Prelude To A 2008 Event: Paper Gold Manipulation Intensifies

The trading action in the paper gold markets of London and NY this week further convinces me that gold is being pushed down in price by the western Central Banks similar to the take-down in the paper price that occurred in 2008.  The motive is to prevent a soaring gold price from signalling to the markets that a big problem is percolating in the global economic and banking systems.

Once again, in the early morning the price of gold was slammed just after the London a.m. price Fix (3 a.m. EST) and again at the open of the Comex gold pit (8:20 a.m. EST) – click on image to enlarge:

This pattern has been persistent over the last two months.  It’s not about gold being “pinned” to the SDR, as Jim Rickards is now promoting.  And it’s not about some mystical gold peg to the yuan.  It’s about western Central Bank desperation to keep the dollar alive in order to defer the inevitable collapse of the record level of dollar-denominated debt and the associated derivatives.

It’s no coincidence that Rickards has floated this theory about the gold price and the SDR recently.  Rickards was rolled out several years ago to promote the idea that the SDR would be the next reserve currency. The Deep State knows the dollar’s life-span is limited. The U.S. dollar is 58% of the SDR, making the SDR the best replacement of the dollar which thereby enables the U.S. Deep State to maintain some semblance of global hegemony.

For the time being, gold is trading almost in perfect inverse correlation with the dollar. The dollar currently is rising vs. all fiat currencies. Therefore, of course it might look visually like gold and the yuan or gold and the yen are trading in tight correlation. But at the root it’s all about the dollar and the effort to prevent the dollar from collapsing.

As for the brewing collapse of the financial system, here’s an interesting chart comparing Deutsche Bank’s stock price with the gold since the beginning for February. The idea here is that the Fed/ECB/BoE began to work on the gold price when it became obvious that the world’s most systemically dangerous bank was in a state of collapse:

Certainly the mining stocks are generally “skeptical” of gold’s price action since April:

And has anyone checked gold lease rates lately?  Currently the lease rate curve for gold and silver in London is inverted. In fact, lease rates gold from 3 months to a year are negative.  Negative lease rates mean the Central Banks will pay bullion banks to lease gold and silver.  Long-timers like me know that this means there’s an immediate and anticipated shortage of physical gold and silver available for delivery, where “delivery” means the metal is removed from the London vaults and shipped to the entitled buyer.

Both gold and silver are backwardated.  It took 11 iterations in the LBMA p.m. fix on Tuesday to balance out the heavy demand for physical gold from bidders. 11 iterations is rare occurrence. 5-6 iterations is rare. 1 or 2 is typical. Metal is tight in London.

If you are monitoring the Comex Hong Kong kilo bar vaults, you are aware that the movement in and out of the vaults there suggests that metal is also tight in Hong Kong, which means it is likely tight in Shanghai.

The point here is that the paper price behavior of gold right now is not what it seems.  I’d be more worried about the motives behind the take-down of the gold price using derivatives than I would about where the price of gold will be in 3-6 months.  I’ve always said that the occurrence of events triggering the price of gold to soar  will make life unpleasant for everyone.

12 thoughts on “Prelude To A 2008 Event: Paper Gold Manipulation Intensifies

  1. “I’ve always said that the occurrence of events triggering the price of gold to soar will make life unpleasant for everyone.” I think you are spot-on 100% correct on that.

    After the price ran up to it’s peak in 2011/2012, the deep state was implementing new software technology [with faster hardware to handle it], and putting the COMEX et al “infrastructure” in place, to make sure that didn’t happen again. And it probably won’t unless the system breaks. The relative peace, law & order, and constant supply of goods & services, etc. is also tied to the system not breaking.

  2. The current system based on theft, manipulation and counterfeiting needs to be broken and replaced with an honest system based on real, tangible and non derivative wealth. A systemic reset is long overdue and inevitable. The longer we continue down the current path, the more painful the reset will be.

    1. “The longer we continue down the current path, the more painful the reset will be.”
      Agree but be careful what you wish for; if it happened tomorrow people you know will die, and many more suffering.

  3. It’s not looking good technically… I’m afraid nothing will abate the pain in the short term. The banksters in full control. Nothing short of a full blown collapse will change the current state of the manipulated mirage in the precious metals space.. but at that pt we will a whole new set of pain that we may not survive sadly.. So I ask what’s the point.?

  4. The cryptocurrency mania was most likely launched in addition, to keep fiat out of physical gold and silver. Why buy gold coins and bars with all the storage hassle when the digital nothings on your thumb drive could increase in price by several thousand percent?

    1. I get that ownership of a particular cryptocurrency [like Bitcoin] could actually be used as a currency [until the governments/central banks get tired of competition to their fiat & decide to fight it]. Other than that function, I still don’t understand what one actually OWNS when they own a cryptocurrency. I get the mania [profit] chasing. A friend says cryptos are being used for all sorts of things. I have no idea what, it that is true.

  5. From a subscriber who was unable to get this posted – excellent observations here:

    Food for thought.

    Is it the “independence” part that might facilitate the high crimes? In theory, it is a nice thought, “independence”, but there are zero checks and balances it seems

    Trump may be the first President to understand a yield curve from a FOREX position. This does not mean I am a fan. Higher rates must be making debt service an issue. On the geopolitical front, I might agree making Russia our enemy to keep the war machine profitable might have serious consequences. Anyway, I am throwing this out there, as this subject of Fed independence is pivotal.

    Does it mean independence of private bankers to rigg markets as they see fit for personal profit as corporate friends and family? Is the God given right of independence only for the profits of the banks while extracting the maximum amount of blood from the citizens?
    Is doing Gods work to maintain financial stability warrant independence? Whoes right is it to define financial stability? Whoes right is it to define independence? Can doing Gods work and orchestrating fraudulent trades reconcile? Does the inside knowlege of primary agents matter when protected by this independence? Are free markets capable of normalcy? Is fair price discovery compatible with financial stability? Is financial stability a synonym for manipulation?

    Nothing is as it seems.

  6. Bravo last two posts Dave. Pretty easy to see even less is making sense by the day. Been stacking and noticing pre 1933 espoused by some as the safest gold to buy as its collectible and already been there and done that confiscation wise is getting more and more sold out….hmmm.

    Thanks for the recon and filling in a few more of the cracks

  7. I have got feeling that Market is rolling over , 2019 is going to be good for Gold finally but we going to see repeat of 2008 with Gold going down first (liquidity problem).

  8. Always great stuff!

    However since lease rates in London conveniently stopped getting published a year or do ago where are you getting your data on lease rates and backwardation please?

    Thanks, Mark

    1. – GOFO rates were removed from public view a few years ago but you can calculate them by hand if you know lease rates and LIBOR. 1 mo silver lease rate went more negative in the last 2 days.

  9. Holy Moly – you’re right!

    Negative lease rates – what the hell??

    How does this work with backwardation, Dave? My understanding is that the interest parity equation is: GOFO = LIBOR – GLR.

    With LIBOR marginally positive, a negative GLR would imply a positive GOFO. But backwardation implies negative GOFO.

    None of this makes sense. The constant manipulation has pushed markets into madness. Not even the equations make sense anymore.

    Also – thanks for the updates. Love the blog.

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