Is This The Real Driver Of Gold's Recent Weakness?

Tyler Durden's picture

If you are a precious metals investor then you may be wondering why the price of gold and silver has been slammed in recent weeks... amid ever-increasing nuclear armageddon rhetoric, storms, quakes, floods, and a central bank (that is notoriously bad at forecasting) about to attempt to do something with its balance sheet thathas never been achieved...

The answer is surprisingly simple... China's Golden Week Holiday.

As SHTFplan.com's Mac Slavo wrote a year ago, and appears to be proved correct once again... Ask the expert pundits on financial media and you’ll get a swath of explanations for how the strength of the dollar or the improving health of the global economy are to blame.

One could reasonably argue that dollar strength this week could certainly put downward pressure on the gold price. So, too, could one make the point that mainstream perspective is such that the economy is improving, which means investors aren’t in panic mode and have no reason to hold a safe haven asset. But neither of these arguments could realistically lead to the smack down we witnessed this week.

So what happened?

Well known gold and silver analyst Andy Hoffman suggests the answer could be much simpler than we have been led to believe.

There’s no reason… there’s not even a propaganda meme of why [gold has been smashed]… there isn’t even a such thing as negative news for precious metals anymore…

 

The fact is, [like the last few years, when prices collapsed], China is closed for the week.

One glance at the last few years gold price action suggests he may well be correct...

After this Friday's close, China will be on vacation for its Golden Week National Holiday and this weakness appears to be traders front-running the traditional chaos that the rest of the world plays when China leaves the playing field.

China will be back in business on October 9th, and that means the Shanghai Gold Exchange, which opened in 2015 to counter Western manipulation of precious metals, will likely help re-balance prices to where they were before this recent takedown.

We could be wrong, but something tells us gold and silver prices won’t stay this low for much longer and that they could well see a complete turnaround when China reopens on October 9th.

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Lurk Skywatcher's picture

So what explains the other 51 weeks of the year?

giovanni_f's picture

ask all those large speculators who enter naked-long paper gold positions at the Comex - only to be taken to the woodshed on  a regular basis by the so-called "commercials".

fx's picture

It's Putin's and fatboy Kim's fault. And Bitcoin's.

BaBaBouy's picture

As Long As Paper GOLD is allowed to be SHORTED Ad Infinitum with No delivery required, Well . . .

TerminalDebt's picture

What explains Gold's weakness for the last decade that you guys have been preaching about gold going to 50,000? Just like the doomday people, eventually you'll be right, but how many generations of us will be dead before you're right?

 

TuPhat's picture

Being dead would sort of qualify for a doomsday for me personaly.

rrrr's picture

Don't worry. Jesus will raise you from the dead and clothe you in immortality. To think otherwise is heresy.

stayhumble's picture

No, believing there is not 72 virgins waiting for you is heresy ;)

Ben Tornilloed's picture

Dammit, your comment made me spit diet coke on my screen.

Dsyno's picture

Bullshit article.

Here's an image showing where the real Golden Week falls in these charts:

https://mobile.twitter.com/BullionBaron/status/913328221340315650/photo/1

Silver Savior's picture

Just look around at the shitshow of an economy we have. Why is it so hard to understand that a reset is coming and precious metals revalued to the new currency 

djealas's picture

Look, TD, for me its never been about gold going to $50k/oz. If that happened the world would be an unholy shit storm, financially, socially, etc. Gold should be higher based on real inflation, not those bullshit numbers the guvmint provides. But the paper gold market is much larger than physical, and you can only short paper gold, not physical.

Another problem is gold miners getting clobbered by low prices, so more people out of work, etc. Yeah, its a small market, but it still puts people to work. Gold is always going to be worth something, long after paper crashes. the historical record just backs that up. Fiat crashes all the time. There's no tin foil in my hat, but even a blind bat has to see the metals market should be doing better, in light of all thats going on globally.

ejmoosa's picture

Not only the shorting of Paper Gold, but the Paper Gold itself is negative.

What did the Fake Beanie Babies do to the prices of real Beanie Babies when they were both being sold on Ebay?

It falsly increases the supply of "gold*".

