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Did we miss a major central bank tightening overnight? The precious metals sector is lit up...
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Thursday, December 13, 2012, 7:18 AM ETDid we miss a major central bank tightening overnight? The precious metals sector is lit up bright red following the Fed's addition to QE and what looks like the promise of ZIRP for at least 2-3 more years. GLD -1.1%, SLV -2.2% premarket. Copper and oil join in, the red metal -1.4%, and WTI crude -0.6%.
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Warren Buffett buying IBM to prop the Dow Jones Industrials is manipulation. Carl Icahn talking up his latest purchase and then selling after a nice gain is manipulation. Central Banks buying gold to justify printing of currency is manipulation.
The price of gold declining in spite of the CB buying is not manipulation, instead, it is the market saying, "you may want a justification for your massive print machine, but you'll have to find another way to achieve."
Regards.
Market doesn't drive any entity ,it is market which is driven by entities .Two basic forces drive market 1. supply and 2. demand .In case of GOLD supply is not proportionate with demand .Central banks have machines to print UNLIMITED money but world doesn't have enough mines to produce UNLIMITED GOLD . This is the basic explanation .
And if you go by fundamentals ,then remember ,in last 2 months ETFs have purchased record amount of GOLD ,around 2500 tons
which should drive the gold price higher even if fed does not print any money .
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I would not be surprised if the loaning of gold was being done using some kind of fractional reserve system like the banks use for money.
As seen by the recent HSBC $1.9B fine and nobody going to jail, the bankers and politicians are corrupt to the very core and capable of anything.
Also keep in mind that the physical gold supposedly held by HSBC on behalf of the GLD ETF is likely to be a bogus scam. Sort of like the old "pigeon drop" confidence game. HSBC is really, really dirty and corrupt. They are the "boogy man" of banking and standing proof that the "boogy man" is real.
I was thinking today would be one of those days where the short sellers would be covering, but it is very clear from this mornings hard spikes down that they intend to drive the price down another technical level.
As a clue to this CNBC reported a couple weeks ago of a large number of puts being bought on GLD at a price relative to about $1685 per ounce.
Here we go again.
I dont get it. Help me out.
There's your flaw. Speculation is driving the price of gold, not inflation.
There are several good authors on SA writing about manipulation in the PM markets. Do a search, decide who makes sense.
I think the Fed should have stopped its expansion of the monetary base in 2009-2010. Pumping more and more money into the system in order to goose spending and borrowing for the purpose of trying to skip the natural deleveraging/recession cycle of business will only lead to more pain in the long-run. Let consumers deleverage and the housing market heal naturally, then we can resume the consumption and repeat the cycle.
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Sorry.
Let me say also on behalf of each one of us who understand this, that there are 10 or more people who don't. That is why the gold price seems so irratioanally low to us. To them, it's over priced and in a bubble. And well, since the only thing that really drives the market price is perceived value, then it can drop, drop, drop and not increase until the crisis has fully unfolded before everyone. It is not likely to rise much before then because people get spooked over the technicals. Markets can behave irrationally for a very very long time.
Could not believe my ears during the Bernanke speech yesterday. Holy Cow! Let's see...printing what--46 billion dollars a month---anybody see a problem with that?
But, most likely, the crash will be on someone else's watch. Not Obama's. He has to be betting on that one. I cannot begain to tell you how much I hope the precious metals prices drop. I really would like to back the truck up again......but can stand these rates given the inevitable outcome.
Governments around the world are buying up gold to justify their massive printing and hope that gold will continue to appreciate. Without a higher gold price, there is little to justify the balloning paper in the system.
Those who argue the manipulation theory (are always right no matter the outcome regardless of "facts") are clearly unfamiliar with the same talk in the 1970's about gold being manipulated as indicated in the Richard Russell comment below:
"But the important thing about the Republican gold platform is that it is a dramatic departure from the Governments position on gold. It is a definite step toward freeing gold from political manipulation, towards letting the market determine what it is worth, towards allowing all who want to trade or own gold to do so. At such time, gold will move towards and to its real market price and its true value (source: Russell, Richard. Dow Theory Letters. September 8, 1972. page 6.)"
Now that gold is moving "...towards and to its real market price and true value..." nobody that is spouting off about manipulation wants to believe it that it isn't being manipulated. The GATA argument which has been bought hook, line and sinker has been proven wrong since the price of gold rose from $252 to $1,700.
It seems that arguing manipulation is just an excuse for not doing the legwork to understand what is really happening in the market. With gold allowed to freely float and not set at an artifically low price (the true definition of manipulation, as opposed to conspiracy theory), usually called a gold "standard", governments are all in on the rising price of gold.
Good luck at always being right.
Regards.
high number for early Asian trading hours."
"They" just saw a window of opportunity to trigger some stops and make a few bucks in the dark of night. This is their typical MO.
Imagine there is this bucket that is filling up. That is the gold price. We know, left unmanipulated it will rise and rise. That is predictable and reliable. A predictable and reliable natural behavior is all you need to be able to significantly manipulate for profit. Because you know, when you stop your manipulation which direction the price will go. Back up.
So these guys watch the bucket until they see it get almost full. Then they knock a hole in the bottom and siphon off the gains. They know it is going to fill back up so there is little risk in their actions. Prior to driving down the price, they buy puts and sell calls. They cash those in like milking a cash cow. They are cleaning up in both directions because they know the next move is then back up.
Okay so other's see this going on. They know they can't wait long to tap the bucket otherwise the other guy will tap it first. So the bucket size gets smaller and smaller as the manipulators become more and more aggressive. That's why the trading channel is becoming more and more narrow and why the price can't breakout like it would otherwise.
However, I expect the first crack in this rigging to appear sooner or later. They can't make physical gold.
In my country PM's ownership is anonymous, not taxed, contrary to stocks or bonds. I expect a tsunami of tax hikes on those vehicles. Gold offers good shelter.
Long term, these guys will get tired of this and move on to something else. But at the moment, this is working.
Given my target gains, I really should be doing spreads to reduce my amount at risk.
The funniest thing about the Fed printing money and buying all these mortgage back bonds (from the Banks) and US bonds (The Government) is eventually inflation will creep in and they will be forced to raise rates, which will force the fed to dump the bonds back out on the open market at a discount absorbing loses on the sale, and the American tax payer will be left holding the bag again while the bankers get rich.
be forgotten when judging the current price of gold. One should also
compare the gold price with the retail price index to gauge its real value.The froth on the futures market should be ignored. PS I wish
I knew what AAPL stands for.