Dear Friends,
All is well in La La Land now that Bear Stearns has imploded. All is well because investment banks can borrow from the Fed for no other reason than to show it is good to borrow from the Fed, and they didn?t need the money.
Are you mad?
Spin on use of the Fed loan facility used by major international investment banks to demonstrate that there is no stigma in using it is raving BS. These firms needed the money and media spun it. That is so silly only raging emotions would be moved by it. They borrowed the money from the Fed for the same reasons that every previous loan was made.
Key investment banks using commercial dealers hammer gold, targeting stops and forcing the highly leveraged (margin) mad traders to bail out as Black Box algorithms fire out mindless sell and sell short orders.
Because major investment banks are public companies they cannot make loans at the Fed and fail to inform their shareholders as it is a material event to their balance sheet condition thereby revealing both the degree and time of borrowings.
Oil?s decline to the cheap price of $105 per barrel helps the operation, if it itself is not an operation.
Now look at today?s condition of the US dollar and recognize that gold is a pure unadulterated operation to make La La Land look even better.
The dollar would be operated except the market is simply too big to push and people are less apt to be panicked by it like energy and gold traders.
Nothing is fixed. Soon that will be seen and the ability to pull off another today becomes less and less.
If you are not margined I believe you have no problem. If you are margined but not so much that you are beyond what you can pay down or take delivery of you have, in my opinion, no problem either. If you are margined up to your eyeballs you are in serious trouble.
Gold is going to $1650 and no camouflage of conditions can stop it because the dollar is hopeless.
Gold is a raving buy in these conditions if you are smart enough not to use margin.
From now on this is exactly how gold is going to trade. I suggest a $100 point range in a day is not out of the question, even today.
Those who attended the private CIGA meeting might recall our discussion of potential gold price actions.
