by Turd Ferguson, TF Metals Report:
Today is October option expiration and Friday brings the end of the month and quarter. Therefore, we should not be surprised by the level of abject and overt price manipulation and chart-painting that is being done this week.
As we discussed late last week, below is the most important chart for this week. We suspected that The Banks would intervene in order to keep price from a new monthly high AND below this long-term trendline. The LAST thing The Banks want is a breakout and rally just as Q3 ends and Q4 begins as this would almost certainly inspire new 2016 highs and a virtuous cycle of even higher prices.
Therefore, what you are witnessing today should come as no surprise. And how do we know that this is a direct Bank price manipulation event? Three things.
Check the open interest versus price. Once again yesterday and just as suspected, open interest rose while price was falling. Given the technical structure, I can assure you that that this was NOT new Spec shorting driving OI higher. Instead, these are The Banks meeting every bid and then some with new naked shorts. Open interest in gold rose by over 6,000 contracts on yesterday’s paltry $2 gain. For the two days of Friday and Monday, where price almost inexplicably was a total of -$1, total OI was up over 13,000 contracts.
Check the action versus the known HFT drivers. Is the gold “price” still coupled and linked to USDJPY and bonds, as we’ve seen for months and years? Hmmm. See below. Note the divergences on these five day charts.
3. Check the moving averages. The Banks also know that they’d prefer to get some help in this effort so we must check to see if an effort was made to break a significant moving average. As we saw just a few weeks ago, if The Banks can break the 50-day moving average, then the TA-oriented HFTs will jump right on the train and do some of the selling for The Banks. Well, see below. First, look at where gold is now relative to its 50-day at $1338…it’s back below. And how did it get below? With one big Cartel shove of nearly 7,000 contracts earlier today!
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