After another take down yesterday, gold bounced back to the $1,600 handle and silver above $40 in the Comex Access market today. Gold/Silver ratio dipped briefly below 40.
On the surface, MSM commentators attributed Tuesday’s sharp 3.7% drop in silver to Obama’s positive announcement about the debt ceiling negotiations.
Behind the scenes however, a more sinister effort to manipulate the silver market was unfolding, as described by BrotherJohnF and Silvergoldsilver below.
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While BrotherJohn thinks that someone sold or “dumped” 50,000 silver contracts (equivalent to 250M ounces of paper silver or $10B worth of physical silver, or in excess of 1 whole year’s of silver production in the US) in one minute, a more probable scenario would be that it was a result of bullion banks’ High Frequency Trading (HFT) algorithms doing their thing to place the price of paper silver anywhere on the chart that suits them and the powers that be at that point in time. Remember that one minute is an eternity in the world of HFT, where transactions happen in the microseconds. Thousands of trading back and forth within or amongst the Cartel members within that 1 minute could produce the cumulative result discussed in that video.
If you don’t mind a little rough language, here’s Silvergoldsilver’s “SLV manipulation July 18th” video capturing the manipulative trades on the SLV ETF before the take down.
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Despite the paper price suppression, several positive outlooks for PMs were recorded at King World News:
GATA Chairman Bill Murphy discusses the forces behind the recent surge of gold and silver prices into all time high and multi-decade high territories. Topics covered include JP Morgan’s trapped silver short position, lack of physical silver for delivery, Gold/Silver Ratio, and why the current bull run is unlike the 1980 Hunt brothers “cornering” of the silver market. Related reading: GATA’s testimony before the CFTC hearing in March 2010
Jim Rickards, in a recent interview with Eric King of KWN, discusses the possibility of “Stealth QE” after June 2011, impact of the war in Libya and the Japan earthquake on oil and the economy, where he sees gold and silver going, and more.
On the Fed’s announcement that Bernanke will be holding quarterly press conferences to explain monetary policy decisions, Rickards said that it will decrease instead of increase the Fed’s transparency as it will be another form of propaganda used to stage manage expectations.
His first question to Bernanke would be “What are you doing in the gold market?”
Listen to the full interview here:
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Listen to the previous interview (Published on March 12, 2011). Here, Rickards explains the concept of “perpetual QE” or “Perpectual Motion QE Machine” where the Fed is able to continue QE without having to further expand their balance sheet beyond June.
Knowing and anticipating this in advance is critical for PMs holders. The dollar value of PMs may be momentarily hammered down if come June, the Fed announced that there will be no QE3. As explained by Rickards, and as proven by precedent (see below), they may go in to Stealth QE, which does not change the fundamentals of PMs one bit. Any dip will be temporary and a great opportunity for anyone who does not yet own any PMs. Then again, this may not be the case considering the effects of the recent war in Libya and the Japan catastrophe.
To help support the economic recovery in a context of price stability, the Committee will keep constant the Federal Reserve’s holdings of securities at their current level by reinvesting principal payments from agency debt and agency mortgage-backed securities in longer-term Treasury securities.The Committee will continue to roll over the Federal Reserve’s holdings of Treasury securities as they mature.
The Committee will continue to monitor the economic outlook and financial developments and will employ its policy tools as necessary to promote economic recovery and price stability.
Jim Puplava, president of FPS, discusses the hot topic of Silver Manipulation with four prominent players in the silver market.
More Charts: 1-Month, 1-Year, 5-Year, 10-Year
More Charts: 1-Month, 1-Year, 5-Year, 10-Year
