Wednesday, September 7, 2011

Do the Western Central Banks Really Believe A Lower Gold Price Will Cut Demand For The Precious Metal?

Let's see now,...  Dollar down, Oil up, copper up, CRB Index up.  Gold and Silver down?  Gold down 3%?!  How can Gold be down 3%?  Who would be dumb enough to sell their Gold?  Western Central Banks?  Of course!  We can't have Gold going up and hit new ALL-time highs day after day if the financial system is collapsing...  That TRUTH would just hurt WAY to much!

By Andy Hoffman
I want to recap what has “happened” in the past few DAYS:

1. Collapsing stock markets, led by Major banks across the entire Western world

2. Rising credit default swap spreads, in many cases to record highs, for the aforementioned banks and  
essentially all Western sovereigns

3. Shockingly horrible economic data in both the U.S. and Europe, including the catastrophic U.S. jobs report on Friday

4. The U.S. government AGAIN breaching its debt ceiling, to NO FANFARE AT ALL!

5. Obama preparing a speech where he will propose additional, MASSIVE SPENDING with printed dollars on non-productive infrastructure jobs (word is it will be $300 billion)

6. The lordly Swiss National Bank PEGGING ITS SUPER-STRONG CURRENCY to the COLLAPSING EURO, eliminating one of gold’s ONLY “competitors” as a safe haven

7. Wikileaks disclosures that the Chinese are well aware of the U.S./European policy of surreptitiously (and illegally) suppressing gold prices, and that the U.S. government KNOWS the Chinese know this!

8. The commencement of September, with just two weeks until the Fed meeting where a QE3 announcement is nearly certain, and three weeks until Europe likely approves creation of the ESFS, a €4 trillion fund printed out of thin air to bail out PIIGS

9. News that China is now planning to end its policy of monetary tightening, and go back to EASING again (!

Yes folks, this list, which is far from complete, lists just what has happened since FRIDAY! On its own, EACH item on this list would yield a SOARING gold price if the market were freely-traded, and combined this is an even more potent brew with the potential to COLLAPSE THE ENTIRE FINANCIAL SYSTEM ITSELF, let alone the gold Cartel. So if anyone is “worried” about today’s MOB HIT ON GOLD AND SILVER, put yourself at ease and use yet another government-engineered “flash crash” to LOAD UP on Precious Metals, as much as you possibly can!

Gotta love Ranting Andy for putting the Gold markets behavior the last couple of days into perspective so succinctly.

Don't you find it a bit odd, that despite a continuing surge in the fundamental reasons to own Gold, the price seems to collapse every time it hits new ALL-time highs.  Do people that own Gold really say to themselves, "Oh my, Gold is at a new All-time high, I better sell my stash!"?  The chart below would certainly prove that to be a stupid decision:

Only a Western Central Bank, intent on offering the Chinese, the Russians, the Indians, and the Arabs a discount price at which to steal the "wealth of the west" would do such a blatantly stupid thing as sell Gold at a new All-time high. 


This chart definitely looks like a loser...SELL that Gold ASAP!

Silver has risen 800%, better sell that Silver ASAP!

Yes definetly, sell those Bubble Metals and buy, buy, buy those "cheap" American stocks!

It should be clear by now to anybody watching the Precious Metals that the efforts by the Western Central Banks to suppress Gold and Silver prices has been futile.  At best, they have only slowed their accent.  Now, they only offer those that seek the Precious Metals as a safe haven in a global currency war, an opportunity to purchase their insurance at discounted prices.  It should be no surprise that Western Central Bank Gold "interventions" last only hours now, instead of days and weeks as they have in the past.

Like the Japanese Yen interventions in March, and again in August, the Swiss Franc intervention will fail given time.  The Japanese Yen interventions were quickly followed by huge spikes in the price of Gold.  Only a fool would believe that a huge spike in Gold will not follow yesterday's Swiss Franc intervention...despite the organized take down of Gold as the Swiss Franc intervention was announced.

Dan Norcini explains below in a blog post today:

“If it is not obvious by now, it should be -an attempt by the Central Banks of the West to derail the rise in the gold price is currently underway.

I mentioned in my midday comments that an effort would take place to prevent gold from moving beyond $1900 in an attempt to paint a double top on the daily price chart and induce a round of technically related selling from speculators on the long side.

This effort can clearly be seen in the following ONE MINUTE BAR CHART which reveals an enormous spike of 4,000+ contracts in the middle of the evening during a time period in the gold trading not normally known for this sort of volume. The question must now be raised - if this was a hedge fund blowing out of a long gold position, why wait for such a low liquidity environment in which to execute to trade knowing full well that by so doing, one would be guaranteed the worst possible exit price for the trade. Also, since the price of gold has been RISING and NOT FALLING, why would any gold long be forced to unload a position. It certainly is not under any duress from price action.

