July 5, 2022

November Gold Drop of 5.5% Worst in 35 Years as “Unidentified Sellers” Continue to Dump Gold

tenth oz gold-eaglesNovember was a miserable month for gold investors as prices dropped by 5.5% for the Worst November in 35 Years.  Adding to the misery, gold is almost certain to have its first yearly decline after rising 12 years in a row.

NEW YORK—Gold prices logged their worst November since 1978 as a brighter economic landscape fanned fears of reduced stimulus efforts by the Federal Reserve.

Gold prices dropped 5.5% in November. The declines help put gold on track to end 2013 in negative territory, disrupting a 12-year winning streak that saw the precious metal set price records.

“Nothing goes up forever,” said Frank McGhee, a senior precious-metals dealer with Integrated Brokerage Services LLC. in Chicago.

“You’ve got the beginning of an economic pickup without any inflationary signs…[and] you have the specter of the end of easy money, and that’s bearish for gold,” Mr. McGhee said.

A record-breaking rally in U.S. equities also lured many traders away from the precious-metals market. On Friday, the S&P 500 touched a record high of 1813.

Gold’s losses haven’t been limited to the futures market, analysts at Barclays PLC said. Exchange-traded funds backed by physical gold, which take the hassle out of purchasing and storing physical gold for individual investors, have seen their holdings drop 38.4 metric tons through Nov. 26 as sales picked up from the prior month.

Still, November is far from the worst month for the precious metal—gold prices fell 12% this June and nearly 18% in October 2008.

Investors in both gold and silver are looking at losses as precious metal prices decline despite record demand for physical gold and silver.

money printing

Exactly who is causing the price of gold to drop by indiscriminately dumping gold  remains an intriguing mystery that the major news organizations have essentially ignored.   Zero Hedge recently questioned why a rational seller would dump large amounts of gold at odd hours into illiquid markets unless they were deliberately trying to drive the price of gold down.

Shortly after 1amET this morning, someone with no apparent fiduciary duty to their client’s for best execution or any apparent trade allocation expertise decided it was time to dump 1500 contracts into an entirely illiquid gold futures market. The 150,000 ounce notional sell order ($184.5 million), captured graphically by Nanex, sent the price down $10 instaneously, tripped the exchange’s circuit breakers and halted the market’s trading for 20 seconds (once again). This is now the 4th market halt in the past 3 months (and this time on no news whatsoever), as the manipulative monkey-hammerings from who knows whom (BIS?) is becoming increasingly obvious.

Via Nanex,

This sort of thing is happening far too often: see also the drops on April 12, 2013, September 12, 2013, October 11, 2013 and November 20, 2013 which also resulted in trading halts.

Will the mystery of who hates gold ever be solved?

gold-buffalo

As documented many times by the Gold Anti-Trust Action Committee (GATA), the “fat finger” on the gold manipulation button seems to have its origins at the highest levels of government and central banks; this being the case, no one should hold their breath waiting for an honest explanation of the mystery of pricing in the gold market.

Every “Solution” To The Euro Crisis Involves Printing Money

Attempts by central banks to blatantly manipulate the price of gold lower should come as no surprise to long time gold investors.  Market News International reported on Thursday that the Bank of England, the Federal Reserve and the Bank for International Settlements mounted coordinated selling in an attempt to drive the price of gold lower. After advancing to $1,757.80, gold reversed course, ending the day in New York trading at $1,706.80, down $51 from the morning high.

The reported attempt to crush the price of gold coincides with the growing perception that every “solution” offered thus far to resolve the potentially catastrophic debt crisis in Europe revolves around the creation of vast amounts of new fiat currency.

European countries that have piled up ruinous levels of indebtedness are quickly discovering that they have run out of options. The limits on imposing new taxes have been reached, bond markets won’t finance additional borrowing, austerity won’t work and debt costs are spiraling out of control as Euro zone economies grind to a halt.

Here’s a rundown of some of the bizarro world “solutions” that have been offered by European rulers to prevent an economic collapse in Europe.  Try to figure out which option does not, at its core, involve the printing of new Euros.

