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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (71695)	11/26/2007 9:08:49 PM
From: Secret_Agent_Man	Respond to of 116555

It’s going to take a couple of days to determine what Friday’s gold market really meant, but I can imagine an intriguing possibility. First, consider the timing; a day guaranteed to be lightly traded because it fell in the middle of the most heavily-traveled USA holiday weekend of the year. Second, gold finished trading on Wednesday at $797/oz— just below the critical $800 level where there are a whole lot of December call options and futures contracts on which the clock is ticking down towards expiration. The setup for a raid on the price of gold was exquisite from a price-capper’s point of view. Sure enough—as you reported—a big sale hit the market. A million ounce sale; that’s 34 tons of gold, 800 million dollar’s worth—presumably enough to send the gold market into a tailspin. That million ounces should have taken gold down to the 770’s, or even lower, on a slow trading day. How many times have we seen "dirty tricks" like this near expiration dates over the last decade? Every time GATA and honest money supporters have howled in vain (and pain) about manipulation and then watched as the financial world ignored the evidence. On Friday, November 23, 2007 something different happened: 34 tons of gold that was meant to bury the yellow metal’s price was bought up by persons unknown and vanished from the market. As I wrote to you earlier, this left a vacuum above $800 that gold leapt up to fill. So here we are, again, in the $820’s—what does it mean? For one thing, it means the Cartel can never be sure again that if they drop a bomb on the market, it won’t just disappear without a trace. That has to worry them a lot. It may also mean that there is more room above the $820’s for gold to streak into, because that 34 tons was most of the supply the Cartel had available for the task of suppressing the pog below $800/oz. If Friday’s gains hold, or expand, it also means that many, many shorts will be liable for some substantial losses; maybe even losses big enough to cause a few failures, defaults and chain reactions. And IF that comes to pass, than Friday will be remembered as the Cartel’s Little Big Horn; the date on which a foolhardy and overconfident combatant rode in to meet his fate. This week’s trading will tell us if this scenario is reality or fantasy. Best wishes, Peter R. lemetropolecafe.com