Ambush at the Comex Corral
Darryl Robert Schoon
Central Banks collude with investment banks to
force down the price of gold
Prediction is an art. Heisenberg’s Uncertainty Principle is as operative
in the realms of the unknown as well as in the known. But, sometimes,
predictions are a slam-dunk such as the large number of put options
placed on United and American Airlines in the days prior to 9/11 through
Alex Brown Deutsche Bank, an investment unit with close ties to the
CIA’s Buzz Krongard.
Note: Alex.Brown’s former Chairman, Buzz Krongard, was appointed
Director of the CIA in 2011. Buzz Krongard’s successor, Mayo Shattuck
III, who oversaw the purchases of the 9/11 puts resigned from Alex Brown
Deutsche Bank on 9/12. For the story of the 9/11 puts, see Mark H.
Gaffney’s series in the Foreign Policy Journal, Black
9/11: A Walk on the Dark Side.
In January 2013, analysts at Goldman Sachs predicted gold would fall to
$1200. That Goldman Sachs would make such an apparently lucky out-of-the
money prediction given the recent ambush of gold at COMEX wasn’t luck at
all. Like 9/11, the COMEX ambush was planned and executed with military
precision.
In his article at Sharps Pixley, Gold
Crushed by 400 Tonnes of $20 billion of Selling on COMEX, former
gold trader at NM Rothschilds & Sons and Credit Suisse, Ross Norman,
describes how the ambush was carried out:
The gold futures markets opened in New York on Friday
12th April to a monumental 3.4 million ounces (100 tonnes) of gold
selling of the June futures contract (see below) in what proved to
be only an opening shot. The selling took gold to the technically
very important level of $1540 which was not only the low of 2012, it
was also seen by many as the level which confirmed the ongoing bull
run which dates back to 2000. In many traders minds it stood as a
formidable support level... the line in the sand.
Two hours later the initial selling, rumoured to have been routed
through Merrill Lynch's floor team, by a rather more significant
blast when the floor was hit by a further 10 million ounces of
selling (300 tonnes) over the following 30 minutes of trading.
This was clearly not a case of disappointed longs leaving the
market - it had the hallmarks of a concerted 'short sale', which by
driving prices sharply lower in a display of 'shock & awe' -
would seek to gain further momentum by prompting others to also sell
as their positions as they hit their maximum acceptable losses or
so-called 'stopped-out' in market parlance - probably hidden the
unimpeachable (?) $1540 level.
The selling was timed for optimal impact with New York at its most
liquid, while key overseas gold markets including London were open
and able feel the impact. The estimated 400 tonne of gold futures
selling in total equates to 15% of annual gold mine production - too
much for the market to readily absorb, especially with sentiment
weak following gold's non performance in the wake of Japanese QE, a
nuclear threat from North Korea and weakening US economic data. The
assault to the short side was essentially saying "you are long...
and wrong".
Futures trading is performed on a margined basis - that is to say
you have to stump up about 5% of the actual cost of the gold itself
making futures trades a highly geared 'opportunity' of about 20:1 -
easy profit and also loss! Futures trading is not a product for
widows and orphans. The CME's 10% reduction in the required gold
margins in November 2012 from $9133/contract to just $7425/contract
made the market more accessible to those wishing both to go long or
as it transpired, to go short.
Soon after we saw the first serious assault to the downside in Dec
2012, followed by further bouts in January 2013 - modest in size
compared to the recent shorting but effective - it laid the ground
for what was to follow. One fund in particular, based in Stamford
Connecticut, was identified as the previous shorter of gold and has
a history of being caught on the wrong side of the law on a few
occasions. As badies go - they fit the bill nicely.
GOLD STOCKS AVAILABLE FOR DELIVERY WERE
FALLING
In an interview with King’s News on April 15th, precious metals trader
Andrew Maguire said plunging gold stockpiles necessitated the attack on
gold:
Gold and silver only have this type of selling when there
are extreme shortages of the physical metal. I am totally
aware that before this takedown occurred there was an imminent LBMA
[London Bullion Market Association] default.
We had already seen COMEX inventories plunging. In 90 days
COMEX inventories saw an incredible decline. So immediately
available physical gold was disappearing. People around the
world don’t understand what has been happening since Cyprus....
