Goldman Sachs prediction of $1200 gold is similar to Hitler predicting the
Reichstag fire
Prediction is an art.
Heisenberg’s Uncertainty Principle is as operative in the realms of the
unknown as well as in the known. But, sometimes, predictions are a slam-dunk
such as the large number of put options placed on United and American
Airlines in the days prior to 9/11 through Alex Brown Deutsche Bank, an
investment unit with close ties to the CIA’s Buzz Krongard.
Note: Alex.Brown’s
former Chairman, Buzz Krongard, was appointed
Director of the CIA in 2011. Buzz Krongard’s
successor, Mayo Shattuck III, who oversaw the purchases of the 9/11 puts
resigned from Alex Brown Deutsche Bank on 9/12. For the story of the 9/11
puts, see Mark H. Gaffney’s series in the Foreign Policy Journal, Black
9/11: A Walk on the Dark Side.
In January 2013, analysts
at Goldman Sachs predicted gold would fall to $1200. That Goldman Sachs would
make such an apparently lucky out-of-the money prediction given the recent
ambush of gold at COMEX wasn’t luck at all. Like 9/11, the COMEX ambush was
planned and executed with military precision.
In his article at Sharps Pixley, Gold
Crushed by 400 Tonnes of $20 billion of Selling on
COMEX, former gold trader at NM Rothschilds
& Sons and Credit Suisse, Ross Norman, describes how the ambush was
carried out:
The
gold futures markets opened in New
York on Friday 12th April to a monumental 3.4
million ounces (100 tonnes) of gold selling of the
June futures contract (see below) in what proved to be only an opening shot.
The selling took gold to the technically very important level of $1540 which
was not only the low of 2012, it was also seen by
many as the level which confirmed the ongoing bull run which dates back to
2000. In many traders minds it stood as a
formidable support level... the line in the sand.
Two hours later the initial selling, rumoured to have been routed through Merrill Lynch's
floor team, by a rather more significant blast when the floor was hit by a
further 10 million ounces of selling (300 tonnes)
over the following 30 minutes of trading.
This
was clearly not a case of disappointed longs leaving the market - it had the
hallmarks of a concerted 'short sale', which by driving prices sharply lower
in a display of 'shock & awe' - would seek to gain further momentum by
prompting others to also sell as their positions as they hit their maximum
acceptable losses or so-called 'stopped-out' in market parlance - probably
hidden the unimpeachable (?) $1540 level.
The selling was timed for optimal impact with New York
at its most liquid, while key overseas gold markets including London were open and
able feel the impact. The estimated 400 tonne of
gold futures selling in total equates to 15% of annual gold mine production -
too much for the market to readily absorb, especially with sentiment weak
following gold's non performance in the wake of
Japanese QE, a nuclear threat from North Korea and weakening US economic
data. The assault to the short side was essentially saying "you are
long... and wrong".
Futures trading is
performed on a margined basis - that is to say you have to stump up about 5%
of the actual cost of the gold itself making futures trades a highly geared
'opportunity' of about 20:1 - easy profit and also loss! Futures
trading is not a product for widows and orphans. The CME's 10%
reduction in the required gold margins in November 2012 from $9133/contract
to just $7425/contract made the market more accessible to those wishing both
to go long or as it transpired, to go short.
Soon
after we saw the first serious assault to the downside in Dec 2012, followed
by further bouts in January 2013 - modest in size compared to the recent
shorting but effective - it laid the ground for what was to follow. One fund
in particular, based in Stamford
Connecticut, was identified as
the previous shorter of gold and has a history of being caught on the wrong
side of the law on a few occasions. As badies go -
they fit the bill nicely.
GOLD STOCKS AVAILABLE FOR
DELIVERY WERE FALLING
Sandeep Jaitly’s
Gold Basis
Service confirmed that gold and silver were in ‘escalating’
backwardation prior to the COMEX ambush on April 12th. This means
that physical supplies of gold and silver were becoming even tighter when the
attack on the gold price began.
 
A failure to
deliver by COMEX has been delayed though not averted by last week’s action.
The paper money cartel is trapped in a fight to the death, its death. The
ambush of gold at the COMEX corral is but their desperate attempt to extend
their ponzi-scheme of credit and debt for a few
more years.
THE USUAL
SUSPECT: GOLDMAN SACHS
While the fund
in Stamford Connecticut may have placed the $20 billion worth of gold shorts but,
if they did, it is far more likely they acted as the agent of far-larger entity
such as Goldman Sachs which had months before predicted gold would fall to
$1200.
