Silver Price Update 5/20/12: Precious Metals Correction, But Anything Goes
Two great days in a row for precious metals amidst short covering. With gold sitting at just shy of $1600 and platinum having maintained the same closing price two days in a row of around $1,450, there are many bullish indicators for the short term in the precious metals markets.
But, as we have seen countless times before, there will be again violent pullbacks. The question is, were the last two days of short covering and dollar weakness a prelude to more short covering and market suppression? My opinion is that this is likely truth. But, whether or not this begins to transpire Monday before gold and silver have more opportunities to solidify this reversal has yet to be seen.
One thing seems clear. Over the past two weeks, as gold and silver have fallen, sellers during times of the day which typically experience high volume (for instance, at the trading day’s end), have liquidated large positions especially in gold. This is not the MO of the beast. The sort of flagrant manipulation associated with illuminist banks like JP Morgan, Scotia and HSBC entails waterfall price-slides. Also, these events happen in thin markets due to cowardice of the ruling class. What we’ve seen in recent near term is something different.
Obviously the price suppression phase for the United States is in vogue, unlike in India where they are currently experiencing a different sort of manipulation which sends the metals to the moon enticing buyers to buy high and to scare others out of the market due to the high price. So, the previous weeks’ events are in-line with the elitist agenda.
Also, it has given the banktards an opportunity to liquidate shorts, which they have done. But, I am not convinced that this dip is over. Now, I could of course be wrong, and the fundamentals are bullish. But this slow motion bring down of the market, I think, might be part of a two-prong attack on gold and silver, platinum and palladium.
The recent seller was kind to the market. They liquidated over a period of time so as to not collapse the market. Or, perhaps, they are part of the precious metals cartel, and their slow bring down was merely a prelude to the in-an-instant selloffs we are used to when the cartel makes its moves. The two-prong attack consists of: bring the metals down slowly to the point of immense support, and then selloff in a big way, bringing them down even further through the perceived support.
Some are saying that a bottom in the precious metals market will be over after a very weak May, in June, which was to be expected considering the age-old advice of investors to “sell in May and go away.” It has been a depressing near-term for precious metals, as gold has declined 3 percent over the last month, silver 8 percent and platinum over 3 percent. Usually prices are depressed for the summer, but in the new paradigm of 110% total market control, anything goes.
As Chris Powell posted today at GATA:
People wouldn’t be investing in the monetary metals if they hadn’t already concluded that the financial markets are now best described by the old song:
It’s a Barnum & Bailey world,
Just as phony as it can be.
But, perhaps the real question at this point, in these suppressed and manipulated markets, is whether or not this spike over the last two days is really just a ploy to suck buyers into the market before attacking it again?
Nevertheless, on Friday, the gold price climbed 1% to $1,590 an ounce as the euro moved up against the dollar. The euro climbed sharply on Friday, partially responsible for the move up in gold. Earlier on Thursday, the euro stood at a 4-month low against the US dollar amid worries regarding Greece’s exit of the euro-zone. Also on Thursday, 16 Spanish banks were downgraded by Moody’s, thus abetting a general sell-off. Yield on German bonds also fell off at record paces.
The US Dollar slumped:
The day earlier, on Thursday, gold gained 2 percent, its biggest one-day climb since January, amid short covering and poor U.S. Economic data on regional factory activity for April. Midweek, gold was down around $1,540, 20% off of its $1920 peak fall 2011.
By week’s end, silver had gained 1.2% to $28.36 an ounce. Platinum was up nearly 1% as was Palladium.
In a note, UBS bank wrote on Friday, “Yesterday, gold defied a stronger dollar, weaker equities, and another raft of negative EU headlines (to rise). It felt like the gold market of yesteryears.”
There is talk from Deutsche Bank about an Ireland bailout pt. 2. The last bailout of Ireland transpired in the late fall of 2010, and it sent silver and gold up. So, whilst the world is focused on the possibility of a bailout of the United States, this might be partially a distraction. For, considering the exorbitant privilege of the United States as world reserve, I imagine that we will be the last domino to fall. Quantitative Easing in other nations might have an effect just the same. Here are Kitco charts for Oct. -Dec. 2010.
Despite the anything goes market, things currently seem reflective of the way things are:
It is tough to say what Monday holds, a day when metals often go down. I expect some action to begin in the thin market of Sunday, and would say that the outlook for the beginning of the week is positive for all metals. But, until we get to $1700 for gold and $35 for silver, the market sentiment will still be bearish.