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Below
is the 24 hour gold chart for
Wednesday, Thursday, and Friday of this week. Notice the 40 dollar rally?
Normally, this type of rally leads to some type of short covering, as
investors who made bearish bets cut their losses and close out their
positions.
Next is a one year chart of the USD index. Notice the dollar breaking down?
This is very bullish for gold.
Normally, a very bullish development, such as the dollar’s
current freefall, would lead to a decrease in bearish bets against gold.
Despite what one might normally expect, open interest on the COMEX did
not fall. In fact, it rose by 22,992 contracts in two days. That is 65 tons
in just 2 days.
Last March, open interest in COMEX gold increased by
1,209,600 ounces in the two days after the fed announced
its plans to double its balance sheet. This is worse.
|
Date
|
OpInt
|
|
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5/20/2009
|
367919
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Wednesday
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5/21/2009
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379924
|
|
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5/22/2009
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390911
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two days later
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390911
367919 minus
22992 increase in Open Interest (2,299,200 ounces)
So then, who sold 65 tons (2.3 million ounces) of gold on the COMEX in the
last two days? Where did this 65 tons come from? Why sell it now, as gold
soars and the dollar crashes?
The only logical answer is that this is a blatantly obvious attempt to keep
gold prices in check. The 65 tons of gold was conjured out of thin air.
Conclusion: There are two key points to take away from this.
1) Despite the best efforts of gold shorts, physical demand is driving prices
higher. The 65 tons of paper gold sold on the COMEX was to absorb as much
investor demand as possible, keeping it out of the physical market where it
would send prices upwards.
2) Such obvious attempts to suppress gold prices are a sign of desperation.
Each new piece of evidence of manipulation pushes new investors into the
physical gold markets, which can’t be controlled. So while shorts on
the COMEX managed to absorb 2 billion dollars of gold demand, they also
provided near indisputable proof that the COMEX gold market is rigged,
damaging faith in the US financial system.
Eric
de Carbonnel
Market Skeptics
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by Eric de Carbonnel
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