European Central Bank (ECB) President Mario Draghi insists that the central bank will not finance government deficits by purchasing new government debt with freshly created Euros.  The amount of government bonds already purchased by the ECB exceed €200 billion and the ECB continues to buy billions of additional euro debt each week.  In addition, the ECB is currently lending European banks as much money as they ask for.  Although the ECB’s charter prohibits it from financing governments by buying their debt directly, the ECB has no qualms about buying government debt in the secondary market.

-Financial assistance from the International Monetary Fund is another option being discussed.  Where would the IMF get the money to lend to debt stressed European governments?  The IMF would be funded with money created by Europe’s central banks which the IMF would then re-lend to the same European nations whose central banks created the money in the first place.

-The European Stability Mechanism (ESM) was established to bail out insolvent members of the European Union.   The amount of ESM funding was grossly inadequate to address the debt crisis.  The proposed solution – grant the ESM a banking license (read license to print money) which would allow the ESM (as a bank) to borrow unlimited amounts of money from the European Central Bank.

If you correctly guessed “none of the above”, you probably are already invested in gold although probably not to the extent that you should be.

Printing money is the last desperate attempt of failed governments to keep the lights on.  Allowing the price of gold to soar would expose the extent to which the Euro, in particular, and all paper money in general have been debased by insane monetary policies.  The Central Banks cannot hide this truth anymore.  Nor can they prevent the price of gold money from ultimately reflecting its true value priced in paper currencies.  Any retreat in gold prices should be viewed as a buying opportunity, courtesy of central banks.

 

Did Central Bank Coordinated Easing Also Include Manipulation of The Gold Market?

On a day when coordinated central bank monetary easing sent stocks and commodities soaring into orbit, the price action in the gold market was curiously muted.

The Dow Jones, S&P 500 and Nasdaq all increased by over 4%.  Gains in various S&P sectors ranged from 4.75% for the transportation sector to 7.51% for the financial sector.  Gold, by contrast, rose a mere 2%.

INDEX PERCENTAGE INCREASE
DOW 4.24%
S&P 500 4.33%
NASDAQ 4.17%
S&P 500 DIV FINANCIAL IX 7.51%
S&P 500 AUTO & COMP IDX 6.99%
S&P 500 BANKS INDEX 6.92%
S&P 500 MATERIALS INDEX 5.91%
S&P 500 INSURANCE INDEX 5.60%
S&P 500 SEMI & SEMI EQP 5.62%
S&P 500 ENERGY INDEX 5.49%
S&P 500 CAPITAL GDS IDX 5.32%
S&P 500 REAL ESTATE INDX 5.17%
S&P 500 TRANSPTN INDEX 4.75%
GOLD – CLOSING NEW YORK PRICE 1.98%

The massive monetary easing by central banks should have sent the price of gold into the stratosphere.  It has become crystal clear that central banks will continue to create whatever amount of money is necessary to prop up a collapsing, debt saturated system.

Why would central banks collude to restrain the price of gold?  GATA has explored this question in depth and in a recent exchange between Lawrence Williams of Mineweb and GATA, Williams writes  “If one assumes that governments as a matter of course manipulate currency exchange rates, then there is logic in their manipulating the gold price too, as many throughout the world consider gold as money (currency) and a rise in the gold price thus equates to a depreciation in currencies — notably the U.S. dollar.”

Most of the world already suspects that the “emperor has no clothes” when it comes to central bank money creation.  Had the value of gold been allowed to soar hundreds of dollars per ounce today, under free market conditions, the entire crumbling edifice of fiat currencies would have been exposed.

Gold is the only currency that central banks cannot destroy.  If central banks did not suppress the price of gold, the true extent of the debasement of paper  currencies would become blatantly obvious and thereby threaten the entire system of fiat currencies.  Central banks have every motive in the world to suppress the price of gold.  How long they can remain successful at it (as they engage in blatant, massive and world wide money printing) is the question on most gold investors’ minds.

More on this topic:

Where In The World Is The Gold?