Sam Briggs

10th September 2020

Last Tuesday’s slump in the gold and silver price explained

Andrew Maguire explores the market forces triggering last Tuesday’s slump in the gold and silver price.

 

Talking Gold’ – a fortnightly update from Kinesis Director and precious metals expert, Andrew Maguire, providing a detailed round-up of the recent action in the gold and silver markets –  a regular feature from the Kinesis Youtube show ‘Live from the Vault’.

In this week’s update on the gold and silver markets, Andrew Maguire explains how last Friday’s release of the non-farm payroll data, allowed insiders to orchestrate yet another “rigged sell-off” in the paper markets – and why gold and silver won’t be held down for long. 

The non-farm payroll report

Agent banks capitalised on last Friday’s release of the non-farm payroll report to carry out a “rigged sell-off” in the Gold and Silver Futures markets, according to Andrew Maguire. 

Andrew Maguire reports that the US Federal Reserve receive the economically significant data a few days ahead of the wider release. A few day’s notice that allowed informed agent banks to commence driving gold and silver prices lower as soon as the market opened last Tuesday.  

Early Tuesday, the moment the silver price rose slightly to December options sweet spot of $29.245, it was smacked down. As Andrew Maguire reads it, the organised selling event targeted Silver Futures in a bid to drag down the Gold Futures price, while flushing as many specs as possible in the process.

Andrew Maguire, a wholesaler himself, reports that wholesale premiums officially rose going into the release of non-farm payroll data, demonstrating exactly how counterintuitive last Tuesday’s sell-off was.

Watch Andrew Maguire explore the impact of the BIS options expiry on the gold price in last week’s Talking Gold from fortnightly Kinesis show ‘Live from the Vault’. 

A carefully calculated sell-off

As Andrew Maguire sees it, these raids were carefully weighed up with a tried and tested formula. Insiders calculated how much short cover could be rinsed from non-delivery specs in the GC and SI, versus the exposure to t+2 deliverable bullion demand in the FX Gold and Silver markets.

If prices drop in the deliverable FX markets, competitive market forces lock in the deeply undervalued physical bullion for physical delivery. As witnessed on the release of non-farm payroll, when wholesale market forces secured tonnes of deliverable bullion at heavily unsustainable FX gold prices. 

However, according to Andrew Maguire, if prices are rigged below equitable supply-demand fundamentals it increasingly tightens up the real bullion available at that price.

What does this mean for gold and silver?

In Andrew Maguire’s opinion, the amount of fiat currency chasing physical gold and silver bullion is tightening up physical bullion supply. In response, the precious metals expert believes the price of gold and silver must rise purely to meet the demand. 

As the precious metals expert sees it, while the massive paper market leverage always has a lagging effect, fundamentals will ultimately drive the chart painted technicals higher.

Andrew Maguire’s parting thought. 

The consensus sees a minimum price of $32 for silver, up to $35. That’s the minimum level.

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Next Episode: Andrew Maguire carries out another thorough inspection of the gold and silver markets. 

 

The opinions expressed in this publication are those of Andrew Maguire and do not purport to reflect the official policy or position of Kinesis. 

This publication is for informational purposes only and is not intended to be a solicitation, offering or recommendation of any security, commodity, derivative, investment management service or advisory service and is not commodity trading advice. This publication does not intend to provide investment, tax or legal advice on either a general or specific basis.