There’s been a lot of speculation in the Gold community about what’s happening in the market this year. 2020 has been wracked with unprecedented gyrations in the gold market.
It’s also seen gold finally breach the $2000 level and, this week after a nasty correction, is still holding onto most of its recent gains.
This rally in gold and the persistent supply tightness which has kept gold futures in contango for most of the year are indicators that something has fundamentally shifted in the gold market.
And now, the question on a lot of people’s minds is whether we’ll see the end of the fiction of the paper gold market as epitomized by the futures market on the COMEX.
Alistair Macleod’s recent article detailed the gyrations of the gold futures market explains why he felt the so-called bullion banks who work with the central banks to keep gold control have, in fact, lost control.
His detailed the use of open interest on the COMEX to push and pull the price of gold and how the market changed after March 23rd when the futures premiums blew out to a high of $70 over the cash price in the forex markets.
Using mass liquidation to crater the price of gold and force thinly-margined, weak longs off their positions is a classic COMEX raid on the gold and silver markets.
And if you look closely at this chart you’ll see a few moments where dramatic drops in open interest didn’t result in big price drops. So, either longs ponied up the cash to stay in their positions or the buying into those ‘raids’ so intense that attempt failed to break the psychology of the gold market.
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