The government really shut down? If (when) the Treasury does actually default, will the value of the dollar increase and thus the value of gold in dollars decrease? Not that the government shutdown is a default, it’s not but it does point out how poor our finances are and does illustrate that we cannot go forward without borrowing more. So why then is gold down $40 today? Is it because China is opening up their banking system to allow them to trade gold for their nearly 2 billion customers? Does going from allowing 7 banks to all 23 banks decrease demand or somehow increase supply? Could it be that gold is down because after only 2 days the amount of gold standing for Oct. delivery is 1/3 of what all bullion banks combined purport to have? Could it be because France and Italy announced that they have no plans to sell their gold? Or as Zero Hedge quipped this morning, are all of the furloughed government workers at home today with nothing better to do than sell “all of their gold?”
All the way back in the middle 1990’s, I noticed the strange trading in gold. Whenever anything “bad” happened or was announced, gold would go down. In almost perfect fashion, any negative financial news would be reacted to by a drop in the gold price. Anytime the President, Treasury secretary or Federal Reserve chairman spoke the price of gold would drop. This has changed somewhat over the last 5 years or so as occasionally gold will rise when either of these 3 is speaking…but not often.
“Games” have been played and price has been “made” with these waterfall incidents. Ask yourself, who would be selling gold today in panic fashion? It can’t be margin calls in other markets as stocks are just fine and dandy. Could it be that traders believe a budget deal will be done…that actually fixes something? Anything? Is it because the economy will do so much better now that higher interest rates are here or because Obamacare will suck the last remaining life out of the economy? Is it anything other than outright and blatant manipulation?
Don’t ask the CFTC about this because it is pointless as the silver whitewash has already proved. Don’t ask “good cop” Bart Chilton because he has nothing to say. We thought that he’d say something in Sept. because HE SAID HE WOULD! He didn’t and I doubt he will EVER say anything about silver again. Do I think he lied to us? Actually no I don’t. I think that he now fully understands that it is not illegal for the “presidents working group on financial markets” (the President and Secretary of the Treasury) to “manage” markets. They can legally (though not morally) do anything they’d like with any market they’d like…whenever they’d like. Why? Because it is law and in the “best interest of National Security.” So, don’t expect anything out of Bart Chilton as I believe he has been “silenced” and cannot say boo one way or the other.
Out of curiosity I turned on CNBC to hear whether even a convoluted explanation for gold’s drop in price was being offered. Nope, nothing…other than “it was reported that a large trader sold on the market open and sort of got things going to the downside.” Imagine that? “A large trader.” Umm, if this “large trader” has such a large “stash” to sell, why wouldn’t they go directly to Asia to sell? This “large trader” could sell at a premium price and all in one lot without shooting himself in the foot by depressing price. There is an answer to this question…and it’s a simple one! Because Asia, when they “buy gold”…they want GOLD not some piece of paper saying that “we’ll send it to you!”
So this is what we have to deal with, fundamentals won’t matter, technical won’t matter, nothing will matter…until it does. It doesn’t matter that supply is already decreasing. It doesn’t matter that just between China and India alone nearly ALL global production is spoken for. JP Morgan’s “long corner,” sovereign nations repatriating their gold…nothing. Nothing will matter until it matters the most. The only course of action is to sit tight and purchase more metal whenever you have funds available to do so. If you know for a fact that something is undervalued or that the price is artificially suppressed, buy it and sit on it because the day will come when the “rig” finally fails. I would not have imagined that the “rig” could have lasted nearly as long as it has. I guess that was naive on my part as I never believed the government would divest all of its gold in an effort to prolong a system (power) that is mathematically flawed.