Don't expect to hear a peep out of the Gold Is Always Manipulated All the Time" crowd about today's massive short squeeze. Here is what a huge short squeeze looks like on a chart. Pretty impressive isn't it?
Don't expect to hear such pithy and insightful "analysis" such as: "Who would buy in such large size regardless of the impact on the market if they were really trying to obtain the best possible buying price? Surely this is 'proof' that our claim of market manipulation by sinister forces is true".
"These insiders and powerful forces are determined to drive the price of gold ever higher and are not even trying to hide their blatant attempts at upward price manipulation".
No, you will get none of that because in their world, this is just the "right and just and fair" thing for gold to be doing. When gold sells off sharply, it is "evil bullion banks acting as agents of the Fed" behind the move. When gold moves higher as computer programs go beserk to the upside, all is good and true and right on the world once more. it is Hallelujah time in the gold cult church! Breakout those hymn books and get those priests and prophets back up there in the pulpit once more to encourage the faithful to remain true and steadfast!
Putting all that foolishness behind us, we can once again see how much fear and panic buying can be created when a powerful short squeeze once again kicks off in a market. Just look at huge spike in volume. It has even dwarfed the massive volume that we saw in this same market exactly a week ago last Friday when that jobs report came in a bit lower than what the market was expecting and the Dollar encountered a sharp selloff.
Once more we are getting a sharp move in the Forex markets, this time being the Euro, which is getting its own version of a short squeeze as many traders are caught short the Euro and are getting out on the heels of a bit better than anticipated Eurozone GDP number.
So far the gold market is not backing down back under the $1180 level, which is the key for the bulls to have a legitimate shot at running this back up to try to put a "12" handle in front of the metal once more. If they can close this market over that level, they have a very good shot at doing that next week although the 20 day moving average, which comes in near $1194 would be the first upside target to be bested before a test of $1200 would be in order. Stay tuned on this one.
I am going to be most interested in seeing what kind of numbers we are going to get out of that GLD once more after this squeeze. Will the ETF attract some new buying or will those looking for other pastures for their monies take advantage of the rally to liquidate. We will see soon enough.
I can tell you that some of the other markets I am trading today are seeing some very strange and bizarre swings occurring in them, notably the meal spreads. The Yen is volatile as well having hit a fresh seven year low early in the session but apparently the rally in the Euro against the Dollar is sparking some short covering in the Yen as well.
I will get some more up later on today after the dust settles. Suffice it to say for now, the gold bulls are seizing the day but they need to flex their muscles a bit more in the mining shares. The HUI is confirming the move higher thus far but has yet to really strongly exceed the peak made on last Friday's big up day.
Let's see what we get on the close - never a dull or boring moment in our modern markets is there?
Hey who knows, maybe some are now reading the lower energy prices, as stimulative in nature, much more so than any monetary stimulus measures that the Western Central Banks might be undertaking and are looking at that as a reason to put some money into commodities once more. Up until now they have all been part of a deflationary wave building in the commodity sector but sentiment is fickle, like the mob in the movie "Gladiator" and can change in a heartbeat.
"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
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