"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat

Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput


Tuesday, December 4, 2012

The "Whack-a-Mole" Gold Bandit Strikes Again

Ever since Wednesday of last week, gold bulls have been on edge. An unusually large surge of sell orders on that day broke the price of the metal sharply lower making a large number of recently purchased put options extremely profitable while simultaneously inflicting some serious chart damage to the metal.

Friday of last week saw another barrage of selling with the market attracting some bargain buying in yesterday's session (monday).

Once again it seems as if the mysterious whack-a-mole bandit has struck the metal. This time it was in the middle of the night here in the US, a few minutes before midnight in the Central time zone. Volume surged to levels not normally seen except during the busy pit session trading hours.

Take a look at the following price chart where you can clearly see the SHARP SURGE in volume in the middle of the night. Notice how that volume spike compares to the height of the volume bars during the pit session hours. That is what makes it stand out so obviously.

It is evident that selling of this nature was designed not to obtain the highest possible selling price for a rather large amount of metal to sell. That would have been done by a measured selling program of scale up selling into both short covering and some fresh buying, as that which occurred on Monday. NO, selling of this magnitude is done with one purpose and one purpose only - to take down a market.

Some of the usual skeptics will no doubt instantly dismiss such talk of manipulated price again. Attempting to convince such is a fruitless endeavor. Someone could piss down their backs and they would still believe it is raining. Truth be told it matters not whom the culprit/culprits are; their footprints are unmistakeable.

Gold will need buying on the physical markets to absorb the speculative long liquidation and fresh shorting that is now occuring as a result of this technical breakdown of the paper markets. That means Asian buying and Central Bank buying.


  1. Considering all of the selling that occurred last week, last night and this morning, shouldn't Friday's COT report shed some light on what types of entities were responsible for most of the selling?

  2. "Someone could piss down their backs and they would still believe it is raining."


    What amuses me, is that these commentators even do ignore the admitted and proven manipulation of the markets:
    Currency markets manipulated.
    LIBOR, the most important rate, manipulated for years from many participating banks.
    Oil market.
    Electrical energy market.
    Carbondiaxide market.
    Treasury markets.
    Gold market (yes, even from letters from the FED!)

    And the mainstream media and ANAL-ysts have the chuzpah, to call this behaviour, a few days before the biggest new wave of money printing can be expected, as totally normal.

    Thank you Dan for raising a rationale voice in this utterly insane "markets".

    Since the atomic bomb was dropped with over 13k contracts in the Dec'12 and 7k contracts in the Mar'13 contract within one single minute, my impression from the price action is, that supression has been continued since, even in Asian markets and prior to London opening. 24h.

    And it's always the same: the market trends NOT lower with normal volume, but higher, but then with increasing volume against the direction of the market it is taken down by overwhelming the bids.

    To me the intention with every day of this behaviour is becoming clearer:

    Helicopter-Ben will be Santa Claus.

    Since gold is a currency, it has been of utmost importance for central bankers, to keep it's price appreciation under control during phases of value depreciation. People look at gold and either are feeling safe with their paper money or they are feeling unsafe.

    Since with 12.12.12 the FED will begin to print 85 bn./month and - as JPM has calculated, in 2013 will montetize 90%(!) of all new US-debt - it is very important for them to bring the metals down from their big resistances, because with 12.12. they will want to go higher.
    The FED will need every reistance, to be able to draw a double top at @1900.

    If someone takes into account the fundamentals, that will become reality within the next months, things become totally crazy:

    1. Breach of, and increase of debt limit.
    2. Further credit downgrade of the US.
    3. End of OT2 and direct monetization of 85 bn/month.
    4. More and more countries diversifying away from the USD and no longer have trust in US treasuries.
    5. No structural political reforms in the USA only postponing of problems.
    6. Gold becoming legal tender instead of Petro-Dollar (e.g. Iran - Turkey).
    7. No end of financial repression.
    8. Japan expected to easy as much until 2% official inflation rate being reached (end of USDJPY carrytrade - Japanese probably entering the gold market soon).

    IMO the fundamentals have never been more promising for gold since the bull market in 2001 with financial repression has begun.

    And what do we see? Gold becoming weaker, as the more clear it becomes, that more devaluation of the USD is around the corner.

    I can understand what the FED is doing, but i cannot understand journalists and analysts, that are not even mentioning the bullish factors for PMs in the next months but instead are building their explanations after the chart has been drawn from Ben and Mario.

  3. Dan,
    Glad to see you calling a spade a spade.

  4. The USD is cracking today and PMs take it up the ass beginning last night all the way into today. The manipulation is so apparent. Gold moving up from $250 to $1,700 doesn't mean that it is not manipulated to keep a lid on it.

    The current price reflects the value of gold in light of supply and demand factors with a big portion of the supply of the paper variety with no physical metal behind it. If the actual supply relative to demand was physical only or paper that was backed by physical on a 1:1 basis, the price would be much higher.

    Thus, the manipulation takes many different forms, i.e. short term market interventions to prevent a technical breakout as well as creating an oversupply in the market to suppress price.

  5. Oh, and what about the flash crash on Tuesday PM. Gold and silver flashed lower and instantly recovered. Was that a signal Dan? Is there any connection to BM being placed in CHARGE OF Regulatory Affairs at JPM last week?

    "Blythe Masters to Lead Regulatory Affairs at JPMorgan Chase

    November 29, 2012 By The Doc 43 Comments

    The face of JP Morgan’s alleged silver manipulation has reportedly been chosen to lead JPM’s regulatory affairs office in addition to her role as head of commodities. Apparently Mr. Dimon feels the need to ensure Bart, Gary, and the rest of the CFTC toe the line regarding the nearly 5 year old investigation of silver manipulation.

    Blythe Masters, Head of Global Commodities at JPMorgan Chase, has been given the additional assignment to lead regulatory affairs for the corporate and investment bank."

    1. Like Charles Manson being made prison warden.

  6. hahaha....Someone could piss down their backs and they would still believe it is raining."

  7. On thing that the Cartel is failing to take note of Dan. With each one of these very noticeable take downs comes the confirmation that this market is rigged to the hilt. Do they care? maybe not but many are watching.

  8. Whether the government is involved in it or let this to be done by the banking cartels makes no difference.
    This is just another scary evidence that the country is run by criminals who can make anything they want to.
    Not that we didn't know this before...


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