Fade the paper market manipulation as physical gold premiums have now hit $40 in China. And there’s more…

Physical Gold Premiums $40 In China
September 16 
(King World News) –
Fred Hickey:  Today’s gold slam (Tues. too) was all about levered traders dumping paper derivatives (200K futures contracts sold in very brief period today) in order to break chart level and stampede gold owners into selling. PRIOR to today’s slam, physical gold price premiums in Shanghai +$40.

Managed Money Short Gold Is Bullish
Managed Money (hedge funds and CFTs) already in rare net short position (COT) before these two attacks. Certainly even deeper today. Justification (such as it is) is “hawkish” Fed including many who believe Fed’s in control and will be able to hike aggressively without breaking economy.

Fed Hiking With Global Economy Teetering
Fed rate hikes work with a multi-month lag, but already seeing signs of global economy teetering – even before most of rate hike impacts hit. Witness brutal FedEx warning tonight. Seeing slowdowns in Europe, Asia and now even US and business deteriorated towards end of their quarter.

Fed Pivot And Gold Thrives During Economic Turmoil
Gold does best in times of economic turmoil (inflation, recession etc.) but as showed in my latest month’s HTS letter, gold typically is weak early in the downturns (along with stocks) but then separates and turns sharply higher, likely anticipating Fed “pivots” (lower rates and QT).

Sentiment Ripe For Major Bottom
Gold sentiment (DSI) went to single digits in late 2015 & fall 2018 major bottoms (DSI 7 today). Managed Money futures contracts went net short those 2 periods – same today. Heavy Asian physical buying and high gold premiums. Fed will fail. Not expecting to have to wait much longer.

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