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Sheesh, I go to the firing range with my friend Massimo to do some shooting (10 shots with his .30-06 and a clip from my AK and my shoulder is SORE...)
I have Tai Chi class in 30 minutes...
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“If, in fact, what Bernanke attempted to tell the investment world today, that QE may not be necessary because of a modest improvement in the statistics of unemployment, if that was truly to be believed, then the stock market should have been off 800 points while gold was gold was down $100. Because the same thing moving the stock market is what’s moving the metals and that is pure liquidity.
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“First you intervene via the mouth. Now, what happened over in Europe? The ECB made $712.4 billion in low interest loans to the member banks. This is the second round of massive credit infusions that has been credited with the easing of the eurozone debt crisis.
So that is quantitative easing and we know the money that’s been coming into the ECB has been coming in from two places. It’s been coming in from the IMF and from swaps done by the US Federal Reserve.
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How many listeners have even seen the $712.4 billion of low interest loans that went from the ECB to the member banks today? It’s there, but you are going to have to look real hard to find it.
Today does qualify as one of the biggest injections of liquidity into the system in the history of the system. Today was a cover-up by the US Federal Reserve and by the mainstream media of one of the largest injections of liquidity into the system that has ever occurred.”
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There was blood in the gold and silver trading pits yesterday as leveraged longs got their heads handed to them on a plate.
The massacre was attributed to a host of different reasons - from month end book squaring, to the positive PMI numbers to Bernanke's suggestion that ultra loose monetary policies may soon come to an end.
None of these reasons would justify the scale of the massive sell offs seen in gold and silver yesterday.
Gold and silver markets saw massive sell orders from large institutional sources - as only large institutions selling could have caused a price falls of the magnitude seen yesterday.
There were highly speculative unsourced rumours of an Asian fund selling gold and rumours of a single bullion sale of 31 tonnes or some 1 million ounces by an unnamed seller.
The unusual trading activity saw some very determined sellers who appeared to not be motivated by maximizing trading profits.
One trader said how he had not seen that sort of volume before and the activity was akin to "computerised manipulation" and that there were “massive volumes going through and appeared as if some large entities had bids and offers at the same price”.
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... I guess we now know what the EE has been planning to do with all of their leased silver. Lost in the madness of yesterday was a drop in the 1-month rate to -0.48%. Since we've been discussing this possible "raid" indicator here for weeks, today's drop should really come as no surprise. Additionally, we should have anticipated this today because, after silver broke cleanly through The Battle Royale line yesterday, it was poised to accelerate toward $40+. A desperate EE clearly decided that today called for desperate measures.
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Most Americans are sleepwalking through life - ignorant of the forces and events that are churning the tides that rock their boats.
Speakig of PAGE, whatever happened to the Pan Asia Gold Exchange that was supposed to finally break the London physical cartel?
Today multi-billionaire Hugo Salinas Price told King World News that central banks were definitely behind the smash in the gold price yesterday. He also said people should ignore it and continue buying gold and silver. But first, here is what Hugo Salinas Price had to say when asked about the plunge in gold yesterday: “I definitely think the central banks were behind it. I look at the graph of the gold price yesterday and when it collapses down $100 in about an hour, that is not natural market action. I think people are getting used to this. This is standard procedure and it doesn’t worry me at all.”
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A reported 31 tonne sell order on the CME rocked gold which saw prices collapse from a high of $1790 in London hours to $1703 during NY trading, followed by a further dip to the low of $1687 in out of hours electronic trading. A fall of over 6% which erased roughly half of the gains since the beginning of the year.
Much has been placed on the testimony by Fed Head Bernanke but other markets saw less impact leading to suggestions that it simply provided an excuse for a particular "non US" fund to bail and take profits in dramatic fashion. It may be possible that the seller had hoped the 1,000 lot sell order would trigger stops and thereby exaggerate the move lower, allowing the buying to potentially come back in at a much lower price. Like the price, there is much speculation on their motive.
