In what was a very obvious push to limit the damage done to those short the metals this month, Gold (AMEX:PHYS) and Silver (AMEX:PSLV) both were sold with extreme prejudice this morning to ensure a more favorable close to the month on the October contracts. Gold fought back to the $1750 level, landing those contract just barely in the money on the COMEX close. October closed at $1752.10 while Silver flirted with the $34.00 level after an initial dive near $33.00. It ultimately failed to close at that level, ending the month at $33.88 for October, ensuring the likelihood that JPMorgan (NYSE:JPM) gets to live another month.
The delivery period begins on Monday and there are two days left this week for institutions and investors to decide how they feel about this current market. QE has not had the rocket-boosting effect it was expected to have, which means that the asset deflation scenario is much worse than is being discussed in the 24/7 all-in-or-go-home financial propaganda houses. The U.S. Postal Service is due to default on retirement benefits in 4 days and there are a growing number of municipalities in the U.S. that are also on the edge of default. Who do you think is going to take the brunt of this? The Treasury bond market is getting another strong bid as the fear trade, but this time in the U.S., is beginning to return.
Until the changes to the capital adequacy rules are finalized, Gold is still not a Tier I capital asset and hence can and will be sold during a fear-induced market panic. Early October is market spasm time normally as money managers do their quarterly re-balancing.
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