Wednesday, December 4, 2012

The "Whack-a-Mole" Gold Bandit Strikes Again

Ever since Wednesday of last week, gold bulls have been on edge. An unusually large surge of sell orders on that day broke the price of the metal sharply lower making a large number of recently purchased put options extremely profitable while simultaneously inflicting some serious chart damage to the metal.

Friday of last week saw another barrage of selling with the market attracting some bargain buying in yesterday's session (monday).

Once again it seems as if the mysterious whack-a-mole bandit has struck the metal. This time it was in the middle of the night here in the US, a few minutes before midnight in the Central time zone. Volume surged to levels not normally seen except during the busy pit session trading hours.

Take a look at the following price chart where you can clearly see the SHARP SURGE in volume in the middle of the night. Notice how that volume spike compares to the height of the volume bars during the pit session hours. That is what makes it stand out so obviously.

It is evident that selling of this nature was designed not to obtain the highest possible selling price for a rather large amount of metal to sell. That would have been done by a measured selling program of scale up selling into both short covering and some fresh buying, as that which occurred on Monday. NO, selling of this magnitude is done with one purpose and one purpose only - to take down a market.

Some of the usual skeptics will no doubt instantly dismiss such talk of manipulated price again. Attempting to convince such is a fruitless endeavor. Someone could piss down their backs and they would still believe it is raining. Truth be told it matters not whom the culprit/culprits are; their footprints are unmistakeable.

Gold will need buying on the physical markets to absorb the speculative long liquidation and fresh shorting that is now occuring as a result of this technical breakdown of the paper markets. That means Asian buying and Central Bank buying.