My Blog
Dan Norcini - Huge $17 Gold & $2.48 Silver Premiums in China
With a fierce bull/bear battle developing in gold around the $1,800 level, today King World News interviewed legendary Jim Sinclair’s chartist Dan Norcini. When asked about the incredible strength in the gold market under the $1,800 level, Norcini stated, “Earlier today your source out of London mentioned the Chinese were paying a $17 premium for gold and an astounding $2.48 premium for silver vs the COMEX over in Shanghai. This is absolutely incredible and you can see it in the charts. The support that is underneath this market is rock solid -- that’s the Asians who are buying in the London and COMEX markets.”
© 2011 by King World News®. All Rights Reserved. This material may not be published, broadcast,
rewritten, or redistributed. However, linking directly to the blog page is permitted and encouraged.
September 21, 2011
Dan Norcini continues:
“As I read that piece, Eric, it was a confirmation of the technical action that has showed very strong buying below the $1,800 level and it keeps forcing the market back up rather quickly. Yesterday it appeared that the buyers were waiting to see if they could pick up some gold at cheaper prices, but today they lost patience and you could see the concerted buying effort, which took gold right back above the $1,800 level.
When the Western central banks started their assault on the gold price about two weeks ago, they took the price of gold down over $60 in one minute’s time in the thin trading conditions in the access market. It was an attempt on their part to induce enough long side liquidation by the speculative community, particularly the hedge funds. It was also an attempt at trying to entice them into a sell mode to help drive the gold price lower.
This has been the pattern for Western central bank gold price manipulation, the attempt to get others to continue the selling for them once they initially pull the trigger. Well, what’s been happening is that when the hedge funds have been selling, instead of the gold price cascading sharply lower, the gold price is finding buyers. It will not collapse, they cannot create the normal avalanche of selling, even with hedge funds liquidating 67,000 long contracts because of what is taking place in the physical market.
Somebody is obviously coming into this market and buying in size, in sufficient quantities, which is thwarting the central bank manipulation efforts dead in their tracks....
Continue reading the Dan Norcini interview below...
Advertisement
To hear legendary Jim Sinclair discuss which company he invested
$32 million of his own money in and why click on the logo:
“Because they cannot get any traction at all to the downside, the bullion banks and the swap dealers are having to cover into these shallow drawdowns in price. They simply don’t have a choice as a very powerful force is standing in the way of further downside action.
The physical buying by the Chinese and other Asian participants is forcing the bullion banks and swap dealers to come in and cover their short positions prematurely. All I can tell you is that as long as those big buyers are coming in from Asia, the bears are in trouble.
There is something else at work here and that is the price action in the mining shares. Normally, in the past when there is a move down like we have seen recently, there is a washout in the mining shares, they would literally implode to the downside. Now, even when the gold price is attacked by the bears, the mining shares hold firm. Today the HUI gold bugs index actually closed within striking distance of the all-time highs.
Look at Newmont, this is a stock that has gone almost straight up for the last month. Newmont announced that if the gold price stayed above $1,700, they were going to increase their dividend. Well, that’s good news if you own Newmont, but it’s horrific news if you have been shorting Newmont.
As you know, Eric, these hedge funds have been playing that ratio spread trade where they have been buying paper gold and selling the mining shares. As we’ve been warning, that ratio trade is beginning to blow up on them as the mining shares are increasing their dividends.
The bottom line is the mining shares are advancing, which is one more thing making it that much more difficult for the commercials to break the gold price.”
© 2011 by King World News®. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. However, linking directly to the blog page is permitted and encouraged.
Eric King
