Gold is getting smacked around this summer.
With all the global economic concerns, you would believe that the price of gold would move marginally higher, not fall over 6.5% from its Feb. high of $1304 an ounce.
Well her’s how that is done whether its collaborative between large Wall Street banks is a matter for regulators. There are investigations into precious metals rigging I am told, but that release could be in the distant future, since it took seven years to hear about Libor rigging.
Price movements in gold have nothing to do with the price paid for an ounce of gold. Gold futures, which is paper, determines the price of the metal. Most futures contracts are written without any gold being purchased, and when you go into a gold ETF, there is no need for gold to be purchased to back that buy order.
Both of these orders, which are the principal means for hedge funds and larger investors to get into gold, can be settled in cash. And in a futures contract 99% of those pacts can just be rolled over to a new futures bet and never take delivery. Therefore there is no need to buy gold or silver to cover the bet, forcing the price down.
It’s the equivalent of allowing naked short sellers to determining the opening price on a stock. They have no skin in the game and their actions are to suppress the price of gold, silver or other precious metal commodity.
JPMorgan and HSBC are the principal precious metals players in the price “fix” — as I see it the “fix” is in.
The desire for physical gold and silver is very high. The US Mint has sold out of 1 ounce gold and silver eagle coins in a matter of days after issuing. The same happen to the Canadian maple leafs.
Neither the US or Canada will mint anymore coinage this year due to tight supply of gold or silver coins, they say.
So you have the financial press celebrating that gold is down and that it is the equivalent of the “pet rock.” The gleefully state that gold is dead bet. Most of these writer and commenters don’t have a clue as to how precious metals are priced. If they did then I would think they would not use it as a barometer for the overall economy.
Why would large banks and business certain “journalists” smack gold around with impunity?
Because the idea is if gold is moving higher, it means the dollar is weakening. So you could say they are in lock step with the Federal Reserve to prop up the dollar.
These same “journalist” will tell you over and over that the Fed will begin to raise rates in Sept. Again to suggest that a strong dollar will allow the Fed to act.
I believe the price suppression of precious metals is a short-term problem. Come Sept., certainly by Oct. we will see a rise in gold as the greenback is seen as much weaker than the false front put on by the Fed.