Bullion was resilient in the face of constant capping efforts last month. The fundamentals for strong gold are over the top and include massive under-reported Chinese physical demand purposefully obfuscated by mainstream media and Wall Street (but documented by myself and other analysts given Swiss refiner flows). Gold blasted through $1,250 last week; something had to be done. This is how the picture looks:
TND Market Brief: Eric Dubin
Western governments are attempting to protect fiat currencies, banking systems and bubble stock and bond markets. Facing strong and rising interest in gold, the entire bubble edifice is at stake. As former Federal Reserve Chairman Alan Greenspan has noted on multiple occasions, gold plays a critical role in global financial markets. Most famously during FOMC minutes, Greenspan noted: “Intervention in the gold market was begun so that the ‘thermometer’ would show lower values — and no fever.” (link)
Leading up to this week, the central planners hubristically blinded by their academic myopia have been unable to stop gold’s rise as gold powered through $1,250 last week. They resorted to aggressively leaning on precious metals mining shares, which I discussed on Silver Doctors SD Metals and Markets (link). Trump’s speech before Congress contained VERY well understood planks that were partially priced into the market before this week. Yes, we saw a big part of the pricing-in of his speech early this week and that did have an outsized impact to precious metals and other markets, but silver and gold were resilient through the first part of this week; the pressure applied to miners began last week.
In order to attack sentiment in an attempt to break the back of gold’s upward momentum central planners had to take evasive action and attack a vulnerable segment of the precious metals investment space; they targeted miners given the huge momentum that had built-up in mining stocks. Again, this was visible last week, but it showed up in a massive way on Monday, and is most visible with the classic sentiment barometer that JNUG represents – which was attacked still further, later in the week but is finally showing signs of major bottom-fishing interest as investors react to the opportunity to get leveraged mining share exposure at prices equivalent to the start of 2017:
Add into this mix the rising expectations of Federal Reserve interest rate hikes and an associated rising dollar and the stage was set for a multiple phase operation to quell gold’s upside momentum. Wall Street and much of the conventional financial world is oblivious to market history. Periods of rising interest rates and even intermediate-term strength in the U.S. dollar are frequently accompanied by a strong gold market. Wall Street has been lobotomized, but alternative asset market analysts like Craig Hemke document this history well and his latest public domain article is worth a read, especially given the importance of rising U.S. debt and the debate about raising the debt ceiling: click here. On a related note, don’t miss Greg Hunter’s recent interview with David Stockman: click here.
This precious metals freak show is entirely manufactured. This is not the first time we have seen different segments of the precious metals market attacked so as to facilitate the quelling of demand for gold, the ultimate objective of Western central bankers and governments that are stuck within the bubble paradigm of their own making and are now stuck with “too big to fail” bubble banks and markets and economies levitated on the legacy of bubble liquidity in service of “fixing” previous busts from previous bubble liquidity cycles (NASDAQ bust of 2000; real-estate and banking sector bust of 2008, etc.).
Question any of this and one is labeled a purveyor of “fake news,” even when high level members of the banking establishment like William White, former Chief Economist for the Bank for International Settlements (BIS) warn (link) about the probable necessity for jubilee given how screwed-up the international banking system has become. Former Federal Reserve central bankers like Richard White have been highly critical of the bubble paradigm, likened to heroin and crack infusions. Instead of trying to develop rational policies to attempt to fix the mess we are in, we have a massive operation to cover things up and paper things over. Suppressing the price of precious metals ins integral to sustaining the bubble paradigm.
With the pressure on miners starting before this week and with fears about rising interest rates and a stronger dollar given Trump’s economic policy remarks delivered to Congress on Tuesday the stage was finally set for a direct attack on metals and silver was placed into central planner’s crosshairs for a massive COMEX attack. Open interest has been rising for a month as new contracts have been issued to sop-up rising demand for paper silver, quelling but not killing upward momentum. By this week, given the weakness in miners and fears over Trump policies, the time was right for an outright raid on COMEX and Yesterday’s attack on silver:
Even with the attack on silver, gold was proving to be somewhat resilient:
The magnitude of paper contract bombing was documented by Eric Sprott and Craig Hemke. In 40 minutes, 150 million paper ounces were sold into COMEX as a carpet bombing attack to quell momentum. Their Friday morning podcast is well worth a listen:
Catch yesterday’s Silver Doctors SD Metals & Markets interview with GATA Chairman Bill Murphy for further context: click here. Doc and Bill Murphy held the fort while I was on vacation.
We’ve seen nonsense like this countless times. Precious metals will recover this month and will continue to have an outstanding year. Precious metals related assets are important financial insurance and we live with massively manipulated markets, across the board. Now is the time to build positions, not panic. This is a buying opportunity.
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Mr. Dubin is the Managing Editor of TheNewsDoctors.com. He has 25 years of experience as an independent buyside securities and global macro analyst. He has well over a decade of experience as a financial journalist, editor and political analyst. He’s primarily an autodidact, but his formal education includes degrees in economics, international relations and MBA. He welcomes feedback on his articles and will make an effort to respond to comments. Email Eric by sending to “Eric” and then @TheNewsDoctors.com. He can also be “followed” on Facebook: https://www.facebook.com/EricDubin
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