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Posts Tagged ‘Intervention’

Today’s Silver Slam Down: Profit Taking or Intervention?

March 1, 2012 3 comments

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If you’ve been following this blog for a while, you’d have noticed that I don’t usually post anything when there’s a sudden upward spike in PMs prices (there’s more than enough cheer leaders out there!), but will almost always have a comment when there’s a sudden smash down - and here’s the latest.

It’s the classic picture of taking the staircase up (red line) and the elevator down (green line). The gradual climb over an entire trading session at the COMEX on Feb 28 has been attributed to short covering and/or new demand. That looks like how genuine buyers in a normal market would behave - buying at a rational pace to prevent sudden price spikes.

Now, take a look at what happened just a few hours ago. We see a series of waterfall declines in just over an hour bringing the price down by over 9%. Does that look like a normal market to you? The mainstream media attributed this to profit taking. The timing coincided with the U.S. Federal Reserve Chairman Ben Bernanke’s  testimony to the U.S. Congress.

Here’s a shorter version with Ron Paul’s comments on the Fed followed by questions to Bernanke after his testimony.

To many market watchers within the PMs community, there’s more than meets the eye.

Whichever way you look at it, this is another classic example of using a piece of news as trigger to execute trades in a manner that results in the sharpest price decline possible in order to paint the tape (scaring away speculators & momentum traders) or to generate negative publicity in the MSM (scaring away retail “investors”). I tend to agree that it’s yet another example of high handed PMs price manipulation and extreme volatility Jim Sinclair and others have been warning about.

Movements in gold will become so violent that gold will become untradable to individuals.

It applies to silver as well, if not more so. Ever wondered what is meant by that? To find out, try buying from some of the smaller web stores or walking into your favorite over-the-counter dealers during or shortly after a major price slam to take advantage of the unusually low prices. Chances are you’ll be greeted with an unusually high premium or an “Out of Stock” message. They could have genuinely ran out of stock, or may just want to temporarily hold back sales fully aware that this slam down is an abnormally and is short lived.

If indeed the PMs market is being manipulated and their prices are so volatile, does it actually make sense to invest in gold & silver?

Here are some articles to address the above question, some commentaries on previous price take-downs and PMs manipulations.

Categories: Articles by PoliticalMetals Tags: , , , , , ,

Decoded: Is there Any Gold in Fort Knox?

October 12, 2011 4 comments

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In 1933, U.S. President Franklin D. Roosevelt outlawed the private ownership of gold by American citizens, forcing them to sell any gold bullion in excess of $100 to the Federal Reserve at $20.67 per troy ounce. To store the huge stockpile of confiscated gold, the US Treasury built the United States Bullion Depository at Fort Knox, Kentucky, in 1936. This vault has a 25″ thick casing with a 21″ vault door made of the latest torch and drill resistant material weighing 20 tons.

There must be something very valuable in there to justify this level of security.  Official records say there’s 4,577 metric tons (147.2 million oz. troy) of gold bullion worth over $200 billion at current prices. Of late however, there’s an increasing number of respectable people questioning the notion that the stated amount of gold is actually still there, and if so, that it remains unencumbered.

In this History Channel documentary Decoded, Brad Meltzer attempts to answer the question “Is there any gold in Fort Knox?”. Featuring interviews with notable figures like Chris Powell of GATA,  Law Professor Kevin Goldberg, Senator Dee Huddleston, former US Senator of Kentucky and many more, it’s an eye opener.

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Part 1 “What if I told you that Fort Knox is empty.The last time anyone was allowed inside was in 1974. Many experts today believe the soilders stationed here are protecting absolutely nothing.They point to numerous theories to explain their believes.., but if you tell me that no one’s been allowed to see this gold since 1974, I want to know if it’s there and I want to know what else is inside. It is time to decode Fort Knox.”

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Part 2 Craig Hulet, a returning veteran charged with issuing weapons to guards at Fort Knox was told by his Officer In Charge not to issue any ammunition because there was no gold inside. As for potential armed intruders - there’s a policy of “Let them in and zip them up”.A Financial Engineer from Princeton who spoke on condition of anonymity discusses the implications of an empty Fort Knox. He compares his work on financial derivatives at Wall Street to the Manhattan Project.

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Part 3--

Is there Gold in Fort Knox?

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Related Articles:

Categories: Articles by PoliticalMetals, Commentaries [Video] Tags: , , , , , , , , ,

Silver is Oversold “It’s a License to Steal”

October 2, 2011 1 comment

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Here are two great interviews discussing the reasons & implications of the recent price action of gold & silver.
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Sean (SGT Report) discusses the recent silver price take-down with David Schectman.

