold price will go up to a moonshot when the physical market overtakes the paper market. They could not have been more WRONG. The gold/silver paper markets are controlled by the Fed, ESF, TBTF Banks, BIS & the Western CB’s involved as well as the Crimex & LBMA.

    These entities cannot be stopped from doing this paper pricing.

    Something else like crashing foreign stock markets and countries totally repudiating their debt held by foreign banks. So dammit, these foreign countries need to band together and take all banks and stock markets back to ZERO. That is what I call the RESET.

    1. That’s lug-headed commentary. To related to the Rutgers special needs guy? The physical market has not overtaken the paper market yet because the Central Banks still have access to 400 ozs bars that can be leased out to bullion banks to make deliveries. The numbers prove this just look at the BIS lease and swaps activity. If the hedge funds on the Comex would stand for delivery on just 10% of their long position, the market would soar.

      1. That’s a big IF and one I have been hearing since 2001. Hedge funds aren’t going to stand for delivery because they don’t want to. They are interested in paper profits from trading as well as staying in the good graces of the system masters.

        1. You are right Hugh.
          I guess it will take Russian, Chinese, and other foreign PHYSICAL demand to break the cartel’s grip. That plus a massive U.S. equities markets decline [selloff, crash] to drive people into PM’s.

      2. And to add to that, Dave, if the markets were actually “controlled” by those entities gold would be trading in the double digits.

  5. The surest way to gauge government finances is to ignore their accounting and look at what they borrow. I just read that the government borrowed, as of year-to-date June 2018, $1.36 trillion. And they are forecasting a budget deficit, if I recall correctly, of less than $700 billion, but the borrowing requirement is blowing out during a so-called boom and in the face of so-called tightening by the Fed, constraining their ability to print.

    This tells me that, indeed, we are witnessing the same old, same old – a manufactured global currency crisis to scare capital into the US so as to fund this voracious deficit spending and keep the regime chugging along. Gold, treated as a currency by the banksters and many hedge funds, is part of the liquidation scheme.

    This happens with such regularity in these EM countries, and elsewhere, that being stupid can’t account for it. Treason and collaboration are words that comes to mind.

Leave a Reply

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

Time limit is exhausted. Please reload CAPTCHA.