Below is a chart of spot gold prices today.
My reaction: I have been tracking spot gold prices for a while, and today is the first time I have seen price action like this. Gold had three sharp swings today. I have seen two swings before, but never three.
Something is going haywire in the gold markets. The end of paper gold must be getting near.
While on the subject of gold, Jim Sinclair responded to one of my blog entries by reporting that the demand side of gold will carry the day.
(emphasis mine) [my comment]
Demand Side Of Gold Will Carry The Day
Posted: Mar 25 2009 By: Jim Sinclair Post Edited: March 25, 2009 at 12:47 pm
Filed under: General Editorial
Has it ever struck anyone that 1.1 billion dollars [1.1 billion = market value of 1,209,600 ounces of gold] in today's world is chump change? When the time comes, demand for gold will smash through a modest one point one billion dollar hole "in the dyke" wall of a quadrillion plus dollar problem.
You are giving the supply side of gold banks too much credit when it is the demand side that will carry the day. [but ]
Spamming the question below everywhere might well be in support of gold bank sales, knowingly or inadvertently.
Eric, spam this if your intentions are really supportive of gold.
If you received what is below but do not get what is above from the same source one question is answered. [Meaning here is slightly unclear...]
Who shorted gold after fed's announcement last week?
by Eric deCarbonnel
Open interest in COMEX gold increased by 1,209,600 ounces in the two days following the fed's announcement last week. Can anyone explain to me who in their right mind would short gold following the fed's plan to double its balance sheet?
My reaction: I agree that the demand side of gold will carry the day. However, Jim Sinclair is also worried that by highlighting strange action in gold futures open interest, I am "knowingly or inadvertently" supporting those who wish to see gold prices stay low. I disagree. I believe that highlighting increasingly strange developments in paper gold markets, as I am doing right now, accelerates the day where gold demand will shift to the physical market and panicked investors will make a run on paper gold
Currently, the majority of gold demand is still absorbed by paper gold (futures, unallocated gold, GLD, etc...). While theoretically unlimited, in reality the supply of paper gold is constrained by the limits of credulity. In other words, as short positions grow in gold derivatives relative to the underlying supply of gold, their credibility shrinks. The biggest threat to those manipulating gold is this loss of faith in their paper product.
Right now, those on the short side of gold are being overwhelmed by demand and are being forced to intervene in blatant and obvious ways to cap prices. Examples of this desperation and loss of control include the large increase in open interest in COMEX gold after the fed's announced its huge balance sheet expansion and the price action in gold today. They are evidence that paper gold is in the process of breaking down.
Some past entries on gold suppression: