Search Blog Posts

Wednesday, June 26, 2013

Raid on Gold and Silver

Author : David Schectman
Published: June 26th, 2013

I’m stepping aside for Bill Holter today.  Bill offers up a great article for our Miles Franklin faithful readers.   But first, Ed Steer’s early morning commentary on the raid this morning on gold and silver…

An Industry and a Country That Won’t Defend Themselves May Deserve to Die

The Wrap
Well, I got my wish yesterday…as it was a nothing sort of day as far as price activity was concerned, so if JPMorgan et al report their volume numbers for the reporting week just past to the CFTC in a timely manner, all of last Wednesday’s and Thursday’s price activity will be in this Friday’s Commitment of Traders Report.

But the marker that I so publicly put down in my Saturday column regarding the Far East low last Friday in all four precious metals, got blown out of the water by JPMorgan’s high-frequency traders starting around 9:00 a.m. Hong Kong time on their Wednesday morning.

Following their usual modus operandi, they waited until after the cut-off for Friday’s Commitment of Traders Report…and then bombed the thinly-traded Far East market with their HFT antics…just like they did last Thursday, hitting every sell stop in sight…and also like the take-down of April 12/15th.  JPMorgan et al are so obvious now, I don’t know why they don’t hire a brass band, print up some placards, and march down Wall Street with them…or maybe take out a front-page ad in The New York Times.  I get the impression that they’re in the desperation stage…the final kick at the can.  But who really knows, except them.

Anyway, with the precious metal markets being as illiquid as they are right now, it’s really impossible to tell just how many more long holders they got to puke up their positions…or how many more technical funds went short.  It can only be guessed at…and won’t be in the public domain until the COT Report on July 5th…a veritable lifetime away in this market.Whatever the Fed and JPMorgan Chase et al have planned, I’m getting the feeling that it’s getting very close…and as I’ve said on [too] many occasions…whatever’s coming, it’s only the timing that is unknown.

One thing that the Fed would really like is some decent inflation in the economy…not only in the U.S., but world wide…but what they are staring at is the obvious possibility of a deflationary collapse in all directions.  One of the ways they can encourage inflation is to run up commodity prices…starting with the three most important ones…gold, silver and copper.  The Fed isn’t about to take that route until their bank, JPMorgan Chase, is out of their short positions in gold and silver…and as maximum long as they can get.  That’s where they have been heading for quite some time…and they seem to be there now…but who knows when they’ll be all done to the downside. 

Ted Butler posts his mid-week commentary for his paying subscribers early this afternoon EDT…and I’m sure he’ll have a thing or two to say about today’s price action…and I’ll steal what I can for tomorrow’s column.  And I should have paid more attention to the last part of his quote in yesterday’s column when he said this…”It is most reasonable for me to conclude that the price of these three commodities [gold, silver and copper - Ed] will move sharply higher once JPM gets all that they can get by rigging prices lower…actually, it looks like they are done by my reckoning, but with crooks you can never be sure until afterwards.”  He was absolutely right about that.

In the midst of all this, still not a peep out of the World Gold Council, The Silver Institute, or any of the miners.  It’s obvious that they would rather shut down or go out of business then raise their voices in protest…and the two organizations that purport to represent their interests remain silent.  I can tell you right now dear reader, when I do finally sell my shares in these companies, I will never, ever, own another mining stock in my life.  The massive failure of the fiduciary responsibilities to their shareholders [and real owners] by these mining company executives and their respective boards of directors, is beyond anything that even I could imagine.

I wrote the above paragraph just before London opened at 3:00 a.m. EDT…and as you are already more than aware, the high-frequency traders showed up at 9:00 a.m. BST in London…4:00 a.m. EDT…and spun all four precious prices lower once again.  Here are the Kitco gold and silver charts as of 5:15 a.m. EDT.  Where have we seen these chart patterns before I wonder?

As I hit the ‘send’ button at 5:20 a.m. EDT…gold is down forty-four bucks…and silver is down a $1.08…but both spiked down to new lows at 5:00 a.m. EDT.  Gross volume in gold is a hair over 100,000 contracts…and silver’s net volume is already 11,000 contracts.  The dollar index has barely moved all night long.

We’ve seen this all before, of course…and I wonder what awaits us at the 8:20 a.m. Comex open in New York.

See you tomorrow.
Read the Full Newsletter