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12/8 Federal Reserve System Banker: Fed Has Lost Control Of The Gold Market Due To Saudi, Chinese and Russian Buying
December 8 – Gold $519.20 up $5.10 - Silver $8.88 up 10 cents
Federal Reserve System Banker: Fed Has Lost Control Of The Gold Market Due To Saudi, Chinese and Russian Buying
"An old, long-whiskered man once said to Teddy Roosevelt: 'I am a Democrat, my father was a Democrat, my grandfather was a Democrat.' Roosevelt then said: 'Then if your father had been a horse thief and your grandfather had been a horse thief, you would be a horse thief?'" --Will Rogers
Unreal what is going on here. Because gold has gone up by a substantial amount, most everyone says it must go down now. Because few can explain WHY gold is going up, most everyone says it must go down now. Because gold always used to go down, with one rally failing after another, most everyone expects gold to go down now.
The Café Sentiment indicator is still blah … a 6 at best. When gold broke $330 to the upside, it was a 9 for weeks. The small specs continue to liquidate their long gold positions. The gold funds are not receiving any new money of any importance … some ARE fielding liquidations. There are no premiums in the physical gold and silver. The small gold/silver stocks barely have a pulse … barely trade.
You could NOT DREAM UP a more bullish scenario. Few out there gets it. The funny part is that finally technical analysis is working picture perfectly. The COT report was super bullish. The chart is super bullish. The acceleration after breaking out at $478 is classic and super bullish. The breaking of decade highs is super bullish. The open interest numbers are super bullish.
Yet, no one seems to care and most everyone is bearish, or does not believe gold can go up from here.
What fun to see technical analysis work after so many years of one failure after another. The reason it is working so well is obvious. The Gold Cartel has lost control of their price-rigging scheme and has ever since Gold Rush 21. Gold has now risen $84 since our historic conference, while the dollar has risen a fair amount. Technical analysis is invaluable in FREE MARKETS, which gold is fast becoming.
For years it was the MIDAS rant that to really understand the gold market it was imperative to know what GATA knows. Most of the mainstream gold world cannot explain why gold is doing what is. They continue to come with an explanation du jour. They have no idea if what they are saying is correct, but they don’t know what else to say. First gold was going up because of a weak dollar, then because of inflation, then because of rising prices. Now the politically correct explanation is that central banks are buying. I will bet you that hardly a one of them has any concrete information of a particular central bank buying. Why are most saying this? Because they read about a number of central banks saying they INTEND to increase their gold reserves.
One of those pundits expounding this them is Dennis Gartman, who said as such on CNBC yesterday. Well, if he knows this to be true, why did he exit the gold market at $460 and missed $60 of this move? It makes no sense.
Now, that is not to say the central banks are not buying. Specific information in this regard (Chinese and South Koreans) has been brought to your attention for some time. The point is because the mainstream gold world and Planet Wall Street cannot really explain this gold move, thus they will say anything … except to admit GATA was right all along.
I am leading up to the most important point of all and that is the mainstream gold world and Planet Wall Street REFUSE to acknowledge the HUGE short position out there and what this means for the future of the gold price.
The gold open interest only rose 1754 contracts yesterday to 342,765. It is still 30,000 off its highs made when gold was $70 lower. There is still room for 100,000 specs to come in on the long side to take gold up to $600.
This is critical information because it tells us (and has for weeks now) that many of the major gold shorts want out, but THEY CAN’T GET OUT without driving the price to the moon. We don’t know the exact number, however, it is safe to say the gold short position is over 10,000 tonnes of gold. Mine supply is running around 2500 tonnes per year and the yearly supply/demand deficit is at least 1500 tonnes per year.
What you have here is MIND-BOGGLING. The only way this can be resolved is for the price to explode in order to slow down demand enough to allow the shorts to START to cover. $600 gold will not do it. That does not mean we have to go well beyond that on the first shot. At some point in this rally, the physical market will dry up due to sticker shock. It does mean we have a long way to go for the gold move to play out. $1,000 gold is a lay up.