Gold's struggle back.

If you read Larry Edelson, his charts predict gold a) to have no support till 1,420 and possibly lower and b) go back all the way to 1,200. I look at the figures and I see something else. Gold threatened to go hyperbolic last September (after Larry's predictions all Summer of a coming crash in gold prices and the Stock Market) so a New York entity intervened and started dumping paper contracts. Gold price was driven to 1,550. As the market absorbed the sell signals gold prices rose again so a second dose of contract dumping took place in Dec that drove gold prices to 1,550 again. Gold prices rose again and this time (Feb and March) gold prices were driven to 1,650. According to my calculations, attempts to keep gold prices low will soon become ineffective and gold will reach a new high before the end of May.

I am a curious person and I asked two questions: 1. why do the powers that be try to keep gold prices low? and how come that they stop after a while?

I have already answered Q1 before, but will repeat the answer here. Gold price is linked to inflation. If gold prices are allowed to rise very steeply, prices will start rising very steeply; most of all oil. The Socialist authorities want to have inflation, but most of all they want control. And they want prices to rise slowly. So, every time gold gets ahead of itself, they knock it down.

So, if Socialist authorities (which includes the FED) really have this much control, how come the gold price keeps going up and does not stay down? That is a good question to which I did not have an answer untill I had read the notes from "Gold Trader" on KWN. Others tell me that the dollars to gold ratio has increased so much that our gold would have to sell at 10-20,000/oz gold to cover all the paper dollars. Socialism is so inefficient that Socialists must kite checks (more printed money and bonds) to cover expenditures. Eventually, the paper currencies will become worthless, so Central banks want to hang on to their gold. But, every time gold is knocked down by the avalanche of paper contracts, some of the phony paper is paid for by fiat currency, but some of it is paid by actually delivering the gold. Thus, something of great value (gold) goes from the Socialist central banks to the East. Then gold price recovers and hits a new high.

Further volatility.

Market volatility in the currency, precious metals and stocks has gotten huge. This is exacerbated by disagreements among the experts, even those from the same company. Take Weiss Research. Sean tells us that the PM market is near turning up and recommends miners, while Larry continues to insist that we will have a huge drop in all then an upturn in gold and silver. To complicate matters, Larry told us that this week, that not only does he overturn his forecast of a huge drop in the DOW to 9,900, but that the Stock Market has now entered a new Bull Market. That was before the 200+ point drop yesterday. Today, Monti Agarwal, another expert from Weiss Research points out that the recovery is running out of steam and we can expect the S&P500 to take a tumble.

You might be perplexed. I am.

So, here is a possible explanation. The Markets are no longer responding normally as predicted by previous events. What drives the markets is the action of the Central Banks including the FED. Consequently, the markets have become unpredictable and hence the volatility.

Gold and dollar by the numbers.

We are witnessing the divergence of the US Dollar from Gold. The announcement by Brazil that it will defend the real (i.e. intervening to reduce the value of the Real or increase the value of the US Dollar) coincides with an increase in the value of the US Dollar. No public response.

We are beginning to see definite tendencies with the Gold market. Manipulation is now obvious as well as substantial.

Taking the 200 DMA from May 09 to today yields a more or less straight line with a slope of $25/month. Lately the 200 DMA is rising a bit faster. Volatility, however, has risen quite a bit. This shows up in faster rises, which are then knocked down by obvious intervention. During July and August last year the gold price had risen $200/2 months. During November last year, gold price had risen $150/month and during December, gold price had risen $150. Each rise is followed by the dumping of significant amount of gold that brings back gold price to the moving average.

The dumping takes place within an hour. No attempt is made to cover up the dump or get the best price. The only objective is to knock down the price. It can be concluded that gold prices would rise 4-6 times faster, were it not for the periodic intervention. Each dump is multi ton and may be ending up in China.

This then is the source of the volatility. When the entity that does the dumping runs out of gold it can dump, expect gold prices to rise parabolically (actually exponentially, meaning much faster than now). Gold and silver miners are cheap and I expect them to break out of the wedge on the upside.

Manipulation of the Gold and Silver Markets.

For the most part of last year, gold and silver miners fell, even as the gold price continued to rise. The best answer I get is that certain entities were trying to suppress gold prices in order to produce a slow rise in gold prices and a slow loss of value in the fiat currencies. The XAU is now producing a wedge and the miners have been increasing. Even during the last drop, the miners held better than gold and are now swinging up.

The second graph shows the action in gold price. Here is where manipulation is shown clearly and perhaps the reasons for it. The price of gold is allowed to increase gradually and every time gold prices start turning parabolic, we see an intervention to crash prices. These are indicated by red arrows. Note that the drops are accompanied by increased volume. Someone is dumping gold to decrease the price. King World News describes what happened during yesterday's dump. Someone comes in and begins to dump a large amount of gold in a short time. The Seller is not trying to achieve a reasonable price. The objective of the Seller is to depress price. In a few days the price is allowed to rise and gold price goes up as a more or less straight line with a certain slope. Note that there was a dump in September, December and yesterday. This is not ordinary sales, but a dump.

The next two graphs show the gold and silver prices on a shorter scale. This pinpoints the dumps more accurately. KWN articles suggest that the dumps are rear guard action by the Central Banks to keep the gold market rising slowly and prevent a panic in the market place. My calculations indicate that gold will reach a new high at the end of May. Perhaps the central banks hope that if they can hold out till then, the "sell in May" adage will ease the upper pressure on prices. The forecast is still for higher gold and silver.