Entities went to the LBMA and said, ‘We don’t trust anybody
anymore. We want our physical metal.’ They were told
they would be cash settled instead by a bullion bank. The
Western governments have been trying to plug holes, and the reason
for it has to do with the default that was taking place at the LBMA.
This is why this smash has been orchestrated because of the run
that has been taking place on physical metal. So Western
governments had to do this because of an imminent run on the
unallocated LBMA system. The LBMA bullion banks had become so
mismatched at one point on their trading positions vs real world
demand that they had to orchestrate this smash.
This orchestrated smash in gold and silver was nothing short of a
bailout for the bullion banks. So there is a run on physical
gold that is taking place and the Ponzi scheme the West is running
is being threatened because of it.
Maguire also added: We are nearing the end of this decline.
Physical demand is already beginning to catch up with leveraged
paper. If gold were to trade into the low $1,300s it would be
unsustainable for very long.
THE USUAL SUSPECT: GOLDMAN SACHS
While the fund in Stamford Connecticut may have placed the $20 billion
worth of gold shorts but, if they did, it is far more likely they acted
as the agent of far-larger entity such as Goldman Sachs which had months
before predicted gold would fall to $1200.
Goldman Sach’s January prediction of the fall of gold reminded me of an
after-dinner conversation I had a few years ago in Europe. The
conversation was with a gold trader at a major European bank and the
topic of conversation was gold.
Gold had been falling for several days and I remember his excusing
himself the previous evening and saying quietly, “I think it’s time to
buy gold”. The next morning the price of gold began moving higher.
What he told me during that evening’s conversation bears repeating,
especially after what has happened. He said that he had been watching
gold’s movements in real time when a highly anomalous event caught his
attention, the bid price of gold had been followed not by an equal
or higher ask price but by a lower ask price and, as he
watched, the price of gold began to fall.
He said he began watching for this anomalous trade and discovered when
it occurred, it was always followed by lower ask prices which meant gold
was being driven lower. The source of the anomalous lower gold ask price
was always J. Aron & Co., the commodities trading arm of Goldman
Sachs.
Note: Lloyd Blankfein, Goldman Sach’s CEO, worked as a precious metals
salesman at J. Aron’s London offices before going to Goldman Sachs in
New York.
TIME OF THE VULTURE GOLD STAGE III
In 2007, in my book, Time of
the Vulture: How to Survive the Crisis and Prosper in the Process, I
wrote:
GOLD
AN ECONOMIC INSURANCE POLICY
FOR A COLLAPSING ECONOMY
THE TIME OF THE VULTURE
AND THE FIVE STAGES OF GOLD
STAGE 1: THE SUPPRESSION OF THE PRICE OF GOLD
Central Banks collude with investment banks and gold mining companies to
force down the price of gold.
STAGE 2: THE PRICE OF GOLD MOVES UPWARD Gold
begins to rise, doubling in price even as Central Banks fight its rise.
STAGE 3: THE PRICE OF GOLD BECOMES INCREASINGLY
VOLATILE The price of gold is subject to increasing highs and lows as
large investment funds move in and out of gold as global economic
uncertainties wax and wane, a sign that gold is increasingly a haven in
uncertain times.
STAGE 4: EXPLOSIVE ASCENT IN THE PRICE OF GOLD
A crisis results in a monetary breakdown which drives the price of gold
to never-before-seen highs. Investment capital floods towards the safety
of gold. Central Banks capitulate.
STAGE 5: THE PRICE OF GOLD STABILIZES The
crisis recedes and order begins to return to the markets. Though losses
are substantial, a new order based on new realities slowly begins to
emerge.
.
The recent 20% fall in the price of gold indicates we are currently still
in STAGE 3. STAGE 4 with its EXPLOSIVE ASCENT IN THE PRICE OF GOLD is next. When STAGE 4 happens is anyone’s guess as prediction is always an
uncertain art—unless, of course, you’re Goldman Sachs.
Buy gold, buy silver, have faith.
Darryl Robert Schoon
www.survivethecrisis.com
www.drschoon.com
www.survivethecrisis.com |