Gold Daily And Silver Weekly Charts - Gold Target Price Reached Intraday

See the intrady commentary on the metals here.

See comments on the Fed's minutes, which shook the equity markets here.

I think those remarks and the subsequent price declines were more indicative of the overbought condition of stocks than any serious convictions on the part of the Fed to actually prematurely end their QE before the conditions in the real economy which they have cited are met.

If they taper the QE purchases, it will because they choose to do something else to stimulate the economy, rather than just prop up the banking sector's bad debts.

I am beginning to consider adding to long term metals positions since the price has hit the targets I set out last week.  I will give it another day to think about it. 

Copper took a pounding today on rumours that a fund was liquidating longs.

The precious metals, both gold and silver, are rather oversold, and the managed funds are holding what appear to be untenably large short position. 

SP 500 and NDX Futures Daily Charts - Fed Say What?

"Several participants emphasized that the Committee should be prepared to vary the pace of asset purchases, either in response to changes in the economic outlook or as its evaluation of the efficacy and costs of such purchases evolved. For example, one participant argued that purchases should vary incrementally from meeting to meeting in response to incoming information about the economy.

A number of participants stated that an ongoing evaluation of the efficacy, costs, and risks of asset purchases might well lead the Committee to taper or end its purchases before it judged that a substantial improvement in the outlook for the labor market had occurred.

Several others argued that the potential costs of reducing or ending asset purchases too soon were also significant, or that asset purchases should continue until a substantial improvement in the labor market outlook had occurred.

A few participants noted examples of past instances in which policymakers had prematurely removed accommodation, with adverse effects on economic growth, employment, and price stability; they also stressed the importance of communicating the Committee’s commitment to maintaining a highly accommodative stance of policy as long as warranted by economic conditions.

In this regard, a number of participants discussed the possibility of providing monetary accommodation by holding securities for a longer period than envisioned in the Committee’s exit principles, either as a supplement to, or a replacement for, asset purchases...

Similarly, one member raised a question about whether the statement language adequately captured the importance of the Committee’s assessment of the likely efficacy and costs in its asset purchase decisions, but the Committee decided to
maintain the current language pending a review, planned for the March meeting, of its asset purchases...

Ms. George [Kansas City Fed] dissented out of concern that the continued high level of monetary accommodation increased the risks of future economic and financial imbalances and, over time, could cause an increase in inflation expectations.

In her view, the potential costs and risks posed by the Committee’s asset purchases outweighed their uncertain benefits. Although she noted that monetary policy needed to remain supportive of the economy, Ms. George believed that policy had become too accommodative and that possible unintended side effects of ongoing asset purchases, posing risks to financial stability and complicating future monetary policy, argued against continuing on the Committee’s current path."

FOMC, Fed Minutes, January 2013

Stocks dropped hard today, albeit from a lofty height reached with few corrections. The trend is not yet broken.

The cause was said to be the release of the January Fed minutes, which suggested that QE will not be everlasting.

I think the correction was as much concerned about the lack of serious work being done in Washington about the sequester, and in particular to address a broken economy.

But in reality the stock market was reaching into bubble territory, with complacency at an extreme.  And the economy has simply not caught up with pricing.  And it may not for some time.

Forecasters keep reaching for the ever receding recovery. And I think it will keep receding, because of the policy error of the Federal Reserve and the Treasury in supplying stimulus to rescue bankers and traders from their own mismanagement and speculation, without performing their most imporatant obligations to the public and the real economy.

The cynical nature of Washington these days is hard for most people to understand.  Those political denizens of the Beltway just do not care, judging by their servile attention to special interests, and preoccupation with personal enrichments and power.  It is probably the tail end of a long running trend, culminating in the rise of a generation which has suckled on the gospel of greed.

SP 500 Futures Intraday

In all our quest of greatness,
like wanton boys, whose pastime is their care,
we follow after bubbles,
blown in the air.

John Webster

Stocks took a serious turn lower after the January Fed minutes release caused some concern that the Fed would begin to diminish their QE strategy.

Well, they might switch it to some other more effective method of providing relief for the monetary mismanagement of the financial system, but the idea that they would do so because the economy is recovering or the banking system is healthy is ludicrous.

