Gold Plunges As Bernanke Speaks: China Is Most Grateful

Tyler Durden's picture


It would appear that the asset-class most sensitive to the next round of renewed money-printing by the Fed - that implicitly seems to provide stock investors with some belief that their USD-numeraire priced holdings should go up in price - is dropping fast and pricing out hope of a 'New QE' anytime soon. As The Bernank speaks and offers nothing more than a Draghi-reinforcing check-to-the-government around the poker table of global macro, Gold is plunging. The biggest beneficiary of the Bernanke soliloquy so far is China, which has managed to get a new cheaper entry point on Bernanke's latest attempt to talk down Gold while keeping stocks up (because rising input costs courtesy of oil apparently only impact the gold bottom line). After importing 100 tons in physical gold (not GLD) in April, the country will be even happier to buy far more at lower, not higher prices.

Gold vs Stocks vs Treasury Yields vs USD...

Chart: Bloomberg

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Thu, 06/07/2012 - 11:50 | 2504033 Dr. Engali
Dr. Engali's picture

If I were buying gold right now I would be most grateful, however I am not.  This is getting exhausting.

Thu, 06/07/2012 - 11:52 | 2504050 SeverinSlade
SeverinSlade's picture

Less exhausting than the central bankers constantly hitting CTRL-P.

Thu, 06/07/2012 - 11:56 | 2504082 Thomas
Thomas's picture

Yup. It is tedious for those of us who are at full position in gold. On the bright side, a good chunk of my cost basis is below $300, which gives me some reason to flip him off and simply wait for his next speech.

Thu, 06/07/2012 - 12:19 | 2504207 Harlequin001
Harlequin001's picture

Does anyone know how the gold price is actually calculated, and I don't mean the AM/PM fix?

Thu, 06/07/2012 - 12:38 | 2504289 Panafrican Funk...
Panafrican Funktron Robot's picture

Personally, I calculate it by calling around my local coin shops to see what their price is on a 1/10 oz eagle, since that is what I prefer to buy.  The price is what you can actually buy it for and hold it in your hand, the rest is just phantoms.

Thu, 06/07/2012 - 13:12 | 2504443 malikai
malikai's picture

This is bullshit! I want $20 gold.

Thu, 06/07/2012 - 13:46 | 2504610 Harlequin001
Harlequin001's picture

What I mean is that the gold price doesn't steadily rise and fall throughout the session, it either shoots or plunges within seconds and then remains fairly flat for the remainder of the session. So what can make it plunge in short order other than direct manipulation?

So, does anyone actually know how the gold price is calculated?

Thu, 06/07/2012 - 14:28 | 2504775 LULZBank
LULZBank's picture

My guess would be, they move up and down violently when the BIS or CBs want to adjust FX rates among currencies.

The violent move up or move down is not the issue, but by how much in various currencies, which I dont think would be uniform in exchange rate terms.

There could be arb opportunities when Gold priced in various currencies and FX rates for those currencies, if it could be traded somehow.

Im no expert, just my guess or gut feeling.

Then ofcourse there will be demand and supply and inflation aspect, which accounts for the more subtle moves.

Thu, 06/07/2012 - 14:42 | 2504777 TWSceptic
TWSceptic's picture

"So, does anyone actually know how the gold price is calculated?"


It's buy & sell orders mostly done by computers these days. You can see it struggle a bit around 1600 then once it goes below it kept dropping. There is little human interaction at that point. Then once below the 1600 level the price drops further based on more preset sell orders coming in. This is how I understand it, someone correct me if I'm wrong.

Thu, 06/07/2012 - 16:40 | 2505312 Havana White
Havana White's picture

The price of gold -- it's right here on this particular thread, the chief reason for gold's big drop today.  Swing traders had piled in over the past several days as technicals signalled green light.  Stochastic, for example, peaked higher than it has since March.  These traders are hitting the sell button as a group, the stochastic turning over like the tip-top slope of a roller coaster.  But the believers, the longs, are in already.  Too few of us to pick up the slack.  In a few days there'll be different charts, different signals.  Eventually, fundamentals will win the day.

Thu, 06/07/2012 - 14:43 | 2504769 greensnacks
greensnacks's picture

As Europe resists temptation of further LTRO, the Fed was to announce further QE? That didn't seem likely. It also feels like a coordinated effort is being implemented to devalue gold pricing, maybe not to $20, but down, down, down.

SWIFT sanctions forced Iran to find other ways to trade and gold being #1. China is happy, because they continue to buy oil from Iran at bottom dollar discounts. Come July 1, EU will stop buying Iranian oil. Forcing an already more harsh depression on Iran. Maybe this is the answer to avoiding war and accommodating their allies with cheap resources?

