Mostly: Classical

[basserdan]

>>>CB Gold Sales...
390 tonnes actual YTD; 110 tonnes short...<<<

Hi Mark,
Conspiracy theorist or not, I thought you might find this piece by Coach 247 from last evening's LeMetropole Cafe to be of interest. I've pasted it from StockHouse to provide a link.

Taking it one step further, that the German CB's oft repeated statements that they were not going to sell their large current year WA gold sale allotment could have been intended as the sedative that helped present a plausible reason for the weekly shortfalls....


"Hi Bill!
I am trying to get the message across to people who are either unaware or unwilling to believe that manipulation on a massive scale can go on in contemporary markets. I am going to take the manipulation argument one step further. Lets just say there is a group with enough clout to dictate the trading over a short term. Lets say that group is anti-gold, for various reasons. Lets say the objectives of that group are to cap the advance of gold, and limit any possible enthusiasm in the market for PM investments. So far, all of the above is reasonable to assume but certainly not something I can prove.
Now if I was running such a scheme and I wanted to maximize the impact of my influence to accomplish my goals, then I would set a bull trap. A bull trap is one in which the maximum number of participants can be drawn into taking a position going long in the market and end up on the wrong side of a short term bearish trend. How would I do this?

I would allow the market to appear to be trending higher, during a time of seasonal weakness, on low volume. I would hold off on selling any large quantities of gold to draw in new money. I would allow a gradual building of a short position to ensure that I am fully leveraged to profit from a sudden downward move in gold. And I would use any influence that I could bring to bear to ensure that other sympathetic players would be aware of the plan and on board to assist.

What we saw through August was exactly the above set of circumstances. Further, we can verify the data over the summer from the member CBs of the Washington Accord, that they were selling only minimal gold even though they were well within the capacity to dump bullion, and the prices were much higher then.

Now when the time came to spring the trap, the media suddenly became full of gold bearish commentary. Short selling of the bullion picked up dramatically, breaking down short term technical support. The European CBs dumped physical gold heavily, even though by their actions the net price they realized from those sales were far lower than could have been accomplished with a more strategic plan. Once the breakdown was achieved in gold, the momentum of the market and hedge fund technical selling took care of the rest.

I believe that the limits of the perfect storm against gold have now been reached. Shortly we will see short covering to reap profits in both the metals and the stocks. CBs will curb their selling to conserve bullion for the next time to raid. The overall objective of creating an impression of gold weakness and dollar stability amid steady interest rates has been accomplished, and the hang over in the gold sector is now likely to persist while technical damage is repaired and longs lick their wounds.

The smoking gun in all of this is the behaviour of the institutional money. Most institutions would have balked at carrying huge paper losses in a short gone bad, but the big names just continued massively piling on the shorts until the market turned. Given the impact of trading losses, when for example hedge funds have blown up in the past, such activity would indicate recklessness on the part of the anti-gold cabal if they did not have prior knowledge that the CBs would step up to furnish a correction at an optimum time and thus bail out the stranded shorts.

As for the CBs, a 16-year old kid at a garage sale selling grandpa's cuff links could have realized a better return on the gold than the administration of those institutions did in their timing of the gold sales. One must conclude that these people are not incompetent, and therefore their actions were motivated by a goal that did not include maximizing the urgency return from the gold sale.

I cannot do more than list circumstantial evidence of the above scheme, but I think the strong motive and the suspect timing of the selling goes a long way to build a case that the

last few weeks in the PM sector have been a carefully orchestrated bull trap. The bright spot to all of this is that the scheme cannot accomplish more than short term objectives, and the conditions are now set up for a resumption of the long term bullish trend for the sector. This would also represent an optimum time to be a buyer and thus profit from the scam that has been perpetrated on the entire sector at the expense of free market trading.

I think most of the sophisticated money is still asleep at the switch, refusing to believe that market rigging can go on so blatantly. The big players will wait for confirmation that the PM bull market is alive and well. They will allow themselves to be led around by the nose by the very corrupt players who are stealing their lunch. But I think there is a growing group of smarter money that is figuring out what is going on, and they will be the ones to seize the buying opportunity that has been so generously created for them.
cheers!"

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