Gold bugs will be pardoned if they are having thoughts of ‘hari-kari’. Gold bugs woke up on November 5, 2014 to another $25 plus drop in the price of gold. Seems that someone found it convenient to dump $1.5 billion of naked gold futures (equivalent to roughly 1.3 million ounces of gold) on the market at around 12:30 AM EST. There are not too many market makers around at that time to absorb the sale. Silver joined the party and at one time, it was down over 80 cents to around $15.20. The dump on November 5 might not have been unusual except the pattern has been repeated on a number of occasions of late.
Since 2011 there has been an ongoing series of gold futures dumps usually in the early hours of the morning when conditions on or around the open of the NY COMEX are thin. The biggest dump was the mornings of April 12 and April 15, 2013 when someone dumped 400-500 tonnes of gold (estimated value at the time of $23 billion) of gold futures (paper) at or near the open of trading in NY.
Gold appears poised to fall into a black abyss. Maybe the black abyss is made of oil as it too has collapsed under $80 and is threatening to fall further. To counter the downward moves of gold and oil something must be going up and it is the US$. Both gold and oil are priced in US$ (see chart – and note US$ is registering an extreme RSI) and they do have an inverse relationship with the US$. The reasons given for the latest decline (and US$ rise) was the Republican win in the November 4, 2014’s mid-term elections. It is well known that Wall Street is quite happy with political ‘gridlock’ in the US.
This post was published at Gold-Eagle on November 6, 2014.
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