June and July are typically the silly season for gold. This is the dead season for Indian and Chinese ceremonial buying of physical gold. And with this lull it becomes very easy for the big bullion banks like Chase to flood the futures markets with sell order attacks - only to cover much lower and thereby taking the money off all the small traders (which is everyone but the bullion banks that have uunlimited trading funds thanks to the Fed)
This is not conspiracy theory. It is fact backed up by several lawsuits that have punished the bullion banks for this very behavior with fines that deprive them of nearly one percecnt of the money they make engaging in the behavior.
It is also the season where many traders take vacations and market volume tends to drop so that, again, large volume trades - or just organized hype - can make certain sectors of the market influence mass perceptions of the market as a whole.
Add to this a Fed that has dramatically raised rates into a slowing economy for the first time since the 1970's (when the US was a creditor nation) and you have a recipe for mass confusion.
Raising rates at all at a time when the debt market - which dwarfs all other markets - has been structured for an entire generation on the predication of rolling debt over for ever in a zero rate environment - is in itself tremendously confusing.
It's never been done before. The effects are known to be LONG AND VARIABLE meaning we haven't even started to experience them - yet evryone has an opinion about what's going on.
The only smart opinion is that we will find out as the massive waves of DEBT REFINANCING hit the economy. That hasn't started. But it will by all acounts start in the next several months. And go on for the next several years.
Meanwhile the price of gold is on sale. And just supposing the world's largest debt refinancing across the entire global economy doesn't go as well at 8 percent as it did at 1 percent, this is a great time to buy some portfolion protection.
Got Gold?
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