Wednesday, August 24, 2011

The attack on Gold mimics May's attack on Silver


As events play out in Gold and Silver, the predictablity of what is occuring is almost comical.

With options expiring this week and Ben Bernanke giving the Federal Reserve's highly anticipated FOMC statements Friday from Jackson Hole, EVERYONE was expecting classic cartel action on both Silver and Gold in the days leading up to Thursday/Friday... and we were not disappointed.

Those who follow the metals have been wondering how long before the same sort of attacks on margins in Gold that Silver saw in May (when margins were hiked 5 times in 8 days to force a selloff).  Even on CNBC last week, Jim Cramer was touting the prospect of margin hikes.

Two weeks ago the CME hiked gold margins by 22%.

Two days ago the Shanghai Gold Exchange jacked their margins by 26%.

This morning Gold plunged by $100/oz, the most since December 2008. Some rationalized that the market was about 24 hours late in processing the news from the Shanghai Gold Exchange hiked gold margins, but in reality the selloff was insiders getting a jump on the next attack.

And that attack is now public after having been widely leaked this morning: the CME has boosted margins in Gold by an additional 27%.

Look for margins to ultimately be raised to 100% cash before things are done. This fast, deep correction is one of the signposts on the way to much, much higher prices for both Gold and Silver.

More importantly look for the blatant and heavy handed bear raids in the metals, although very much anticipated and a source of some profits, to continue.

Remember... nothing has changed in the fundamentals driving both Gold and Silver.

There has never been a time in history when debt problems globally have been this monstrous.  Harry Schultz, the retired but highly respected investor, summed up the calamity we face in his last market newsletter at the start of the year.  He said,  “Roughly speaking, the mess we are in is the worst since 17th century financial collapse. Comparisons with the 1930’s are ludicrous. We’ve gone far beyond that. And, alas, the courage & political will to recognize the mess & act wisely to reverse gears, is absent in U.S. leadership, where the problems were hatched & where the rot is by far the deepest.”

==================
Email: village_whisperer@live.ca
Click 'comments' below to contribute to this post.
Please read disclaimer at bottom of blog.

6 comments:

  1. The big question is WHY are the exchanges engaging in this "attack" on gold/silver prices?
    Answer: (Without reverting to conspiracy theories) They aren't! They are protecting themselves against losses due to the volatility. The exchange has no vested interest one way or the other, they make their money by a very mall percentage of the transactions. Why should they care? (Again, answer without conspiracy theories.)
    When volatility rises the danger of leveraged speculators running out of margin should the spot price move in the wrong direction for their bet rises, the risk of the exchange having to make good on the other end of the bet without being able to recover it from the now BK speculator rises, and the exchange jacks margin requirements simply to protect themselves.
    Also if the price is being driven by real organic people who want physical shiny stuff to dance around the room with, margins don't matter! Silver is acting a lot more like a speculative play driven by leveraged computers fueled by cheap Fed money than it is by Ma and Pa Kettle saving their pennies in the only form they feel safe about.

    We are in dangerous times, their is no real "investments" out there right now, and cash itself isn't safe. I'm not making light of the problems facing us, not at all. I just think this constant silver boosting without regard to easily verifiable facts such as the role of margin requirements is doing no-one a favour. Some of your posts reveal some real knowledge and an engaging writing style, and then you come up with this self-serving BS a Realtor would be proud of.

    If I'm somehow wrong on the role of margin, I want to know! Please enlighten me. Show me how the exchange benefits by suppressing silver.

    ReplyDelete
  2. "As events play out in Gold and Silver, the predictablity of what is occuring is almost comical.

    With options expiring this week and Ben Bernanke giving the Federal Reserve's highly anticipated FOMC statements Friday from Jackson Hole, EVERYONE was expecting classic cartel action on both Silver and Gold in the days leading up to Thursday/Friday... and we were not disappointed."

    If this is true, why weren't you writing about this earlier in the week? And why don't you tell us when the next raid will be, since it is, after all, comically predictable.

    ReplyDelete
  3. ^ W has been kind of doing that... for over a year now. Ive learned about how the game works from this blog and a couple others along the line. You know its going to happen... when it does... you don't worry... because you know that its never going down for long.

    Im debating if tomorrow AM should be the next buy... or next Monday. Probably doesnt matter that much, because I indent to hold for a very long time.

    ReplyDelete
  4. Take downs always occur during options expiry week, we've written about that in the past. Combine that with an impending FMOC speech (another planned take down event) and it's a given. As for CME margin hikes, there has been lots of blog articles written on other blogs warning about getting ready for it.

    When will the metals get hit next?... You can rest assured that in the days leading up to the release of the next non-farm payroll numbers that the metals will be heavily shorted again. Same with next months options expiry week.

    It happens every month like clockwork.

    ReplyDelete
  5. If we had any real media on this planet,todays blog would be headline news. Instead this information on market manipulation is ignored (mainstream press) or outright denied (Garth Turner, Paul Krugman). I swear if people really understood what what was going on, the Wall
    Street criminals and their political puppets would be chased down in the streets.

    ReplyDelete
  6. Who needs to be a bank robber when you can run the bank and steal from the people?

    ReplyDelete