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Gold’s London AM fix this morning was USD
1,721.00, EUR 1,289.812, and GBP 1,079.13 per ounce.
Yesterday's AM fix was USD 1,788.00, EUR 1,329.96, and
GBP 1,120.79 per ounce.
Gold fell 5% in New York yesterday and closed at
$1,696.70/oz. This was its largest one day loss since December 2008. Spot
silver was down 6.4 percent at $35.54/oz, reversing
the 4.5% seen Tuesday.
Cross Currency Table – (Bloomberg)
Spot gold has risen more than 1% today after the sharp
drop yesterday as Asian jewellers, traders and
investors rushed to take advantage of attractive prices. Gold in Europe
remains near the highs seen in Asian trade and is now trading at $
1,718.38/oz.
There was blood in the gold and silver trading pits
yesterday as leveraged longs got their heads handed to them on a plate.
The massacre was attributed to a host of different
reasons - from month end book squaring, to the positive PMI numbers to
Bernanke's suggestion that ultra loose monetary
policies may soon come to an end.
None of these reasons would justify the scale of the
massive sell offs seen in gold and silver yesterday.
Gold and silver markets saw massive sell orders from
large institutional sources - as only large institutions selling could have
caused a price falls of the magnitude seen yesterday.
There were highly speculative unsourced
rumours of an Asian fund selling gold and rumours of a single bullion sale of 31 tonnes or some 1 million ounces by an unnamed seller.
The unusual trading activity saw some very determined
sellers who appeared to not be motivated by maximizing trading profits.
One trader said how he had not seen that sort of volume
before and the activity was akin to "computerised
manipulation" and that there were “massive volumes going through
and appeared as if some large entities had bids and offers at the same
price”.
5 Year Gold Price Daily– (Bloomberg)
The positive PMI data would ordinarily result in some
price weakness as would the testimony from Bernanke which suggested that the
Federal Reserve's ultra loose monetary policies may
not continue much longer.
However, the scale of the selling and size of the price
falls was unusual.
Respected analysts such as legendary Jim Sinclair, John
Embry and Jean-Marie Eveillard suggested that the sell off was due to manipulation by bullion banks.
Sinclair said it was an “intervention” and
was “window dressing” that long term bullion investors should not
be concerned about as inflation was coming due to “QE to
Infinity.”
Embry said that it was a “smash down” and a
“paper fiasco.” Jean-Marie Eveillard
suggested that central banks may have intervened, as they are doing in fx and bond markets, and sold gold in volume into the
market.
It is of course very difficult to ascertain what caused
the sharp falls in the precious metals yesterday however it would be naive to
completely discount what Sinclair, Embry and Eveillard
believe may have happened.
The Commodity Futures Trading Commission (CFTC) has
been investigating manipulation of the silver market for more than 3 years
now.
While Bernanke’s nervous testimony in front of
the US Congress yesterday drove down stock markets and boosted the dollar,
many market participants believe the US Fed will launch another round of
quantitative easing and will flood the markets with more cheap money.
This will lead to inflation - giving investors an
additional reason to buy bullion.
European banks took €530 billion of cheap 3 year
funds from the ECB yesterday, bringing to over €1 trillion the amount
of money the ECB has dumped into the financial system in two months.
Bullion is still up 10% this year, on track for its
twelfth yearly gain, as interest rates remain low and central banks continue
to inject cash into the markets boost liquidity.
It provides yet another great buying opportunity for
gold and silver bullion buyers whose are focused on the long term and realise bullion's ability to protect and preserve wealth.
It shows the importance of being wary of leveraged
trading which should only be engaged in by experienced professionals and even
they should be wary. 'Widows and orphans' should avoid all forms of 'paper
gold' and stick to physical bullion.
The sharp fall in silver may again be used to warn and
prevent investors from buying silver as it is "too volatile".
When similar sharp falls occur in equity markets
(Nikkei and many European indices in recent years), it is never used as a
stick to beat stocks. This again shows the continuing bias and double
standard against gold and silver and in favour of
equities.
Currency & Precious Metal Ranked Returns YTD –
(Bloomberg)
It is worth remembering that while gold and silver fell
sharply yesterday, gold and silver are up 9.5% and 24.5% YTD. Again, showing
the importance of focussing on the long term
diversification and safe haven benefits of the precious metals.
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SILVER
Silver is trading at $34.77/oz,
€26.13/oz and £21.81/oz.
PLATINUM GROUP METALS
Platinum is trading at $1,695.50/oz, palladium at
$710.00/oz and rhodium at $1,475/oz.
NEWS
(Reuters)
Gold bounces back, bullish tone intact
(Reuters)
Gold down 5 percent, biggest one-day drop in 3 years
(Wall Street Journal)
Gold, Silver Take It On The Chin; Bernanke Warns Of
Inflation
(Money Control)
Is the profit-taking in gold a buying opportunity?
COMMENTARY
(King World News)
Eveillard - Desperate Central Banks Intervene in Gold Market
(Jim Sinclair)
Today’s Window Dressing Fall In Gold
(Forbes)
Ron Paul Tells Bernanke He Killed The Dollar, Silver
Coin In Hand
(Zero Hedge)
Ron Paul To Ben Bernanke: "People Lose Trust In
The Government Because You Lie To Them About Inflation"
(King World News)
Embry - Gold & Silver Smash Temporary, Oil to
Super-Spike
(Reuters)
Iran's gold-for-oil offer won't shake bullion world
(King World News)
Sinclair: Today was a Cover-Up By the Fed &
Mainstream Media
(King World News)
Slippery Silver, the ‘Devil’s
Metal’
Mark
O’Byrne
Goldcore
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