Saturday, September 23, 2017

With latest gold price smash unable to break the 50 DMA, central banks losing control in keeping the price from going higher

When central banks dump physical gold onto the markets as the BIS has done throughout the year, or they instead use HFT computers and bullion banks to dump thousands of naked short paper contracts, the most important thing they strive to achieve is to break key technical levels such as the 100 day, 200 day, and 50 day moving averages.

This is because a great deal of traders in the precious metal markets rely heavily upon technicals for their trading decisions far more than they do using fundamentals or geo-political events.

Which is why the latest smash of the gold price following the Fed's FOMC meeting was really a loss for the central banks because despite being able to collapse the price by a little more than 4% since September 7, the chart has not broken the 50 day moving average (DMA), and manipulative interventions are quickly reaching the point of diminishing returns.

All year long, if the gold price has stayed above the 50-day moving average (end of January and again in early August), price has recovered. But, and it’s a big but, if the gold price falls below the 50-day, we have gone lower before recovering in price. 
Of course, we could totally blow that call, but here’s a close up of the 50-day to see just how critical that blue line is: 
The gold cartel sees this exact same line, and they know what the significance of it is. In the short term, a break down in price would be more of the same old frustrating stuff, but, it is good news for us as this is a line in the sand for the cartel, and they don’t really know if they want to cross it. - Silver Doctors

Perhaps the most important factor with gold is not necessarily the price, but the demand that is taking place which is forcing central banks like the BIS to dump large amounts of reserves to try to cap the price.  And this was addressed just yesterday by long-standing metals analyst James Turk.
Eric King:  “James, I wanted to talk about the BIS (Bank for International Settlements) mobilizing all of that gold.  As you know, the bullion banks, who act as agents for Western governments, were heavily shorting the gold market.  And you were saying there were large backwardations in gold and silver, Maguire was talking about how they were getting overrun in the physical market.  And then all the sudden the BIS mobilized all of that gold and the smash in the gold and silver markets began.  Can you talk about that?” 
James Turk:  “Yes, we’ve seen this so many times, Eric, that you almost have to expect it.  When there is panic behind the scenes by the bullion banks and the governments that are trying to cap the gold price, they go to the vault and they pull out some bars that haven’t seen the light of day for probably decades and then ship them over to Asia.  And this just happened again… 
James Turk continues:  “In fact, what the BIS mobilized was a record amount of physical gold (for the BIS).  And that’s an indication of what we are seeing.  The physical demand for gold and also for silver has just been huge.  It (physical gold and silver) is getting vacuumed up by entities who are moving out of dollars, the stock market, and other assets, into something safe.” – King World News
The bottom line is that unlike previous years, central banks are fighting a battle of diminishing returns because the demand for precious metals like gold and silver are hindering their ability to induce large drops in the gold price in relation to the amount of physical and paper gold they dump onto the markets.  And as long as demand remains high, at a certain point these banks will inevitably have to throw in the towel, and this will send the gold price once again soaring higher, and continue validation of its current bull market status.


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