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The Last Great Gold-Silver Slam

Apr 15, 2013

Last Thursday someone put out a fake report that Cyprus was about to sell its gold to pay off debts, worth about 563 million euros.

http://uk.reuters.com/article/2013/04/11/uk-cyprus-gold-idUKBRE93A0DP20130411

Although the central bank of Cyprus denied the report, they did not have sufficient credibility to convince people that they were telling the truth.

http://www.ibtimes.com/cyprus-denies-rumor-it-will-sell-its-gold-raise-funds-option-raises-same-question-other-struggling#

"A Central Bank of Cyprus spokesperson said Wednesday that rumors stating that it would sell 75 percent (approximately 10 tons or $523 million) of its gold were inaccurately reported by Reuters."

This gave the gold market the jitters, because the more gold is sold, the more the price drops. Then on Friday some large gold manipulator actually put 124 tons of gold on the market for sale, which slammed the price down below $1500/oz.

http://investmentwatchblog.com/massive-20-billion-paper-gold-sell-orders-trigger-stop-loss-selling-and-unfounded-panic/

Reports suggest that a futures sell order worth $6 billion, equal to 4  million ounces or 124.4 tonnes of gold, by a large investment bank sent prices plummeting and spooked the markets contributing to the decline. The order was  believed to have been placed through Merrill Lynch’s brokerage team.

The futures market then saw a further wave of selling of contracts worth some  $15 billion, equivalent to 10 million ounces of selling or 300 tonnes, in just  35 minutes.

http://bullmarketthinking.com/gold-trader-expect-margin-calls-monday-morning-as-big-players-do-whatever-it-takes-to-get-physical-metal/

Following Friday’s panic sell-off in gold, one of the world’s top gold traders and recent interview guest, Gary Savage, shared some powerful commentary on what the smart money is doing in the market right now.

Gary said, ”Let me be clear. Just because we got a max ‘Blees’ rating and a large ‘Buying On Weakness’ (BoW) number Friday doesn’t mean the bottom [actually] occurred [on] Friday. It almost certainly didn’t. Margin calls are going out Monday morning.

He is saying that many investors who buy on margin will lose what they have put down as a downpayment in their purchases of (paper) gold futures. And so they will be required to sell their purchases at a loss, because they don't have enough money in the account to keep up with the dropping gold prices. This, in turn, just puts more gold on the market, as people are forced to sell more and more of their gold by the hour.

This only increases the pace of the drop in the price of gold. As the price drops, more and more margin calls occur, and more and more people are forced to sell their paper contracts at a loss. It is like a snowball rolling down a hill, increasing in size until it hits the bottom.

That is what is happening today. The price of gold has dropped another 8% (as I write) to $1358/oz. No one knows where it will close today.

Silver has dropped as well, as it usually sympathizes with gold. Silver is down more than 11% to $22.91/oz.

I have long talked about the big banks that have been manipulating the price of gold and silver downward in order to make paper currencies look better. They do this by shorting the market, i.e., selling paper contracts as if they had a lot of gold to sell. But in recent months, their short sales have been in danger of being blown out of the water by a huge rise in the price of gold and silver. It appears that they have finally decided to do something to slam the price way down, so that they can cover their shorts at a profit, and then start buying gold at bargain prices. That way they will make huge profits as the price goes up to $2000 or beyond.

The only real losers here are those who have bought paper instead of the real physical stuff. Those who have bought physical gold and silver have nothing to worry about. In fact, all this does is provide people with a tremendous opportunity to buy at bargain prices. Gary Savage continues,

So if you are holding, don’t freak out on Monday morning if gold is down again. It almost certainly will be. But if this was an artificial event, and I’m confident it was, then once it’s finished gold is going much, much higher. The big players that created the event don’t do so to sit in a stagnate market. They do so because they know the manipulation has ended and there are big gains ahead as the secular trends resume with a vengeance.”

 

When we look at how these prices got slammed, first with a false rumor about Cyprus, followed by a huge actual sale by some big investment bank or fund, it seems quite obvious that this is "an artificial event." In other words, the prices will likely go back up as fast as they have gone down, and those who understand the reason for this volatility are likely to make quite a lot of money. Especially the manipulators, who know how to regularly fleece those who buy paper gold. Manipulators also know when the price will go back up, because they are the cause of such volatility in the first place, so they will make money both ways, first when the market goes down, and then when the market goes up.

There were astute people who predicted this very thing over the past few years. They said this would happen just before the end, when the price of gold would rise to $5000 and silver to $200. Perhaps we are nearing that end.

I have believed for many years that when the price of silver shoots past $50/oz, it will mark the prophetic end of head of gold and the conquest by the arms of silver. This present volatility puts me on alert that we could easily see the price rise from $20 to $50 in a very short period of time. If that happens, it is doubtful if the price of silver will stop at $50. Bargain prices will come to an end at that point, and the global reset will be upon us.

 

 


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Dr. Stephen Jones


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