There has not been a major "Summit" this year in the lead up to which or during which the paper price of spot Gold (and usually Silver) on the New York futures market has not taken a major dive.
On Monday, February 23, barely a month after his inauguration, Mr Obama held a domestic summit to discuss the issue of "fiscal responsibility". On the previous Friday (February 20), Gold on the Comex had closed above the $US 1000 level for only the second time in its history. By the time the summit was over, Gold had fallen $US 31. A week after the summit, it had fallen almost $US 100 from its February 20 level.
On April 2, the leaders of the G-20 nations met in Italy. Gold duly fell $US 21.00 on the day.
On June 16, there was a "BRIC" (Brazil, Russia, India, China) Summit in Russia. Gold didn't fall at all during this one. That's the anomaly which goes a long way towards proving the rule.
On July 8, the Heads of State of the G-8 nations met in Italy. Gold did it again, falling by $US 20 on July 8.
And over the the first two days of the week just ended - July 27-28 - there was a big "summit" in Washington DC between the principals of the US and Chinese governments. At the start of this meeting, Gold was trading in New York at $US 953.50. By the time the meeting was over two days later, Gold had closed down $US 26.40 at $US 927.20. In the data on the week's trading on this page (see above) take a look at the volume on the New York market on July 28-29.
By now, the manipulation going on here should long since have become so obvious as to be laughable. Be that as it may, it is still "working". We wonder for how much longer. As you know, Gold duly recovered all its "summit losses" by the end of this week this week, including a big jump of $US 18.80 on the spot future price on Friday, July 31. Even more ominous, the traded-weighted US Dollar index (USDX) had one of its biggest one day falls so far this year on July 31. The USDX fell 0.95 on the day to close at 78.45. That's lower than it was in the lead up to the US/China summit. In fact, that close on the USDX is the lowest since late September 2008 in the dire days leading up to the refusal of the Fed/Treasury to bail out Lehman Brothers.
Wall Street is by no means oblivious to the dire threat which hangs over the US Dollar centric global financial system. "Insiders", top corporate officials, have been selling more stock than they have been buying ever since the stock market began its rally in mid March this year. The rally is still intact, but it is running out of steam. This week, the Dow managed a rise on the week of less than 1.0 percent, and this after a three-week rally since July 9 during which it has risen almost exactly 1000 points or just over 12.0 percent. But Wall Street wants the rest of us to think that the situation is in hand, that the dark days between September 2008 and March 2009 during which the markets threatened to collapse altogether are behind us. That is what all the statistical manipulation and the talk of "green shoots" and recovery are in aid of.
Also very useful in this undertaking are headlines like "Dow ends best month in 20 years" which are appearing in major newspapers and websites this weekend. Just the thing to keep the faith. Never mind the fact that the US government has spent and/or guaranteed debt in the multi $US TRILLIONS to keep the system standing up. To keep the major threat to the system - the alternative money - "lying down" is ridiculously cheap in comparison.
The problem is that the futures markets deal with paper, and as the global borrowing and spending by government increases, the demand all over the world for Gold that is actually METAL continues to increase. At the same time, Gold production, like the production of almost everything else in the way of REAL economic goods, is falling. The best that the paper shufflers on the Comex can do these days is to hold the line - under the $US 1000 per troy ounce ceiling that they are desperate to defend.
The big surge in futures trading this week which coincided with a major "summit" on the current state of the global financial system is typical. The almost instant rebound in the paper price of Gold back to the level it was at before the latest paper "fix" went in is not. Most of the smaller traders on the precious metals futures markets are getting whipsawed unmercifully. So are the big "institutional" traders, but they don't care. As long as the paper Gold market functions, any losses incurred in keeping Gold below that all important $US 1000 level are minuscule to the point of invisibility when one considers the losses which will be faced by the financial powers that be when Gold breaks loose.
(Chart appears here in original analysis.)
A new low was hit on the chart when spot future Gold closed in New York at $US 705 on November 13 last year. This pushed the chart two "Xs" below the $US 715 support level established in late October and equalled early in November. Then came the first big turnaround - and upturn on the chart - of November 14. The region between $US 700-720 firmed as SOLID support for Gold. That support "zone" was emphatically confirmed as Gold rose by just over $US 110 between November 13 and November 28 last year.
On February 20, as you know, Gold made it all the way back to its previous all time highs. But it did NOT break through the $US 1000 barrier. Since then, Gold retreated to just below the $US 900 level in three moves down. What is being traced out on this chart is a gigantic "reverse" head and shoulders formation. The trading range between $US 900 and $US 1000 was broken early in April. Over the month of April, a tighter range between $US 870-910 was established. Gold went straight up on this chart for six weeks - from the start of May until early June. The close below $US 955 on June 9 turned the chart down. Six weeks later, Gold falling just below the $US 910 level. Last week, we had the upturn we've been waiting for on this chart. And this week, despite all the frenetic action during the week, the chart has not budged. The question now is how much longer will the right "shoulder" of the immense reverse head and shoulders on the chart last.
We began the table below in 2007 and have extended it into 2009, even though Gold in all four currencies in the table remain well above their 2006 highs. The all time highs for Gold which occurred in 2008 have remained intact in US Dollars and in Yen.
But in terms of the Euro and especially the Aussie Dollar, the situation is very different. Gold hit new all time highs in both currencies on January 30 with situation being duplicated by Gold in terms of MANY other currencies. On February 20, those highs were taken out when Gold hit $US 1000. They were not taken out when Gold hit $US 1000 again in May. Right now, Gold in US Dollar terms is much closer (about 5 percent) to its all time highs than it is in terms of any other major currency..
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