Forecasters Keep Seeing a Recovery Just Around the Corner

I attribute this to jawboning, perhaps wishful thinking, and certainly more perception management.

Bernanke and the boys are caught in a box of their own construction, and they do not see a clear way out.  Or perhaps they do, but they are too servile to the monied interests to take it.

Intermediate Gold Chart Revisited - Range Trade in the Currency War

"There is not a crime, there is not a dodge, there is not a trick, there is not a swindle, there is not a vice, that does not live by secrecy."

Joseph Pulitzer

I think that gold is caught in a range trade since its big run up to a record high.

The range is roughly between 1550/1570 and 1800.

I do not think the government is funding this directly, but indirectly the funds are coming from the Fed and its cronies, and well as de facto policy endorsement from the government, so that the regulatory bodies turn a blind eye to the massive shorting at opportune times.

The short interest money flows are getting rather intense as the gold price dips lower to the bottom end of the range, showing increased resistance from stronger hands. This would also indicate a rising or stable interest rate caused by short selling rather than by long liquidation.

The metal bears spent quite a bit of time and ammunition in the middle of last year trying to break support.  So I think we might see another contest at that level hold again, or even become exhausted before we reach it.   I cannot know how strong the hands of the metal longs have become.  And of course, the ready supply of paper to throw at them. 

I think the leverage in the metals is creeping to higher highs.  It will be an interesting contest to watch, as the shorts keep expanding their bets, as indicated by changes in open interest, aided by a decrease in margin requirements at the Comex, and the longs hanging on to a brazen, relentless pounding from London and New York.

As an aside, some fellows talk about backwardation in the gold futures prices, but I see a normal contango.  This is merely an observation from the data. And when people talk about supply constraints, at least some data to show this would be useful to see to back that up.   One can infer it, but it is not really credible without some factual data. 

I don't think this is a bullion play, but rather a paper play, for now.  But as it goes on, it takes an obvious toll in the real world.  Just like the ongoing bailouts of the banks using the creation of currency. 

But at some point the tide will turn, and the timid will find their voice once again. It just is a matter of how much damage has been done, and what demagogues may arise to attempt to tap the wellsprings of confusion, hatred, and resentment.

The 'GotGold Report' shows an interesting chart, that the big short in gold is being driven by the 'managed funds' boys, which includes the hedge funds. This implies that their customers might get taken out to the woodshed in a high powered reversal.

Several commentators including Denver Dave, Harvey Organ,  Him Sinclair, and Dan Norcini among others, have been seeing the same things in the COT reports, but I like this chart which GotGold has created, as it is shown here.   There are none braver than those playing with Other People's Money, especially to the extent that they are insiders and the Others are not.

Peter Hug, the 'trading director' for Kitco Metals, was on Bloomberg TV today calling for a decline in gold to the 1525 level, probably based on the last chart shown below.   I know Kitco buys and sells metals on the retail side, but I wonder what trading they do to merit a 'trading director.'  Are they arbitraging customer sales and gold and silver held in non-allocated accounts?  I am sure that they are hedging their inventory exposures.  I do not think they offer managed funds, so they are probably trading for their own book.

So let's see what happens.  I have no crystal ball unfortunately. But I was willing to dump some  hedges today, in order to free up cash for some possible long buys in the near future.  I will have to watch how the 'sequester' plays out.  Kicked cans and down the road comes to mind.

It would be customary to get a plunge and then a snap back in a capitulation bottom.  However, there is a reasonable chance that the shorts capitulate, either based on an event or sheer exhaustion from trying to meet their downside price objective.

But longer term this is damaging the supply sources and the mining industry.  Desperate central bankers do not really care about this, but it will have its way, sooner or later.  They are truly frightened of losing control.

As a reminder, next week is Comex option expiration, and I suspect we will see a bottom either around that time, or later this week.  Maybe even today.  This is based on the structure of the options, which unfortunately is a fluid situation, so it is not as predictive as one might otherwise hope.

