Monday, March 29, 2010

MANIPULATION, FACT OR FANTASY

Amazingly enough...or maybe it's not so amazing, every time gold corrects we see the conspiracy theories flying thick and heavy. I've questioned these theories I don't know how many times and I have yet to receive a logical answer. Now that I think about it, I don't believe I've ever received any answer.

If gold is being manipulated by the powers that be how then in the world did gold manage to rise from $250 to over $1200? I have to say if someone is manipulating the price of gold they are doing a damn poor job of it.

I have to ask, when gold was rallying hard last November, where was the manipulation then? I didn't hear a peep from the conspiracy crowd all month.

When gold was rocketing higher in late 2007 and early 2008 where, were the conspiracy buffs? Was there a conspiracy to raise the price of gold at that time?

How about the monster rally in 2005 and 2006? How could this possibly happen if gold is being suppressed?


Folks, here is the truth. Virtually anything can be tampered with in the short term. It happens all the time. But no one and I mean no one, can halt a secular bull or bear market. Case in point, Greenspan and Bernanke have printed literally trillions upon trillions of dollars in the vain attempt to halt the secular bear market and it has backfired every time. Just like it's going to backfire this time too.


Let me show you three charts.







There's nothing mysterious about the gold market. It's simple, when the dollar is in its secular bear trend gold is in its secular bull trend. When the dollar is in a counter trend rally gold corrects or consolidates.

It really is that simple.

When gold gets extremely stretched above the mean it regresses, just like every other market in the world. Actually, regression to the mean is the one principle in the stock market, or any market, that you can bet the farm on.


When gold enters the final phase of a C-wave advance emotional traders spike the price irrationally far above the 200 DMA. Smart money, noticing what is happening, start selling. There's nothing evil about that. As a matter of fact it's just good commonsense.


Let’s face it, as long as the dollar is falling any attempts at manipulation will fail. When the dollar is rising gold either corrects or consolidates. I don’t see anything nefarious about that scenario.


As a matter of fact often, as the dollar is rising, gold just consolidates. That makes me wonder if there is a hidden group of gold bugs working to prop up the gold market when it should be falling. (wink wink)

Fact is any manipulation to depress price below the natural level of the market will only increase demand. Let's face it no one controls demand. Any attempt to force price lower than where it should fall normally will just bring in more demand from China, India, Europe, investors, etc.

If the governement is actually trying to control the price of gold it just means gold will go much higher than it would normally . We can only hope there is manipulation going on as it probably means gold will go to $10,000 instead of $5000.


So I’d have to say unless you think some mysterious force is also controlling the currency markets and the law of regression to the mean, all in an effort to manage the price of the comparatively small precious metals market, I'm going to suggest one get on with the business of making money and forget about this manipulation nonsense and if manipulation is going on then run, don't walk, to buy gold because it will only lead to much higher prices.

41 comments:

  1. Toby

    Its 10am here in London (good morning) and both today and yesterday the FTSE opened up, and then sold off & it's just turned neg as I write. Market breadth here is dropping off too. I'm mostly in cash as recommended except for some low-beta small-cap PM miners.

    Of more interest to me than GATA etc is how to tell when the forthcoming correction ends and hence pick a good entry point. The market is always volatile at the end of a sell-off. I hate whipsaws! I know that you are not into picking tops and bottoms, but i'm trying to break the habits of a lifetime.
    Regards

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  2. Considering gold is probably going to be in a consolidation phase for a while you could still buy when the stock market corrects but they may mean your positions will fluctuate up and down for a considerable period as gold goes through the next A,B and C-wave consolidation.

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  3. Of course, if we accept that the Gold market is not being manipulated, then who do we blame for our losses?

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  4. Now we are getting at the heart of the problem. Almost invariably the manipulation card is pulled when the market doesn't do what investors want it to do. And it's not just the gold market. I hear it constantly from the bears that the stock market is being held up by the Plunge Protection team, Fed, Obama so he can get health care passed, etc..

    Heck I even heard theories that during the crash that the government was behind it so they could grab power.

    It never ceases to amaze me the levels of denial people will go to to avoid taking responsibility for their own actions.

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  5. Gold is manipulated in the short term. Haven't you heard about JPM and HSBC?? It is only natural for such a small market. Why do you think Brown sold England's gold at the lowest possible price?
    Stock markets are heavily manipulated too. Of course if you would admit that then you would't have such credible excuse for the rally which in your opinion is a raging bull based on fundamentals (?) such as a flood of liquidity that has nowhere to go except on the prop desks of the big banks. Unless the economy is improving and i am so dumb i can't see it or because i don't watch bloomberg or cnbc.
    And please don't give me the cr*p of inflation which is a debatable possibility in the future but not for now.

