From yesterday’s Midas report by Bill Murphy

“We hear a good deal about the paper trading game (derivatives) having a great affect on the physical market … and that is true, but only for a relatively short period of time. The gold shorts, such as The Gold Cartel, can bomb the derivatives markets at the right time and turn speculative longs into sellers. Remember, the futures market is, and is known as, a price discovery mechanism. This price discovery can be based on different factors at different times. In the months ahead, however, it will get back to demand versus total available supply.

What is the fair price of gold? The futures market price is supposed to give us an idea what that fair price is now and for many months ahead. Sometimes it is right on, sometimes too eager, and sometimes too pessimistic. The Gold Cartel camp waits for the specs to become overly exposed on the long side (even if the specs are correct in their assessment) and then makes their move to flush them out, as we have just seen. We have witnessed the same pattern for the last 8 years of this bull market.”- From yesterday’s Midas report by Bill Murphy of LemetropoleCafe.com