- Metals SMASHED- Are Gold and Silver Headed to NEW LOWS?
- Would An Interest Rate Hike By the Fed Ignite the Next BULL Market in Gold & Silver?
- We Already Have HYPERINFLATION! (of the fiat currency quantity- & We’ll Have Currency Collapse Within 2-3 Years!)
- Can the Banks Talk Gold Down to $900?
- Alasdair is Ready for the Collapse: Lets Get On With It!
The SD Weekly Metals & Markets With The Doc, Eric Dubin, and Alasdair Macleod is Below:
Recall that when the stock market took a dive in August, the Federal Reserve went out of its way to dial down expectations that 2015 would witness the start of interest rate normalization. Only a few weeks earlier, foreign exchange markets were going haywire, China’s stock market was tanking, and under the surface a bomb went off in commodities markets linked to Glencore and Deutsche Bank’s derivative’s book was stinking up world markets. The icing on the cake? The Fed executed the biggest reverse-repo operations in world history. You know about it. But most financial market “professionals” have no clue it happened because the mainstream media was too busy following the latest movements of Kim Kardashian’s ass to inform on maters of consequence. Was it any wonder Janet and company took the extra effort to calm the markets? Of course not.
Fast-forward to today. Now that the S&P 500 has regained nearly all of the ground lost since August, it’s the perfect time for FOMC members to jawbone expectations in the “hawkish” direction.
That’s what we witnessed this week, and the mainstream financial world is perfectly content to incorrectly believe this also explains the decline in precious metals.
Early this month we discussed how gold and silver were going to cross their 200 day moving averages and how that would stimulate further buying interest by “paper traders.” In recent years we’ve seen a cycle of bursts higher in precious metals prices tied to the buying patterns of North American and European money managers returning to the “paper” gold and silver markets via ETF exposure and secondarily, direct exposure via the COMEX and the LBMA. That is what happened last January, and the return of Western paper traders is part of the reason why gold and silver have bounced recently.
The cartel has a hard enough time keeping a lid on prices given persistent Asian physical demand complicating the juggling of derivatives books and vault inventory ledgers. Add on additional organic demand for paper gold and silver and – gosh, darn it – Jamie Diamond has to “manufacture” more open interest to meet that new long interest demand, or price would have to rise to trigger the interest of someone else that had a rational economic justification to be the “other side” of the “new” trades initiated to meet the “new” market perception justifying higher paper precious metals prices. In other words, as Bill Murphy always says, “market action makes market commentary,” and during the second half of this week we’ve seen the cartel turn on a fire hose of liquidity, willing and able to issue contracts without care. That has more to do with why prices declined during the second half of the week than any reaction to the FOMC release.
A normal financial market participant operates with real-world economic constraints. JPM benefits from its favorable regulatory relationship with the US banking and financial market system. It has brushed aside criminal fraud cases, only paying (huge) fines, and has avoided accountability for silver manipulation altogether. People that deny the existence of precious metals market manipulation frequently miss the critical understanding that JPM and other cartel bullion banks, with official sector backing, have the ability to periodically tamper down demand by issuing short side interest when real world market conditions don’t justify that action.
When Craig Hemke joined us two weeks ago we warned that the cartel was likely about to initiate a major capping effort given the crossing of the 200 day moving averages and a variety of signals momentum was slowing. That’s exactly what happened, but notice the difference between gold and silver during the second half of October? Silver managed to trade mostly sideways, only breaking down this Thursday. The stronger relative performance is a reflection of tighter retail market conditions a few weeks ago, and that has valuable market signal intelligence value as we consider going forward conditions. It adds to the evidence supporting the case that silver bottomed in July.
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Thanks for checking out this week’s show – Eric Dubin