GO GATA!
What happened? The AM Fix came in higher at $634.00, confirming strong demand for physical gold and that was all she wrote. Then the usual occurred:
Bill,
Truly amazing. Yesterday the Bank of Canada leaves interest rates unchanged, and immediately the dollar jumps against the Euro.
Today (7 am EST), the Bank of England had a rate announcement. I'm assuming that they, too, left rates unchanged. Immediately the dollar exploded up against the Euro, which is comical b/c England isn't even a member of the Euro community. And, of course, gold gets pasted as well.
Amazing that anyone could possibly believe that inflationary monetary policies are negative for gold. I mean, I know it's the cartel doing this gold trashing, but the fact that not a single person ever questions this ridiculous market reaction is simply amazing to me.
Especially since it ALWAYS occurs at the same times each and every day.
Andy
Going into pivotal mid-term elections in the US in exactly two months, the US economic numbers are clearly spelling out STAGFLATION (see King Report below). Of course that is a recipe for gold to move higher. However, since it is a simplistic barometer used by Planet Wall Street as to how the Fed is doing in its so-called fight against inflation, the price must be held in check. It must be held in check to keep inflation expectations in check. Spin and expectations are everything in Washington these days. Thus, Herr Paulson sent out orders to his gold bashing platoon to take the price down, no matter how it looked.
Why not from his standpoint? As Andy says, the sheeples on Planet Wall Street won’t say a word. More importantly, they will nod with approval and point to the falling gold price as a sign inflation talk is overdone. Even worse, the nitwit dingbats in the gold world won’t make a peep either. They are an abomination.
Gold was also ordered lower because the US stock market is looking vulnerable in this very weak stock seasonal period. The S&P, DOW and DOG were all called a fair amount lower before the New York opening this morning, which is rare. Gold was pummeled ahead of that opening to the tune of $12. As oft-mentioned here, should the US stock and real estate markets tank ahead of those coming elections, it is bye bye incumbents.
That was the good news. The PM Fix came in at $621.50, after which The Gold Cartel went back to work, leaning on gold further. The Paulson Platoon didn’t need to do much more. The funds began selling like crazy, taking gold down to $614 … which brings us full circle to the lead off comment in MIDAS yesterday:
"One of the knocks over the years I have heard is MIDAS blaming gold’s demise on a daily basis always to the activities of The Gold Cartel, which is just the way I see it most of the time. Most of those people who don’t get it have NEVER traded a futures contract in their lives. What they don’t realize is The Gold Cartel "sets the stage," or at least tries to. They don’t need to do the selling if they can influence the specs to do it for them. Often the cabal crowd are the BUYERS on big market down days as they have set up the technicals (moving averages, etc.) to influence the funds to sell."
That is EXACTLY what happened today.
The gold open interest rose 2381 contracts to 322,379, the highest in some time. This represents a good deal of fund buying, some of which is now being flushed out. The silver open interest gained 820 contracts to 108,952.
The Silver Fix this morning in London was also HIGHER than the prior Comex close, coming in at $13.06. No matter … the price managers went into action on the Comex, fostering a sharp move down to $12.67 and then to $12.42.
The dollar rose .43 to 85.47. The euro lost .91 to 127.26. The move had to be the work of the Exchange Stabilization Fund and other central banks, as it made no sense based on the news, which was dollar bearish, not bullish. US interest rates FELL with the yield on the pivotal 10-year T Note dropping to 4.78%. It seems the move up in the dollar was set in motion to assist in dropping rates.
The desperados in Washington are going all out to prevent the developing housing debacle from accelerating ahead of the coming elections.