*Some of this gold is imaginary, but we market it anyway.

sinbad2's picture

American fraud, but don't worry you can't hold back the tide forever.

fockewulf190's picture

Fraud is worldwide. All the banks are linked and packed to the gills with derivatives totaling over a quadrillion. Sovereign debt levels are out of control. Central banks combined are debasing to the tune of hundreds of billions per month just to keep the shitshow from collapsing. Stocks are being bought with some of that money printed out of thin air as well, not to mention bonds, which in turn is the only thing keeping the massively underfunded pension funds from imploding.

Phyzz is dirt cheap. Bought me some more Maples and Philharmonics today. Thanfks for the manipulated prices.

loves the truth's picture

not going up until the moral improves

HardAssets's picture

Morale where ?

Gold is doing just fine outside the Western dominated areas. They're stacking at bargain prices and mining like crazy.

ParkAveFlasher's picture

Chinese Year of the Monkeyhammer

BandGap's picture

Pay no attention to the man behind the curtain.

I don't care, it's going to be a gold and silver weekend for me. Glad both are on sale.

 

Kirk2NCC1701's picture

Gold prices get smashed, so that China's CB and its people can buy it cheap.

We see their foot soldiers in the West doing their dirty work and thus fail to ask the most obvious of forensic questions: 

"Who benefits the most when PM and Commodities are cheap?" The answer is always "China. But also KSA."

Irvingm's picture

SHEPWAVE has been calling every move in gold, stocks and oil 

 

It is not complicated.

 

https://www.facebook.com/permalink.php?story_fbid=10155108125820326&id=1...

BandGap's picture

Thanks for reminding me, going to leave my morning smoothy sh*twave in the golden bowl.

Tiwin's picture

 

What does shitweave say about the future? Past aint good enough.

ludwigvmises's picture

This story would be a lot more believable had it been posted BEFORE the fact. Finding reasons after price weakness is a loser's game.

Irvingm's picture

It is typical of non analysis.

Irvingm's picture

It is typical of non analysis.

sinbad2's picture

The proof of the pudding is in the eating, we will see if you, or the author is correct next month.

ONEwarrior's picture

I guess you are not going to BTFD?

chubbar's picture

How long are the weeks over in China? Gold started down on the 26th and Golden week ends on the 8th. The 9th is 11 days away.

TuPhat's picture

The red lines don't match the charts very well either. 

sinbad2's picture

I didn't know why the price dropped, but I grabbed 3 kg of silver, I should have waited a while longer, oh well.

ParkAveFlasher's picture

Bounce it off the couch, it will make you happy again.

BigCumulusClouds's picture

Gold and silver prices are set by the commercials on the COMEX. And they have big short positions they need to cover at a profit. That's why PM prices are declining.

giovanni_f's picture

see, they need the ever-clueless naked-longs for their regular running the stops-game. Understand, no naked-long large specs, no naked-short large comms. Got it? Any questions?

LightBulb18's picture

It should be easy for taxi companies to dominate uber, just charge A little more than them and you don’t have to worry about the driver being A criminal. There are cabs near most places people take cabs. 

GoldLion's picture

Buy the fear - huge bounce coming - trust me :)

Yellow_Snow's picture

I've never heard that before.

shovelhead's picture

Never trust anyone who says trust me.

bullionbaron's picture

No. https://twitter.com/BullionBaron/status/913328221340315650

The manipulation of time scale and date ranges in this post to try and make it look like there is a repeating pattern is shocking.

scintillator9's picture

Imagine where the price would have been were it not for all of those sudden margin inceases by our good friends at the CME in 2011?

https://www.reuters.com/article/businesspro-us-markets-silver-slide/silv...

The CME Group sharply raised silver futures margins for a fourth and fifth time in under two weeks, an 84 percent rise in trading costs that has helped provoke a nearly unprecedented sell-off.

The 20 percent slide in silver prices since they touched an all-time high of $49.51 an ounce on April 28 has been in large part driven by selling from speculators who may be unable or unwilling to bear the surging cost of holding positions.

 

http://www.telegraph.co.uk/finance/personalfinance/investing/gold/872332...

CME Group, the world's largest commodity exchange, raised margins on gold by more than a quarter, which is the biggest increase in two years and the second decision to lift prices in a month.

 

Why Garsh, imagine if the stawk market did something like that........ Guffaw, guffaw.

Yellow_Snow's picture

More likely disgruntled gold investors flocking over to Bitcoin.

peekster's picture

I love a good correlation....like this one. pool deaths vs nicholas cage films.

http://www.tylervigen.com/view_correlation?id=359