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Why did gold plunge nearly $45 yesterday? Certainly, hedge funds were selling – Could it be a case of end-of-year booking profits? Maybe. Most of the funds operate with short-term thinking. They don’t care if gold will go to $10,000 in three years, they only care about today. That makes for volatile markets. Truth be told, when the price falls off a cliff, a “waterfall drop” like yesterday (see charts below) there is no way that profit is the motive for the sale. Usually it’s the Gold Cartel (aka JPMorgan) dumping a lot of contracts to start the fall and then the mindless computers that run the buy and sell orders for the funds join in. What you get is another day like today. They happen all the time, but, at the end of the year, gold will still be up $300 or more. I don’t mind – I purchased 20 one-ounce Platinum Eagles today at a very good price.

Read what our own Ranting Andy Hoffman has to say from yesterday’s Rant, Rehypothecation.

Read the following article by LeMetropole Café for their take – which, by the way, I happen to agree with completely!
Sinister is the best way to describe what is occurring in the precious metals markets. That description can’t just be assigned because of disappointing price drops. It is how, when, and why they drop, which is so sickening and perverse.
For the last 13 years the GATA camp has highlighted the activities of The Gold Cartel and their various tactics … such as PLAN A, B, and C, 2% Rule, etc. Another is to foretell imminent attacks on gold by selling in the gold/silver shares or silver right before an assault on gold. In the case of the shares it is usually a day earlier … for silver it can be minutes or hours. It is as if they are sending out their signals to other traders about what is to come for bullion.
Last night was a perfect example of how The Gold Cartel operates. In early Asian trading hours gold was down $2.50, but silver was down over 50 cents, especially glaring after the way it traded Friday on the Comex. Huh? Not too long after, like in a blink, gold suddenly fell over $25 in minutes … yet another one of its waterfall collapses … another Gold Cartel raid in action following their silver smoke signal…

It went from bad to worse. Gold fell to $1656 on the Comex before calming down. Silver actually fared relatively better following its initial bombing last night. It sank to $30.78 early but seemed to want to get back around $31, even with gold under pressure. The sequence often appears to be JP Morgan knocks silver, gold gets trounced, and then the Morgan traders take advantage of the gold selling to cover their silver shorts. Bing, bang boom … money in their pocket.
It is clear what The Gold Cartel was up to. Gold had formed a giant wedge pattern since late summer and the cabal’s contrived selling during a very light trading time in Asia (another drive-by shooting) blew the price through the floor of the lower wedge trend line…
Daily gold
http://futures.tradingcharts.com/chart/DG/
According to Café member Craig Rogers, gold dropped from $1711 to $1688 in a matter of minutes as 4,000 contracts were dumped on the market. That sort of selling is not done by anyone trying to maximize profits on their sales. There was an agenda there, pure and simple … another Gold Cartel tactic to demoralize the market and to hoodwink long speculators.
Once that floor of the well formed wedge broke it engendered all sorts of technical selling including that of the ubiquitous Dennis Gartman…
(Kitco News) – As gold prices valued in euros continues to fall, newsletter writer Dennis Gartman says he is reducing his position in the metal. He says based on technical charts, prices have fallen through an upward sloping trendline. “The gold bugs will take us to task for abandoning gold once again. That is fine with us. Let them take us to task. We’ve been bullish for quite some while; that bullishness has been proven proper, and if the market’s price action dictates that we hove to the sidelines, hove we shall,” he says. He also notes that when he is ready to reenter the market, it will be to own gold and gold equivalents, and not gold equities. He points out that since last December, gold’s price has risen about 24%, while the Barron’s Gold Mining Index has fallen approximately 8%. “There will be a time when the gold mining shares outperform gold itself, but that moment is still likely not upon us,” he says.
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This morning, I sent Backwoods Jack the following email:

“Jack, what is happening to this great country of ours? It ain’t what it used to be!”
Chris Powell: Suspend habeas corpus and enact martial law?
By Chris Powell
Journal Inquirer
Manchester, Connecticut
Monday, December 12, 2011

http://www.journalinquirer.com/articles/2011/12/12/chris_powell
/doc4ee6179b321e6127406122.txt

