Detailed Explanation to a Good Question from "The Golden Truth"

One of the blogs I follow, The Golden Truth, received a comment in the form of a question today.  I thought it should be shared, and I hope Dave does not mind.

The comment:
Dave,
Any thoughts as to why gold and silver have been moving in opposite directions to each other the last couple of days?

Dave's reply:
Good question. Primarily because this is what is known as "roll" week in the futures market. The last day you can hold May silver contracts is tomorrow, unless you fully fund your account for delivery. Since most long positions are speculative funds who have no intention of taking delivery, there is usually heavy selling in the week prior to "first notice" which is this Friday.

Typically the gold/silver manipulators (JPM, HSBC, GS, etc) will try to force the market lower during "roll" week, because they know they have a large amount of natural sellers. In fact, it can be argued that silver is performing much better than usual right now and I think because it seems that a large number of the longs are rolling forward to the next front-month, which is silver. Typically in the past, on a day like today during roll week when you wake up and silver is getting hammered, it just stays down. Silver has been bouncing back all during the last trading week.

The Golden Truth can be accessed at: http://truthingold.blogspot.com/
Go there and read today's post: Physical Gold Buying vs Paper Fraud

In it Dave states "It is becoming more readily apparent to anyone observing and participating in the trading/investing of gold and silver that the physical market is beginning to overwhelm the fraudulent, fractional bullion practices of the Big Wall Street Banks. This is a scandal that ultimately looms much larger than anyone realizes and will take gold and silver to prices that will shock even astute, long-time precious metals market participants."

The Top 20 Silver Producing Countries in 2008

Top 20 Silver Producing Countries in 2008 (in millions of ounces)

1. Peru - 118.3

2. Mexico - 104.2

3. China - 82.8

4. Australia - 61.9

5. Chile - 44.9

6. Poland - 38.9

7. Russia - 36.1

8. United States - 36.0

9. Bolivia - 35.8

10. Canada 21.5

11. Kazakhstan - 20.2

12. Turkey - 10.1

13. Argentina - 9.9

14. Sweden - 8.4

15. Indonesia - 8.0

16. Morocco - 7.8

17. India - 7.1

18. Guatemala - 3.2

19. Iran - 3.2

20. South Africa - 2.7

Source: The Silver Institute. 2010. http://www.silverinstitute.org/supply_demand.php#supply

Precious Metals Trader Blows Whistle on Market Manipulation

Many people in the precious metals (PM) market have long suspected market manipulation by JP Morgan and other large banks. These firms have allegedly been keeping down the prices of gold and silver. I personally believe there is more manipulation on the silver price because of the many industrial applications of silver; however, it would not surprise me if both markets were heavily manipulated.

Today, Andrew Maguire, a former Goldman Sachs trader blew the whistle on gold and silver price manipulation. According to an article by Michael Gray of the New York Post, Maguire explained JPMorgan's role in the metals pits in both London and the US, and how they can generate a profit either way the market moves. Of course JPMorgan denies the allegations and says that no one in the firm is familiar with Andrew Maguire.

Despite gold's rise each of the last 10 years, Bill Murphy, chairman of the Gold Antitrust Action committee believes the price of gold today would be closer to $2,300 an ounce if the price just moved with inflation, but Maguire believes the price should be even higher given the fear trade that would have sent prices spiking during the financial crisis in 2008-09. Both PMs have seen a recent spike since Maguire's e-mails became public

According to e-mails that Maguire sent to Commodities Futures Trade Commission (CFTC) regulators, he was uncannily accurate in his predictions of how the PMs would trade on release of the January jobs report. Maguire stated that The prices of gold and silver have been allegedly suppressed by JPMorgan and HSBC. Maguire laid out the banks’ plan in e-mails to the CFTC prior to trading on the Comex on Feb. 5, 2010 by contacting the CFTC via e-mails. On February 3, 2010 he sent an e-mail giving them a heads up for a manipulative event signaled for Friday, Feb. 5th, 2010. Then, on the 5th, Maguire sent an e-mail to confirm that the silver manipulation was a great success and played out precisely as he had predicted.

To read the Post's article in it's entirety go here.