Thu, 06/07/2012 - 13:22 | 2504500 AustriAnnie
AustriAnnie's picture

Its determined by reading the minds of every market participant at once, and then trying to guess when and how they will change their minds in the next instant.


Thu, 06/07/2012 - 11:59 | 2504096 BoNeSxxx
BoNeSxxx's picture

if it looks like a coordinated smackdown and quacks like a coordinated smackdown, then well... it's probably a coordinated smackdown.  fuckshites all of them

Thu, 06/07/2012 - 12:01 | 2504112 ArrestBobRubin
ArrestBobRubin's picture

Friend, that's the 1/2 empty outlook. The 1/2 full one? BTFD!

Thu, 06/07/2012 - 12:16 | 2504194 BalanceOrBust
BalanceOrBust's picture

Looking at that chart, it would seem that a group got together yesterday just before noon hour and decided that they would collectively take gold down today at the start of Bernanke's speech. Then a few of them went to their trading desks and decided to front run the group decision a bit. After all, which of their fellow conspirators would dare report them to the authorities (assuming of course that the authorities were not in on the conspiracy)?

Thu, 06/07/2012 - 12:33 | 2504267 ITrustMyGut
ITrustMyGut's picture

if we look.. we se plenty of evidence of coordinated transfer of wealth... and the aggressive end of the FRN.. china's direct access to monetize us debt, etc.

so.. gold take down is indeed purposeful... that Asia, and specifically China.. is being offered it cheaply... that a new Reserve currency is being prepared.. again, simply... they are aggressively coordinating.. to eliminate the FRN... and establish new.. will it be Renembi? not sure.. but it will NOT be USD/ FRN

Thu, 06/07/2012 - 12:39 | 2504293 Vagabond
Vagabond's picture

True.  The big runnup yesterday was manipulation as well.  There was no major news story that I know of to trigger such a move.  Looks to me like the big move up yesterday was posturing for todays take down.  Bull trap.

Thu, 06/07/2012 - 13:01 | 2504396 Soul Train
Soul Train's picture

Indeed, China wants an alternative to the usdlr. Who can blame them??? Competition is good, right?

Thu, 06/07/2012 - 11:52 | 2504051 SilverTree
SilverTree's picture

The TRUTH will set us FREE!

Thu, 06/07/2012 - 12:08 | 2504155 LongSoupLine
LongSoupLine's picture

Bernanke is guilty of treasonous acts against the United States.

Try, convict and impose the punishment for treason.

While you're at it, throw the rest of the FED, Congress, Treasury and Justice in there too! 

I love my country and what it could be.  I hate what it has and continues to become because of these greedy, manipulative and power hungry self serving fucks!

Thu, 06/07/2012 - 12:22 | 2504221 BoNeSxxx
BoNeSxxx's picture

bernanke??? for piss sake kissinger is still a free man.  until that asshat is held accountable for his treasonous acts and crimes against humanity there will be no justice for bernanke (or corzine, or...)

Thu, 06/07/2012 - 14:21 | 2504755 flacon
flacon's picture

How is it that Kissinger keeps on ticking? He was a fat kid, and a fat man, but he's like a bizillion years old. Same goes for David Rockefeller. 

Thu, 06/07/2012 - 14:53 | 2504866 BoNeSxxx
BoNeSxxx's picture

drinking the blood of children?  harvesting the energy from the human anguish they have caused?  no, it's probably just good ol' clean living... they do that other stuff for their own amusement...

Thu, 06/07/2012 - 13:16 | 2504418 Oh regional Indian
Oh regional Indian's picture

Sliver Tree...



Thu, 06/07/2012 - 11:53 | 2504054 Pladizow
Pladizow's picture

When it comes to physical PM's, remember - Bernanke and the manipulators work for you, not against you!

Thu, 06/07/2012 - 11:56 | 2504078 ArrestBobRubin
ArrestBobRubin's picture

Darn tootin' Think of it as your Sicko Subsidy

Thu, 06/07/2012 - 12:16 | 2504177 fockewulf190
fockewulf190's picture

Purposeful headfake from Yellen yesterday dropping the hint about QE 3 being a possibility. Seems the goal was to burn gold sentiment and rape the speculators. No doubt some have been shot down in flames. I'm glad I kept my powder dry and held back....I smelled a rat and it sure as shit showed up today. I'll wait a few days and let this play out a bit and then order some more Phyzz off the bottom. Nothing has changed. Not one single fucking bit.

Thu, 06/07/2012 - 23:55 | 2506210 jwoop66
jwoop66's picture

yeah, it was all a setup from the fed.   Chasing people away from pm's.  Bernank should just shut the fuck up.

Thu, 06/07/2012 - 11:53 | 2504057 achmachat
achmachat's picture

... don't forget stackers all over the world. Stackers are most greatful too!

