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Today’s Gold Price Take-down Operation Has The Smell Of Desperation

Tuesday, April 15, 2014 15:30

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(Before It's News)

TND Guest Contributor: Dave Kranzler |

I had a feeling that gold and silver were being put on the “down” elevator by the bullion banks when I checked prices late in the evening last night and saw that gold had been hit for about $8 right at the open of trading in Australia. A quick drive-by hit when Australia opens has become almost as common an occurrence as the near-daily price take-down at the opening of the Comex floor trading in New York.

Then Bloomberg, Reuters and the Wall Street Journal each published conspicuously negative news articles which predicted a big drop in the price of gold during 2014. All three articles were based on a recent report published by the World Gold Council which contained highly questionable estimated data on China’s YTD demand for gold and an even more highly questionable forecast for China’s full-year gold demand in 2014. It was clear that none of the reporters who wrote these articles had vetted the WGC’s data, which has been shown to be remarkably unreliable in the past. See this report, for example: Chinese Gold Demand and the WGC’s Estimates.

Furthermore, the Wall Street Journal’s article highlighted a comment about the gold market from some money manager in Miami. It was a name I had never come across in nearly 14 years of studying, researching and trading the gold market. The money manager’s commentary was riddled with incorrect statements and nonsensical assertions.

Shortly after the Shanghai gold market closed last night, the market manipulators went to work on the gold price. Gold was taken down another $20 during the morning trading in London, primarily in three HFT trading induced “mini flash crashes.” There were not any related news reports or events that would have triggered the relentless selling of paper gold (Comex futures via the Globex system and LBMA forward contracts).

As soon as the Comex floor trading opened at 8:20 a.m. EST, nearly 4,000 contracts were dropped instantaneously onto the floor and into the Globex system. This is over a half a billion dollars worth of gold – over 10 tonnes of paper gold – in a nano-second. This amount represents 47% of the amount of actual physical gold that was reported to be available for delivery by the Comex yesterday. The sudden burst in volume halted the Comex computer system for 10 seconds. The contract bomb caused an immediate $16 plunge in the price of gold. Over a period of 7 minutes from the time the Comex opened, over 14,000 contracts traded. This represented over 18% of the total volume in Comex contracts that had traded in the previous 14 hours of trading starting at 6 p.m. EST the night before.

Obviously this is was intentional and determined selling of paper gold for the purposes of driving the price a lot lower. The news reported over the last 24 hours, if anything, should have caused the price of gold to move higher. This includes the re-escalation of the events in Ukraine, an inflation report released this morning which showed that the rate of inflation in March was double the rate that was expected by Wall Street forecasters and a report of manufacturing activity in the northeast which was significantly lower than expected.

It is no coincidence that today is the anniversary date of last year’s $200 price plunge in gold. In fact, about a week prior to last year’s intervention operation, a series of bearish articles and Wall Street analyst reports started hitting the newswires, similar to the flurry of news reports that were released last night. It is painfully obvious to anyone paying attention that there is a serious effort being conducted by the Fed, the U.S. Government and the big banks to hold down the price of gold.

The reason for this is that the U.S. Government is growing more desperate by the day to prop up the stock market and the U.S. dollar. Russia and China have been announcing a series of deals between each other and with several other large trading partners to begin conducting oil and gas trade using their respective currencies, thereby completely bypassing the use of the U.S. dollar. It is clear that far and middle eastern countries are working to systematically scale down and phase out the world’s reliance on the U.S. dollar and the catastrophic political and economic policies it represents.

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About Dave Kranzler

I spent many years working in various analytic jobs and trading on Wall Street. For nine of those years, I traded junk bonds for Bankers Trust. I have an MBA from the University of Chicago, with a concentration in accounting and finance. My goal is to help people understand and analyze what is really going on in our financial system and economy. You can follow my work and contact me via my website Investment Research Dynamics. Occasionally, I publish on Seeking Alpha too.

As a co-founder and principal of Golden Returns Capital, LLC Mr. Kranzler co-manages the Precious Metals Opportunity Fund, a metals and mining stock investment fund.