Spot gold led prices down yesterday after Fed Chairman Bernanke gave no hints that a third round of quantitative easing is about to take place. But, as I said yesterday, watch what Bernanke does, not what he says.A anonymous commenter at the CFTC web page claiming to work for JPMorgan writes today, in part:
The Fed is currently printing very aggressively and this will be bullish for commodities and the stock market. Any pull backs should be viewed as short-term technical corrections.
The collapse in the gold price was particularly dramatic as prices fell by more than 5 percent. I view this as simply stops being triggered on the futures market. The stops were placed in cascading fashion just under the market. It was a perfect set up for short-term bear raid (with possibly government help?), timed to coincide with Bernanke's testimony. This can happen with commodities tied to the futures market and why it is dangerous to be either short or long in the futures market, unless you know what you are doing. You are much better off in stocks, and even wasting assets like options--where you can limit your risk.
Dear CFTC Staff,As I said in the Alert, the gold market was ripe for a Bear Raid, but still the timing was suspicious (Gold dropped as Bernanke spoke). That's why I put in the short comment about possible government involvement. Now, this unconfirmed JPMorgan employee (and I want to emphasize unconfirmed employee) talks about that specific down move (along with many other things).
Hello, I am a current JPMorgan Chase employee. This is an open letter to all commissioners and regulators. I am emailing you today b/c I know of insider information that will be damning at best for JPMorgan Chase. I have decided to play the role of whistleblower b/c I no longer have faith and belief that what we are doing for society is bringing value to people...
There is something else that you may find strange. During month-end December, we were all told by our managers that this was going to be a dismal year in terms of earnings and that we should not expect any bonuses or pay raises. Then come mid-late January it is made known that everyone received a pay raise and/or bonus, which is interesting b/c just a few weeks ago we were told that this was not likely and expected to be paid nothing in addition to base salary. January is right around the time we started increasing our short positions quite significantly again and this most recent crash in gold and silver during Bernanke's speech on February 29th is of notable importance, as we along with 4 other major institutions, orchestrated the violent $100 drop in Gold and subsequent drops in silver.
Bear raids are run in the commodities pits all the time, by all kinds of people. But if the comment from the anonymous writer is correct that 5 major institutions pounded gold in a co-ordinated hit---and timed with Bernanke's testimony, does this me Bernanke owes them?
My two cents is...let 'em raid it!
ReplyDeleteGold needs to shake out the weak hands anyway...It's become easy money. We need Kudlow to talk about King Dollar, and Roubini to Tweet about what fools the gold bugs are.
It's the natural order of things.
Then, after the strong hands (who have been waiting for what seems like forever) to get a deal accumulate during a consolidation, it'll be time to spring forward with some strength.
1300-1400 is what I see to be the sweet spot. Let's see if the bears have enough to get it there.
By "raid," does Wenzel mean sell mass quantities to drive prices lower? That would mean that they would need to have gold on their balance sheets, and a lot of it. Who in their right mind would sell gold in this environment?
ReplyDeleteI love seeing "manipulation", I buy at every major drop. They can't keep up the shell game forever and what follows is unstoppable advancement.
ReplyDeleteIt's all about no panicking and being in it for the "long haul".
Ditto to the above posters. Let them short paper versions of gold and silver. They often short many times more gold/silver than actually exists. At the same time, physical dealers get flooded with orders when prices drop sharply. This also seems to keep a nice, rising floor on the market.
ReplyDeleteSooner or later, the massive short squeeze will come.
Funny how the comment seems to have been removed from the website.
ReplyDeleteI don't think anything will come of this. I used to work for a self-regulatory organization in the futures industry. The CFTC and other futures regulators don't have the knowledge or resources to really investigate general complaints. They should be able to check up on things like fraud or compliance violations, but they can't evaluate balance sheets for risk. They have no shot at catching trends on the financial statements of multiple firms and putting together some kind of story about market risk or conspiracy.
Plus, my impression was that the CFTC does almost no review of financial statements. They make rules, take on fraud investigations of small companies, and pursue cases against unregistered firms. Everything else is left to NFA and the exchanges, and NFA almost exclusively hires kids straight out of undergrad that don't know what they're doing when they sign-off on a financial statement submission or investigation. Plus, all the financial statements are assigned to random people that won't necessarily talk to each other in a given week, let alone about what they saw during the 30 minute review they devoted to one firm.