Gold and silver have been sold down pretty hard since April 18th. But
the structure of the weekly Commitment of Traders report, which shows
the long and short positions of the various trader classifications
(banks, hedgers, hedge funds, other large investment funds, retail) had
been flashing a short
term sell signal for the last few weeks. The net short position of the
Comex banks and the net long position of the hedge funds had reached
relatively high levels. Except Thursday (May 4th), almost all of the
price decline action was occurring after the London p.m. gold fix and
during the Comex floor trading hours, exclusively. This tells us all we
need to know about the nature of the selling, especially given the
enormous amount of physical gold currently being accumulated by the
usual eastern hemisphere countries. The table above calculates the Comex
banks’ paper gold positioning going back to 2005. As you can see,
currently the net short position and the net short position as a percent
of total open interest had reached a relatively high level. This
typically when the banks engage in raiding the Comex by unloading
massive quantities of paper gold in bursts in order to trigger hedge
fund stop-loss selling. It serves the dual purpose of pushing down the
price of gold and providing a relatively riskless source of profits for
This is a cycle that has repeated numerous times per year since 2001.
This time, however, more than any other time since 2001, the sell-off in
the price of gold is counter-intuitive to the collapsing financial and
economic condition of the United States, specifically, and the entire
world in general. The likely reason for the current price take-down of
gold is an attempt by the elitists to remove the batteries from the
“fire alarm” mechanism embedded in a rising price of gold. An alarm that
lets the populace know that there’s a big problem that will hit the
system sooner or later; an alarm that lets public know systemic failure
is beyond Government and Central Bank Control.
A similar manipulated take-down of the price of gold and silver
occurred in the spring of 2008, ahead of the great financial collapse
crisis. Gold was pushed down to $750 from $1050 and silver was taken
down from $20 to $10. This price decline was counter-intuitive to the
collapsing financial condition of the U.S. financial system, which had
become obvious to anyone not blinded by the official propaganda at the
time. Of course, after the financial collapse occurred and was addressed
with money printing, the price of gold ran up to an all-time high.
It’s likely a similar situation if taking place now. Only this time
around all “assets” are in price-bubbles fomented by record levels of
fiat money creation and the interminable expansion of credit. The debt
portion of this equation is getting ready to hit the wall, the only
question is timing. This explains the parabolic move in the price of
Bitcoin. Bitcoin is nearly impossible to manipulate. Once the western
Central Banks lose the ability to manipulate the price of gold in the
derivatives markets, the price of gold and silver will go on their own
parabolic price journey – one that will leave the price of Bitcoin in
the rear view mirror.
The Shadow of Truth further elaborates on the current price-action in
the precious metals market and why latest sell-off is likely signalling
the next financial crisis:
Rory Hall, Editor-in-Chief of The Daily Coin, has written over 700 articles and produced more than 200 videos about the precious metals market, economic and monetary policies as well as geopolitical events since 1987. His articles have been published by Zerohedge, SHTFPlan, Sprott Money, GoldSilver and Silver Doctors, SGTReport, just to name a few. Rory has contributed daily to SGTReport since 2012. He has interviewed experts such as Dr. Paul Craig Roberts, Dr. Marc Faber, Eric Sprott, Gerald Celente and Peter Schiff, to name but a few. Visit The Daily Coin website and The Daily Coin YouTube channels to enjoy original and some of the best economic, precious metals, geopolitical and preparedness news from around the world.
Dave Kranzler spent many years working in various Wall Street jobs. After business school, he traded junk bonds for a large bank. He has an MBA from the University of Chicago, with a concentration in accounting and finance, and graduated Oberlin College with majors in Economics and English. Dave has nearly thirty years of experience in studying, researching, analyzing and investing in the financial markets. Currently he co-manages a precious metals and mining stock investment fund in Denver and publishes the Mining Stock and Short Seller Journals. Contact Dave at firstname.lastname@example.org.
The author is not affiliated with, endorsed or sponsored by Sprott Money Ltd. The views and opinions expressed in this material are those of the author or guest speaker, are subject to change and may not necessarily reflect the opinions of Sprott Money Ltd. Sprott Money does not guarantee the accuracy, completeness, timeliness and reliability of the information or any results from its use.
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