500 Tons of Paper Gold Dumped on Friday, What’s Next?

I wish I knew the answer to the above question.  As of the last year or so, I admittedly have not had a good feel about the direction of gold and silver prices.  I always thought that as things got more severe and more terminal, the prices of assets we see on our screens would be more and more quite intentionally disconnected from the reality on the ground due to increasingly aggressive, desperate and coordinated action by the power structure.  Looking back, it seems this really got underway in the fall of 2011, shortly after the U.S. treasury market was downgraded and gold shot up to over $1,900/oz.  I have gradually recognized my inability to call things in such manipulated financial markets, which is why I decided to step away and offer less commentary on these topics as things play out in the end game.

I do not think it is at all coincidental that Bitcoin and gold  (two currency threats to Federal Reserve power) both got smashed within a couple days of each other.  In the case of gold, it was a day after Obama had a private meeting with all of the key bankster oligarchs that 500 tons of paper gold, or about 25% of annual production was sold on the market.

As such, I think the interview below from Marin Katusa of Casey research is a great listen for anyone wanting to take a step back and look at the market. Enjoy!

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  1. Massive Put Option Buying in GLD

    If the big boys and their elite pals were trying to cook up an opportunity to get long the gold market by shifting the largest speculators on the planet into selling, they have managed to do just that.

    The Commitment of Traders report of this week is useless since it captured none of this drastic selling that occurred today. My guess is that, based on the volume of trading that occurred today, we have seen a further build in the hedge fund net short position in silver and are very close, if not there already, to seeing the hedge funds actually net short gold for the first time in a decade.

    I never thought I would live long enough to see a world in which the very concept of money has been rendered so utterly meaningless. Money, the way I learned it, was a store of value. If “money” can now be created out of thin air, in unlimited quantities, with ZERO implications, repercussions or consequences, then we have indeed entered a new era in which prosperity can be created by a Central Bank, independent of manufacturing or any capital industry whatsoever and in which governments are unlimited in the amount of that money that they can spend. We have also seen the very notion of a bear market in stocks rendered completely obsolete. From this point forward in history, stocks will never go down and debt in itself has been transformed into an non-entity.


    How the Gold Market was Crashed

    And then the attack began. Wave after wave of selling until gold got to 1525. Then they break down the price below the two year low and all the stops that have been accumulating there start getting tripped up and the selling accelerates as it begins to feed on itself. The physical market for gold sees this as a gift and gets ready to make their move and buy up the gold.

    Now comes the part that is pure genius or a total coincidental thing that just so happens to be a gift to those who are short the market and those who would be responsible to deliver gold should the inventory deplete.


    The screens all freeze.

    What does that mean?

    No one can get to the physical market to buy at these low prices but at the same time, they can’t sell or protect their position either. The system is frozen. Yes, just like at Bit-coin. The system locks up. And of course the results are going to be the same, just on a lower percentage level.

    What can the physical holders do?

    Meanwhile the futures market continues to drop.

    So what happens? The physical market holders begin to panic. How can they protect themselves as they can’t sell either?

    What would I do if I were in that situation?

    There is only one solution, especially during a panic. Short and ask questions later.

    Therefore it is my speculation that based on 350,000 contracts sold on Friday and the massive drop, some of those contracts was the physical market having no choice but to enter into the futures markets and in order to hedge their physical position holdings, sell contracts or short the market. It’s either that or wait until Monday and be subject to potentially heavy losses should margin calls go out over the weekend. With no time to think and survival instinct kicking in, the physical holders most likely did what they could to protect themselves. They went in and shorted the futures market.

    From there the market goes into a free fall as the physical market can’t buy at these low prices because the computer system is down; they can only sell futures to hedge their long physical holdings and so they do what they have to and begin selling futures.


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