Market Manipulators choose a Chinese holiday to attack Gold
The long-side speculators who trade paper based claims to gold, silver and other precious metals (futures contracts) are, generally speaking, get-rich-quick schemers. They are the managers of independent hedge funds. They vie for control over the futures markets with institutions that include some of the largest banks in the world and the hedge funds that are owned or operated by current or former executives of those banks. Both long side and short side speculators at futures exchanges, like COMEX in New York, operate at extraordinarily high levels of leverage. The long side speculators are pure gamblers, as they have no influence over central bank policy. In contrast, their opponents take no gambles at all. They are the big international banks that control the world’s major central banks and finance ministries.
In spite of repeated complaints, the players in “paper gold” market still set precious metals prices. When I speak of “paper gold” I include silver and platinum, because both of those metals are also traded in the form of futures contracts and futures markets also set their prices. The same dynamic is at work, and a large number of gold traders take heavy cross positions in the two other metals. Although there is not a 100% correlation between the metals, cross positioning generally means that when gold goes up, silver and platinum go up also, regardless of the state of the physical market. Indeed, physical market surpluses and/or shortages end up having little to do with precious metals pricing, at least in the short to medium term.