Ordinarily if a seller wanted to get the best price for his metal he would seek to finesse the selling over time, hunting out liquidity (finding people who are the other side of his sell order) and thereby ensure he gets the best possible profit. This seller was clearly simply out for effect.
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Commenting on the sell-off, CIBC World Markets wrote in a note to clients that “Gold – looks like a large seller of gold in the market. a 10k contract traded, down ticked the price by $40/oz. roughly 200k contracts trade per day, but unusual to see such a large single trade. not likely due to contract expiry either. That transaction represents 1mln oz of gold.”
Hmm, for that manipulation to make money for someone, you'd then have to "finesse" buying a heck of a lot more back at the lower price, wouldn't you? ...
Sharp falls in the gold price have prompted some bears or pessimists to predict it will plunge below $1,000 (£625) an ounce.
Even specialist dealers, such as GoldCore, talked of “blood in the gold and silver trading pits as leveraged longs got their heads handed to them on a plate”.
Goldcore priced bullion at $1,721 or £1,079 per ounce this morning, compared to yesterday’s fix of $1,788 or £1,121 per ounce. A spokesman said: “The massacre is attributed to a host of different reasons – from month end book squaring to Bernanke’s suggestion that ultra loose monetary policies may soon come to an end.
“None of these reasons would justify the scale of the massive sell offs seen in gold and silver yesterday. Gold and silver markets saw massive sell orders from large institutional sources – as only large institutions selling could have caused a price falls of the magnitude seen yesterday.”
Brian Dennehy of independent financial advisers (IFAs) Dennehy Weller commented: “Yet again the ‘safe haven’ myth of gold has exploded. It went down during intraday trading by about $100.
“This doesn’t mean the bull market has ended. It just means that when you buy gold you must do so with your eyes open – it is a highly volatile fringe asset.
“Our technical analysis suggests one of two possibilities. That the bull run is over and the price will eventually work its way down into the $700 to $1,000 range – or one final high lies just ahead before that large correction towards $1,000 will begin.”
Perhaps unsurprisingly, Adrian Ash of BullionVault took a different view: “The uptrend starting at Lehmans’ collapse remains unbroken, monetary policy remains abject worldwide, and the debt crisis remains unfixed and unaddressed.
“Extricating yourself from credit risk with physical bullion of course exposes you to price risk. That risk is growing more volatile the longer we spend behind the looking glass of sub-zero real rates.”
Perhaps at this point I ought to declare an interest, lest anyone accuse your humble correspondent of attempting to manipulate the global gold price; I hold some BlackRock Gold & General in my self invested personal pension.
More importantly, some IFAs support Mr Ash’s view that recent turbulence will prove no more than a short-term blip. Ben Yearsley at Hargreaves Lansdown said: “I don’t think the position on gold shares has really changed.
“The gold price has remained high and gold shares haven’t really moved therefore the disconnect between their profits and share prices remains. The world is still in an uncertain place therefore the demand for gold will remain strong, therefore underpinning the gold price and underpinning gold miners profits. So the outlook for gold shares remains good.”
Similarly, Alan Steel of Alan Steel Asset Management, said: “We may have the odd correction in price but gold is on a long haul secular bull market – in other words, the main direction is up.
“However, the crowd gets extremely pessimistic or optimistic from time to time. So we should see a short shallow fall in price which I’d view as a buying opportunity.
“We are not out of the woods yet on government debt in the West. Or, as we say up here in Scotland, governments are on a shoogly peg . As long as that’s the case and interest rates remain low, there’s a strong case for holding a portion of gold – in an exchange traded fund, unit trust or whatever – as an insurance policy. I certainly do.”
So, barbaric relic whose bull run is nearing its end or a long-term store of value that governments cannot devalue? Amid all the excitement of opposing views, it is worth remembering that despite recent setbacks, the gold price remains more than 9pc higher than it started the year.
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