COMEX Gold Trading Was Form vs. Substance Today

MBA, Market Analyst & Author @ The Mining Stock Journal
June 17, 2021

For the most part, after 20 years of researching, investing in and trading the precious metals sector, I have learned to live with the oppressive amount of official intervention in the precious metals market. There is evidence of said manipulations, including declassified Government papers dated back to the Nixon and Ford Administrations. But enough of that – it’s settled history.

The sell-off today in the gold and silver market was unadulterated, blatant price manipulation confined to just the CME paper gold trading arena using Comex paper gold contracts, as soon as the FOMC policy statement was released at 2 p.m. NY Time. Note that the only commodity market in the world that is open at this time is the CME/Comex.  Market “depth” is thin at this time of day. The paper gold price was further hit another $20 right after the NYSE closed (click image to enlarge), when liquidity is as its lowest.

The price action above starting with the initial price slam when the FOMC policy statement was released occurred in a pure paper derivative trading venue. There was not any physical gold bought or sold. The buyers of the contracts were the banks covering their massive short positions. Unfortunately and by design, we won’t get to see what affect today’s trading had on the COT report structure until a week from Friday because the cut-off day for the Friday COT report is Tuesday. This is,  in and of itself is bullshit, because the CME knows Comex trader positions in real-time.

I would bet an entire chest full of 1oz silver Chinese pandas that the only physical gold that traded after Asia closed, around 3 a.m. NY time,  was the gold bullion products sold to retail buyers from coin dealers.

Furthermore, what type of “rational” market participant looking to sell a significant amount of any asset or securities, would indiscriminately unload large quantities onto the market in a short period of time, rather than attempting to maximize sale proceeds by feeding the item being sold more slowly over an extended period?

Finally, the FOMC policy statement was not materially altered from the previous FOMC meeting policy statement. The FOMC suggested that there might to two 0.25% interest rate hikes in 2023The disingenuity and lack of substance behind that statements from the FOMC and from Powell in his presser is palpable.  The policy statement is a “straw man. ”  It means nothing and it’s materially identical to the previous FOMC policy statement release.

I would suggest, given the weakness in economic activity as reflected in several recent material economic reports (ISM/PMI is not material, for instance), that the next policy change of substance from the Fed will be an increase in money printing.

*********

Dave Kranzler spent many years working in various analytic jobs and trading on Wall Street. For nine of those years, he traded junk bonds for a large bank. He has an MBA from the University of Chicago, with a concentration in accounting and finance. He currently co-manages a precious metals and mining stock investment fund in Denver. My goal is to help people understand and analyze what is really going on in our financial system and economy. Dave publishes the The Mining Stock Journal a bi-weekly subscription newsletter that features junior mining ideas as well as relative value ideas in large cap mining stocks.

 

Gold was first discovered in U.S. at the Reed farm in North Carolina in 1799, a 17-pound nugget.

Gold Eagle twitter                Like Gold Eagle on Facebook