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  6. Well if you would take the time to go to the mall or local restaurant you would see that the economy is improving. Granted is an improvement that's based on the Fed flooding the world with liquidity and its going to have an unhappy ending just like the last time they tried this.

    But let's face it when you throw trillions of dollars at the market it has to go somewhere. It's no miracle its going into stocks. There's nothing manipulative about that except the fact the Fed printed an ocean of money.

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  7. "If gold is being manipulated by the powers that be how then in the world did gold manage to rise from $250 to over $1200?"

    Perhaps the world governments are doing a very good job controlling the price. Perhaps the price would be north of $5,000 per ounce minus Government interventions. The government manipulates the supply of dollars. Why wouldn't they manipulate the supply/demand of gold?

    Take the stock market. No one can seem to explain the rise since March. However if you take government PPT money (US tax Dollars) and have 10 trading desks trading between themselves getting paid a commission (of course) to do the governments trading an instant bull market is created. This is more than just money printing going on here and finding its way into the stock market.

    Don't forget this is the same government that has shown no inflation since the appointment of Alan Greenspan and have debased the US dollar into oblivion. They don't include fuel, food, insurance, taxes and everything else people need to spend for. These government figures are BS.

    Would you want them managing your finances? Do you actually believe and trust what these people say?

    By the way I don't own, buy or sell gold.

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  8. I actually fully expect gold will get to $5000 before this bull is done.

    But to blame everything on manipulation is just silly. If the stock marekt was manipulated why didn't they just start manipulating when the market started to tank in early 08.

    Other than printing a lot of money that has to land somewhere I just don't buy any of these manipulation theories. The markets are just way to big to be controlled for anything other than the short term. I think the recent bear market is ample evidence of that.

    It's always funny that these manipulation theories spring up when traders can't bring themselves to admit they are just on the wrong side of the market. It's always easier to place the blame on someone else than just admit you missed.

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  9. You are making an assumption that blame or trading is involved in formulating a conclusion here. Neither is true, so you're wrong right there.

    The government via the Fed and Treasury control the money supply. You need to ask yourself why? If that is not a major form of manipulation then the word needs to be redefineed.

    Now, based on the fact they print money to maipulate they would be foolish not to have their mechanisms in place to manipulate Gold.

    The government manipulates the largest brokerage houses in the world too, hopefully not vice versa.

    Here's a few private sector guys that don't hang out at the FED to play bridge.

    http://www.businessinsider.com/mack-blankfein-and-dimon-arrive-at-new-york-fed-for-high-level-meeting-2009-11.

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  10. you should do more research on gold market manipulation instead of merely providing few pics here and ignoring the big mountain behind your head. looks like you are paid by U.S government.

    check this out if yu wanna know more about Gold manipulation

    http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2010/3/30_Andrew_Maguire_%26_Adrian_Douglass.html

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  11. I never said the government doesn't control the money supply I said they don't waste their time trying to control the gold market.

    I still don't see anyone answering any of my questions. So let's try again. Instead of throwing all this nutty manipulation nonsense out just answer the question.

    "Give me just one plausible reason for why manipulation would stop in Nov. 08 as the dollar was falling and why it would start in Dec. of 09 when the dollar started to rally and after gold had rocketed through $1000.

    Just one believable reason for why a manipulated market was "allowed" to rise to $1200"!

    BTW I listened to Eric King whine, piss and moan about the price of gold collapsing during the crash last year even though physical was unavailable. Anybody with half a brain knew the reason gold was crashing. Everyone was getting margin calls as the market collapsed they had to sell any and everything they had at the time.

    I was just amazed at the sniveling by King becasue his position was going against him. If he just had a little commonsense he would have realized that the market can only stay irrational for so long and the price of gold was bound to bounce back if demand was exceeding supply.

    I pretty mauch decided at that point that there was no need to listen to this character...ever.

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  12. Seeing what's at the end of one's nose requires constant effort.
    ~ George Orwell

    The universal aptitude for ineptitude makes any human accomplishment an incredible miracle.
    ~ Col. John P. Stapp

    The ideal tyranny is that which is ignorantly self-administered by its victims. The most perfect slaves are, therefore, those which blissfully and unawaredly enslave themselves. When a well-packaged web of lies has been sold gradually to the masses over generations, the truth will seem utterly preposterous and its speaker a raving lunatic.
    ~ Donald James (1931-2008)

    Men occasionally stumble over the truth, but most of them pick themselves up and hurry off as if nothing ever happened.
    ~ Winston Churchill

    Hypocrisy in anything whatever may deceive the cleverest and most penetrating man, but the least wide-awake of children recognizes it, and is revolted by it, however ingeniously it may be disguised.
    ~ Leo Tolstoy, 1828-1910, Russian Novelist, Philosopher

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  13. Toby,
    They can't answer the question.

