With gold & silver smashed yet again this week, The Doc & Eric Dubin break down the trading and bring focus back to the BIG PICTURE, discussing:
- SDR Basket change this fall? Eric explains why it’s likely and it’s consequences
- Cartel paints a head and shoulders pattern on silver’s 6-month chart with a target of $12-$13
- Authorized Purchaser of US Silver Eagles bought out by French bank Soc Gen- metals desk to be SHUT DOWN
The SD Weekly Metals & Markets Wrap With The Doc & Eric Dubin is below:
Chart courtesy TFMetals Report:
Step right up! It’s entrails reading time.
The Cartel’s market manipulation makes a mockery of traditional analysis given the temporary suppression of the norms of markets and economics. Trading this week offers a good example of the gold cartel’s war against real-world physical bullion market forces.
We recorded this week’s show on Thursday, April 9 and this write-up was composed after the Friday market close. Let’s take a stroll down memory lane and review last week’s trading action.
The April 3rd Non-Farm Payrolls report served up about half the number of jobs expected by the Wall Street consensus forecast. Precious metals markets were closed on Good Friday. Reaction during the thinly traded Sunday evening access market was swift, with both gold and silver gapping up. Strength continued consistently throughout much of London’s trading session and even managed to remain strong after the COMEX open.
Notice that last Monday’s peak came as gold moved towards the LBMA P.M. Fix. The LBMA transacts more physical gold clearing than the COMEX and the physical market was overpowering the paper market during London’s trading session.
But check out the action for the rest of the week. In order to reverse the newfound bullish market tone, the cartel went to work shorting the market, particularly after the close of regular Monday COMEX trading. The goal? Get gold under the Sunday evening gap up. This “tape painting” remained the pattern all the way through Thursday, with the goal managing prices downward:
Mainstream media attributed the shift in Monday’s sentiment to comments by New York Fed President William Dudley. Friday’s lousy employment report had Dudley openly admitting that he and fellow Fed hawks might have to cool their jets about raising interest rates as early as June. But that’s not the message the mainstream media and conventional finance world chose to interpret – bizarre, to be sure.
Traders drove the dollar’s perfunctory bounce off the near 50 week moving average. That dollar strength throughout the week helped the Cartel’s effort to paint the precious metals tape downward.
But a funny thing happened Friday. Despite the jawboning from Federal Reserve officials about the prospects for a June rate hike and continued dollar strength all week, precious metals took off to the upside at about 4am EST. It looks like the bullion banks are having a hard time meeting LBMA physical market demand. Even Friday’s pre-COMEX open reportage of Richmond Fed President Jeffrey Lacker making the case for a June rate hike failed to dampen precious metals prices. This is the sort of price action one would expect with a “normal” gold and silver market shaking off price management efforts while responding to an accelerating economic downturn – above and beyond all the other bullish fundamentals for gold and silver.
Odds are, we’ll see nice precious metals price upside next week given that the physical market constraint acting on Friday’s LBMA trade (and last Monday) will not resolve itself in the very short-term. But the Cartel will be back, to be sure. In fact, we’ll probably see prices trade sideways for about a month, on a net basis.
But with the prospects for a Chinese gold holding announcement as early as May and the best fundamental backdrop since the start of the gold bull market, it’s only a matter of time before paper traders push gold and silver higher, forcing the Cartel to execute a “managed retreat.” I view Friday’s trading as yet one more data-point that suggests November’s precious metals sector lows will not be taken out, and that the precious metals markets will grind higher over the balance of the year — a two steps forward, one step backward sort of dynamic.
Tune into the show for an extended discussion about China, the IMF, the SDR basket and how dynamics may unfold in the months ahead. I’ll also be discussing this subject with Jason Burack on Sunday; his Wall Street For Main Street podcast will likely be released Sunday evening or on Monday.
Got to love William Banzai7!
Since Uncle Ben’s memoirs have yet to be published and his newly found passion for blogging offers specious insight, here are a few stories worth checking out over the weekend:
- Proof: The World Is Actively Preparing To Ditch The Dollar — Bill Holter interviewed by SGT Report
- AIIB, BRICS Development Bank And An Emerging World – F. William Engdahl
- Kick Open The Doorway To Liberty: What Are We Waiting For? – John W. Whitehead
Thanks for tuning in and enjoy the weekend — Eric Dubin