Goldman Sach’s January prediction of the fall of gold reminded me
of an after-dinner conversation I had a few years ago in Europe. The conversation
was with a gold trader at a major European bank and the topic of conversation
was gold.
Gold had been
falling for several days and I remember his excusing himself the previous
evening and saying quietly, “I think it’s time to buy gold”. The next morning
the price of gold began moving higher.
What he told me
during that evening’s conversation bears repeating, especially after what has
happened. He said that he had been watching gold’s movements in real time
when a highly anomalous event caught his attention, the bid price of gold had been followed not by an equal or higher ask
price but by a lower ask price
and, as he watched, the price of gold
began to fall.
He said he
began watching for this anomalous trade and discovered when it occurred, it
was always followed by lower ask prices which meant gold was being driven
lower. The source of the anomalous lower gold ask
price was always J. Aron & Co., the commodities
trading arm of Goldman Sachs.
Note: Lloyd Blankfein, Goldman Sach’s CEO,
worked as a precious metals salesman at J. Aron’s
London offices before going to Goldman Sachs in New York.
TIME OF THE
VULTURE GOLD STAGE III
In 2007, in my
book, Time of the Vulture: How to
Survive the Crisis and Prosper in the Process, I
wrote:
GOLD
AN ECONOMIC INSURANCE POLICY
FOR A COLLAPSING ECONOMY
THE TIME OF THE VULTURE
AND THE FIVE STAGES OF GOLD
Ø STAGE 1: THE
SUPPRESSION OF THE PRICE OF GOLD Central Banks collude with investment banks
and gold mining companies to force down the price of gold.
Ø STAGE 2: THE
PRICE OF GOLD MOVES UPWARD Gold begins to rise, doubling in price even as
Central Banks fight its rise.
Ø STAGE 3: THE
PRICE OF GOLD BECOMES INCREASINGLY VOLATILE The price of gold is subject to
increasing highs and lows as large investment funds move in and out of gold
as global economic uncertainties wax and wane, a sign that gold is
increasingly a haven in uncertain times.
Ø STAGE 4:
EXPLOSIVE ASCENT IN THE PRICE OF GOLD A
crisis results in a monetary breakdown which drives the price of gold to
never-before-seen highs. Investment capital floods towards the safety of
gold. Central Banks capitulate.
Ø STAGE 5: THE
PRICE OF GOLD STABILIZES The crisis recedes and order begins to return to the
markets. Though losses are substantial, a new order based on new realities
slowly begins to emerge.
When I was
writing Time of the Vulture: How to
Survive the Crisis and Prosper in the Process gold was in STAGE 2. The price of
gold was then $650. Today in April 2013, gold is now in STAGE 3 where THE PRICE OF GOLD BECOMES INCREASINGLY
VOLATILE The price of gold is subject to increasing highs and lows as large
investment funds move in and out of gold as global economic uncertainties wax
and wane, a sign that gold is increasingly a haven in uncertain times.
The recent 20%
fall in the price of gold indicates we are currently still in STAGE 3. STAGE
4 with its EXPLOSIVE ASCENT IN THE
PRICE OF GOLD is next. When STAGE 4 happens is anyone’s guess as
prediction is always an uncertain art—unless, of course, you’re Goldman
Sachs.
Regarding STAGE
4’s eventuality, I wrote in Time of the Vulture:
When allied troops stormed the beaches at Normandy, it was the
beginning of the end for Nazi Germany. But between Normandy and Berlin was a
great distance in miles, blood, and time. So it is with the battle between
paper money and gold.
Paper money had its day as did Nazi Germany. During the expansion of
the 1980s and the boom times of the 1990s, it appeared that paper’s triumph
was complete, and gold an outdated relic.
Indeed, from 1981-2000 and especially so between 1996 and 2000, paper
was the unquestioned victor. In the late 1990s, the price of gold was but ¼
of what it should have been. Only its most ardent believers and supporters
had faith that gold’s day would come.
GOLD’S DAY IS ALMOST HERE
In my youtube video at https://www.youtube.com/watch?v=D0duUjR_C4s, The Collapse and Emergence of Eras, I
discuss the collapse of the present economic paradigm and the better world
that will replace it. These are momentous times. The volatility of gold is an
indicator that far greater changes are in motion than merely the price of
precious metals.
Buy gold, buy
silver, have faith.
Darryl Robert Schoon
www.survivethecrisis.com
www.drschoon.com
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