Vince Lanci: Golds Open Interest Declines But Price Hasnt Come In Yet | Arcadia Economics

The fact that the open interest is decreasing in this fashion, which is completely normal, while at the same time the market is going sideways to higher, is not completely normal. It’s very bullish. When I say to you, sell season sucks. It sucks for the people that are trying to make money being short. And today is just another example of it. Welcome to the Morning Markets and Metals with Vince Lanci. Where each morning Vince brings you the financial and precious metals news to get you ready for your day. And now here’s Vince. Good morning everyone.

It’s Monday the 9th and I’m Vince Lancey. We’re going to discuss, we’re going to go back and reminisce about an article about the silver mafia, the hammer, the silver mafia, all the news focused on the manipulation of silver at the execution level by traders and by multiple banks and collusion. One could even say that it was RICO in fashion. However, it didn’t get a lot of news time, but there were lawsuits and there were imprisonments on the gold side as a result of it. And Chris Marcus reminded me of it. So we went back and looked at the old articles as well as stuff that we had written, analyzing the legal aspects of it, believe it or not.

And we just put something together. We’re going to read some of that for you today. And then also we’ll touch on the fact that sell season sucks so far for the bears. All right, starting with the markets. We’ll give you a chart to look at first. Here’s the gold chart. We’ll get rid of, we’ll leave the lines there. Let’s leave 47. Stop right there. Gold should be a lot lower. Now I’m not saying all the dollar and gold aren’t connected anymore. Ha ha ha. You know, they aren’t, but gold should be a lot lower.

It really should in this environment. Okay. Take your yields are up three, four basis points that might be holding gold up a little bit. Stocks are up 56 handles. Wow. The VIX is down 1.4 vols. Gold is down a little bit less than a buck. Silver is up 20 cents. You could say silver is holding gold up. Copper is up eight cents. This is economic. WTI is only up four cents, but it had been hammered so much. Natural gas is down eight cents. That’s not related. Bitcoin is up 353 and Ethereum is up 17 and platinum and palladium are both up 12 and 20 respectively.

Platinum is now over palladium again. All right, that’s whipsawing me. Soybeans up six at 1030, corn unchanged and wheat down two at 566. Okay. Recalibrating my brain here. The market is behaving like there’s something good economically going on now. I’d probably have to look at Chinese stocks. This could be coming out of China because silver’s up, copper’s up, oil’s up relative to where it has been in the last couple of days. And the dollar is up. Smells like, although I really haven’t looked at all yet, smells like China doing something to strengthen their markets, which would mean printing money.

I’m going to look at that before we go. Gold should be a lot lower because the dollar was stronger. And in fact, at 1am, that’s what happened. The dollar started to ratchet higher and gold went boom, dropped like five or six dollars. And then it stopped and it started ratcheting higher gold. And now it’s back to unchanged. And now it looks like gold is caught between two forces today. The stronger dollar, that’s bearish. Okay. And stocks are up. Right. Silver’s up. Economic metals are up. Well, somebody’s stimulating somewhere. Maybe peace broke out.

Who knows? So anyway, if this continues and the dollar down ticks a little bit, you could see gold really pop today. Wow. Fascinating. All right. So let’s get to the less fascinating news, which isn’t really unfastening at all, in my opinion. All right. So remembering the silver muffin. There’s the front page. The story that I think people focus on the most this time of year, at least since we’ve been writing about it, is the seasonality of gold and silver. The gold seasonality starts in September and ends in January. And there’s a sell season and a buy season.

We have done a, it’s cursory, but it’s very explanatory write up on it called buy seasons full timeline. And it gives you the dates and it gives you the simple explanations. And we’re going to do a podcast as well on that to give you some more fine tuning with some more charts and what have you. That’s a story we’d recommend. If you’re like, what’s sell season by season? Nobody talked about it before us. Probably nobody will talk about it while we’re talking about it. You’ll hear things like tax selling and you’ll hear things like January effect, but you won’t hear it the way we’re putting it.

All right. So that’s the front page. Plus we have a very thorough CFTC report analysis in which we discuss seasonality and a couple other things that may be interesting to you. The hammer and the silver mafia. Now this is something we wrote and put out yesterday. It’s behind a paywall to be fair. But here’s the top that subtopics, the case of silver market manipulation, manipulation through collusion, broader implications and manipulation tactics, legal and market reactions. I don’t know why that’s bolded there. The hammer and growing the changes in the silver market, conclusion and related work on it.

We’re going to read some of that today because it just says a whole lot. The problem hasn’t been stopped. So under the case of silver market manipulation, while you’re looking at that, the case in hand revolved around the alleged manipulation back then of silver prices by traders at major financial institutions, including Deutsche Bank AG and Fortis Bank. Until 2014, silver prices were determined through the London fix, the silver fix, a system where a handful of traders would set global reference prices via daily calls. This method, however, began to crumble under scrutiny as early as 2008.