    I really liked the one from the guy that said "For that month the manipulation, for whatever reason, was halted"

    Classic

    LMAO!!!

    I've got to say these conspiracy nuts are just hilarious.

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  14. Hi Toby. I am among those that believe in the manipulation theory, but I do understand how much disinformation can go out there.

    That being said, I have a couple of theories as to why the manipulation exists in the currency and precious metal markets.

    As for the theory on why the dollar has gone up at times when it should continue it's downward path, what about currency swaps that the Federal Reserve performs with other central banks? http://www.marketoracle.co.uk/Article10091.html

    When Alan Grayson asked Bernanke what they've done with 500 billion dollars, Bernanke admits the currency swaps, but doesn't mention who ended up with that money (dispersed by other central banks) or what they do with them. All he mentions is this process helps keep interest rates low. http://www.youtube.com/watch?v=n0NYBTkE1yQ One very likely possibility of what the foreign financial entities do with those swaps is buy U.S. treasuries which props up the dollar and diminishes their currencies to prop up their exports ... or so the theory goes. I believe this would be manipulative. If this is isn't the case, what else would the currency swaps be used for?

    One of the other comments on this blog mentioned an interesting development occuring with a precious metals trader who has been in contact with JP Morgan traders admitting to manipulating the silver markets (to the short side). Same thing happens in gold. I'll put the link on again and suggest you listen to it and the preceeding information associated with this link and tell us how it is not manipulation of the precious metal markets. http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2010/3/30_Andrew_Maguire_%26_Adrian_Douglass.html . I happen to listen to this interviewer a lot and he always has credible guests on.

    I look forward to the replies on those 2 things I mentioned. 1) Dollar being propped up through currency swaps coordinated by the Federal Reserve with other central banks. 2) Precious metals being manipulated to the short side by the big boys (aka JP Morgan and HSBC). COT report shows the Commercials and what they have on the long and short side. http://news.goldseek.com/COT/1269632037.php

    Thank you

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  15. double post

    Just read your comment about Eric King. ha, ha. He does come off as a arse licking tool at times, but I do like his guest list and the good thing is that the guests do most of the talking.

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  16. I must admit I'm no expert on the currency markets. But I do know the stock market is way too big to be controlled by anyone for anything other than the very short term. And the bond market is many times the size of the stock market and the currency markets dwarf both of them. So I have to assume no one is going to be able to change the path of the currency markets for very long.

    The fact is that the dollar follows a normal cycle just like everything else and when sentiment gets too stretched a reversal almost always occurs.

    I can tell you I've been hearing this same trader spilling the beans story in one form or another for 7 years. One of these things always manages to surface when traders make up their minds that gold isn't doing what they think it sould be doing or at least not in the time frame they want it to do it in.

    I can guarantee that once gold consolidates and once the dollar resumes its secualr bear trend gold will resume it's upward march. Then everyone will forget all about the manipulation nonsense for a while until the next correction.

    I've never understood why gold traders and investors think that gold should be different than any other asset and it should never correct.

    For heavens sake gold is only down 10% from all time highs. That's not even hardly a respectable consolidation much less correction and the gold bugs are acting like their first born son has been kidnapped.

    I mean just look at some of the comments. These people are actually irate that I would have the gall to question their precious manipulation theories.

    Obviously if we take that away they have no one to blame for their losses but themselves.

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  17. I think the manipulation aspect is easier to believe from us because gold (and to a certain extent silver) is seen as the mortal enemy of fiat currencies. Many people like to call gold a hedge against inflation. I actually would agree with Martin Armstrong's version which is gold is a hedge against government. It's in the interest of the US and most other Western nation governments to keep the price (in federal reserve notes in our case) of gold under control so that people do not lose confidence of their currencies.

    I do especially like Larry Summer's take on Gibsons Paradox. The gist of it is that in a market where gold is freely traded, suppressing gold prices can keep interest rates low. Some interesting commentary on Gibsons Paradox is found here http://www.goldensextant.com/commentary18.html


    By the way, why would manipulation supporters complain while the gold price is rising? Rhetorical question, but I do get what you're saying.

