Gold Tests $1400 Fails, Falls in Asian Trading

By Tom Luongo in Gold and Oil News | April 18, 2013 2:40 | Tags: , , ,

Just moments ago Gold was bombed on the Hong Kong open back below $1340 per ounce, before recovering slightly.  Last night the market re-tested $1400 just after the U.S. equity market opened but that test failed and gold was under pressure all day through New York trading and through early Sydney trading.  Once Hong Kong opened a 4000 contract order hit the market running long stops below the $1365 level that had formed up as the bottom of short-term consolidation.

The bottom line is that the raids in gold are not over and the market is still structurally very weak.  Price is being supported only so far as it needs to be while hundreds of tons of physical product are taken off the commodity exchanges while the NY and London bullion banks attempt to destroy any long still trying to stand for delivery of physical metal the LBMA and COMEX do not have.

Since the raids began last week the number of contracts standing for delivery on the COMEX has risen by another 4 tons (as of Tuesday evening).  Silver’s open interest refuses to melt down significantly in the face of this price drop so the situation continues to operate against all normal expectations.    At this point I would expect at least one more attempt to break down below $1320, the spike low from Monday on Gold and a similar move in Silver.

If there is a sovereign entity willing to lose billions of dollars to force a resolution here and the CME Group declares force majeure with the Fed settling the trades in Dollars, that is the stuff wars are made of.  I hate to say it but it is worth considering.

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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