Making Sense of Gold Correction; Federal Reserve Serves Main Street and Other Whoppers – Welcome to Dystopia #20

TND Exclusive:  Welcome To Dystopia #20

So much for our plan to keep the show under an hour!  Jason Burack of Wall St for Main St and I cover a heck of a lot of ground in episode 20.  Market events and the shift we have seen in the 2016 Presidential Election contest since episode #19 called for expansive analysis.

For the time being, the powers that be have finally been able to put a stop to precious metals buying momentum.  Jason and I walk through the past couple of weeks leading up to today’s trading action, with particular emphasis on last Friday’s employment report and how open interest on the Comex has ballooned as speculators and a growing percentage of the conventional financial world are scarfing-up long positions while the powers that be, as reflected by the “commercials” as reported by the Comex Commitment of Traders reports, have been aggressively issuing naked shorts to counter the new tsunami of demand for paper gold.

We recorded after the New York market close on Monday, and it’s nearly midnight and the start of the Tuesday overnight session (Eastern Time).  Not surprisingly, gold is attempting to bounce.  The regular session closed at $1,265.40, we tested ~$1,260 and are now back over $1263.90 again as I type, the spike high of February 11th.  For many weeks, that level was being interpreted as upside resistance by paper traders and targeted by the cartel as it attempted to erase the entire post-Feb. 11th move.  Now, predictably, given the new bullishness among paper buyers showing up at Comex, that level is serving as an initial trigger for a bounce.

Odds are, since the paper traders have been the ones behind the lion’s share of the latest bull run, they’ll probably sit on their hands until we get a full test of the 50 day moving average, which would put gold immediately below $1,250, and in my assessment, the highest probability case is that the powers that be will not be able to get much traction below the 50 day moving average.  But time will tell, of course.  The next major price range where the paper boys will start itching to go long again would be in the low $1,220s level for gold.  On a related note, the bounce we have seen in the dollar is going to likely lose momentum and roll over BEFORE 95 on the DXY index.

Therefore, at least when it comes to how conventional financial actors interpreting technical signals are concerned, we probably have a little bit more pain ahead in precious metals before paper bulls are emboldened again to take another swig at the Comex paper gold canteen.  When will these paper addicts pay less attention to the Stanley Druckenmillers of the world scarfing down paper gold and more attention to Kyle Bass and his argument that allocated, physical storage is not that expensive and indeed, sane?  Who knows…  But the paper boys cause the cartel heartburn, and the avalanche of naked short issuance of late isn’t going to extinguish the precious metals bull, and the bull is going to resume its upward romp very soon.

2016 Election

We next turn our attention to placing this action in the context of the stock market and what may happen later this year, as the 2016 election approaches.  If you missed Greg Hunter’s fascinating interview with former Clinton insider Larry Nichols, it easily is one of Hunter’s most provocative interviews and well worth a listen: click here.  Jason and I dive into some of what Nichols discussed, and take the conversation in surprising directions.  The second half of 2016 is going to see a lot of fireworks, one way or another.

Scumbag Nominees

1) Deutsche Bank- They told their clients Italian government bonds were safe in 2011 while their firm dumped 90% of the bonds they own! Silly muppets! http://mobile.reuters.com/article/idU…

2) Charles Ortel reveals more crimes/fraud/theft at the Clinton Foundation: http://www.zerohedge.com/news/2016-05…

3) Former Goldman Sachs alumni and current Minneapolis Federal Reserve President, Neil Kashkari, says Fed’s Job Is To “Serve Main Street”.  Yeah.  Right.  http://www.zerohedge.com/news/2016-05…

Thanks for tuning into this episode! – Eric Dubin