Manipulating Gold – Fed Gets Caught Red Handed
If you’ve read any of my previous articles about the manipulation of gold prices, you know that the Fed and other western central banks are desperately trying to suppress prices.
Although they’ve been doing this covertly for decades, now their manipulation is becoming more extreme and far more visible.
Take, for example, what we can clearly see on February 6th, when the prices of gold and the S&P 500 stock futures were blatantly manipulated.
In late January and early February, the price of gold attempted to push up through $1,265.
It has since pushed through and in doing so triggered short covering by those who are riding the coat-tails of the Fed’s manipulation of gold prices.
This short-covering has since driven the price of gold higher and higher.
As I’ve discussed previously, the west is facing a monumental problem of short supplies of physical gold to deliver to countries like China and India, who are aggressively buying.
As you may remember, the Fed has been working feverishly for years to keep the price of gold low to strengthen the perceived value of the dollar.
Then came Thursday, February 6th.
As the Asian markets opened, gold started to move higher. Then, as the Comex session opened, gold rose from $1,254 to as high as $1,267 per ounce.
Why? Because of short-covering.
Now, look what happened at 8:50am:
In less than one minute, 3,225 gold contracts were sold, driving the price down by about $15 per ounce. This single minute of trading was about 40 times the normal volume seen in the previous 15 hours of trading!
And surprisingly, the SP500 futures contract jumped higher:
When this strange combination happened, there was absolutely nothing in the fundamentals that could explain this move . . . other than the combined manipulation of gold and the stock market futures. All of this was of course in vain although the bottom line remains.
The bottom line is this: The West is running out of physical gold at the exact time China, India, and other Asian buyers, are continuing to buy in record amounts.
The Fed is trying desperately to head off the cataclysmic problem of delivery fault.
So, they are doing everything possible to drive prices down, especially during key Comex delivery periods.
They would much prefer that holders of these gold futures contract settle in cash, rather than in the delivery of physical gold.
However, what do you think will happen when there’s no more gold for delivery?
How then will the Fed be able to continue pushing the price of gold down by selling what everyone will know is not there?
What will happen to the dollar when the price of gold skyrockets?
These terrifying questions will be examined in an upcoming article.
In the mean time, I would love to hear your comments and thoughts on this subject and would be honored if you were to share this with your friends and colleagues using Facebook Twitter etc.
Until next time…
Dustin
P.S. If you ever wanted to try our automated trading software which has out performed the S&P by 8 times for three years running now is your chance.
Interesting piece Dustin and may well be something in this but if the Chinese are furious buying the physical (which they are at unprecedented levels) and of course asset (i,e companies that dig up the physical), why could it not be they at this stage who could equally be responsible for the above. Some clever stuff going on with them, they have no interest in the Fed defaulting on its ability to deliver (nor in the implications to the USD if this happens since they own so much US debt..is it 1.5T?). Most importantly, if they are (there is no doubt) and want to continue to aggressively buy gold and gold assets (which again evidence would suggest this is accelerating), they have the most to gain from keeping gold price low and so logically, from their perspective why not use futures contracts (as you so ably describe above) to do this…for now.
This seems far more compelling as the relationship between gold and the USD has been looser in the last 12 months than it has been traditionally.
Not so much a disagreement but an alternative and yet logical explanation
Cheers
Mike
Hawkeye options
Western clout has even managed to muzzle India’s historically unquenchable apetite for gold in 2013 by getting the GOI to drastically curb imports and levy higher taxes. That flood gate when opened is going to swamp a lot of shorts…. Just waiting….
If what you are saying is true, all the Fed are doing is holding back the inevitable,
and they are digging themselves into a bigger grave.
I wonder if the Fed knows that if you mix nickel and brass, you get mixture that resembles gold, and jewellers have been doing this for years.
On the other side to this is, if gold price naturally falls, to which I don’t think it will, then Asian buyers will left with very expensive paper weights, but in reality there is not that can be done. Gold being a precious metal will always have a certain residual value.
I do not do Forex and I don’t know anything about it.
did u read the Stansberry report which explained what the Chinese are doing?
well if the Chinese keep buying gold with the excess usa dollars they have , our dollar will become less worthy and the Chinese gold will become a super fortune .
Great article and comments.
As an option trader I look for unusual option activity. There has been plenty in the paper gold (i.e. GLD). My hunch is that the guys in black hats are also buying Puts and shorting Calls. While one can never know for sure who the buyers and sellers are, there are massive, unusual, bets being made with GLD options. Just one example is the Jan 2015 120 strike GLD Calls and Puts. Someone made a $22.8 million dollar bet by selling Calls and someone made a $27 million bet by buying Puts at that strike. Even larger bets have been made on every month and weekly expiration here out up to the 130 strike.
So what does this mean? 1) Very large players are making very large bets. 2) Options, like Futures can be used to move or suppress the underlying asset. 3) GLD is at $127.62; it’s 200 day moving average. Once GLD breaks out over $130 the folks making those big option bets are in trouble.
One might insert the word Fed for human in the following quote.
“Never underestimate the power of human stupidity.” – Robert Heinlein
Not only is the Fed involved in the manipulation of gold but silver as well. JPM is also deeply involved in this manipulation of both precious metals. There is no true market valuation of precious metals since the manipulation is based on sales of paper (with nothing physical to back it up). When the paper sales far exceed the known amounts of physical in the world along with the total amounts being mined this would certainly make Bernie Madoff look like a piker. One must also look at JPM with a great deal of skepticism as the were the funnel for Madoff’s fraud for many years and yet they were unable to recognize the fraud taking place. When are some of the guilty bankers going to face prosecution? Just as a side note GATA, Eric Sprott and numerous others have proven time and time again that this manipulation takes place every day by the TO BIG TO FAIL BANKS.
hello
Can you explain the expression “short covering” if you don’t mind …..