Gold Prices: Are Big Sales A Sign Of Manipulation?

| January 30, 2018 | 0 Comments

gold pricesGold prices tumbled Friday following some large sales starting at noon.  Periodically you’ll hear people questioning if the gold market is manipulated; the answer can be almost anything you want.  In this case, this Gold Enthusiast smells a bit of a rat.  At the time the US Dollar was flat, which fundamentally means gold price should be stable.  The price of gold started dropping with heavy selling starting at 1:25pm Friday, while the dollar started rising at 2:00, over half and hour later.  In this case, it’s more like gold selling drove up the price of the dollar – almost as if an engine were turned backward and started producing gasoline.

Here is the 1 day chart for GLD, the unleveraged gold ETF, on Friday.  You can clearly see the large drop starting at 1:25, and the big increase in volume shown below the chart.

unleveraged gold ETF

(credit Fidelity)

By itself that doesn’t look too bad.  But in the context of the week, something clearly went on.  Here’s the 5-day chart of GLD for last week. You can clearly see the rise in price over the previous several days, then the sudden drop on Friday.

SPDR Gold Shares

(credit Fidelity)

This sort of action doesn’t always mean someone is up to no good.  It can happen because of news anticipation, where prices rise ahead of an expected or uncertain event.  Then when the event does or doesn’t materialize, there can be a quick correction.  In this case, the only big economic activity was the summit meeting in Davos, where – to be frank – nothing happened that wasn’t expected.  At least not to this Gold Enthusiast’s eyes.

Technically gold was just up through Fall’s peak of 1357, and as we all know breakouts can succeed or fail.  This one looked like it was going great guns, right up until it fell off the cliff.

So what caused the big drop in gold prices?  Was it actual selling, or was it one big entity taking a bearish position?  Let us know what you think in the Comments below.

Signed, The Gold Enthusiast

DISCLAIMER:  The author has no positions in any mentioned security.  The author is long NUGT and JNUG, and may add to or sell these positions in the next 48 hours.

Note: This article originally appeared at The Gold Enthusiast.

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Category: Gold

About the Author ()

Mike Hammer has had a wide-ranging career, with trading and investing as a continuing theme. Mike graduated from UC Berkeley with a business degree, then worked with Macy's in their operations arm. He left Macy's and spent a summer trading his own account, which taught him a lot about trading in general and markets in particular. Trading through the Black Monday and the Crash of 1987 showed him how most people are unprepared for upheavals in their trading. He then joined Waddell & Reed as a financial advisor, helping regular people understand their finances and meet their life goals. Then came the usual story - Mike met and married the lady of his dreams. They moved to upstate New York, where Mike worked first for a small manufacturing consulting company, then Cornell University. While loving the work and the higher-education atmosphere, Mike missed the world of finance. Eventually, he signed up for stock trading coaching with the Adam Mesh Trading Group, to learn from people who understood modern markets. Within a year, Adam asked Mike to become a stock trading coach. Since then, Mike has trained over 200 individuals, spoke at several national conventions, and is a frequent contributor to conference calls across the Adam Mesh community. Mike writes The Gold Enthusiast daily newsletter, runs the Golden Hammer trading service, and participates in the Mesh Private Portfolio. He also keeps a position in international education which keep him in touch with "the student mindset". Mike closely follows the gold, energy, and financial sectors. His motto is "Plan your trade, then trade your plan!"

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