Gold and silver have been sold down pretty hard since
April 18th. But the structure of the weekly Commitment of Traders report,
which shows the long and short positions of the various trader
classifications (banks, hedgers, hedge funds, other large investment funds,
retail) had been flashing a short term sell signal for the last few weeks.
The net short position of the Comex banks and the net long position of the
hedge funds had reached relatively high levels. Except Thursday (May 4th),
almost all of the price decline action was occurring after the London p.m.
gold fix and during the Comex floor trading hours, exclusively. This tells us
all we need to know about the nature of the selling, especially given the
enormous amount of physical gold currently being accumulated by the usual
eastern hemisphere countries. The table above calculates the Comex banks’
paper gold positioning going back to 2005. As you can see, currently the net
short position and the net short position as a percent of total open interest
had reached a relatively high level. This typically when the banks engage in
raiding the Comex by unloading massive quantities of paper gold in bursts in
order to trigger hedge fund stop-loss selling. It serves the dual purpose of
pushing down the price of gold and providing a relatively riskless source of
profits for the banks.
This is a cycle that has repeated numerous times per year
since 2001. This time, however, more than any other time since 2001, the
sell-off in the price of gold is counter-intuitive to the collapsing
financial and economic condition of the United States, specifically, and the
entire world in general. The likely reason for the current price take-down of
gold is an attempt by the elitists to remove the batteries from the “fire
alarm” mechanism embedded in a rising price of gold. An alarm that lets the
populace know that there’s a big problem that will hit the system sooner or
later; an alarm that lets public know systemic failure is beyond Government
and Central Bank Control.
A similar manipulated take-down of the price of gold and
silver occurred in the spring of 2008, ahead of the great financial collapse
crisis. Gold was pushed down to $750 from $1050 and silver was taken down
from $20 to $10. This price decline was counter-intuitive to the collapsing
financial condition of the U.S. financial system, which had become obvious to
anyone not blinded by the official propaganda at the time. Of course, after
the financial collapse occurred and was addressed with money printing, the
price of gold ran up to an all-time high.
It’s likely a similar situation if taking place now. Only
this time around all “assets” are in price-bubbles fomented by record levels
of fiat money creation and the interminable expansion of credit. The debt
portion of this equation is getting ready to hit the wall, the only question
is timing. This explains the parabolic move in the price of Bitcoin. Bitcoin
is nearly impossible to manipulate. Once the western Central Banks lose the
ability to manipulate the price of gold in the derivatives markets, the price
of gold and silver will go on their own parabolic price journey – one that
will leave the price of Bitcoin in the rear view mirror.
The Shadow of Truth further elaborates on the current
price-action in the precious metals market and why latest sell-off is likely
signalling the next financial crisis:
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Rory Hall, Editor-in-Chief of The Daily Coin, has
written over 700 articles and produced more than 200 videos about the
precious metals market, economic and monetary policies as well as
geopolitical events since 1987. His articles have been published by
Zerohedge, SHTFPlan, Sprott Money, GoldSilver and Silver Doctors,
SGTReport, just to name a few. Rory has contributed daily to SGTReport since
2012. He has interviewed experts such as Dr. Paul Craig Roberts, Dr. Marc
Faber, Eric Sprott, Gerald Celente and Peter Schiff, to name but a few.
Visit The Daily Coin website and The Daily Coin
YouTube channels to enjoy original and some of the best economic, precious
metals, geopolitical and preparedness news from around the world.
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Dave Kranzler spent many years working in various
Wall Street jobs. After business school, he traded junk bonds for a large
bank. He has an MBA from the University of Chicago, with a concentration in
accounting and finance, and graduated Oberlin College with majors in Economics
and English. Dave has nearly thirty years of experience in studying,
researching, analyzing and investing in the financial markets. Currently he
co-manages a precious metals and mining stock investment fund in Denver and
publishes the Mining Stock and Short Seller Journals. Contact Dave
at dkranzler62@gmail.com.
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The author is not affiliated with, endorsed or sponsored
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those of the author or guest speaker, are subject to change and may not
necessarily reflect the opinions of Sprott Money Ltd. Sprott Money does not
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