Loading ...Don’t be fooled by the officially driven counterintuitive gold and silver action this week. It was all about the defense of the round number at $1,300, a breach of which will set off a tsunami of sideline buying, and not from flushable synthetic naked long hot money. The officials who rig this market are far more constrained than they have ever been as real fundamentals close the jaws of a vice on their paper market scam.
Dips Will Be Shallow
Dips from here on will continue to be shallow. Why? Because those seeking to accumulate physical are gaming the paper market to a point that it simply cannot be leveraged anymore. When officials generate sufficient undeliverable paper gold supply in the futures markets to swamp paper market non-delivery buying, as we saw this week into the $1,300 level, it appears to work (at capping the price of gold) and that little has changed with respect to the decades old wash and rinse cycle gaming. However, as we have noted many times, Eric, competing sovereigns, central banks, and institutional physical buyers have learned to capitalize upon these divergent buy windows to accumulate large size (physical purchases of gold) into a desperate Fed trying to balance its gold capping defense.