We can probably eliminate this as the cause therefore since only the rankest of fools would attempt such a thing.

The next question that must then be raised is if this were a hedge fund doing the selling to establish a fresh short position, why would they sell in such size at such an hour guaranteeing themselves to be filled with a fresh short position at the worst possible price by selling into a hole? The logical answer is that they would not do such a thing.

By the process of elimination and due to the fact that a major attempt by a Western Central Bank (the Swiss National Bank) to deliberately debase their currency occurred less than 24 hours previous to this selling barrage, added to the fact that an obvious raid took place on gold knocking it down below $1900 during the time frame in which the Swiss Franc devaluation was announced, this huge sell order must be therefore traced back to the Western Central Banks which are now going after the gold price in an attempt to cloak their utterly incompetent, impotent and predictable response to the current economic woes of the West.

To assume that the ECB, the Federal Reserve, the Bank of England, the Bank of Canada, and any other major Central Bank of the West did not have previous knowledge of the plans by the Swiss National Bank to debase the Franc is to live in a fantasy land and be devoid of all sound wisdom. Of course they knew beforehand as something of this importance would not be done unilaterally by the Swiss.

The attack on Gold is therefore an effort by these modern day alchemists who are attempting to achieve prosperity by magically altering slips of paper into something that might constitute value in the eyes of the beholder to discredit the yellow metal and send it careening lower.

China must be watching this with both disgust and delight. Disgust in seeing the depths of corruption that ails the Western monetary system and delight in the fact that the machinations of these conjurers is providing a discount in the price of the metal which they will be more than pleased to accept.

Take a look at the following chart and tell me with a straight face that this is NORMAL trading action. Any trader worth his salt knows this chart looks amazingly like a chart of a currency facing INTERVENTION PRESSURE from a Central Bank.”

Central banks smashed gold ahead of Swiss devaluation, Davies says

Or perhaps, much of the recent decline in the price of Gold may also simply be related to the fear that yet another CME margin increase in Gold may be imminent. 

China’s largest Gold exchange, The Shanghai Gold Exchange will raise trading limits and margin requirements on its Gold and Silver forward contracts on Sept. 9 to prevent excessive volatility.

This is noteworthy because the CME followed the last two Shanghai Gold Exchange margin increase with increase of their own with in 2-3 trading days, blaming "market volatility" for their decision.  Volatility created solely by the margin increases themselves.  A pending CME margin increase in Gold is something to be wary of through the balance of the week.

The hit in Gold is a boon for Silver investors...BUY THE DIP!

As Swiss devalue their franc, gold may be last currency standing
By Jeff Cox,
Just as talk had begun to intensify about a gold bubble building, the metal got another boost today when the Swiss National Bank announced measures to decrease the value of the franc.

The SNB's move was widely viewed as positive for gold because the metal will gain even more popularity as a safe-haven investment of choice.

For the past 14 months -- and, in fact, since Lehman Brothers failed in September 2008 -- the franc has experienced a parabolic rise as financial instability beset many of its neighbors as well as the US.

But the Swiss central bank, faced with worries that the ever-strengthening currency would jeopardize the country's export-based economy, announced an aggressive cap for the franc's value against the euro.

Consequently, the currency tumbled more than 8 percent in Tuesday trade. Gold, while down narrowly amid a global asset selloff, is expected to fare well in the days ahead.

"With Japan massively intervening in the (currency) market and the Swiss effectively curbing the safe-haven status of the Swiss franc today, we only really have gold as the last-standing safe-haven currency around," David Rosenberg, senior economist and strategist at Gluskin Sheff in Toronto, wrote in his daily note. "While the US dollar has liquidity, it unfortunately has a debt burden alongside it that gold does not."

FLASH: China knows about gold price suppression, and U.S. knows China knows
China knows that the U.S. government and its allies in Western Europe strive to suppress the price of gold, and the U.S. government knows that China knows, according to a 2009 cable from the U.S. Embassy in Beijing to the State Department in Washington.

More Beijing embassy cables show China sees gold as central in currency war
More news media-monitoring cables from the U.S. Embassy in Beijing to the State Department in Washington show that both China's government and the nation's financial press, tightly controlled by the government, consider gold to be the main weapon in a world currency war that is under way.

1 comment:

  1. Remember,

    Paraguy buying gold mined on their land.

    Same with Romania

    Same with Kazakstan.

    And Chavez mimics un announced as yet?