This is why we’re called the gold fix, by the way, the gold fix and the silver fix, because we knew that the fixes were literally a manipulative moment. Manipulation through collusion. According to court filings back then, traders from Deutsche Bank and Fortis Bank, later acquired by BNP, were actively engaged in collusion to manipulate silver prices. Electronic chat logs, this is the crazy part, electronic chat logs revealed their conversations about coordinating market moves to benefit their positions. They were actually talking about it on the record about what they were going to do. Quite unimaginatively too, by the way, these guys were not very good at it.

In one exchange from another, from February 25th, 2008, a Fortis trader said, I can’t wait for another day when we get the bulldozer out of the garage on gold and silver, to which the Deutsche Bank trader replied, haha, yeah, implicitly that’s bearish. This kind of back and forth illustrated a clear intention to rig the market by these participants, an action that according to the analysis was carried out in multiple instances between 2008 and 2013, well before that and well after that. But the timeframe in question, there was a lot of good data.

We went through the documents and we wrote a piece on it and actually consulted, look, I personally consulted on two of the civil lawsuits as a forensic kind of person translating these things. And I’m not going to say any names, but I was, I was advising on that. The hammer and growing the mafia. Let’s go to that section. One prominent trader evolved into checks known as the hammer, as in he hammers the market, or maybe Maxwell Silverhammer, if you’re a Beatles person, further underscored the pervasive culture of collusion. In April 2011, 2011, when silver spike, the hammer suggested expanding their operation stating, quote, we need to grow our mafia a little bit to get a third position involved, meaning they needed help.

The goal was simple, continue manipulating prices and growing influence in the market. As a result of those actions or being caught, right, concerns about manipulation of the $30 billion silver market came to the forefront. Silver’s relatively small size and volatility made it a prime target for rigging. In 2014, the London fix was discontinued and replaced with an electronic auction mechanism. Same thing. Just no people putting their voices on it. Side note, transparency through electronic execution is transparency in price, not transparency in counterparty. It actually puts a curtain between who’s trading and who’s not.

You can’t put a name on the trade anymore. Not saying it’s worse. I’m just saying everything can be abused if you, this change in to increase transparency, although skepticism about lingering manipulation remains within financial circles. All right. Conclusion. The systematic manipulation of the silver market through coordinated actions between traders and multiple banks represents a dark chapter in financial markets. Although settlements have been reached and processes have been revised, this case stands as a reminder of the vulnerabilities inherent in precious metals trading. They’re all major banks, including Deutsche Bank, HSBC, Standard Chartered, and perpetuating these practices highlights the need for constant vigilance and reform in commodity trading.

That’s market execution manipulation and it happens in every market. Okay. I was a victim. I was an observer and I was actually a perpetrator of these things. However, structural manipulation cannot be stopped because it’s in the structure. Structural manipulation refers to things like changing an asset from tier one to tier three. You structurally manipulate or create an arbitrage. You create an arbitrage to sell gold if you say something is tier three, but if you do it because you want the market to go down as the market structure does, as the government does, well, that’s what happens.

So now it’s tier one and we can’t complain about gold anymore in that respect, but we can certainly complain about silver. Moving on. That’s an excerpt. That whole story is here. I haven’t relinked right here with a couple other comments. Sell season starts with the whimper. Okay. This is sell season. All right. Sell season starts roughly September 1st and ends roughly November 15th. And during that timeframe, gold has a high probability of going down. Silver usually follows gold, but these markets are kind of different now. So we can go up during sell season.

It’s not sell season. It’s liquidation season is what it is. So if a lot of people are short, you will see liquidations. And that’s right there. That’s a chart from the CFTC report. And it’s related because you see funds selling. You see, I’m going to translate this for you. Hedge funds that are long goals. I’m a goal now are selling and they’re driving the market lower and the banks, the swap dealers at the banks are buying because that’s what they do. That’s market making. That’s their normal duties. It’s not manipulation. Also, some hedge funds are selling to get short.

So bulls are selling to get out, bears are selling to get short, and banks are buying the dip. And that’s their business model, completely normal. Okay. The fact that the open interest is decreasing in this fashion, which is completely normal. While at the same time, the market is going sideways to higher is not completely normal. It’s very bullish. Okay. So when I say to you, sell season sucks. It sucks for the people that are trying to make money being short. And today is just another example of it. I’m laughing because I’m short, you know, I’m looking for the market to go sideways or lower over the next month and it’s not.

