"Shanghai Gold will change the current gold market with its 'consumed in the East but priced in the West' arrangement. When China has the right to speak in the international gold market, the true price of gold will be revealed." - Xu Luode, Chairman, Shanghai Gold Exchange, 15 May 2014
The quote above is for the benefit of anyone who refuses to acknowledge or accept that the price of gold is manipulated by western central banks, led by the BIS, using the paper gold derivatives traded on the LBMA and the Comex as well as using "structured notes" in the OTC derivatives market. Those who assert that the precious metals market is not manipulated do so from a position of either complicity or ignorance.
The price of gold began spiking higher on Thursday, May 30th. Over that time period, the front-month futures contract (August) has run from $1,280 to $1,340. I believe this is being driven primarily by the market's perception - in response to the steeply inverted Treasury and Eurodollar futures curves - that a significant problem or problems is/are occurring in the global financial system.
The idea for this chart came from a chart I saw posted by @StockBoardAsset (he had it labeled "Gold/Silver"). The chart shows the XAU index since inception to the present on a monthly basis. I also edited the labels and added the British pound crisis label.
I like it because it shows why it's highly probable that the precious metals and mining stocks - especially the mining stocks - are near the bottom of a long-term trading pattern that goes back 35 years. The low end happens to correlate with a period in which the stock market was at or near a top followed by a significant sell-off in stocks.
If I spent the time to create a chart showing the SPX to XAU ratio, it would look somewhat like the inverse of the chart above. I'm encouraged by the move in gold and silver over the last week. At some point, there will be a pullback/consolidation of the sharp price rise. But if you study the chart above, it would appear that the mining stocks have the potential to make a big move in the 2nd half of 2019 and that move may be starting.
One of the "tells" which indicate the fundamental underpinnings are in place for a big move in the sector is the escalation in the frequency and intensity of price manipulation on the Comex. The banks have been significantly enlarging their net short position in gold contracts plus the volume of PNT and EFP transactions (Privately Negotiated Trades and Exchange For Physicals) has increased substantially over the last couple of weeks. There's a high correlation between the volume of PNT/EFP transactions and the price-capping efforts exuded by the Comex price action.
Note: PNT/EFPs are a way for the banks to "deliver" under the terms of the Comex contract without producing and delivering an actual physical Comex bar, recording the serial number on the bar under the receiving party's name and moving the bar into an allocated account. It's an extension of the fractional bullion system that is used to manipulate the gold price. It allows the banks to deliver phantom gold in lieu of delivering real bars.
Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.