Tuesday, April 10, 2012

London Trader - Fed’s Global War Against Gold Escalating

“Gold was trashed on Monday, while the Fed minutes essentially said nothing.  When a central bank coordinates that kind of attack, it’s war, of course it’s war.  This type of action is coordinated by Bernanke and the Fed and executed by the bullion banks.  It’s actually laughable if anyone thinks that was a legitimate selloff, on what was, in reality, no news.
“No legitimate market participants were really selling.  Sure there were some stops that were taken out, but it was the bullion banks that came in with their selling and this was what suddenly created the air pockets.
There is massive sovereign physical buying going on right now.  Interestingly, the sovereign buying is being swamped by paper selling.  Sovereign buyers are aggressively buying tonnage every day at these levels.  You have to remember their goal is to pick up physical and get rid of dollars.  Nothing has changed. 

Interestingly, the Asian buyers have figured out the algorithms, like breaking an enemy’s code in war, and they are using the algorithmic trading to get the best prices each day for physical gold at these levels. The trading is just taking place at lower levels because these bullion banks and the Fed, which manage the price of gold, get overzealous in their price fixing.

But there will be a huge price to pay for their activity....
“An incredible amount of physical gold has been promised for delivery and the amount of promised gold is increasing every day. 
Meanwhile, back in the casino, the bullion banks don’t know whether it’s day or night.  But out back there are trucks carting off some of the remaining Western gold to vaults in the East.

There is very little low hanging fruit left for the paper guys to cover into.  Meanwhile, you have the sovereign buyers who are saying, ‘You know what, this elephant herd has kind of stopped now,’ and they want more physical gold at these levels. 

Every day at the fix, regardless of price, sovereign entities are buying physical gold.  They are averaging in at the fixes, as well as during the declines.  On top of that, there are bids for hundreds of tons of physical gold starting at the $1,610 level and below.  This is why the recent decline in gold halted $2 above that level. 

Regardless, these physical buyers will be purchasing at the fix going forward, even if the price of gold rises.  This is why the smart money, the few individuals and entities that are in the know, continue to accumulate physical gold.  These well financed individuals and entities are buying because they know they will be in profit. 

After ten days of the price being pummeled, after seeing these relentless sell orders come in, day after day, I can understand how smaller players can get demoralized.  Many of these smaller players have been in the mining shares, and while gold has risen $1,000 to $1,500, many of the smaller companies are the same price. 

It’s the same bullion banks doing this to the mining shares.  The same players that are manipulating the price of gold and silver.  The bullion banks are naked short these mining shares in an effort to keep the prices capped.

This is why when you look at the OTC Reports, in the latest quarterly report, there are $150 billion dollars worth of certain derivatives.  These are not futures, options or even swaps.  JP Morgan and HSBC control over 97% of all of the gold derivatives.  When you think about it, this is a mind-blowing number.
So this is a war.  This is actual warfare where the central banks and their agents are targeting sentiment.  You think the Fed and the bullion banks don’t monitor King World News?  Of course they do.  There is a war going on here.  This is a war against gold and holders of gold and the gold shares.  They are being targeted.

The bullion banks are so naked short both gold and silver, and they owe so much physical metal to market participants, that this has become like hell for them.  They are starting to prey on each other.  We are now at the point where these bullion banks are forced to fight a day trading battle each day, sometimes against each other.

We are now to the end game.  The bullion banks are so naked short gold and silver it’s unimaginable.  They owe so much physical metal to market participants and more physical purchases are being scaled in every day.  The sovereign buyers are taking down huge size, we’re talking serious tonnage. 

The bottom line here is the leverage by the bullion banks is extraordinarily massive, and players have to remember, eventually it has to get unwound.  Jim Sinclair recently stated, ‘Overvaluation in the gold market will be something to behold.’  I can promise you, his statement will be proven correct.”

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