And I do think, almost beyond reasonable doubt, that this 'thrown rope' higher in the SP futures, with the exception of the dip around the fiscal cliff scare, is being driven indirectly by Fed and Administration policy.

“The stock market is the key player in the game of economic growth.”

Alan Greenspan to Maria Bartiromo

And besides targeted tax cuts and loopholes, there are few better methods of channeling liquidity to the one percent that are betting than the equity markets and bond markets, supplemented by privileged access to non-public information about policy, as well as managing public perception of policy and the economy.

"If we understand the mechanism and motives of the group mind, it is now possible to control and regiment the masses according to our will without them knowing it."

Edward Bernays

This bubble in stocks and tinkering with real world supplies of products will end badly, as always.  And it does not provide much comfort to think that the best defense against corruption for many of the leaders of the West is ignorance and incompetence.  It seems like a great confederacy of greed, shepherded by the rule of dark powers, and spiritual wickedness in high places.

Net Asset Value Premiums of Certain Precious Metal Trusts and Funds

US Ready To Strike Back Against Chinese Cyberattacks

"At some point we do have to call the Chinese out on this," said Michael Chertoff, Homeland Security secretary under President George W. Bush and now chairman of the Chertoff Group, a global security firm. "Simply rolling over and averting our eyes, I don't think is a long-term strategy."

It is worth keeping an eye on this.   It has not been very widely reported.

The implications of this are broader than most people think, especially with regard to the globalization meme and 'free trade.'  China has been very aggressive in this area for some time.

The currency war is opening a new cyber front. But I find it hard to believe that Obama will do anything substantial.

AP
US ready to strike back against China cyberattacks
By Lolita C. Baldor

WASHINGTON (AP) — As public evidence mounts that the Chinese military is responsible for stealing massive amounts of U.S. government data and corporate trade secrets, the Obama administration is eyeing fines and other trade actions it may take against Beijing or any other country guilty of cyberespionage.

According to officials familiar with the plans, the White House will lay out a new report Wednesday that suggests initial, more-aggressive steps the U.S. would take in response to what top authorities say has been an unrelenting campaign of cyberstealing linked to the Chinese government. The officials spoke on condition of anonymity because they were not authorized to speak publicly about the threatened action.

The White House plans come after a Virginia-based cybersecurity firm released a torrent of details Monday that tied a secret Chinese military unit in Shanghai to years of cyberattacks against U.S. companies. After analyzing breaches that compromised more than 140 companies, Mandiant has concluded that they can be linked to the People's Liberation Army's Unit 61398.

Military experts believe the unit is part of the People's Liberation Army's cyber-command, which is under the direct authority of the General Staff Department, China's version of the Joint Chiefs of Staff. As such, its activities would be likely to be authorized at the highest levels of China's military...

Read the rest here.

Gold Daily and Silver Weekly Charts - Option Expiration Next Monday

Intraday commentary here.

Another day, another raid by the gangs of New York. And an abject failure of leadership, globally.

"Practices of the unscrupulous money changers stand indicted in the court of public opinion, rejected by the hearts and minds of men.  True they have tried, but their efforts have been cast in the pattern of an outworn tradition.

Faced by failure of credit they have proposed only the lending of more money. Stripped of the lure of profit by which to induce our people to follow their false leadership, they have resorted to exhortations, pleading tearfully for restored confidence.

They know only the rules of a generation of self-seekers. They have no vision, and when there is no vision the people perish.

The money changers have fled from their high seats in the temple of our civilization. We may now restore that temple to the ancient truths. The measure of the restoration lies in the extent to which we apply social values more noble than mere monetary profit."

Franklin D. Roosevelt, First Inaugural Address

SP 500 and NDX Futures Daily Charts - Don't Fight the Fraud

There are many reasons offered to buy equities.

One of the reasons being touted lately is that with bonds in a bubble, and nowhere to go but down, and money leaving commodities, equities are the only place for money to go to obtain a fair return.

But there was another reason offered today on US financial television that had me gobsmacked, as my British cousins say.

The guest said that the market was 'rigged to go higher.'

So obviously one should not short it, and staying out of it is not such a good play either. Rather, if you know the dice is going to come up the same way each time, you need to get in on the betting, whether it makes sense otherwise or not.

