London Trader Redux


Observers of recent gold and silver price action will note that December 2012 is closely following December 2011's script. Last year, too, gold responded to bullish news by falling below its 200-day MA.

Also, on December 20 & 21 of last year, the London Trader made an appearance on KWN, prompting one of my more popular posts, an objective appraisal of his claims to insider connections (e.g. in Asia) and market foreknowledge. My best conclusion (in the comments) was: 
So, it seems [The London Trader] has a knack for coming right before big movements, in either direction. . . Next time he appears, think long straddle.
Well, it turns out that was pretty good advice for 2012. The red, dotted vertical lines on the chart below mark the dates that the London Trader appeared on KWN since last year's post:

Interestingly, on December 20 and 21 of this year, the London Trader did not make a KWN appearance, but Andrew Maguire did. It's pretty obvious, though, that Andrew Maguire is, in fact, the London Trader. For example, if you listen to the latest interview, the London-dwelling trader Maguire says that futures players at hedge funds are "just chasing dots on a screen," which echoes the London Trader's locution from last year: "These kids are literally just chasing a dot up and down a screen" 

So, I suppose we should expect some violent price action in the near future, either up or down.


Anyway, for the record, please find below links to all of the London Trader's KWN posts since my similar post last year (in chronological order, coinciding with the dotted red vertical lines on the chart above), so anyone can read and judge for himself whether this guy is to be trusted or not. 

12/20/2011 "We are making a historic bottom right now. " [technically still true, as gold hit $1523 the next week, but hasn't gone below that again so far]
12/21/2011 “Each of those important support pivots that everyone is watching, like the 50 day moving average and so on, each one of those are taken out in the access market in the quiet trading, overnight, on three successive days.  In other words, they take out these three important pivots, which turns the momentum buyers into sellers. "[fair summation]
1/17/2012 "If we get a pit close above $1,650 you could see a lot of scared shorts begin to cover.  This could create a very quick move higher in the gold price."[good prediction]
3/7/2012 "You see people saying gold is headed to $1,620, $1,600, $1,500.  I guarantee you these individuals do not know what’s going on in the physical market.” [gold proceeded to fall to $1620, $1600, $1545 over the next 4 months]
3/8/2012 "The physical silver orders that were just filled have been waiting since February 16th.  Those orders near the $33 level were filled in huge size on Tuesday.  These long-term accumulators are buying every dip.  There were some fills at $34, but some very large orders were filled near $33. As long as we stay under $34, there is going to be constant accumulation. [silver of course made a new low a few months later of $26.18, and spent months with a $27 handle]
3/19/2012 "Those that have been calling for gold to collapse to $1,200 are completely unaware of what is taking place in the physical market.  Who is going to sell it down to those levels?  Hypothetically, if it were to drop below $1,600, China would literally be buying hundreds of tons of gold." [good point about gold's falling to $1200, but it did spend ~3 months below $1600, so China must've bought hundreds of tons squared]
4/5/2012 "There are bids for hundreds of tons of physical gold starting at the $1,610 level and below.  This is why the recent decline in gold halted $2 above that level. " [those Asian bids seem always to be there until they're not]  "You think the Fed and the bullion banks don’t monitor King World News?" [no comment]
6/8/2012 "During all of the chaos of the last couple of months, the Eastern hemisphere has been vacuuming physical metal out of the market...There was an absolutely staggering amount of silver that was purchased by an Eastern buyer three weeks ago near the $27 level" [that buyer and his Asian friends presumably ran out of money to buy silver when it fell to $26 shortly thereafter].  "The bullion banks are ...trying to extricate themselves from their short positions in the paper market.  They are attempting to do this before transparency comes into the market.  They do not want a situation where the aggressive hedge funds actually get evidence that these bullion banks are naked short." [of course, the same bullion banks proceeded to build up enormous short positions again several months later, positions that remain enormous in silver]
7/20/2012 "It is now beginning to be discussed, openly, that the unallocated gold is not at the banks.  This is definitely the case with many of the allocated accounts as well.  The reason I’m pointing this out is you have a more ‘open’ disclosure that’s taking place with regards to this. This tells me there is something major that is happening behind the scenes... something is brewing here.  There’s no smoke without a fire.  The reason this information is beginning to be discussed more openly is because of legal reasons.  They need to be able to say, ‘We disclosed to people that the gold and silver wasn’t there.’ " [though King later gives the London Trader credit for calling the $200 rise that eventually followed this interview, clearly, he wasn't making a short-term price prediction here, just explaining a phenomenon. Nonetheless, his bullishness came right before gold moved past $1600 for good (so far, anyway)]
10/16/2012 "The London Trader assured KWN that 'we are not going to see a waterfall decline in the gold market.' ... India is back buying in the mid-$1,700s.  India was back yesterday.  India is back today.  They need to buy gold and they are stepping ahead of other entities and becoming a large buyer. The Indians are not stupid.  They know the commercials harvest the weak hands on the COMEX.  Once they see open interest get to a certain level, they fully expect a reaction in the price.  But your readers have to understand that there isn’t going to be a ‘correction’ this time, there will only be a ‘pull back.’  There is a big difference between a pull back and a correction." [you be the judge: gold was at $1750 that day, fell to $1684 over the next few weeks, made its way back to $1750, and since then has fallen as low as $1635 with most of the fall coming over a few days] 
10/16/2012 "“It got to the point where the vast majority of stops were located near the $1,810 level.  If gold would have pierced $1,810, that would have tripped the vast majority of all of those weaker, underwater commercial short positions out of the market.  This would have created enough of a short squeeze that we would have seen new highs in gold very rapidly.This would have been a literal failure by these commercials (commercial signal failure).  The gold market got to within $10 of their stops.  Why do you think the bullion banks threw everything they had at the gold market at the $1,800 level?  We were within a hair of a major price explosion, and disorder in the gold market. " [that certainly sounds plausible, but also (unfortunately) somewhat Wynter Benton-ish in its "just so story" aspect]
10/17/2012 "As the markets are taken down, it exponentially increases the amount of physical silver that needs to be filled." [but keep in mind, silver was at ~$33 at the time of this interview, so the "exponential" buying must have continued all the way down to $29.90, where silver now sits. Which raises the question, what good is this seemingly constant exponential buying if silver can fall 10% in a week, and show no near term signs of recovery? Maybe one day it will make a difference, but no obvious sign of that over the past year] 

