Our sales have increased by 30-40 per cent over the last week following a decline in gold prices. Given that the current price level will continue, we see this season as one of the best festive seasons in terms of jewellery sales in recent years,” said Rajesh Mehta, managing director, Rajesh Exports, one of the largest jewellery retailers in India. – LINK, as sourced from John Brimelow’s “Gold Jottings”
I say “unofficial” bottom to this 9-week manipulated take-down in the price of gold because we don’t know to what extent the western Central Banks will throw paper at the NY and London gold “markets.” But based on the latest Commitment of Traders report, the bullion banks are covering their shorts fairly aggressively while the moronic hedge funds dump their longs and try to chase the market lower by piling in to the short side. This has always been a recipe for at least short term move higher in the metals.
But the cartel’s takedown of the paper gold price has created a nice ex-import duty premium bid in the Indian gold market just ahead of India’s festival season: “Dropping of the rates depend on the international market. If it continues, we are sure to have a bumper Diwali this year,” said N Anantha Padmanabhan, regional chairman, All India Gems and Jewellery Federation – LINK.
Please note that a sudden surge in legal kilo bar imports will not depress dore bar importation or smuggling, the latter of which is now estimated to fill about 30% of India’s annual gold demand now.
Recall that China was closed last week, while India was transitioning into it’s biggest buying season. The banks used this opportunity to launch their most aggressive paper attack on gold since 2011 in London and on the Comex. They also used the big drop last week to print profits at the expense of hedge funds and whiny retail bucket shop traders. But, the western gold cartel take-down of gold using paper has helped ignite India demand: “In the past fortnight, gold has fallen in the international market by 5.8 per cent; the price in India is down 4.9 per cent. With the ‘pitrupaksha’ period over, when buying of gold is considered inauspicious, festive demand has started – LINK.
With the bullion banks covering their illegal paper shorts, gold is the most oversold that it’s been in 3 years. I suggested several weeks ago that we might get a “200 dma” pullback. Here it is:
Again, I’m calling an unofficial bottom because, in a system that allows a criminal to run for President, there’s not telling the degree to which Wall Street will resort to illegal market manipulation in order to keep a lid on the price of gold. But I am certain that the Indians, Chinese and Russians will – as Alan Greenspan would say – “measurably” increase their “consumption” of physical gold.
I will be reviewing and updating my favorite junior exploration picks in this week’s Mining Stock Journal. I am featuring some graphs which reinforce my view that this sell-off is over, with the market “percolating” for another big move higher – possibly ahead of the next Fed policy move, which I believe will entail more QE. I am also going to present some ideas to take advantage of the oversold condition of the highest quality large cap mining stocks. You can subscribe to the Mining Stock Journal with this link: MSJ Subscription. This includes email delivery of all back-issues. The last issue featured a silver explorer trading below 50 cents that could ultimately be a $10 stock.