Now I've heard everything. Don't fight the fraud.

After the bell, Dell beat earnings by a penny.

What hath Ben wrought.

Don't ask why; just buy.

Comex Metals Option Expiration For Remainder of the Year - Hedge Fund Buying Metal Shares

As a reminder, next Monday is the March option expiration for gold and silver at the Comex.

Here is an interesting blurb on the steps the government of India is taking to dampen gold imports: fractional reserve bullion. I wonder where they got this idea?

"The government recently stopped requiring gold-backed exchange-traded funds to hold physical gold in the amount of their sales. Instead, the funds will be allowed to deposit some gold with banks who in turn can lend it to jewelers, which in theory should reduce imports for a time."

India Cultural Demand Defies Gold Curbs

And there is this tidbit:

"SAC Capital Partners LP, a $20 billion dollar group of hedge funds founded by Stephen A. Cohen, quietly positioned itself in over $240 million dollars worth of gold, silver, and mining share investments during Q4 2012.

Of great interest is the structure of those positions. They are indicating, that the firm is expecting a massive spike in both gold and silver, as well as a staggering move higher in the mining shares."

SAC Puts $240 Million into Gold/Silver/Mining Shares Investments

As you may recall, it is Stevie Cohen's cohorts who are being frisked up for having traded on non-public information. Naw, couldn't be.

About that FDIC Controversy, and Some Other Internet Rumours

I answered a few emails on this a week or so ago, but the issue seems to have come back again.

There was a change in the aggregation of accounts at the FDIC as of 31 Dec 2012. That change rolled back a consideration that had been granted for 'non-interest bearing transactional accounts' held at a bank. Such an account is what is normally considered a checking account. Those were to be aggregated with the other accounts of the account holder.

But in terms of aggregation, nothing else changed. Some people said the rule would aggregate ALL accounts at ALL banks to a single Social Security number in the amount of $250,000.

This is not what the FDIC said, not at all.  And there updated information from 1 January 2013 confirms this.

The aggregation rules are still based on a 'per bank' basis. And within that bank, those rules are roughly as follows per the FDIC's webpage.

I do not know the future. Some will ask, 'well do you trust the ....?'    Probably not, and I tend to trust in God, and look at the data for everything else. But there is a wide gap between blind trust and just making things up.   And it is there that we must make our stand, on as firm a ground as we can find.

It is not unreasonable to believe that dollar debts will be paid in devalued dollars, and there will be de facto defaults as well.   This has been going on for quite some time, and there is plenty of historical precedent.  Much of the hoohah going on in politics revolves around the allocation of financial pain.

There are legitimate concerns, and fears, and phantoms.   The difference between the first two is the difference between probability and possibility.  And with regard to the last, it is a terror of the imagination that is inimical to reason and to a rewarding life and the refuge of despair.

We entering a time of rumour and hysteria. I have been hearing some rather crazy things, about the Mormons buying up all the real estate of California, and the Queen of England buying up Nevada.  And some other things I do not care to even mention in this Café, from the usual repugnant sources of fear and hatred and violence about the usual victims of prejudice. 

Because to do that is not to stand with the truth as we can know it, even if we think we are wallowing with those in the mud for 'the right ends' and things we may sincerely believe.   That merely serves the madness, which serves none but itself.  

If hatred and fear crowd out the reason, and love, in our words and our minds, we have probably gone off the path.

Prime Minister Abe's Radical Plan for Japan's Constitution

Here is a notice of an upcoming talk at the Foreign Correspondents Club of Japan that I found to be of interest.

I am sure there is some political hyperbole here, and there are also some big 'ifs.'  But this sort of thing does seem to be the general trend amongst the developed nations. 

Democracy was an innovation imposed on Japan in the aftermath of the second World War.  Most westerners do not realize that for the majority of its political life, the postwar government of Japan has been a government dominated by a single party, the LDP in partnership with their corporate combinations, or keiretsus.  

And this 'Japan Model' of concentrated political power in a partnership between government and their corporations is responsible for the lack of reform that led to Japan's 'lost decade.'

