From yesterday's huge issuance of new contracts to today's latest enforcement of the "Never, Ever, Ever, Ever Rule", the control and manipulation of the gold market by The Criminal Banks continues in earnest. While it's nice to see prices remaining firm, there is nothing to suggest that this is going to get any easier, anytime soon.
Let's start with the open interest numbers. By now, I've so thoroughly beaten this into your head that you're likely to tune out if I go through the whole exercise again. However, since we continue to see our membership grow, I probably ought to offer the Cliff's Notes version, at least....
Once again yesterday, The Banks created massive amounts of new paper short obligations in a desperate attempt to restrain paper price. Without providing any additional physical metal collateral, The Banks summarily created 14,345 new paper gold contracts yesterday. At 100 ounces per contract, these new paper shorts represent a future obligation to deliver 1,434,500 ounces of gold or about 45 metric tonnes. Of course, The Banks have no intention of ever delivering that amount of gold. They will, instead, simply continue to feed new contracts to the hungry Specs until their appetite is satisfied. The Banks will then wait for the opportune moment and then try to force The Specs into a mad scramble for the exits. The Banks will then use this Spec selling to buy back all of their ill-gotten paper shorts, thereby closing back out all of the open interest that they had just recently issued. It looks like this:
March 1: Open interest 450,555. Price $1231
March 10: Open interest: 504,118. Price $1274
March 15: Open interest: 493,086. Price $1232
March 17: Open interest: 508,262. Price $1266
March 21: Open interest: 504,152. Price $1246
March 22: Open interest: 510,579. Price $1250
April 4: Open interest 470,842. Price $1219
April 11: Open interest 498,189. Price $1258
See how that works? And, as we discussed last month, it appears that The Banks feel a little threatened when total OI rises above 500,000 because, on three separate occasions, deliberate raids soon followed after the 500,000 level was breached. So, first and foremost, look out!
Next, we have the "Never, Ever, Ever, Ever Rule". This rule has been around for years but plainly in effect recently as we've documented three of four clear enforcements of it in just the past few weeks. And what is the "Never, Ever, Ever, Ever, Rule"? Plainly stated, on days when The London Monkeys stand down and price is actually allowed to rise in the US overnight, the responsibility for managing price lower falls to The Banks of the Comex. It sounds simple but it is what it is. Here was latest example from last Tuesday, the 5th:
With The London Monkeys standing down again overnight, today is another "Never Ever" day...and how does it look so far? See for yourself:
And keep in mind that the primary driver of HFT Spec cash into gold futures this past week has been the sinking USDJPY (http://www.tfmetalsreport.com/podcast/7550/tfmr-podcast-wednesday-april-6). THIS is the #1 reason why price has rallied and the USDJPY is bouncing a bit this morning...undoubtedly helping the cause of The Bankers.
So, as it pertains to gold, just proceed cautiously. Understand the forces that are opposing you and act accordingly. They WILL lose in the end...it's just The End isn't likely to be tomorrow.
On the bright side, silver charged higher overnight and, though it too has given back a little this morning, it's hanging in there above $16. As we discussed last week, once the most recent downtrend was broken and price got back above $15.20, the stage was finally set for an attempt at a new higher high. To accomplish this, silver needs to get through the $16.38 intraday high of October 28 last year. Can it do so on this attempt? Maybe. I think, instead, it's more likely to encounter stiff Bank resistance there before falling back a little to regroup so be patient. Once silver gets through there...and it will...it should accelerate into the 17s and beyond. Thus the fight from The Banks to keep a breach of $16.38 from occurring.
Have a great day,