Thu, 06/07/2012 - 11:53 | 2504061 LULZBank
LULZBank's picture

This is getting exhausting.

When people are exhausted or tired, their ability to resist or making sound decisions is low.

Thu, 06/07/2012 - 11:58 | 2504094 DoChenRollingBearing
DoChenRollingBearing's picture

@ Dr. Engali

I signaled gold's price drop by buying phyzz on Tuesday...

Thu, 06/07/2012 - 12:08 | 2504153 fuu
fuu's picture

See there you go again, you could have  hired a couple of sales guys for the same cost...

Thu, 06/07/2012 - 12:54 | 2504358 Chump
Chump's picture

Keep up the good work.  I do the same with silver.  Wait and wait for an entry point, buy, boom watch the price drop by several percent.

Thu, 06/07/2012 - 12:05 | 2504142 Peter Pan
Peter Pan's picture

I used to have the same attitude until I realised that it's the full time score that matters in this game and not the half time score. If you have any doubt about the final outome then sell your gold and join the other zombies who are paid 1% interest.

Thu, 06/07/2012 - 19:29 | 2505683 NOTfromSanFrancisco
NOTfromSanFrancisco's picture



"...zombies who are paid 1% interest."... Who's getting 1% interest?... Where?... My C.U. savings is paying 0.1%...

Thu, 06/07/2012 - 13:00 | 2504385 Nobody For President
Nobody For President's picture

Agreed, Doctor - so buy silver instead.

Thu, 06/07/2012 - 14:53 | 2504886 kekekekekekeke
kekekekekekeke's picture

seriously ugh screw all these stragglers they had their chance >:O

Thu, 06/07/2012 - 11:50 | 2504037 SeverinSlade
SeverinSlade's picture

Get yer PMs heeeeeere! 

Thu, 06/07/2012 - 11:50 | 2504039 VonManstein
VonManstein's picture

extremely harsh moves but i still got it placed (bouncing now) of my breakout channel.

bear in mind though i am a complete amature with this trading thng and much prefer my physical

Thu, 06/07/2012 - 11:52 | 2504044 Rip van Wrinkle
Rip van Wrinkle's picture

Remember those days when Benrnake opened his fat mouth and gold rose on every sylable?


These guys are smart. They've learnt their lessons. Bernanke opens his mouth now and the POG disappears off the charts. Wonder why??


Has anything else changed? Is anything better now than it was then?

Thu, 06/07/2012 - 11:57 | 2504083 No Euros please...
No Euros please we're British's picture

Bernanke is not so smart if he can't see the Chinese sucking up real physical gold everytime he suppresses the price and he doesn't wonder why.

If China get enough gold to re-introduce the gold standard they become the new world currency and the good ol' USD is sunk bigtime.

Thu, 06/07/2012 - 12:01 | 2504117 GeezerGeek
GeezerGeek's picture

What makes you think Obama and Bernanke aren't under orders from the Chinese to suppress the POG until China has enough, however much that may be?


Thu, 06/07/2012 - 12:36 | 2504283 ITrustMyGut
ITrustMyGut's picture

+1 BINGO.. we have a Winner!

Thu, 06/07/2012 - 14:33 | 2504797 TWSceptic
TWSceptic's picture

Why? makes no sense.

Thu, 06/07/2012 - 15:41 | 2505081 FREEEEEEEEEDOM

China can end this game tomorrow if they want, always stay friends with the guy who got the whistle. Atleast you have to accept his decision.

Once you realize that the dudes running this shit aint retarded current times become very interesting. The petrodollar is sure coming to an end and i think Bernanke, in some perverted way, actually is doing everything right. He sure knows that this shit aint gonna go back to the heydays of 99, all he can do now is minimize the damage during the transition. What else can he do? Ctrl-P looks like the option that will bring the least amount of pain to the debtridden west. History might be kinder to him than we think.



Thu, 06/07/2012 - 16:13 | 2505236 ATM
ATM's picture

Obama is a Maoist.

Bernenke not so sure but being where he is I wouldn't discount that chance that's he's in bed with Obama and those cohorts. 

You destroy a country by destroying it's currency. All these people know that. They are all on pace to destroy the currency and thus the country.


Thu, 06/07/2012 - 11:54 | 2504045 Temporalist
Temporalist's picture

It's more contrived than a 3rd grade performance of Oliver "Twist"

Thu, 06/07/2012 - 11:57 | 2504086 ArrestBobRubin
ArrestBobRubin's picture

Please Sir... more bullion?

Thu, 06/07/2012 - 12:28 | 2504250 ArrestBobRubin
ArrestBobRubin's picture

Starring creepy old Bernanke as Fagin and Geithner as the Artful Tax Dodger.

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