The Constitution and its integrity takes on an added importance to those devoted to the democractic freedoms and individual protections for this reason.

The Foreign Correspondents Club of Japan
Shinzo Abe's Radical Plan to Change Japan's Constitution

Lawrence Repeta, Professor, Meiji University School of Law
Masako Kamiya, Professor, Gakushuin University Faculty of Law
Yoichi Kitamura, Representative Director, the Japan Civil Liberties Union

12:00-14:00 Thursday, February 21, 2013

Japan's Liberal Democratic Party has made no secret of its plan to comprehensively reform the Constitution, which it says was 'imposed' on the country after World War 2. On April 28, 2012, it revealed what these plans are. The date was chosen to commemorate the sixtieth anniversary of the San Francisco Peace Treaty.

In Diet interpellations on January 30, Prime Minister Shinzo Abe declared that the party would move forward with these plans under his leadership. For many years, debate over constitutional amendment has focused on the war-renouncing Article 9 but the LDP reform plan is far more radical.

If successful, the party would delete Article 97, the Constitution's most powerful declaration of human rights, and make several other far-reaching changes, including elevating maintenance of "public order" over all individual rights; adding a new requirement that citizens "respect" the kimi ga yo hymn and the hinomaru flag; eliminating free speech protection for activities "with the purpose of damaging the public interest or public order, or associating with others for such purposes"; and reducing parliamentary majorities required for constitutional amendments.

If the party achieves these goals, it will create a Constitution that mandates citizen obligations to the state rather than the other way around. This would effectively mean a rejection of popular sovereignty and a return to Japan's prewar order. The LDP and its allies secured more than two-thirds of the House of Representatives in December elections. If they can achieve the same level in the House of Councilors, the door will be open to a new Constitution to match Mr. Abe's vision.

A panel of experts has agreed to come to the FCCJ and explain the significance of these enormously important proposals. Lawrence Repeta is a professor at Meiji University Faculty of Law. Masako Kamiya is a Professor of Law at Gakushuin University and representative director of the Japan Civil Liberties Union. Yoichi Kitamura is a representative director of the same union and a co-counsel in many noteworthy cases, including litigation that led to the historic 2005 Supreme Court decision that found the Diet in violation of the Constitution for failing to adopt adequate voting procedures for Japanese who reside abroad.

Please reserve in advance, 3211-3161 or on the website (still & TV cameras inclusive). The charge for members/non-members is 1,700/2,600 yen, non-members eligible to attend may pay in cash (menu: braised chicken with rosemary and cream sauce). Reservations canceled less than one hour in advance for working press members, and 24 hours for all others, will be charged in full. Reservations and cancellations are not complete without confirmation. For meal service, please enter the room by 12:25.

Weekend Viewing: Shakespeare, For All Time

In Search of Shakespeare by Michael Wood is a wonderfully entertaining overview of the life and career of William Shakespeare, of whom we know quite a bit. And Wood gives us a deeper insight into Shakespeare, the man.

I enjoy Michael Wood's popular investigations into history and geography.  He brings an intellectual excitement and wonder to his documentaries that never seems to lose its edge, or to become cloying.  I do not know if this is his persona, or his genuine character.  But he is remarkable in his ability to share his knowledge and joy of learning with ordinary people, which is the hallmark of a teacher.  

Below is Part Four of the series, dealing with the last part of his life.  I recommend the entire series to you, as well as some of his other works. 

I spent quite a bit of time reading and studying Shakespeare at school. I was lucky to have two Harvard educated teachers, one in high school and one at University, who were very knowledgeable literary men, who had a deep learning of Shakespeare, his sonnets and his plays. 

And I read widely about him and his works on my own.  Reading was a solace, an entertainment, and at certain times a refuge.  I suppose as a  working class young man, Shakespeare provided a view of life that lifted me above what I saw each day, and gave me a broader, renovated vision.  This is the power of art, to uplift and transform, to speak to others across the vast gulf of place and time.

Literature, music and the visual arts are often denigrated in 'hard societies,' and abased to the pedestrian use of the State as diversion and propaganda. But even in the most heavily laden social environments, beauty in the arts can bloom. And they do so much more with the encouragement, rather than repression, of the culture.

