August 24 – Gold $1669.80 up 20 cents - Silver $30.61 up 16 cents
Silver Charges Ahead, Gold Rebuffs Cartel Raid
"You haven’t had a rush until you’ve had a Gold Rush." … GATA’s Adrian Douglas
Here is a real surprise. Gold sold off in Asia and then began to take off into the early London trading hours … WHEN … "they" showed up yet again. The Gold Cartel traders stopped the gold advance about an hour later than usual and quickly shoved the price back to $1664 in an effort to calm down newfound precious metals excitement.
This is no surprise to veteran Café members with the way the HUI acted yesterday. It couldn’t get out of its own way with gold and silver on fire to the upside. Over the years we have made a point how The Gold Cartel manipulates the gold/silver shares at times to indicate to allied traders what they have in mind for gold the next day. Is it yet another coincidence gold is called $6 lower this morning after its breakout?
Gold and silver have shot up very quickly. It’s not some testing of breakout points on the downside that is the issue. It is how, when and why gold trades the way it does … how easy it is to spot The Gold Cartel interfering in the free market process. There ought to be a great deal of buying support for gold above $1650/$1655 and for silver above $30. Physical market buyers know the significance of the breakouts and will be ready and willing to buy any kind of breaks towards those levels … which means the price of both precious metals should not get back there.
Pundit commentary about why gold and silver took over remains amusing…
Reuters this morning:
"Spot gold has risen more than 3 percent this week after minutes of the Federal Reserve's August policy meeting showed the bank is likely to deliver another round of monetary stimulus "fairly soon" unless the U.S. economy improves considerably."
Reuters very early this morning:
U.S. stocks ended near session lows Thursday after St. Louis Fed President James Bullard dampened expectations for further monetary easing, saying current economic conditions are not weak enough and called the latest meeting minutes that hinted at more easing "stale."
The what is good for the goose ought to be good for the gander thing again. How can the same news elicit that sort of contrasting commentary to be taken seriously? It brings me back to my ole line, "PRICE ACTION MAKES MARKET COMMENTARY." The pundits will put out anything to the public to justify what the price of a given market does.
If I may … for the last 13 years it has been my take that THE key to understanding the gold and silver markets was to appreciate how bullish the supply/demand situation has been. In that regard the supply/demand statistics put out by the gold/silver world establishment have been WRONG and misleading … probably purposefully so. No need to go back and get into all the details. Suffice it to say the GFMSes and CPMs of the precious metals world have not accounted for the gold and silver supplied into the marketplace to suppress the prices. Therefore, the price potential for gold and silver to go higher and higher has been there all this time, as the supply/demand situation is always in bullish mode. The artificially suppressed prices of these two precious metals always encourage more demand than would be the case if they were allowed to be traded freely. This is why GATA has been right about what the price of gold would do 12 years in a row, while those establishment types have often been wrong. Even now Kitco’s Jon "The Nitwit" Nadler and Jeff Christian of the CPM Group are BEARISH, even if allowing for a modest rally, one they say won’t last.
So … IMO that is the key to the gold and silver markets. It is not what the dollar does, nor whether there is more QE. Of course, anything, like QE, which stimulates more demand, is BULLISH. But, it is not critical for gold and silver to take off. That is how bullish the supply/demand situation really is … and this is WHY gold and silver can do what they did yesterday, while the stock market sold off, on the very same news.
Silver is acting like a champ. After falling to $30.34 on the Comex opening, and lower than that prior to that opening, it has steadily moved higher, making one high after another, even with gold down on the day.
The open interest numbers were just released and traders seemed to like them, as gold popped to go positive. The gold open interest only rose 5384 contracts to 410,679, which is a pittance considering the move we had yesterday. This means there is PLENTY of room for new spec longs to pour in here without even coming close to having them be over extended.
The silver open interest went to yet another new HIGH for the move, up 3627 contracts to 129,496. This is extremely bullish as the specs are jumping onboard the breakout above $30. Perhaps it is also more of the smaller commercials adding to their positions to take on JPM and their massive short position.
So, who is selling? JPM again? This is a quandary for me in that they are in trouble in the first place with their silver short position. What are they doing? Here’s the deal the way I see it…
You will recall in early July that our Switzerland source said that both gold and silver would breakout in August, and then make a run to all-time highs. At the time he also said that JP Morgan has a big problem with their silver short position, and that it had something to do with JPM "whale trade loss" and with the silver position they took over from Bear Stearns years ago. And, naturally, it has something to do with their constant manipulation of the price of silver.
This "problem" ought to surface at some point, so why are they still at it in terms of selling? James Mc hit it on the head yesterday, and that the real problem is not whether the price of silver goes berserk (unless it means a failure to deliver problem to longs … that would be a MEGA problem for numerous reasons), but how it might affect the price of gold … which, in turn, could have a catastrophic effect on JP Morgan’s larger than life derivatives book. An explosion in the price of gold could set off an adverse chain reaction in that book (especially with interest rate derivatives) which could quickly get out of control, especially in terms of counterparty activity.
Oh, for crying out loud, gold just fell $8 and silver dropped 20 cents on this, while the DOW rallied quite a bit on this…
Bernanke Letter Defends Fed Actions
Federal Reserve Chairman Ben Bernanke, in a letter responding to questions posed by U.S. Rep. Darrell Issa (R., Calif.), chairman of the House oversight committee, defended actions the Fed has taken to support the economy and said there is room for the Fed to do more…
As I was saying earlier, The Gold Cartel is so easy to spot and so predictable. Time and time again of late we have noted how gold is sold on Bernanke/Fed pronouncements. It happened yet again. The good news is gold came all the way back to make a slight new high for the day and silver recovered what it had lost.
Note how gold was pushed back at the exact time it was stopped yesterday…
The AM Fix was $1666.50 and the PM Fix came in at $1667.
The Commitment of Traders Report
*The large specs increased their long positions by 3,329 contracts and reduced their shorts by 2,284 contracts.
*The commercials reduced their longs by 4,651 contracts and increased their shorts by 4,424 contracts.
*The small specs increased their longs by 2,676 contracts and reduced shorts by 786 contracts.
JP Morgan and its Gold Cartel allies were going all out to prevent silver from breaking through $29 and then $30, but have failed so far. The specs have the upper hand for the time being. Should silver be able to lurch through $34, we could be looking at a commercial signal failure.
*The large specs increased their longs by 9,345 contracts and reduced their shorts by 7,035 contracts.
*The commercials decreased their long positions by 9,515 contracts and increased their shorts by 17,767 contacts.
*The small specs increased their longs by a huge 9,795 contracts and reduced their shorts by 1,107 contracts.
As in silver, The Gold Cartel went all out to prevent gold from taking out $1630 and then $1650. So far they too have failed. Of note is that, unlike in silver, the gold open interest only began to take off the past few days. It was very low when that change of futures ownership was taking place. Because the overall open interest remains so low in gold, the big spec long increase should not be construed bearishly, in my book anyway.
The weekly precious metals charts are beauties…
Gold and silver have come a long way in a short period of time. Today’s comebacks after early pressure were reassuring. As mentioned before the breakouts, the bases that gold and silver have formed over the past many months are extremely powerful and can support moves to much higher prices. It appears the smart money has moved in and is moving in further … while the general public yawns, as demonstrated by the comatose action in the shares. While aggravating if you are a share owner for the time being, it is very bullish!
NOTE: Silver made a made a new high for the day in Access Market trading and is last at $30.82!
AND ALL THIS IS HAPPENING BEFORE THE JP MORGAN SILVER SCANDAL GOES MAINSTREAM!!