I’m going to try and go easy – as I know many of the readers here are very much so invested in Gold. As well please keep in mind – I too believe in the long term story.
But with such macro forces at work – it absolutely pains me to envision you sitting there at home, considering every little tick up and down, gaps, bollinger bands, cycles, COT, and the most ridiculous of all – “selling on strength and buying on weakness numbers” – on “paper gold” through GLD!
It’s Ridiculous! Stop it! Stop it right now!
I’ve even heard some of you consider that Uncle Ben’s 85 billion dollars a month could in some way be “good” for gold prices?? Have you lost your mind? Seriously! It’s 100% completely the opposite!
Ask yourself this: Who on earth could believe the dollar’s exchange rate in relation to other currencies if the dollar was seen collapsing in value in relation to gold and silver?
This would completely defeat the money printing effort of the Fed – and completely undermine the bond buying!
The Fed is a private bank! with one goal and one goal only – to profit! They can’t possibly let the value of gold skyrocket if they intend to kill the U.S dollar! Think about it!
So……The Federal Reserve uses its dependent “wallstreet bank buddies” to short the precious metals markets. By selling naked shorts in the paper bullion market against the rising demand for physical possession, the Federal Reserve is then able to drive the price of gold down.
Bullion prices take a big hit, bullishness subsides and the flow of dollars into bullion is stopped….and the money printing can continue.
As long as the Fed continues to print ( and soon looks to print more ) I am at odds with any suggestion that gold will do anything more than trade flat at best.
In any case – bring it on then……I’m ready.
The Real Game: Currency Wars and Gold’s Controlled Demolition
Dollar Index Strength Through Precious Metal Suppression
Here’s what most traders refuse to acknowledge: the DXY isn’t climbing because of economic fundamentals or interest rate differentials. It’s rising because the Fed has weaponized gold suppression as their primary tool for maintaining dollar hegemony. Every time we see coordinated selling pressure in the futures markets – particularly those convenient 3 AM EST raids when London opens – we’re witnessing central bank policy in action. The algorithm-driven sell orders flooding the COMEX aren’t random. They’re surgical strikes designed to break technical support levels and trigger stop-loss cascades among retail traders who still think they’re playing in a fair market.
Watch EUR/USD, GBP/USD, and AUD/USD closely when gold gets hammered. Notice how these pairs immediately strengthen against the greenback? That’s not coincidence – that’s coordination. The European Central Bank, Bank of England, and Reserve Bank of Australia are all complicit participants in this currency stabilization scheme. They need dollar strength just as much as the Fed does, because a collapsing reserve currency would drag their export-dependent economies into the abyss.
The Paper Gold Manipulation Playbook
Let me spell out exactly how this manipulation unfolds, because understanding the mechanics will save you from getting steamrolled. The bullion banks – primarily JPMorgan, HSBC, and Scotia – hold massive short positions in COMEX gold futures that dwarf actual physical supply. These aren’t hedged positions. They’re naked shorts backed by nothing more than the implicit guarantee that the Fed will intervene if delivery demands threaten to expose the fraud.
Here’s the playbook: Phase one involves accumulating short positions during Asian trading hours when volume is thin. Phase two launches the coordinated selling assault just before key technical levels, ensuring maximum psychological impact on momentum traders. Phase three deploys mainstream financial media to reinforce the narrative that gold’s decline reflects “improving economic conditions” or “reduced inflation expectations.” It’s textbook market manipulation, executed with military precision.
The most insidious part? They’re using your own money against you. Every ETF purchase of GLD or IAU provides more ammunition for the shorts. You think you’re buying gold exposure, but you’re actually funding the very mechanism designed to suppress gold prices. The physical metal backing these ETFs can be hypothecated, rehypothecated, and leased out to the same bullion banks shorting the market.
Currency Pair Correlations Reveal Fed Strategy
Smart forex traders should be watching gold’s inverse correlation with carry trade currencies like AUD/JPY, NZD/JPY, and GBP/JPY. When precious metals get crushed, these pairs typically rally as risk appetite returns to the market. But here’s what’s really happening: the Fed’s gold suppression creates artificial confidence in paper assets, driving capital flows back into higher-yielding currencies and away from safe havens.
The Japanese yen becomes particularly important in this dynamic. Every time gold threatens to break higher, watch for mysterious strength in USD/JPY that has nothing to do with Bank of Japan policy or Japanese economic data. The Fed and BOJ have a coordinated arrangement – dollar strength against the yen helps maintain the illusion of American economic superiority while keeping Japanese exports competitive. It’s a win-win that requires keeping gold firmly under control.
The Endgame: Physical Shortage Will Trump Paper Games
But here’s where this whole scheme eventually falls apart, and why I’m positioning for the inevitable reversal. Physical demand from China, India, and Russia continues accelerating regardless of paper price manipulation. The Shanghai Gold Exchange now trades more volume than COMEX, and they demand actual delivery. Central banks worldwide have been net buyers for over a decade, quietly accumulating while publicly dismissing gold’s monetary role.
The mathematical reality is brutal: global mine production peaked in 2018, recycling flows have declined, and industrial demand from technology sectors keeps growing. Meanwhile, the paper gold market has created synthetic supply that’s roughly 100 times larger than deliverable physical inventory. When this fractional reserve system finally breaks – and it will break – the price reset will be violent and swift.
Until that breaking point arrives, respect the manipulation but don’t get married to losing positions. Trade the trend, not your beliefs. The Fed’s gold suppression strategy is working exactly as intended, keeping currency markets stable while they continue printing trillions. Fighting this beast requires patience, proper position sizing, and perfect timing. Most traders have none of these qualities, which is exactly why this system persists.