What is remarkable about the wealthy class in America is that they have such narrowly limited educations, in the manner of clerks and technicians and professional conmen, and thereby have so little appreciation of art. 

Their expectations of themselves are exhausted in material acquisition.  They are given to banal and garish displays, imposing but lifeless edifices of power.  They have deadened their sentiments in pursuit of the material. It reminds one of the monumentally lifeless art of National Socialism, a cultural 'dead end' without any higher prospects.

And cut off from the organic fertility of its culture, the artistic impulse becomes increasingly introspective and eccentric, formless, fruitlessly growing inward, howling its shock and isolation from within deep wells of subjectivity.

Creativity is a sign of life. If a society has no arts, it has no creative life.  Look at the manner in which a people put their creativity to use, and one will see what they hold in high regard, what they love, and serve.

Intermediate Gold Chart - 1550 to 1570 For a Range Trade, If It Gets There

This looks like a long consolidation, with a range trade of 1550 to 1800.

If we do get down as low as 1570 one might be inclined to step in and buy, adding to longer term holdings and for a trade, with an eye to that 1550 as a low and an upside target north of 1700.

I am sure most traders on the Street are seeing/thinking the same thing. So it might take some agility, and scaling in. And of course if too many specs pile on there, the bullion banks will deliver a short term smacking on general principle. That's what they do. It is tough playing against the house, especially when they get to deal your cards face up.

But I will also be keeping an eye on the stock markets, to see if they correlate with the metals, or if not, and how the VIX fares.

Gold Daily and Silver Weekly Charts - Hedge Funds and Specs Selling

The Commitments of Traders chart below is courtesy of GoldSeek.

That report suggests that the Banks are starting to cover, and that the small specs and the hedges are doing the short selling.  Let's see what next week's report says to confirm this, since it will include today's big selling operation.

In the silver market the banks are having trouble taking new longs at these prices, causing some to speculate that they are stuck a bit on the big short.  I'll wait to see more evidence on that.

After the bell, the SEC says traders front running the options market in the Heinz - Buffett announcement netted $1.7 million, and that the SEC presumably intends to do something about it.  Small fry most likely if they do.

Intraday commentary on the metals market here and here and here.

Remember that Monday is a national holiday in the States.

Have a pleasant weekend.

SP 500 and NDX Futures Daily Charts - Bernanke Says 'Economy Is Recovering'

Actually he did NOT say that.

But that is what the spokesmodels on Bloomberg TV were saying most of the afternoon, citing that as the reason for the sell off in the metals and the late strength in the stock market.

Here is what he really said, according to Bloomberg (in print):

"Federal Reserve Chairman Ben S. Bernanke said the U.S. economy is far from operating at full strength and reiterated his commitment to record easing.

“With unemployment at almost 8 percent, we are still far from the fully healthy and vibrant conditions that we would like to see,” Bernanke said today at a meeting in Moscow of his counterparts from the Group of 20. “The United States is using domestic policy tools to advance domestic objectives...

The U.S. central bank has faced criticism from some foreign officials, including Brazilian Finance Minister Guido Mantega, who in October said that its accommodation has weakened the dollar, threatening to fuel a “currency war” of competitive devaluations. The Fed under Bernanke has expanded assets to a record exceeding $3 trillion and pushed down the benchmark interest rate close to zero.

“We believe that by strengthening the U.S. economy we are helping to strengthen the global economy as well,” Bernanke said...”

A Commentary on the Metals Markets: Gold and Silver Price Controls

This article excerpted below by Jeff Lewis seems to capture the nature of the recent action in the metals market. And the SP stock futures market, inversely. It is fairly heavy handed stuff.

I often watch 'the tape' throughout the day, and have been doing so, off and on, for the past fifteen years, and part time much longer, since 1976 at least.  What I see is how he describes it.

I have been through these cycles in metals and stocks many times, almost too many to count. And so I am not so overly moved one way or the other.  That is the benefit of no leverage, a proper allocation, and a suitably long time horizon. 

