What a week! The volatility in the gold and silver markets is quite noticeable and getting a lot of attention. The reasons why have been presented by a number of us, so no need to cover that some more. However, IMO something very meaningful and constructive has begun to come into play … something that is going to send the prices of gold and silver much higher in the months ahead … something Ed Wener touched on. The scenario…

*The Gold Cartel, in orchestrated fashion, has been bombing gold and silver since Leap Year Day on February 29th. They have done so with "waterfall" attacks time and time again, as Alex pointed out above. This blitzkrieg bombing has terrorized investors and influenced market commentators to talk about how dangerous it is to invest in gold. Course, that is just what The Gold Cartel wants.

*As we have pointed out for some time now, strong hand buyers, like China, are out there waiting for The Gold Cartel to go into action, so they can accumulate more physical gold on the cheap. As Ed says, weaker hands are exiting the long side due to market volatility, while strong hand, patient buyers are taking advantage of the dips and buying.

*Last Friday was a watershed day, as we have discussed, due to the violent rally on a day when the price of gold would normally have been crushed with the DOW falling apart and other commodity markets under severe pressure. It was my thinking this occurred because gold was sold out and because these normally patient buyers went to the market, competing against each other for wanted physical gold. Then, with London not opening until the following Wednesday due to the Queen’s holiday, it led to some panic shortcovering by shorts who had to be baffled by the extraordinarily unusual price action.

*The Gold Cartel had to be horrified. In typical fashion they counterattacked viciously, sending the prices of gold and silver cascading to the downside the past couple of days. But, guess what, both gold and silver bolted back up from the dead today, with gold roaring back $30 off its lows, even with the dollar firmer and the euro under pressure. And, the price stormed back even though other metals were in the tank. Platinum was down $5; palladium lost $12; copper fell 8.6 cents per pound to $3.28 and is back at its recent lows.

The Gold Cartel had both gold and silver on the ropes and couldn’t close the deal.

*That makes it two Fridays in a row that gold has performed contrary to the way it has traded for many years, thanks to how The Gold Cartel influences the price. Why? Seems to me they have overstretched. As mentioned above, there are just too many strong hand buyers that know the drill and that want in. We appear to be at, or getting closer, to the Tipping Point where the demand for physical gold and silver is strong, that The Gold Cartel will be forced to retreat … just like what happened to them around $300 and below in 2001. What might be different this time is that they might have to "run for the hills" speedily, meaning gold could move up very quickly at times in reverse waterfall fashion, or perhaps that should be “water-fountain fashion?”

Have to stay tuned for that one.

Either way, gold and silver, outside of a liquidity event in the financial markets, appear to be poised to begin a long march higher after this recent washout on the downside.

This is good timing, just out at King World News about "The London Trader" whose inside look confirms just what the GATA camp has been saying the past few days and pretty much "the scenario."…

With many global investors still rattled by the recent price action of gold and silver, today King World News interviewed the "London Trader" to get his take on these markets. The source told KWN that not only was a shocking amount of paper gold sold in just 4 hours yesterday, but it was also confirmed that the mainstream media is not reporting the staggering amount of physical gold that has actually been purchased by China recently. Here is what the source had to say: "China has purchased hundreds of tons of gold in the last couple of months. China is not disclosing what their true reserves are. Russia is delaying disclosure and so is Iran. We saw record gold imports of over 100 tons through Hong Kong to China in April, as reported by the mainstream media, but what has been reported is just the tip of the iceberg."

The London Trader continues:

"What we've seen is a dramatic acceleration of physical gold purchases as the price has been drawn down. Staggering amounts of physical gold are being purchased. The acceleration of physical purchases, at these lower levels, is the reason why gold has been holding firm and building such a nice base.

I want to be very clear about this, in addition to what is being reported by the mainstream media, we have seen hundreds of tons of additional physical gold being purchased by China over the last three months....

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/En
tries/2012/6/8_London_Trader_-_Staggering_515_Tons_of_Gold_Sold_in_4_Hours.html