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The Price Of Gold: The Fed's 60 Seconds Of Desperation

Published 01/07/2014, 01:30 AM
Updated 08/21/2024, 03:35 AM
GC
-1.32%
SI
-1.62%
FTNMX301010
1.41%
BETI
0.47%

The price of gold had remarkably smashed $35 in the space of 60 seconds at 10:14 a.m. NY time this morning. 12,000 contracts hit the market almost all at once. To put this size in context, on Friday a little over 107,000 Feb contracts traded during the entire 23 hour Globex system session. In other words, today at 10:14 a.m., a little over 11% of Friday's total volume traded in the space of 1/1380th of the entire Globex session for a given period.

The hit came from nowhere and halted a strong rally in the price of gold that began last night in Asia. Concurrently, the dollar was selling off hard, as was the S&P 500. There was no apparent news or event that would have triggered the price smash:
Cmex February Gold Contract 1-Min Chart

The price of gold at the time of writing has since recovered about 90% of the price hit. Silver, which was giving all indications of behaving like a runaway freight train before the hit, has recovered about 2/3 of its price-ambush.

Mere manipulation by desperate criminals?

This is the unmistakable sign of desperation. Desperation to keep a lid on the price of gold in an attempt to make the public believe that everything is ok in this country and with the U.S. dollar. But we all know otherwise...

I have no doubt that the hit was used by JP Morgan to get more long Comex gold futures and to induce a flood of GLD share selling. The GLD shares will be turned into the GLD Trust either today or tomorrow and used to remove more gold. I bet within the next couple of days, today inclusive, we'll see a large withdrawal of gold from the GLD Trust. For the record, the selling of GLD shares does not trigger the removal of gold. Actually, gold can only be removed by the banks who exchange shares for gold.

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