Comex Gold Trading Was Form vs. Substance Today
The comments below are an edited and abridged synopsis of an article by Dave Kranzler
Last week, the gold and silver market was treated to blatant price manipulation in the CME paper gold trading arena using Comex paper gold contracts when the FOMC policy statement was released at 2 p.m. New York time. Note that the only commodity market in the world that is open at that time is the CME/Comex. Market depth is thin at that time of day. The paper gold price was hit another $20 right after the NYSE closed, when liquidity is lowest.
The downward price action started when the FOMC policy statement was released, and it occurred in a pure paper derivative trading venue. There was no 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 see what effect that trading had on the COT report structure until a week hence.
Kranzler would bet a chest full of 1-oz silver Chinese pandas that the only physical gold that traded after Asia closed, around 3 a.m. New York time, was the gold bullion products sold to retail buyers from coin dealers.
Furthermore, what type of market participant looking to sell a significant amount of any assets 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?
The FOMC policy statement was no different from the previous meeting policy statement. The FOMC suggested that there might be two 0.25% interest rate hikes in 2023. The disingenuity and lack of substance behind that statement and from Fed Chair Powell in his presser is palpable. The policy statement is a straw man. It means nothing, and it is identical to the previous FOMC policy statement release.
Given the weakness in economic activity as reflected in several recent material economic reports, the next policy change of substance from the Fed will be an increase in money printing.