I am cutting my section back today because Bill Holter is writing two articles. The first article is on Syria and the second is on backwardation.
Also, Andy Hoffman wrote one of his best blogs today and you should make it a point to read it.
At 9:30 New York time gold is UP nearly 1% to $1,417. Silver is also up to $24.54. Are you aware just how unusual this is?
Things have changed! JPMorgan (and the other commercials) are massively long gold now. JPMorgan is starting to cash in on the 25% of the market LONG CORNER they established over the summer. The technical and momentum funds are on the short side. JPMorgan now profits from a rising price. The hedge funds will have to start covering their shorts very soon, or they will give back the profits, booked on the way down. After a day like today, it is hard not to see that the game has changed.
By the time Larry Edelson jumps off the fence and finally states it is time to get back in, the people he scared out of their physical position will have left a lot on the table. Further, when people sell out on the way down they are usually reluctant to get back in, especially if the price has already risen 30% or 40% or more; and that will be the case by the time Larry gives the go-ahead in another month.
After the latest horrible housing numbers, the Fed is in no position to cut back on QE. The war drums are beating in the Middle East. Congress is in gridlock over the budget. Europe is a mess. And most important, JPMorgan is long gold! This is the perfect storm for gold and silver to break free and I now believe that it is possible for gold to log a gain for the year, which just a short while ago would have not been possible. If gold can keep up the string of unbroken year-end gains through 2013, in spite of the way the first half of the year went, it will be beyond impressive! Yes, the bull market is still with us and is gaining momentum again.
LeMetropole Café had the following to say about option expiry…
As a Reminder, Tuesday Is Options Expiration On the COMEX
The goal line defense at 1400 gold is more understandable if one remembers that this is an important week on the COMEX.
Tomorrow is option expiration for gold and silver, and $1400 is a psychologically important level for gold.
Round numbers like 1400 tend to attract a lot of ‘buy to cover’ stop orders. So a break through 1400 could trigger a quick run higher.
And perhaps even more significantly, this is the last week of the August delivery period, and gold is in relatively short supply for delivery. At this point a quick rise in price is likely to attract more contract holders to take delivery, rather than encourage eligible bullion holders to opt for delivery.
I have included a snapshot of the calls that are subject to expiration this week in gold, and their distribution by strike price. There are about 8,800 calls between 1400 to 1425 that will be expiring this week.
This is only a small part of the picture, but I think it is more relevant than usual for the reasons cited above.
We’ll see how the price action continues through this week, for a better idea of what is happening. But it is hardly what one might call fundamentally honest and transparent.
If the cap on price seems counterintuitive you must have an old fashioned concept of what the markets are for, with such quaint notions as supply and demand and price discovery. These markets are all about power and influence, and using gimmicks and positional power and privileged information.
Sometimes when a coiled spring releases, it does so with some extraordinary power.
–Le Metropole Café, August 26, 2013
Zero Hedge asks, “Will 8th Time Be The Charm For $1,400 Gold?”
The valiant $1400 defense failed. Gold at $1405 now
It seems defending the critical levels we highlighted on Friday remains the market’s mission today.
AAPL over $500, check! Dow over 15,000, check! Gold under $1,400, check… for now (oh and Silver under $24, check). We can’t help but wonder who the magnificently positioned ‘trader’ is that keeps wiping away the bid-stack every time we touch $1,400 – especially as the contrarian in us notes that more than half the analysts in Bloomberg’s survey expect price to fall (the most since just before gold bottomed nine weeks ago)… With Kerry’s briefing appearing to raise the chances of war, it will be tough for ‘them’ to defend this push
– Zero Hedge, August 26, 2013
Now, some important commentary from Jim Sinclair below:
A picture of the process of the emancipation of physical gold’s price from the price of fraudulent paper gold’s price.
The key to the 2020 Great Reset based on the “Euro R 4 Standard.”
Chinese Gold Imports – China Imports 104 Tonnes of Gold in June Posted on August 16, 2013 by Al Roy
China just imported 104 tonnes of gold in June and their cumulative imports are clearly exponential as they are gobbling up gold at the recently low prices.
–jsmineset.com, August 25, 2013
China and Russia are aligning themselves with Egypt and Syria now. The US dollar could be in their cross hairs. Both China and Russia have been importing a great deal of gold lately. Note the chart, above. The dollar’s days as the world’s reserve currency and as the world’s Perto-Currency could end quickly. Keep a close eye on the price of gold now. If it really starts to take off, the Syrian issue will be unraveling and the dollar will be under fire.
There is no doubt that our “diplomacy” in the Mid East has been a disaster. Arab Spring is threatening to topple country after country. We are even at odds with Egypt and Saudi Arabia, our former friends and allies – over whether to support the new Egyptian military government or the “democratically” elected Muslim Brotherhood faction. China, Russia, Saudi Arabia and Qatar support the military, and in fact they have offered north of $12 billion in aid. We backed the wrong side. Syria has Russia in her corner, and Iran and possibly even China. We are once again supporting the extremist faction. We learned nothing from our Libyan experience.
If the US launches Cruise missiles, this can get out of hand real fast. This is one of the most likely Black Swan events I have been warning about for the last few months. Take a deep sigh of relief if we get through this one without igniting the fuse that will set all the financial markets ablaze.
Below is Jim Sinclair’s Commentary:
And so it starts without camouflage of any kind. The BRICS are flexing their golden muscles.
World learns to manage without the US
The giant sucking sound you here, I said on August 15 on CNBC’s The Kudlow Report, is the implosion of America’s influence in the Middle East. Vladimir Putin’s August 17 offer of Russian military assistance to the Egyptian army after US President Barack Obama cancelled joint exercises with the Egyptians denotes a post-Cold-War low point in America’s standing. Along with Russia, Saudi Arabia and China are collaborating to contain the damage left by American blundering. They have being doing this quietly for more than a year.
The pipe-dream has popped of Egyptian democracy led by a Muslim Brotherhood weaned from its wicked past, but official Washington has not woken up. Egypt was on the verge of starvation when military pushed out Mohammed Morsi. Most of the Egyptian poor had been living on nothing but state-subsidized bread for months, and even bread supplies were at risk. The military brought in US$12 billion of aid from the Gulf States, enough to avert a humanitarian catastrophe. That’s the reality. It’s the one thing that Russia, Saudi Arabia and Israel agree about.
America’s whimsical attitude towards Egypt is not a blunder but rather a catastrophic institutional failure. President Obama has surrounded himself with a camarilla, with Susan Rice as National Security Advisor, flanked by Valerie Jarrett, the Iranian-born public housing millionaire. Compared to Obama’s team, Zbigniew Brzezinski was an intellectual colossus at Jimmy Carter’s NSC. These are amateurs, and it is anyone’s guess what they will do from one day to the next.
By default, Republican policy is defined by Senator John McCain, whom the head of Egypt’s ruling National Salvation Party dismissed as a “senile old man” after the senator’s last visit to Cairo. McCain’s belief in Egyptian democracy is echoed by a few high-profile Republican pundits, for example, Reuel Marc Gerecht, Robert Kagan, and Max Boot. Most of the Republican foreign policy community disagrees, by my informal poll. Former defense secretary Donald Rumsfeld blasted Obama for undermining the Egyptian military’s ability to keep order, but his statement went unreported by major media.
–jsmineset.com, August 24, 2013