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Wednesday, August 24, 2011

* Updated Listening to the "Gold" Experts on CNBC

Gold has cratered nearly 200 dollars an oz since it's 1917 high on Monday. Silver is down 5% as well, hovering around 40 and change.

So what gives Frankie? This morning I was listening to the geniuses on CNBC's "Fast Money." Let me tell you a little secret. This is almost ALWAYS true. By the time somebody recommends a buy or sell on TV, the news is old. Useless. In fact, if you were to follow TV would almost certainly lose. Why? Because the people running their mouths have front run you. They traded ahead of their TV appearances. Told their buddies.

So today I listened to some idiots, particularly Dennis Gartman, talk about outside reversals and gold collapses. This is what really happened.

Two days ago, the Shanghai index raised margin requirements for gold traders. This shook out a significant portion of smaller, poorly capitalized speculators who were in just trying to make a quick buck.

Then yesterday, there were rumors of additional margin hikes. 

We also have options expiration on Friday. Both metals, gold and silver, have made long investors a bunch of money. The losers in that trade are the big commercial banks. Driving the price of both metals down prior to settlement- means saving a lot of money.

*Zero hedge reporting minutes ago that the CME hiked margin rates by 27% on gold and that undoubtedly their intentions were leaked. This makes perfect sense on how gold could lose over 200 bucks in two days. Fucking crooks.


davecydell said...

Correct analysis. I saw Fartman today also, CNBC has been all a gaga over gold's pullback this morning.

But as you say: "Fundamentally, has anything changed?"

davecydell said...

No worry, Chavez ain't selling.