As we all know by now, we haven’t had free markets since the fall of 2008 when the SEC banned short selling in financials. Other than currencies, which are the most heavily manipulated markets in the world, the metals are a close second or third if one includes sovereign bonds.
I became cautious when gold crashed in June even though the dollar had basically gone nowhere. That was a warning that someone was suppressing the metals again. So we’ve been very careful with tight stops as we’ve been hunting for an intermediate bottom.
At this point I think we are dealing with a large bank or central bank that would like to cover their shorts into a panic. That probably means gold will continue to be suppressed and manipulated until they succeed in breaking the July 2017 low.
So we’re staying on the sidelines for now.
Update: For the first time in a long time gold is making an effort to break free of the suppression holding it back this morning. If the bulls succeed in breaking the manipulation we could get a nice short squeeze on the banks that may have held onto their shorts a little too long. We’ll have to see where the battle is at when we close later today.