As a person dumb enough to trade precious metals futures professionally for the past 20 years, here is my 2 cents worth about the current correction in AU & AG. Anyone who thinks commercials have total control over pricing is wrong. If that were true AU & AG would be at $0....
...bankers, both primary & central always short rallies, yet the price of AU went from $300 to $1900, between 2001 & 2011. There are 3 huge events which have occurred recently. 1) Commercial short interest is at a record and increasing as we fall through moving averages...
..& conversely speculative long position has risen as AU breached its moving averages; this is not how trend following CTA's operate & thus essily manipulated by nefarious bullion banks. With 2 of the largest US macro funds openly bullish for AU, it is possible they are adding..
..to positions during this correction. Anyway you look at it, market structures has changed. Commercials adding to shorts in correction bearish, possible strong hands buying dip bullish. 2) Eurasian Central Bank demand could reach 700 tons this year, adding a 3rd large physical..
...buyer to Chinese & Indian consumer demand. All 3 of these buyers demand increases at lower prices. Chinese & Indian premiums plummeted as Gold rallied in August, September, & October. Indian premiums recovered last week & Chinese premiums firmed. With AG in largest...
...backwardation, I have witnessed, & the most manipulated AG miner, CDE breaking out on bad earnings, my gut feeling is bullion banks are atleast hedging their AG shorts. During the 2001>2011 bull, buying AG & AU below moving averages and rising premiums was extraordinarily...
...profitable. 3) The Feds attempt to normalize their balance sheet failed. As Professor Bernanke explained to Congress, QE was not monetization since it was the temporary purchase of long term financial assets, I expect Lawyer Powell to explain to Congress on Wednesday...
...that purchasing T-Bills with printed cash is "technical". Anyone who ever took Money & Banking now knows both QE & T-Bill purchases was and is monetization. Money supply growth has accelerated to an 11% annual rate, since the Feds reaction to repogeddon in September. Last....
...week witnessed the largest bond market selloff since the week before repogeddon. It will be interesting to see if repo demand surges next week, confirming financial markets cannot handle surging Treasury supply. Anyone who thinks the Reserve Currency of the world openly...
...monetizing debt, when foreign demand for Treasury's has collapsed is bearish for Gold as inflation expectations rise and money supply accelerates, please block me. Anyone who thinks the economy is accelerating because of an ISM services beat, while LA port traffic is down...
...19%, both exports & imports, does not understand how US economy works. I do expect Lawyer Powell to try to convince you, he knows better on Wednesday & maybe the commercials take AU & AG lower on his testimony, but I fully expect large US macro funds, Eurasian Central Banks...
...& Chinese & Indian consumers to bid for more AU & AG than is available in NY or London. As always this is not investment advice, do your own due diligence, & decide for yourself if a new bullmarket in AU has begun.
