Major Battle Rages in Gold Market
Source: NumisMaster, Patrick Heller (6/9/09)
"The major battle between the free market and the U.S. government's efforts to suppress gold prices. . .will rage during the course of this week"
In a huge turn of events, over the past two weeks, the U.S. government's trading partners have lost several skirmishes trying to suppress the spot price of gold.
On Tuesday, May 26, gold closed on the Comex just over $950. Even the near last-minute surprise gold dumping failed as buyers jumped in to buy this "bargain-priced" gold. This resulted in a larger number of Comex gold call options that expired that day to be "in the money" than would have occurred if the spot price had closed lower. As a result, demand for the immediate delivery of physical gold was higher.
This scenario repeated on Thursday, May 28, the day OTC gold options expired, the gold spot price again closed above $950. Despite steady, obvious gold dumping to drive down the price, buyers kept absorbing the new supplies.
On Friday May 29, gold closed in New York at a new all-time high close for the end of a calendar month. Buyers had seen the inability to suppress gold prices earlier in the week and took that as a green light for higher gold prices.
To try to offset some of this positive news for higher gold prices that week, a story started circulating that Congress would vote to approve the 403 metric ton sale of gold by the International Monetary Fund.
Finally, on Wednesday, June 3, the manipulators had some success. The Comex gold price closed at $964.50 and silver at $15.30.
Just when it looked like gold and silver prices might be stymied, buyers once again jumped into the market on Thursday, June 4. At the Comex close, gold settled at $981.25 and silver at $15.88. At that moment, it appeared that the U.S. government's years-long effort to suppress precious metals prices was on the brink of collapse.
That didn't happen.
The major battle between the free market and the U.S. government's efforts to suppress gold prices will rage during the course of this week and maybe beyond.