Another COMEX Price Smash
The comments below are an edited and abridged synopsis of an article by Craig Hemke
It appears there is now no reason to own gold in any form; we have a Covid vaccine, and Biden/Yellen will solve all future debt and deficit issues. So: Sell it all; buy stocks and Bitcoin. That’s what the banks hope you do.
Why was the gold price smashed, and a liquidation event forced that coerced as many parties as possible to not stand for Comex delivery in December?
1. While Comex option expiration always has an effect, the current selloff placed nearly as many put options into the money as there were call options out of the money.
2. There is not a new liquidity crisis. The Dow hit 30,000 recently, and nearly everything except gold and silver was up.
3. While recently fined $920,000,000 for precious metals market manipulation, JPM isn’t out of the precious metals business. The fine was less than the bank made trading precious metals over just the past twelve months.
So what’s really going on, and why were the Comex metals driven sharply lower?
It’s likely that a Barclays customer spend $350,000,000 on November 20 for the immediate delivery of 1,889 Nov20 contracts. It is possible the same person hit them again on November 23, putting up about $150,000,000 for 767 more.
Why would someone rush to put up $500,000,000 in order to get immediate delivery of 8.26 tonnes of gold from the Comex? Why not wait for December?
At the same time, the price is smashed—again on no news and while the dollar, the TIP, and bond market are mostly flat.
You unexpectedly flush price on a simple PMI datapoint. You keep the momentum going down. You get the Asian trade gapping things lower. You keep the heat on in London. You get the specs in NY to panic flush again on the Comex and suddenly the price is below the 200-day MA. The media trumpets that gold is now at its low since July and everyone wants to sell, forgetting why they bought gold in the first place.
Hemke’s target for 2020 was precisely where the price sits now. Meanwhile, the situation for the banks has certainly deteriorated, thus the need for the massive liquidation flush just before December deliveries began.