  • Place of technical analysis in a manipulated market
  • Silver is so oversold “It’s a License to Steal”
  • Difference between physical silver and paper silver prices
  • Why hedge funds sold their winning positions in gold & silver
  • While hedge funds, Soros & Paulson sold paper silver in the Comex, the Indians, Russians, Chinese, Arabs and retail buyers bought up all the physical silver they could get their hands on. (Make sure you watch part 2)

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Al Korelin (Korelin Economics Report) discusses the recent silver price take-down with David Morgan. Some key points:

  • Have the fundamentals for silver changed?
  • CME margin hikes favour the shorts
  • Political events and how they affect the price of silver
  • If you don’t want to lose any money, stay out of the futures market. They are for professionals
  • Stay out of this sector if you don’t have a high degree of accumen in the industry or can’t take wild swings
Categories: Commentaries [Video] Tags: , , , , , , , , , , ,

Credit where credit is due

September 24, 2011 9 comments

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“When you own gold you’re fighting every central bank in the world”. Jim Rickards

To a great extend, that holds true for silver as well. This week, holders of Political Metals lost a battle, but certainly not the war. Measured against the USD, gold and silver are worth less compared to a week ago by 9.6% and 26.3% respectively.

It all started with Ben Bernanke’s statement, following the 2-day FOMC meeting, stating the obvious - that “there are significant downside risks to the economic outlook, including strains in global financial markets”. His antidote was a plan to purchase $400 billion of long-term Treasury bonds and to sell an equivalent amount of short-term debt. More commonly referred to as “Operation Twist 2″, this plan seeks to further reduce long term interest rates, after having pledged to hold short term rates practically at zero until 2013.

That announcement, made in the backdrop of the Eurozone debt crisis and news of slower growth in China, sent global stocks and commodity markets into a waterfall decline. This set up was ideal for the bullion banks who have massive gold and silver short positions. All they needed to do was to pull the trigger, and that’s exactly what they did on Thursday. Silver was pushed down sharply through its key 50 and 200 day moving averages, triggering an avalanche of tech funds selling the following day.

Going for the final kill of the week, news of yet another margin hike by CME (gold by 21%, silver by 16%) leaked into the market towards the end of Friday’s trading day. That further fuelled the selling, pushing silver briefly below $30 before closing at $31.08 - down 26.3% for the week.

In other markets this week, the Dow suffered its biggest loss since 2008. In four days U.S. stocks lost $1.1 trillion in value.  The MSCI all-country world share index (tracking thousands of stocks from developed and emerging countries) recorded its second worst quarter in 23 years and the 30-year bond rates dropped 55bps - the biggest move since the 1987 Black Monday.

So there you have it, Dr. Ben Bernanke, bullion banks & CME working together in perfect harmony. I don’t believe for a moment that the resulting market turmoil was any surprise to Bernanke. Despite saying that gold is not money, he’s smarter than most people made him out to be. After all, he achieved an SAT score of 1590 out of 1600, graduated from Harvard and has a PhD in economics from MIT. Contrary to its statutory mandate of foster maximum employment and price stability, this market turmoil I believe is a piece of precision engineering to achieve some larger agenda. This round is yours, congratulations Ben!

This engineered global markets take down could be part of the deflationary phase that Mike Maloney talked about, which is a prelude to the hyper-inflation phase. They have to assist the bullion banks cover their shorts and bring the Political Metals price down to a lower base before starting the next round of QE or equivalent. Marc Faber told ThomsonReuters that “if the S&P drops to around 900-950, we’ll get QE3 for sure”.

Four ways to view the developments over the past week

If you’re reading this blog, you’re not a professional or a day trader, possibly someone already invested in gold or silver, someone holding some Political Metals (I distinguish between investing & holding here) or someone in the process of researching the matter. As non professional traders, we have to look through and not at the turmoil unfolding before us. All of the bloody carnage above are on “paper” or bits on silicon - illusionary financial derivatives of something tangible (like gold and silver) or derivatives of something totally virtual and non-physical (like interest rates, bonds, debts, CDS, etc). Real or imaginary, they are all derivatives backed by nothing more than a promise or lies of a third party.

Unfortunately, in so far as gold & silver is concerned, the outcome of the imaginary paper price wars above gets applied to the physical world. Price discovery currently comes from the paper derivatives market. Banks and multi billion dollar hedge funds throwing thousands of futures contracts or bets at each other (most of which are done through computerised High Frequency Trading algorithms) determine the price of the coin or bar you pick up at your local bullion dealers. Until such time when this absurd situation of the tail wagging the dog changes, I suggest 4 possible ways for you to view the developments over the past week, using silver as an example.


