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'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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JPMorgan's picture

Anyone that sees PMs as a 'investment' is going to keep being disappointed, it's the wrong mindset in my opinion.

The way I see it is you can hold devaluing currency in a negatively yielding bank account that can be frozen at the stroke of a key or you can hold physical gold.

Q. Why would you want gold to be revalued to $5000-$10000 an ounce?
A. Simply... you wouldn't. Overnight just like that you are to all and intense purposes locked out from accumulating more.

The value aspect to purchase more is squashed, if you are not already holding you have missed it.  


GunnerySgtHartman's picture

Agreed; it's a store of wealth, a means of protecting oneself against exactly what we're starting to see.

Silver Savior's picture

I want to see it revalued at $50,000 an ounce. That's how much the economy sucks. 

You can still accumulate more by metal detecting.

Toshie's picture

ZH is at it again trying to predict the future gold price movement. Lol.

ONEwarrior's picture

So far history usually repeats. I'll keep my bets with history.

bobsmith5's picture

ZH has nothing to do with it. These charts come from the observations of Andrew Hoffman one of the first analyst to point out and prove manipulation with charts. And, that's exactly what these charts also prove along with the fact that this is options expiry week a favorite smash time for PM's by the central bankers.

Vincent Langley's picture

did you see what Bullion Baron mentioned about the actual dates?

No longer a correlation is there?

darknmy's picture

Nothing to do with the fact that trillions of gold were found recently? 

Vuke's picture

Jeepers, did not know that and I'm in the business.  The fact is discoveries and grades have plummeted.

Latina Lover's picture

Didn't you know, they just found 5 millions tons of Yakamoto's hidden gold in the Phillipines.  Gold is going to 3 dollars a ounce.  /sarc off.

Son of Captain Nemo's picture

clap... clap... clap...

Who is the ex-Federal Reserve employee that made the rounds a few years ago "big haggish" looking woman that said in public that you shouldn't own it because that bounty is soooo very large and has already "been discovered" to discourage investment in it?...

bobsmith5's picture

Fact you say? Extraordinary claims require extraordinary evidence. Where is your evidence?

More down votes for this ridiculous comment.

GoldHermit's picture

Actually, a shortage of physical is developing

bjax's picture

The answer is surprisingly simple... MANIPULATION !! FFS !!

cynical_skeptic's picture

"mainstream perspective is such that the economy is improving"

whodat, the fake news media pom pom pushing faggots at cnbs and the delusional "economists" at the fed.  who finally admitted the other day they were wrong about inflation and employment, the only two elements of their bullshit "mandate" ?   Fucking boulderdash

Don in Odessa's picture

Wrong!!! Put a chart of the Yen and a chart of gold side by side.

wisebastard's picture

had nothing to do with goldman sachs pimping max keiser virtual specialist technology to rape the markets with paper gold short....of yeah.....ZH just suck my dick......why not bust out some more one minute charts...

Dg4884's picture

So buy more silver today and tomorrow.  Got it.

Latitude25's picture

Ever listen to Andy Hofmann recite his news?   It sounds like he's delivering the Communist manifesto.

Panic Mode's picture

I travel to Hong Kong twice every year. I strongly advise western people travel to HK or Shanghai to appreciate the momentum of economy. After the trip, you will feel you are so fucked back at home.

The way chinese people spend money like they hate it or no tomorrow.

brushhog's picture

It seemed to me that it dumped when the Korean war bullshit kind of imploded, and the BS about the debt ceiling was kicked down the road again. I usually dont buy and sell gold in the short term but this time I actually made a smart move and sold at 1340. I intend to buy back fully when I feel its reached the bottom.

ReturnOfDaMac's picture

My target is $50 Oz, that's what it says on the coin.

Son of Captain Nemo's picture

At this point nothing will ever make ANY difference for the U.S. markets when it has no control of energy and what it does control it is losing by the hour ( and no significant technology manufacturing other than what is made for the MIC...


Arrest Hillary's picture

Gold needs an electronic gold backed app .... so it can be a currency again .... it's too risky, difficult to store and expensive to trade .... a gold backed crypto .... if only governments and central banks were honest .... and would issue real gold backed money .... that's it, pewter coins backed by real gold .... something's gotta give ?

Arrest Hillary's picture

A friend went to England to see mum and friends .... he left 150 silver maples with me .... he wanted me to liquidate 25 and send him a paypal .... it was easier just to buy them myself at a generous $17 each ?

Clowns on Acid's picture

Would been nice if a Bitcoin chart was transposed on the gold chart for Golden Week.

Ignorance is bliss's picture

why would Bitcoin react to China's holiday? The Chinese aren't allowed to own Bitcoin.


Comex should go to zero once everyone realizes the gig is up.


Comex should go to zero once everyone realizes the gig is up.

Al Huxley's picture

I'm going to stick with the explanation that it's Comex options expiry and futures rollover week - you can always count on gold weakness at the end of the Comex calendar month.  Although I do appreciate the heads-up about Golden Week.  Usually I expect recovery in the week after the comex month-end but this looks like a good chance for another week of selling before the turn-around.

ReturnOfDaMac's picture

Someone is awake!  Happens EVERY month ...

el buitre's picture

The Bankster Cabal is evil but they are not stupid.  They combine Golden Week, a torrent of Comex naked paper shorts, and boosting the dollar against the yen to monkeyhammer gold.  A trifecta.

Quinvarius's picture

The COT report is all you needed to see.  Nothing else matters.  The COT was draining off last week.  By now, it is probably in a bullish state again.  We won't know for sure until the data comes out.

Don't bother with seasons or festivals.  There is no magic or greater meaning.  The only supply and demand that matters is paper contracts.  When the COT shows too many specs are long, you get out.  When the specs are flushed, you get in.  You can make gold a difficult trade.  Or you can accept it for what it really is and make it the easiest path to winning to trades.

Examine the COT data at the bottom of this chart.  It is delayed.  So is the flush complete yet for this long term uptrend?  I my estimation, during a long term uptrend, 100k contracts or less represents a spec flush.  On any time frame, you can see that COT is what matters.

The only thing that matters is if the specs got cheated by the market riggers printing unlimited contracts and providing unlimted supply.  Accept that it is a fake market or you will lose.  Ignore hype.  Ignore everything you were ever taught about how a market is supposed to work.  There is nothing going on in the paper gold market but completely predictable fraud...which you can use to your advantage.

GoldHermit's picture

I like Quinvarius' explanation, but here's another angle...


Yep - use the COT report - spot on.  I follow the commercials.  When they start to get short, stay away and when they cover it's the all clear until it starts again.  Why?

Physical gold is flowing from west to east big time.  China, Russia, India, et al use the paper smash to accumulate physical.  They are going to go after the dollar as the reserve currency at some point for many reasons.  There are indications of that now.  Follow the Yuan backed by gold contract China is offering for oil.  

Silver Savior's picture

Repeat after me. Gold and silver are investments! If I don't feel there is anything else worth investing in because the whole world is going to shit then metals are an investment. 

I am taking shit currency and trading it for real money for INVESTMENT. I am going to GAIN purchasing power. 

Ron_Mexico's picture

I'm just gonna wait to find out what "Shempwave" has to say about this.

assistedliving's picture

finally some ZH Chart Porn i can get a rise out of