Gold Succumbs to Shorting Pressure

By Tom Luongo in Gold and Oil News | March 29, 2013 3:00 | Tags: , , ,

While we are watching record amounts of gold stand for delivery on the COMEX and the European banking system being delat irreparable body blows in the hope of re-igniting money velocity gold was relentlessly sold even though the GDP and unemployment data coming out of the U.S. was below expectations.  This should have sent gold flying higher but nothing is as it should be in these current markets.

Money is not flowing into the paper gold market at this point.  But it is flowing into the physical market and that is what will, ultimately, take the day.  The S&P 500 was goosed to an all-time high and the weekly/monthly/quarterly close at these record levels will keep momentum traders coming into the market.

Gold ended the month up slightly but down for the quarter.  March was a very placid month in terms of price which means a higher probability of an out-sized move in April.  At this point if the idiots running the COMEX attempt to take gold down to $1400 the physical buyers will destroy the exchange.  On the first day of delivery 5099 contracts stood for delivery and there are more than 13,000 still to be served this month.  This works out to more than 40 tons of gold for April alone.

For silver, we are likely looking at another month of tape-painting and lagging prices until the point comes that delivery will need to be addressed.  Currently open interest in silver is extremely high and looks like it will remain so the farther down the price goes.  The bears keep trying to break the longs in Silver but the open interest keeps rising.

About Tom Luongo
Tom is a professional chemist and self-taught economist who has been following and trading stocks for nearly 12 years. He has no formal ties to the financial industry and considers that an asset in his analysis of the interplay between monetary policy and capital markets.

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