There’s a big difference between Investing(1) & Holding(2). If you adopt approach (1), and are smart enough to handle scenario (3), congratulations! Trading this dip or swapping silver for gold just before the GSR shot over 56 would have reaped a handsome return. After years of following newsletter writers, both paid and free, I came to the conclusion that attempting to achieve (3) is at best illusionary, and at worst risky. This is particularly true in a manipulated market. Take a look at some of the forecasts by well respected industry players here. Either they missed this week’s price action or are not telling us something. Richard Russell puts it this way:

I look at gold and silver, not as a play for profits, but as an accumulation of hard assets, in a world that it drowning in fiat money, and a world that will probably print trillions more of irredeemable paper.

Finally, if you’ve been waiting patiently (4) or have spare dry powder, congratulations! While the paper price of gold & silver gets whacked, physical demand is very strong. KWN reported that Sprott Money temporarily runs out of physical silver. So, get ready to pick up your discount. Not necessarily immediately, but then again, picking the absolute bottom can also be illusionary. Best industry advise is cost averaging.

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Categories: Articles by PoliticalMetals Tags: , , , , , , , , , , , , , , , , , , , ,

Why hasn’t gold kept up with inflation?

September 22, 2011 Leave a comment

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Towards the end of Chris Powell’s speech at the 18th CLSA Investors’ Forum in Hong Kong, he addressed the all important question Why hasn’t gold kept up with inflation?

It’s because Western governments found ways of vastly increasing the supply of gold without having to go through the trouble of mining it — to dishoard and lease it from central bank reserves and to issue certificates of deposit against gold that never existed in the first place.

“Why” is supposed to be a basic question of journalism. But it has fallen out of financial journalism when it comes to gold, he lamented.

In recent years, and especially in recent months, I have spent much time explaining the gold price suppression scheme to leading financial journalists in the West. I have given them the documentation. Some of these journalists seemed interested. But none has ever reported anything about the issue. One writer who works for a major news agency in the United States was intrigued enough to call the Federal Reserve and ask about its gold swaps. She got a very telling “no comment.” But unfortunately she could not get her editor’s permission to write a gold story.

Frustrating as all this is, it is not too surprising. After all, who are the major advertisers in the Western financial news media and the major sources of financial news? The market manipulators and governments themselves. And journalists seem to take for granted that central banks operate in secret, particularly in regard to gold, so there’s no point in questioning them — even though central banking now determines the value of all capital, labor, goods, and services in the world, and does so in secret.

So here I am in Asia, which is a major victim of the gold price suppression scheme. Maybe there will be more curiosity and indignation about it here.

But Asia is not the only victim of this scheme. My own country may be the biggest victim. For this scheme has helped to corrupt the United States, destroying our once-free markets and the accountability of our government.

We in GATA do what we can, even though, from our beginning, we have wondered whether we could really presume to speak for gold. And not just for gold, of course — we are not idolaters — but for the economic and political liberty of individuals and the national sovereignty that gold serves and stands for. With gold always under attack precisely for what it represents, and with no others coming forward to defend it for what it represents, with even the gold mining industry’s main trade association refusing to acknowledge the attack, we have hoped that any presumption on our part might be forgiven.

We remain largely amateurs. At the outset we did not half understand what was going on and what we were setting about to do. Our name preserves that imperfect understanding. We thought we had discovered just another anti-trust violation. It was a while before we perceived that we were up against government policy and that most of what we were discovering had been discovered long ago, at least in principle, just not well taught, publicized, preserved, and made timely again.

Because it can work only through surreptitiousness and deceit, this government policy will be defeated when it is more widely understood — and every day it is being better understood, because it is getting so brazen. It was more brazen than ever the other day when Switzerland devalued its franc, the world’s leading “safe haven” currency, apparently leaving the “safe haven” field exclusively to gold. But just a few minutes before the Swiss franc’s devaluation was announced, unidentified sellers dumped thousands of gold futures contracts on markets around the world, causing the gold price to plunge along with the Swiss franc. These sellers plainly did not aim to make a profit from their gold holdings; if they had intended to make a profit, they would have sold gradually into the market. No, they meant to knock the price down hard, and they did.

These sellers almost surely were central banks. But as far as I could tell, no Western journalist has yet put a question to any central banker about that strange and counterintuitive action in the gold market.

I ask for your help in forcing an end to the gold price suppression scheme. I ask in the cause of giving individuals, nations, and all humanity a chance at democracy, liberty, and limited government with a neutral, fair, and impartial international currency that serves not just one government or another or one class or another but rather the whole brotherhood of man.

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> Read the full speech here

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Chris Powell, is the treasurer/secretary of Gold Anti Trust Committee and a newspaper editor in Connecticut.

Categories: Articles from external sources Tags: , , , , , , , , , ,
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