“What happened yesterday in the gold market was very interesting. One full hour before Bernanke's testimony, the bullion banks started selling. Over the next 4 hours, the bullion banks sold the equivalent of 515 metric tons of paper gold. This was in just 4 hours, and again, the selling started one hour before Bernanke’s testimony...
The real question here is, how could an entity begin selling such a massive amount of paper gold when there hadn’t been any news? (starting to sell before Bernanke's testimony)...
The bullion banks are ringing the register at both ends, while trying to extricate themselves from their short positions in the paper market. They are attempting to do this before transparency comes in to the market. They do not want a situation where the aggressive hedge funds actually get evidence that these bullion banks are naked short.
They are concerned that if it is discovered they are naked short gold and silver, those hedge funds will aggressively target those banks. This is what happened to JP Morgan, recently, when the London Whale got caught. As soon as Jamie Dimon was forced to admit a $2 billion loss, the sharks realized they were vulnerable and came in to attack. That has greatly magnified the size JP Morgan’s loss. The last thing powerful entities want to see is for this to occur in the gold and silver markets.”
London Trader at King World News
One has to consider information such as this as input to be compared to other things, since we cannot directly view what the unidentified source is specifically seeing.
However, having watched the tape in real time and looked at the changes in Open Interest, it seems to be a credible description of what happened.
It also tracks closely with my own view of the game which we are in.
So as a further word of caution, if you cannot bear irrational volatility, do not trade the paper gold and silver markets. Take your positions according to your investment plans and then sit and wait.
I am perhaps not so sanguine that an end to the manipulation will come anytime soon as the London Trader seems to imply. Or perhaps this is just how I interpret what he says.
While Bart Chilton and the CFTC promise change and reform, it seems unlikely to happen anytime soon, at least before the national elections.
Still, one never knows. Change is in the wind.
