Impressions of suppression

Posted | 16/07/2014 / Views | 2170
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Last night again saw someone dumping about $2.3 billion in futures contracts in one hit, taking gold down $10 in it’s wake and great news if you, say, had a heap of short positions….  When we get the sort of blatant price hit we saw Monday night and then again last night, it reignites the speculation of whether this is just Wall Street using their might and high frequency trading abilities to drive markets and make money, or is it indeed ‘sponsored’ by the US Fed / Governments to suppress gold and make all appear good in the world.  The latter is a ‘bridge too far’ for most people to believe and very few probably really know.  Irrespective it can’t last as it defies mother nature’s supply and demand forces (who always win in the end), but we are always reminded of this infamous quote from then Bank of England governor Eddie George: 

“We looked into the abyss if the gold price rose further. A further rise would have taken down one or several trading houses, which might have taken down all the rest in their wake. Therefore at any price, at any cost, the central banks had to quell the gold price, manage it.”

When a commodity in strong demand has it’s price pushed to at or below the cost of production by unnatural trading techniques, at a time when paper assets are looking very bubble like, at any time something could snap and the price let loose.