This isn’t some trader’s “fat finger” accidentally overloading the sell button and pressing “sell.” This is unadulterated BIS/ECB/BoE/Fed sponsored market intervention:
TND Guest Contributor: Dave Kranzler
At 4:01 EST, a paper gold nuclear bomb was detonated in the Comex Globex computer system. The graph above is just the August “front month” paper gold contract on the Comex. In that contract 1.49 million ozs of paper gold were dumped into the Comex electronic trading system. Zerohedge is attributing 1.88 million ozs. That would include the selling in all of the paper gold contract months.
But that’s not the entire amount of the paper hit. There would have been a large amount of LBMA gold forward paper gold contracts dumped in correlation with the Comex paper avalanche. ZH attributes $2.2 billion in paper gold dumped. But the real number including LBMA forwards dumped was much larger.
“The mysterious plunge has the market spooked,” says some idiot named Bob Habercorn from RJO. This was not “mysterious.” It was intentional – a shock and awe market intervention that was intended to “spook” the market. That quote is from a Bloomberg report full of fake news (caution, this article contains fake news: LINK).
The article claims that China bought less from Hong Kong in May. In fact, the amount of gold exported from Switzerland to India and Hong Kong was up 39% from April, according to Platts. Furthermore, we have no clue how much gold moves into China through Beijing and Shanghai, numbers which are intentionally hidden from the world.
Here’s the reason that today was selected by the BIS et al to attack gold in the paper market in an effort to scare the crap out of the market:
the day was well chosen as the Muslim world including Turkey was closed for the end of Ramadan as was India which has the amiable habit of observing the holidays of religious minorities. – from John Brimelow’s Gold Jottings
The largest buyers of physical gold in the world right now, India + Turkey, were closed for the observance of a religious holiday. And Shanghai closed for the day 31 minutes earlier.
4:00 a.m. EST is one of the slowest, lowest volume trading periods during any 24 hour period. Why would a seller of a large number of contracts sell at that time of day, when the largest buyers of what is being sold are not in the market at the time of the sale?
If it were merely a “fat finger” – the fake news narrative – then the mistake would have been immediately corrected and the price would have quickly recovered. Anyone who buys the “fat finger” story is either tragically ignorant or hopelessly naive.
When India returns tonight to the market, I would expect gold to get a strong bid. Indians have a habit of buying a lot more physically deliverable gold than they might have otherwise when the western Central Banks put gold “on sale” by lowering the price in the paper market. I suspect Turkey and China will increase their appetite as well.
The mining stocks per the HUI barely acknowledge the artificial price take-down. The HUI is down less that 1%. In the past, on a day when gold was taken down to this degree, the HUI would have dropped at least 4-5%. It’s almost as if mining stock traders are laughing at the latest Central Bank antics. I know I am…
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About Dave Kranzler:
I spent many years working in various analytic jobs and trading on Wall Street. For nine of those years, I traded junk bonds for Bankers Trust. I have an MBA from the University of Chicago, with a concentration in accounting and finance. My goal is to help people understand and analyze what is really going on in our financial system and economy. You can follow my work and contact me via my website Investment Research Dynamics. Occasionally, I publish on Seeking Alpha too. As a co-founder and principal of Golden Returns Capital, LLC Mr. Kranzler co-manages the Precious Metals Opportunity Fund, a metals and mining stock investment fund.