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These days, Technical Funds selling on Comex is responsible for gold’s poor performance.  JPMorgan, most likely at the Fed’s behest, is the spark that lights the fuse.  The Technical Funds are massively short gold and JPMorgan and several other large commercial bullion banks are taking the other side of the trade, going long.  The large commercials always win.  If they are long, you should be too.

I found Rick Ackerman’s explanation of Monday’s gold action interesting:

GCG14 – February Gold (Last: 1239.90)

We’re told there was nothing criminal behind yesterday’s $30 swoon. Even if that’s the case, there was most surely a whiff of desperation on the seller’s part. COMEX reported that 4000 contracts changed hands in the space of a single second. That might not sound like a lot of time, but it evidently was long enough to allow buyers to get any and all reasonable bids out of the way, the better to rip the unfortunate seller a new orifice. From a technical standpoint, we’ll still need a pop above December 16’s important ‘external’ peak at 1251.70 for bulls to remain on the offensive. If it happens today, but no later than Wednesday in any case, that would be best.  My immediate upside target is 1261.80, so traders should bring a bullish bias to the task.

Rickackerman.com, January 7, 2014

Many analysts believe that gold is all about the dollar.  Jim Sinclair is one.  Bill Murphy is not.  Yesterday, it certainly wasn’t about the dollar.  Ed Steer said:

It should be obvious to all those except the willfully blind that what went on in the precious metal markets yesterday had zilch to do with what was going on in the currency markets.  Here’s the chart from the Sunday night open onwards.”

 

Casey Research, January 7, 2014

If it’s not about the dollar, then what’s it about?  Steer had something to say about this as well (if you haven’t figured it out by now, it should be clear I really enjoy Steer’s input.  He and Ted Butler have a particular take on the gold and silver market that I feel very comfortable with.)

In about a minute, gold got hit for $35 the ounce—and tripped circuit breakers for ten seconds as the bid stack got cleaned out by a 4,200 contract sell order.  As I keep saying, no “for profit” seller ever unloads a position that size in that manner.  The only seller would do that is one that is trying to influence the price—and it had the desired effect.

Well, the ‘fat finger’ showed up just as the gold and silver markets were about to go ‘no ask’ at the London p.m. gold fix.  This was no accident, yet no one in the precious metal world will do a thing, especially the miners.  The CFTC has done nothing in the past when prices are slammed like this, nor has the CME Group—so it’s just more proof that JPMorgan et al can do whatever they want, whenever they want.

Casey Research, January 7, 2014

Even though it is upsetting to watch gold go down or sideways, at some point in the near future the price will swing back up, in spite of the Technical Funds short positions and then they will cover.  The funds will cover those contracts by going long.  That is what we are all waiting for.  When it happens, now, next April, next fall, no one knows, but it will happen.  Just remember, on the way up from $1200 to $1900, there was a lot of money spent on gold – and it will be again.   If you bought gold at $1700, $1800 or $1900 then why complain now, when you have an opportunity to buy more at this price, or any price below that temporary top. $1900 was not the final chapter.  It is an opening chapter.

Look, gold could fall – or not, but what I am sure of this, it will rise to astounding new heights early this year – or maybe next year.  No one has a crystal ball for the short-term.  As long as there is enough gold to deliver to China, and at these prices it seems doubtful this can continue much longer, they can cap gold.

You can either be angry and frightened – or you can say thank you for allowing me to buy it so cheaply.  That’s exactly what the Chinese (and all the buyers of physical gold and silver) are doing now – in record amounts.

If you are considering a gold purchase, is there a “best” time to lock in the order?  There probably is.  According to Ed Steer:

In gold, as is always the case, the high of the day comes about 45 minutes before the London open.  The big change this month was the low tick came at the London a.m. gold fix—and not the p.m. gold fix.  The high of the day came about 45 minutes after London closed—and then it’s all down hill into the 5:15 p.m. electronic close in New York.  The activity around the p.m. gold fix doesn’t even rate a mention.

 

While on gold, here’s the chart for all of 2013.  As you can see, it looks a bit different than the current month.  However, it’s the chart pattern that’s the same.  Prices are always higher in Far East trading until about an hour before the London open—and then it’s mostly all down hill into the 5:15 p.m. electronic close in New York.

Here’s the entire 2013 calendar year for silver—and as you can tell, it looks quite a bit different than the December chart on its own.  But with the noise stripped out for a whole year, the pattern is the same as for gold.  An increasing price up until and hour before the London open—and then down hill into the New York electronic market.

With some minor variations, the five-year charts appear similar—and they all share one thing in common.  Regardless of whether it’s gold or silver, the price is up in Far East trading until an hour or so before the London open—and then they’re sold off for a loss by the 5:15 p.m. electronic close in New York.

Casey Research, January 7, 2014