Cryptojunkies: Beware the Ides of December

Tuesday, December 12, 2017
By Paul Martin

By: Michael Ballanger
Tuesday, 12 December 2017

As Bitcoin futures are set to begin trading next week, precious metals expert Michael Ballanger discusses movements in gold and cybercurrencies.

It was two years ago this week that I proclaimed that we were witnessing the final lows in the 2011–2015 bear market in the precious metals as gold traded down to $1,045 amidst total capitulation by the Large Specs and after massive short-covering by the Commercial traders. The weekly COT for that week showed an aggregate short position of a miniscule 2,911 contracts down from the earlier highs of over 300,000 contracts. About six weeks later, despite the earlier bottom in gold, the HUI (NYSE Arca Gold BUGS Index) got mauled mercilessly and closed at 99.19 on January 19th 2016. What followed was the best rally in a decade as the HUI peaked the following August at 286.05. The 2.88 times move in the HUI was paltry compared to the moves in the leveraged ETFs NUGT (Direxion Daily Gold Miners Bull 3X ETF) and JNUG (Direxion Daily Junior Gold Miners Bull 3X ETF). The NUGT moved from $13.92 in January to $143.06 in August for an advance of 927%. Based on what I saw in the latest COT report, the set-up is in progress for a repeat performance. And it will be a BIG one.

The recent Nov. 27 commentary was entitled “Bullion bank short-covering will become year-end profit-taking,” and that is EXACTLY what transpired this past week as the bullion bank traders (loosely termed “Commercials”) covered 22% of their shorts into the decline. To wit, since the COT week ends on a Tuesday, the Wednesday–Friday projectile emesis of unwanted longs was a perfect example of the longstanding opinion voiced by this author that in gold and silver, you BUY breakdowns and you SELL breakouts. Why do I violate the basic trading rules for technical analysis? It is because unlike most other markets, the precious metals markets are “rigged.” The bullion banks waited for the hedgies (Large Specs) to gather en masse on the long side of the trade before crushing price down through 50 and 200 DMAs, triggering a full-scale liquidation into the ever-greedy and welcoming arms of the bullion banks. It was a complete no-brainer as you can see below with the profit taken on a notional value of $7 billion allows for a very Merry Christmas indeed for the serial manipulators manning the desks of the most corrupted, compromised markets on earth. I figure they took $50 per ounce out last week on 5,665,100 “ounces” of fabricated, phony, counterfeit “gold” for a tidy year-end profit of $283,255,000, which has got to be the best (and easiest) job in all of finance. Backstopped by the CFTC and the central banks, this rigging exercise is surpassed in history by none except perhaps the masterful importing of bootleg liquor by Capone from the mighty Canadian Bronfman family back in the days of Prohibition. The only real difference is the utility of self-medication associated with booze versus the blatant robbery committed by the bullion banks.

The Rest…HERE

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