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The Cartel Morning Blues

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Published : April 05th, 2012
917 words - Reading time : 2 - 3 minutes
( 4 votes, 4.8/5 ) , 2 commentaries
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I had another RANT topic fully written last night, but when I awoke to the “aftershock” of the “FED MINUTES DECIMATION,” I changed my mind about what to publish. Instead of going to the gym, I spent more than two hours compiling data from the past six months to prove a point I have discussed for years, my contention the Cartel purposely attacks gold in the thinly traded “pre-market” to sour sentiment and “set a negative tone” for the day.


Believe it or not, until I researched it in last Thursday’s RANT, “WHY THE U.S. WANTS WAR,” I wasn’t sure exactly what 3:00 AM EST – the first KEY ATTACK TIME of the day – corresponded to. I was pretty sure it was the London pre-market hours, which I then confirmed to be 2:15 AM EST through 4:00 AM EST. In other words, the Cartel traders come to work at 7:15 AM London time, have a cup of coffee, allow the market to sit quietly for 45 minutes to prevent speculation as to why it would PLUMMET at the pre-market open, then do their thing. After the 3:00 AM EST hit, gold prices tend to stabilize until the New York pre-market, which I define as 7:00 AM EST (when I typically arrive at the gym) to 9:30 AM EST – the NYSE opening.


For years, I have discussed my frustration at arriving at the gym rested and optimistic, only to watch the gold price whittled down nearly every day. In recent weeks – starting with last month’s “LEAP DAY VIOLATION” – I have been particularly irked by the early morning shenanigans, especially on days following strong performances that should – theoretically – result in morning follow-through. After yesterday’s “FED MINUTES DECIMATION,” I was particularly irritable, so when I awoke to the chart below, something inside me SNAPPED. As you can see, an essentially flat line from 3:00 PM EST yesterday to 3:00 AM EST today, and then BAM, another WATERFALL DECLINE at EXACTLY 3:00 AM EST…


24hGold - The Cartel Morning B...


…with silver – as usual – following the time-tested Cartel rule that if either of the two metals outperforms for a day or two, it MUST massively underperform immediately thereafter…


24hGold - The Cartel Morning B...


This morning, I compiled data on every trading day of the past six months – to the beginning of October – to determine the validity of my thesis that gold prices fall during the New York pre-market period far more often than they rise. Remember, I did a “congruent” analysis of how often gold PLUNGES versus how often it SURGES in last month’s RANT, “CHUTES AND LADDERS,” so it should be no surprise what I came up with this morning.


MONTH

CHUTES

LADDERS

RATIO

Gold Change

Sep-11

50

30

1.7

-15%

Oct-11

35

17

2.1

6%

Nov-11

21

19

1.1

0%

Dec-11

26

14

1.9

-7%

Jan-12

13

12

1.1

9%

Feb-12

23

11

2.1

3%

Mar-12

8

3

2.7

-5%

Total

176

106

1.7

-11%

Average

25

15

1.7

-2%


Which is, that gold falls twice as often as it rises during the New York premarket hours, as I run on my gym’s stair climber, gritting my teeth watching the “Dow/Gold x 2” and other evil ALGORITHMS. The average size of the daily declines – $7/oz – is not enormous, or significantly different than the size of the gains, but the fact remains that gold has fallen during this “formative” time of the day on 75 occasions, compared to 37 when it rose and seven when it was unchanged.


Regarding the 37 rises, even they “overstate” the morning’s bullishness, as true Cartel watchers know that at 10:00 AM EST, the second KEY ATTACK TIME commences. In other words, even if we get our average $7/oz increase in the pre-market, just 30 minutes later there’s a good chance it will be erased. Conversely, when gold is down $7/oz going into 10:00 AM EST, “goldbug fear” is at sky-high levels, particularly if you have a heavy weighting in mining shares, which evaporate brokerage account balances like “ICE CREAM IN JULY.”


Gold Price Change, 7:00 AM EST – 9:30 AM EST

Month

Up Days

Down Days

Mo. Chg. (Pr)

Mo. Chg. (%)

Oct 2010

4

10

$90

6%

Nov 2010

8

11

$32

2%

Dec 2011

4

14

($180)

-10%

Jan 2012

8

11

$172

11%

Feb 2012

7

13

($14)

-1%

Mar 2012

6

16

($56)

-3%

Total

37

75

$44

3%


My point is thus, per the mining share commentary earlier in this RANT and countless others. Over an eleven year period, gold prices have not only beaten the Dow seven times over (excluding Dow survivor bias), but risen every year, regardless of how many WATERFALL DECLINES, “CARTEL MORNING BLUES,” and “named storm” blitzkrieg attacks, such as the current “FED MINUTES DECIMATION.” The fundamentals for Precious Metals prices are as bullish as at any time in the eleven year bull market, while the near-term – and perhaps intermediate- and long-term outlooks for mining shares are highly uncertain.


The “CHUTES AND LADDERS” and “CARTEL MORNING BLUES” phenomenon will never end until the Cartel is inevitably BROKEN, and you can bet they will use each and every such act as cover to naked short mining shares. I perform such analyses to demonstrate PHYSICAL gold and silver have weathered every such “storm” in the past – and should continue to do so in the future – but can offer no such assurances with “paper investments” like mining shares.


PROTECT YOURSELF, and do it NOW!



 

 

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Andrew Hoffman was a buy-side and sell-side analyst in the United States (including six years as an II-ranked oilfield service analyst at Salomon Smith Barney), but since 2002 his focus has been entirely in the metals markets, principally gold and silver. He recently worked as a consultant to junior mining companies, head of Corporate Development, and VP of Investor Relations for different mining ventures, and is now the Director of Marketing for Miles Franklin, a U.S.-based bullion dealer.
Latest comment posted for this article
As I have written previously,I do love a good RANT. But I have some concerns here. So what if there are chutes and ladders, algorithms etc.? They are just noise and part of the play. Reminds me of the game Snakes and Ladders. As I recall U go up and d  Read more
S W. - 4/6/2012 at 7:03 AM GMT
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As I have written previously,I do love a good RANT.
But I have some concerns here.

So what if there are chutes and ladders, algorithms etc.? They are just noise and part of the play.
Reminds me of the game Snakes and Ladders. As I recall U go up and down but in the end someone wins at the top and other players are placed further down but still ahead of start point.

So it is with trading. Keep at it with good risk management and eventually you win.

My concern though is all this chatter about markets being manipulated, rigged blah blah blah.
If you trade at the end of the day or week none of that matters in the slightest provided appropriate stops are in place.
If the GOLD market is being manipulated...so too is the SILVER ,AUD/USD, EUR/USD whose charts are almost identical and are virtual proxies for each other !
So I trade either of those given the right signal but only one at a time. Same as I do with S&P 500 & Dow minis. TRADE END OF DAY,END OF STORY.

Further, I listen at times to the BODS on KWN and who am I to argue with billionaires re rigging etc.
BUT the weekly chart of GOLD from Sept last shows a reversal bar and from there a 1,2,3 high, then a lower low and a lower high and right now is looking very precarious indeed.
Sinclair and co. need better tech analysts working for them I suggest.
But no worry...gold could go to approx $1100 and still be in a monthly UPTREND.
Friendly tip...do not confuse holding physical with trading prices of gold.
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Andy, thank you for telling it as it is. Keep up the good work.
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