If I am concerned, it is because this sort of thing undermines the confidence in the markets and the financial system, and ultimately the currency.  And judging from the polls, the confidence and approval is quite low.

This fakery and gimmickry is not productive, and does not contribute anything to an economic recovery.  It does not recommend hard work, and savings, and sound investment. 

Quite the opposite, it teaches the arts of the conman,  greed and corruption, by example.  It makes the people cynical and ashamed of their leaders.  And that is corrosive of society as a whole, where the ends justify the means, honor means little, and oaths of office even less.

The plutocrats who recognize no justice but their own do not want to hear it, but this is the very essence of moral hazard.

"Consider for a moment the remarkably high volume of COMEX contracts traded during the days when the spot prices for gold and/or silver were driven sharply lower.

An illusion of weakness tends to prevail in these situations because the majority of precious metal traders do not seem to understand the difference between a paper claim and the real thing, nor do they seem to realize that only paper contracts or claims are being sold when the price of the precious metals drops — not the actual metal itself. Basically, the futures contract seller cannot be forced to deliver physical metal, and so sellers can simply settle their profit or loss on the trade in cash.

Furthermore, the fact that such price drops are typically initiated by the dumping of huge swaths of paper contracts by proprietary traders working at giant bullion banks that are too big to bail and/or fail, makes them seem more like manipulative attempts to scare the precious metals market into a selling panic.

No one is actually selling real bullion during these allegedly “not-for-profit”-led precious metal sell-offs.  Instead, the paper market is moving the metal prices as the tail seemingly wags the dog.

Perhaps this was once a civilized way to discover the fair price of a commodity, but in today's age — regardless of the obvious and highly questionable concentration of only a few sellers comprising the entire net short position of the futures market — every market trades in a high speed, momentum-based, and computer program monitored environment.

This manipulative activity is also permitted by regulators and exchanges in the equities market via dark pools that spoof and front-run millions of unsuspecting penny stock day traders who seem caught up in the race to catch the elusive Red Queen of a good trade.

Practically every notable move lower comes from concentrated short sellers intentionally destabilizing the market to force precious metal prices down, although the so-called exports never seem to see it this way. Furthermore, no matter how blatant the sudden dumping is, it is almost always painted and viewed publically as a 'longs selling' event.

If all of that were not enough, predictable sell-offs almost always occur after margin announcements. As a case in point, maintenance margins were lowered last week, thereby providing an incentive for unsuspecting momentum or technical oriented longs to enter the market.

As usual, these weak longs were quickly harvested in less than two trading sessions after the margin announcement was made...

The good news, or the flip side, is that open interest has remained high in the precious metals futures markets, despite the numerous downdrafts. This indicates that stronger hands are accumulating..."

Jeffery Lewis, The Untold Reality of Gold and Silver Price Controls

Gold at Technical Extreme In the 'Wash/Rinse' Cycle of This Decline

The data on this chart is from yesterday's close, but I have drawn in the price action.

The technical data indicate that gold is getting to the end of the 'wash' portion of the 'wash-rinse' cycle in this decline.

So we may get a bounce soon, and it may go as high as 1680. But gold needs to break this intermediate downtrend.

Note that the CRB does not reflect a similar price decline in commodity prices. The divergence of gold (and silver) from the CRB and stocks is remarkable.

I do think this is an indication of the currency war. So when it comes, I think the turn higher may be quite violent. Best for non-combatants to stay out of the way as best they can by not trading the short term and avoiding leverage.

Federal Reserve's Monetary Base

The Fed is increasing its monetary base aggressively again.

Net Asset Value Premiums of Certain Precious Metal Trusts and Funds

Looks like a washout in the premiums.

Gold Intraday

Hard to miss the deliberate price smackdown.

As I said yesterday, "I will not be surprised to see a final big move to run the stops to the downside in the precious metals, and take additional shares and units of paper claims before the markets break free."

So is this 'the final big move?' Of course I do not know, no one does. But gold is now deeply oversold, and we are nearing the rinse phase of the wash-rinse cycle, at least according to the technical indicators.

Things like this are a pity, because they make a sham of the markets. But what else is new.

Three day weekend ahead. And the currency war is on.