Saturday, January 29, 2011

Market Manipulation, Why Gold and Silver Have Declined

The Thompson Reuters CRB index weighting has not changed since 2005. However, virtually all other commodities related indexes do rebalance in early Jan of every year. For instance the $CCI consists of 17 commodity constituents – with 5.88 % of the index allotted to each commodity. It rebalances in early Jan. every year.

Silver’s RABID TEAR [out performance] last year ensured that it would be “cut back” to conform to its intended 5.88 % weight.

Other commodities indexes do the SAME THING.

Big Banks know this – they run or manage most of these index funds.

Index funds dominate the trading universe more today than at any time in our financial history.

Silver and gold are being PUNISHED – in a macro sense – in early Jan - from a commodity index re-weighting point of view – PRECISELY because they outperformed so much last year. This explains why silver is getting creamed so much more than gold – it way outperformed gold on a relative basis last year.

It’s my understanding that this rebalancing window effectively closes with the expiration of Jan. Options [Wed]. (more)

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