gold down big time, page-15

Dratoz

I agree. Interest Rates down and Gold down is a con!

The 'masters of the universe' have been acting in a super inflationary fashion of late. The Fed has been behind massive bailouts of the world's biggest banks, and they have slashed interest rates with alarming speed. However, the huge flow of additional liquidity is nowhere finished yet. In reality, it has probably just started as the potential derivative losses still in the system are in the trillions of dollars, not just the billions that are currently being injected.

The Fed must have sensed this was coming two years ago when they scrapped M3, a reporting mechanism that regularly announced the amount of new money supplied to the system. With M3 out of the way, the only other barometer of inflation is gold and commodity prices, so it makes sense that if this sector is 'killed off' for a period, it would buy them valuable time to continue papering over the chasms that have opened up in the world's fragile financial system.

Part of the recent falls have been facilitated by the 'system managers' as they have acted to increase margin requirements, and to reduce the leveraging ratios of hedge funds from 10 to 1 to 5 to 1. This has caused big funds to readjust the gearing of their holdings which just happened to have been overweight in gold and the resources sector.

Having changed the ground rules it didn't take a lot of selling to trigger the black box trading platforms utilized by the funds. And with Asian markets closed yesterday, the markets were able to be manipulated down with minimum effort, as the black boxes outbid each other on the downside. Another footprint of the manipulators is their use of Access trading (a normally thinly traded market available to institutional dealers that operates after Comex closes). When a take down is about to be orchestrated heavy falls on the Access market are a sure indicator that something is afoot.

Despite all of the above, the fundamentals haven't really changed for commodities and if real demand from Asia isn't killed off, real shortages will continue to create pressure on prices as inventories keep falling.

And the extra liquidity in the system will then be attracted to the viable commodities sectors, including precious metals, like a magnet, creating a bubble that will make all preceding bubbles pale into insignificance. The commodities super cycle bubble, after taking 30 years to incubate will be a sight to behold.

(Just some thoughts on a lazy Good Friday, from what I have gleaned around the traps. Remaining long and strong still makes a lot of sense to me)

Cheers
Nev