That big spike up today that Zerohedge is saying is $450mm worth of paper gold occurred exactly at 8:15 a.m. EST, 5 mins before the Comex gold floor opens. Someone either wanted to cover a big short or, less likely, a big fund decided to get very long. I couldn’t see any news or event-related triggers. But the tape-action reflects a fear-driven trade if it was short-covering OR probably some sort of inside view of information not yet public if it was a trade to establish a long.
TF Metals report (link) that GATA published yesterday contained excellent sleuthing by Mr. Ferguson. When I saw that JPM had become quite net long gold futures several months ago, my first impulsive thought was that they were getting long in order to be able to turnaround and dump big quantities of contracts to control the Comex price at some point. TF Metals illustrates this is likely what occurred with the published data as evidence. (CFTC Bank Participation Report).
HOWEVER, it occurred to me that – perhaps – IF JPM has to resort to building up long positions in paper gold to enable the banks to turn around and dump the contracts in order to execute effectively its Fed-mandated policy goal of capping the price of gold, is this yet another indication that the bullion banks are running out of physical supply to throw at the market?
In my opinion, it is.