Links to Maguire's 3-part appearance here. Let's see if he can outperform his alter-ego.

6 comments:

duggo said...

"So, I suppose we should expect some violent price action in the near future, either up or down."

So are we buying or selling? Confused dot com

GM Jenkins said...

So are we buying or selling?

We're drinking eggnog, duggo. Eggnog!

duggo said...

So I can take it the eggnog is definitely down.

Warren James said...

Beware the traditional celebratory Eggnog @ GM's country mansion, a deep draft I have drunk, my head feels like a mashed pumpkin.

Keeping the pundits honest is good stuff, GM. My takeaway is that most of those calls were decent except the ones related directly to a purported physical/paper disconnect where it gets hairy. I should tune into KWN more regularly...

This post appears to have gotten a bit of attention over at TMFR, good! .. to be honest I am not sure why anyone would resist the idea of A.M. = L.T. (unless it's associated with insider trading or something - that would be a juicy scandal).

S Roche said...

Warren,

Over at Turdville part of your work was re-posted without attribution:

http://www.tfmetalsreport.com/comment/253848#comment-253848

and earned the poster 9 hat-tips, which I think you can bank as your own, and some praise for accuracy:

http://www.tfmetalsreport.com/comment/253923#comment-253923

and a very snarky rebuke alleging plagiarism:

http://www.tfmetalsreport.com/blog/4406/wrapping-2012?page=9 which earned 24 hat-tips, and by rights belong to you as well.

Yes, I have a lot of time on my hands watching the gold price crawl towards my targets.

Snopes Roche

Warren James said...

:) yes, quite a discussion. I think GMJ could easily get a job writing charting content for TFMR (I hear the pay is better than Screwtape Files). Perhaps imitation is the sincerest form of flattery? I agree attribution should have been given, I was a bit jealous that GM had the time to stitch together all these London Trader price calls - I wish we had the time to do it for all the commentators out there it would keep them honest.

Speaking of holding folk accountable for their predictions, Martin Armstrong has recently clarified his position - we are headed straight for STAGFLATION he says, not HYPERINFLATION. It's good that Martin has come of out the closet on this issue, though I'm surprised that he thinks the USG will not print money to cover the deficit ???

I personally think it will be another year of (mega) can-kicking, proving most pundits wrong in the process, but WTFDIK? GM's call based on the TPTB keeping things 'normal' was a good one and reliable.

Regards,