Here it comes again. And again. This time it’s coming harder and faster…
After the initial dump this morning, here’s another:
Just a little reminder about how this works:
Nobody in their right mind would come in and all of the sudden have to sell 12,128 contracts damned the price. That’s over $1.5 billion in gold sold in one single minute.
Sure, this is not to say every contract sold that minute was from one person. What it means is that a huge order comes in. It hits everybody’s bid and then some. This causes traders who are long (betting the price will rise) to sell out of their positions because they are losing money.
For example: Person buys gold this morning at $1293. They set up a “stop loss” at $1280. This means they are willing to lose $13 on the trade and sell automatically to get out of it so they don’t lose any more.
A HUGE order comes in at 11:37a.m. EST (which is just what happened).
The order blows though $1280 to the downside so the trader is sold out of his position.
Now multiply this by 100s and 100s of traders that are in the market setting stop losses to not lose that much money.
When the banks flood the sell orders, the longs losing money are forced to sell out of their positions. Others legitimately trying to sell must sell at a lower price because there is a massive order dropping that price. The banks, on the other hand, just sold all that gold. They didn’t have any gold. They “sold it short”, meaning they sold it first and have to buy it back later.
If they buy it back later at a lower price, they make money. They sold it for $1293 and bought it from our trader above at $1280. The bank made $13. Our trader lost $13, and since the trader does not have unlimited money, but because the banks can sell unlimited paper gold to push down the price, the bank wins.
The time when it stop is when there is no gold left on the COMEX to deliver. That is the point when the manipulation is up. Until then, the banks can always strong arm the individual because the banks print the money and the paper gold. But there is indeed a limit to selling short because actual gold has to be delivered.
The other thing forcing a floor (where the price can’t go lower) is the cost of production. Printing paper gold is free but mining the real thing costs money, so they can’t push too far. It’s a delicate balance but it works and will work until it won’t, and that is when we see perhaps “commercial signal failure”, which is when they sold too much gold and can’t deliver it all.
Here’s another look at the morning massacre:
Just in the time it took to type this up:
To all the Bitcoin fans:
Welcome to your first lesson in Market Manipulation and Price Suppression 101.
Except real physical gold (and silver) is very expensive to mine and must be delivered into the market so the real thing backstops the downside manipulation.
To everybody else:
– Half Dollar
About the Author
U.S. Army Iraq War Combat Veteran Paul “Half Dollar” Eberhart has an AS in Information Systems and Security from Western Technical College and a BA in Spanish from The University of North Carolina at Chapel Hill. Paul dived into gold & silver in 2009 as a natural progression from the prepper community. He is self-studied in the field of economics, an active amateur trader, and a Silver Bug at heart.