All right. So enough about my worries. So sell season starts with the wiper. I’m going to click on this so you can see what it looks like. This is a two hour conversation that I have with gold fixed founders. Hold on. That I have with gold fixed founders almost every week. And I share with premium subscribers when I do it. And this week is, I think, very informative in that we figure out that we’re in the sell season and the market’s not really dropping that much. Number one, number two, we think that the banks are covering shorts, which is what they do when when long sell, but they’re not letting it breathe as much as they normally do, which suggests that there’s some urgency on their part to cover.

And number three, this cycle, we’ve seen this cycle before over the last year, but it’s getting shorter and more and more shorter in duration and more tight in range, implying implying that if we can survive the next month or so here, it could really spike. You know, you have the bricks coming up, right? You have Russia saying they’re going to be buying more gold. And you’ve got an election coming up. I think the world is has you got it. You got to be crazy to be sure. It’s just your gold right now.

All right. So moving on. Data on deck. Big data week. I don’t think it’s an important data week, but it’s a big data week. And if I be, that’s the small businessmen sentiment, actually very important for the economy. Okay. Small businesses still lead this economy. All right. CPI inflation. They expect to see it continue to creep lower. PPI is probably more important this month. Anyway, that’s the data. And let’s do a final market check before I let you all go. I know I said use that was intentional. All right. So here we go.

Here we go. I’m going to split the screen for you so you can see what I was talking about with the dollar. Where is that gold gold? Yeah, it’s always gold for me, right? And we go to the hourly. All right. Check it out. Check it out. So last night opens. Here’s midnight. This is Eastern time. I’m showing you in there, right? And the dollar, the dollar starts to strengthen the dollar’s firm, but it starts to definitively break out of a little bit of your technician, little bit of a range here. And it looks like midnight, Monday, midnight, American time, Monday, midnight to one, it starts to move, right? Now, while I’m doing this, look at what gold does.

Gold’s on the right. Gold down ticks a little bit. And then down ticks pretty big. That’s huge. Somebody watching dollar gold correlation says, oh, shit. And they sell their gold. And then it stops. And then it starts to ratchet higher while the dollar is ratcheting higher. So someone said, impossibly, the dollar’s strong or sell gold. And that person was wrong. And they were wrong because the reason the dollar is higher is because someone else’s currency is lower. All this complicated stuff I’m telling you, they want the fucking gold. They don’t want the dollar versus the gold.

They want the gold. This is about physical gold. Now, let’s see what the cap, why would the dollar be up? Gold be up. Silver be up. Stocks be up. And the 10-year yield be up at the same time. Why would that happen? Because all correlations are going to shift, folks. And they’re all going to shift because there’s a new player in the market. And that new player, where’s my global? Where’s my global stocks? Oh, damn it. I have more, more stocks. Bear with me. I’m going to pause this for one second. Be right back.

Okay, I’m back. I looked at equities and I didn’t really see anything crazy. Well, Japan is crazy down. But it has to be related to the yen. Maybe someone announced the policy change. So the yen going up is the yen weakening. The yen is weaker. The dollar is stronger. And gold is sold because the dollar is stronger. And then gold is bought. And every thing about this, but it might be related to the fact that the yen, and it’s not crazy, it’s not unheard of, but yen, Japan may have done something that’s going to encourage inflation and maybe China’s going to follow suit.

However, here, let’s put up gold for you on that. So you can see the move. You know, Japan is a tricky country when it comes to gold. People think, oh, the yen is weaker. The dollar is stronger. Therefore, I should sell gold and that will work sometimes. But sometimes when the yen weakens, it’s the whole Asian region when the yen weakens is rolling out of yen and into gold. So, you know, Japan’s, it goes from, you know, what’s the old expression that Mises has said? People stop worrying. When people worry about the return on their money, they do dollar-gold correlations, right? When people start worrying about the return of their money, they do gold-gold correlations, right? They start worrying about default and what have you.

So that’s where we are. I’m Vince. Have a great day. Welcome back in the rally to purchase gold and silver. This week’s deals include one-ounce silver fill harmonics from the Austrian men in Austria, good figure. Fortunately, these beautiful coins are only $3.10 over spot. Well, we still do have silver under the $30 level, which it obviously eclipsed earlier this year. And on the gold side, this week’s special is one-ounce gold Kuberance for only $60 over spot. And again, you can place an order by calling 833-326-4653, or emailing us at Arcadia at milesfrankton.com.

Happy to answer any questions you have and get you set up with whatever you need. So call us at 833-326-4653. And as always, thanks for watching. Please note that this video is not intended as legal-licensed financial trading advice and is to be used for informational purposes only. Please contact your financial advisor before making any decisions. And thanks for watching. [tr:trw].

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