Zeev's Turnips Patch-No Politics (ZEEV)

[mlsoft]

schloss...

I have no idea what AG will do this week, but his history since the onset of the rally last March is that if given an opportunity to rally, he will do so. The surprise for me today was the lack of follow through to Friday's selling. It could be that the market is just digesting the reversal and selling will intensify later this week, but I would not count on that. Instead, I will wait to see what happens.

As for gold, it is a very tiny market compared to the equities markets, the bond markets, and the currency market, so it can be controlled with pocket change. Actually, the gold cartel (GS, JPM, C, MS, et al.) wants to hold gold down as much as the Fed does -- it is critical to the cartel because they are reputed to be sitting on large short positions and huge derivative positions so a large rise in the POG could cause them to suffer a disaster. Until Bernanke's recent speech, I had felt that the cartel was more interested in slapping gold down than the Fed, but that speech brings that idea into question. Also I remember when JPM, C, and BAC were in danger of meltdown due to derivative pressure last summer and the Fed went into full rescue mode for those companies, including driving the POG sharply down.

So yes, the fed can easily control gold, and Bernanke's speech just gave them an additional reason to do so.

Good luck to you.

mlsoft