Fade Gold Manipulation: Physical Gold Premiums Now $40 in China
The comments below are an edited and abridged synopsis of an article by King World News
Fade the paper market manipulation as physical gold premiums have now hit $40 in China. And there’s more…
September 16, Fred Hickey: Today’s gold slam was all about levered traders dumping paper derivatives (200K futures contracts sold in very brief period today) in order to break chart level and stampede gold owners into selling. Prior to today’s slam, physical gold price premiums in Shanghai +$40.
Managed Money (hedge funds and CFTs) were already in a rare net short position (COT) before these two attacks. Justification is a hawkish Fed, including many who believe the Fed is in control and will be able to hike aggressively without breaking the economy.
Fed rate hikes work with a multi-month lag, but we are already seeing signs of the global economy teetering—even before most of the rate hike hits (witness the brutal FedEx warning). There are slowdowns in Europe, Asia and even the US.
Gold does best in times of economic turmoil (inflation, recession etc.) but it is typically weak early in the downturns (along with stocks) but then separates and turns sharply higher, likely anticipating Fed pivots (lower rates and QT).
Sentiment is ripe for a major bottom: Gold sentiment (DSI) went to single digits in late 2015 and fall 2018 major bottoms (DSI is 7 currently). Managed Money futures contracts went net short those two periods. Heavy Asian physical buying and high gold premiums. The Fed will fail. We will not have to wait much longer.