Desperate and Blatant Manipulation

Dan Norcini

Monday must now be the new "Friday" when it comes to gold. Those of you who have been watching the gold price action over the last decade know what I am referring to. For those of you who are a bit newer to the gold game, Fridays, particularly after a payrolls report, have typically been the day on which gold was taken down by the bullion bank crowd to mess with the weekly chart and the technical picture.

Last Monday saw gold put in a horrendous bearish downside reversal day which the bulls managed to negate the rest of the week by a sheer gritty determination not to run. Today (another Monday) we have an exact repeat of the same bullion bank tactic that they employed 7 days ago; to wit, a takedown after price took out last Friday's session high while gold mining stocks were also moving sharply higher. The result - an exact repeat of last Monday technically - another bearish outside reversal day on the daily chart. This coming on the heels of a brand new record high in Dollar terms at the London PM Fix ($1,261).

It is quite evident that the perma-bears at the Comex are determined to cap gold at $1,260. No one hits bids with the intensity that I saw this morning unless they are trying to take price lower. The reason is obvious - a closing push through $1262 and gold goes immediately to $1,280 - $1,285 garnering all the more headlines and casting more doubt upon the integrity of world's current monetary system, which is under extreme duress. What the bullion banks are attempting to do is to form a double top on the daily price chart - it really is that simple.

Some are pointing to the stronger dollar as the culprit behind the weakness in gold, but that is denying the obvious and grasping for an explanation. Bonds are shooting sharply higher today and even the Yen is stronger as once again risk is back in focus and investors are moving to safe havens. Under such a scenario, the very notion that gold would be sold off as a "risky" asset is laughable for its stupidity.

The fact is gold was sharply higher after the conclusion of the meaningless G20 summit which was nothing but a group of yakking heads talking to hear themselves saying something. Investors rightfully interpreted that as further confirmation that nothing serious was going to be done that would restore confidence towards paper currencies. They then bid the yellow metal higher which held its gains from overnight as it moved into New York trading and even added some. We are then to believe that investors had a sudden change of heart so much so that they immediately became convinced at mid-morning that gold was no longer worthy to be held but instead US paper Treasuries were much more to be desired? Based on what news, what report? Come on already - are there actually people out there who are so damn dense that they believe this nonsense? This is what an orchestrated takedown looks like, pure and simple.

My own view is that this will meet with as much success as the previous Monday's. Not a thing has changed in regards to the world's monetary system - nothing. We always have to respect the technical price action because today's markets are dominated by techies but those same technicals worked in favor of the bulls last week based on the price action Tuesday through Friday last week. They have to repeat their performance once again.

Let's see how support levels function tomorrow and Wednesday. Chalk up today for the history books and forget about it. What is more important now is whether the bulls will hang tough and refuse to run. If they do not run, bears will be forced to cover as they did last week. As I mentioned in this past weekend's analysis of the COT report, bears will have to force price down below $1233 on a closing basis to induce long side liquidation.