Americans seem ready to forfeit their most basic civil liberty — actually, all their civil liberties — without a whimper.
By a vote of 93-7 the Senate this month approved a military appropriations bill empowering the government to designate any U.S. citizen within the country as a terrorist and to have the military hold him indefinitely without trial and without the right to habeas corpus, the right to be brought before a court for a judgment on the legality of one’s imprisonment.
In effect the legislation is a declaration of martial law throughout the country.
The bill still has to be reconciled by a conference committee with a different version passed by the House of Representatives. But even Connecticut U.S. Rep. Joseph D. Courtney, a liberal Democrat and a member of the committee, plans to support the martial law provision and expects it to be enacted. Courtney, who used to be a lawyer, cites as consolation the money contained in the bill for Connecticut military contractors, tens of millions of dollars for jet fighter engines manufactured by the Pratt & Whitney division of United Technologies Corp. in East Hartford and for nuclear submarines made by the Electric Boat division of General Dynamics in Groton.
At least Connecticut’s junior senator, Richard Blumenthal, was one of the lonely seven senators who voted against martial law. Connecticut’s senior senator, Joseph I. Lieberman, who also used to be a lawyer but now is the Senate’s foremost advocate of perpetual imperial war, voted for it.
The Constitution prohibits suspension of the right of habeas corpus “unless when in cases of rebellion or invasion the public safety may require it.” While habeas corpus was suspended in certain circumstances during the Civil War, there is no rebellion or invasion now and no impairment of the criminal-justice system, and the mere danger of terrorism does not constitute rebellion or invasion.
President Obama is threatening to veto the legislation but not so much for its suspension of habeas corpus. Rather, the bill is objectionable to the president because it would prevent the government from transferring terrorism suspects from the prison at Guantanamo Bay, Cuba, to installations in the United States, even for trial.
If the bill becomes law the president and his successors will gain dictatorial power, the power exercised by the worst tyrants in history — Hitler, Stalin, and Mao — the power to kidnap anyone off the street or out of his own home and lock him away incommunicado forever. The president will be able to do that even to members of Congress themselves, and while it would suit them right for enacting such an abomination, Americans better rise up and stop it if they don’t want the country to slip into totalitarianism as Germany did in similar circumstances in 1933.
First the German people were demoralized and deprived of economic security by hyperinflation and depression. Then they were frightened into submission by the burning of the parliament building in Berlin, which was opportunistically depicted by the National Socialist-dominated coalition government as Communist Party terrorism and used as the pretext for a proclamation, issued the next day, suspending all civil liberties, including, specifically, habeas corpus. Three weeks later the Nazis persuaded parliament to surrender its power through the infamous Enabling Act, allowing the Nazi chancellor to rule by decree. He did so for 12 more years.
Eventually one of those decrees was the “Night and Fog” decree, under which people across Europe simply disappeared, never to be seen again.
Americans may have some vague awareness of the horror perpetrated by Germany back then. But do they have any idea of how closely they are following the Germans in what led to it? Our politicians don’t seem to have any idea.
Republicans who scream about the supposed oppressiveness of a government that would require everyone to have medical insurance are rushing to give that government the power to make people disappear. And Democrats who chafe at the government’s refusal to recognize same-sex marriage are ready to forfeit the longest-established and most substantial liberties because a free society can never eliminate the danger that someone can plant a bomb somewhere — though a totalitarian society can’t eliminate it either.
No amount of military contracting in Connecticut can be worth even a day without due process of law. The purpose of military contracting is to protect the country, and without due process of law the country will not be worth protecting.
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Chris Powell is managing editor of the Journal Inquirer.
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Shortly thereafter, Backwoods Jack sent me the following email in response to the article by Chris Powell:
It`s about time the Senate showed some brass balls. Illegal aliens
should all be deported and given an opportunity to file for entry and
US citizenship.  All 11 million of them. Those needed to work on farms
should be given temporary visas and apply for them yearly with no
voting rights. Must have drivers tests as well. If this is martial law
so be it.   They also should have health insurance and speak English
in order to get a work visa.  If 11million paid 10 dollars a month for
health insurance and social benefits California would be prosperous
again.    Why are Jewish people notoriously liberal? Seems the only
Jewish hawks are in Israel and God Bless Them!!!!!  
Jack
It took me a few minutes to stop shaking my head, but when I recovered from the email, I shot off a reply:
Backwoods, Are we reading the same article.  It talks about loss of habeas corpus and you write back about illegal aliens?  Jack – Jack – here one of our most important freedoms is being trashed and you fart in the wind.  Will I ever be able to help you?  I really am starting to doubt it.  You are just an old horse who refuses to change his ways or views.  They usually end up in the glue factory.  Start thinking rationally; you do have a very large and active brain.
As for Jewish people, being the object of centuries of prejudice and persecution, they tend to support the underdog.  That is a fine trait, though in this case, we can’t as a country, afford to support these causes.  And, as you know, Susan and I are not very liberal – on social issues yes, on fiscal issues no.
We try to be open minded – even about the possibility that your promised ‘spring will bring a strong economy and that our country will turn things around and once again be the great country that emerged from WWII.’  But the odds of that happening are nil.  Re-read the article below and you will see where our idiots in Washington are leading us.  Not down a road you want to travel!
The reason I keep inserting these (real) emails between my dear friend Backwoods Jack and myself is because Backwoods represents the great majority of well to do 70+ year Americans. Try as I may, I just can’t believe that these folks don’t “get it.” Especially someone like Backwoods, who has had the benefit of nearly a decade of my tutelage.

The following quote from Mr. Gold, Jim Sinclair, is of particular interest to me.

For those of you who still do not believe that the government intervenes in the gold market, take a look at what Jim has to say:
Dear CIGAs,
The following action is to be taken when the gold price get hit as currency controls are prepared, financial euromortus sets in, euro leaders talks politics, not actions, and when clearing houses go pear shaped.
Close your eyes, cover up with puppies, turn the heat down, light a wood fire and take a nap. Gold is headed for $4500 in the normal manner it always does – 5 steps forward and 4 back. RELAX!

Major buyers are between $1610 and $1650. Sellers are at $1764. It looks like the Gold banks are working for the Exchange Stabilization Fund.