    You are right about overreacting to the correction, although I think the correction should have occurred at about 1300 - 1350, instead of 1220. Doesn't matter much to me, since I'm long on the PMs and used this as buying opportunity.

    In the mean time, the following is interesting in which a former Goldman employee says that the LMBA (or is it LBMA) acts like a gold ponzi scheme. Even admits that they trade gold fractionally at 100:1 leverage. This was also mentioned during he recent CFTC public hearings on metals manipulation. http://www.zerohedge.com/article/former-goldman-commodities-research-analyst-confirms-lmba-otc-gold-market-paper-gold-ponzi

    That market is way bigger then the COMEX. What happens if they default and can only promise cash instead of bullion? Interesting thought to ponder.

    Thanks for writing back. I think all of us agree on the end result, just differ on the means to get there.

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  18. Toby, about three years ago I would also have laughed at the mere mention of an all-out manipulation of markets, let alone precious metals. But then I became frustrated that currency-moves didn't go as I predicted (bad news silver up?). I began to look for information, and found litteraly thousands of websites covering the subject, even long before I came aware something fishy was going on, they were writing about it. At first my reaction was as was your reaction: "These markets are just TOO DAMN BIG to be manipulated for extended periods of time!" Gradually however, evidence became clear that that wasn't the case. After reading The Daily Bell, Ludwig Von Mises, Rand, Rothbard, Hayek, Rockwell, Roadtoroota et al, I found that to keep the current system running the elite HAS TO MANIPULATE this system, otherwise it would have perished by now. You are right though, manipiulation will not last forever, but it will spell the end for THIS system, not the end for mankind!

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  19. Why are you using an alias Gary? If I am correct this exact same drivel is posted on:

    http://smartmoneytracker.blogspot.com/2010/03/to-manipulate-or-not-to-manipulate.html

    Of course, you sold off all your physical and are now holding only paper Gold substitutes so it's not like you're exactly unbiased. In fact, you know so little about the Gold market that you shouldn't be running any kind of advisory service at all. It's not what you know that can hurt you, it's what you know that just ain't so.

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  20. Toby,

    GATA themselves have answered your post in amazing detail: http://www.gata.org/node/8488

    50-years of history, FOIA-released government documents, and many links. There is plenty in that one post to keep you busy, but it should answer your every question (probably several times over).

    Enjoy.

    -Rich

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  21. I've read all that many times. The fact is that if gold really was being manipulated it would be much much higher than it is.

    The fact is the governement can't control demand. Artificially suppressing price would only increase demand from China, India, investors, etc. That would drive price higher. It really isn't possible to manipulate markets other than in the short term. One certainly can't alter the course of a secular trend.

    Of course the nice thing about "manipulation" is that one never has to take responsibility for their mistakes. Hey if gold didn't do what we said it was going to do it's not our fault. The government is suppressing price.

    It's one of the oldest tricks in the book.

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  22. Don't care either way, just two questions. Did the London Gold Pool in the sixties exist to manipulate the gold price? YES, but that doesn't mean anyone is doing it now.

    "It was probably a mistake to allow gold to rise so high" Paul Volcker
    responding to a question of what he would do differently in hindsight regarding the 1970's economic malaise.

    To me, that comment would seem to suggest that they could have prevented gold from reaching 850. Note that I am not saying they could have stopped the price from rising. By comparison, the 35 dollar an oz price of 1971 went to 850 in 1980. The 255ish price 1999-2001, is roughly only a 4 time gain, the equivalent of gold hitting 140 in 1980. Or only reaching 1/6 the gains of the 70's decade. Manipulation does not mean suppression, not does it mean a one way bet. Obviously, even relatively average market observers are well aware that primary trends can not be manipulated AGAINST the trend. It can't be stopped. But, it can be slowed, and you can manipulate it both ways, up and down.

    AGAIN, I don't care one way or the other, and I don't think any traders do much either.

    I can think of two probable ways to determine if the market was being manipulated if it really matters. Position limits for EVERYONE, not just the peasants. Let's find out if the market price patterns fluctuated once 3 or 4 entities don't control 90% of the market.

    And two, allow the various national 'investment funds' to hold as many contracts as they like, and stand for delivery if they so choose for the entire allotment.

    An audit of the gold the US holds might also be a good idea.

    Again, I could care less since money is made on price changes, the direction really doesn't matter, though if I were manipulating a market, it would be done up and down, not merely trying to hold a helium ballon under water, when it slips, it tends to jump right on out, when it comes back down in the pool, i can grab it again and push it down. That is what I would do, but that's just me, I like to make money.

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  23. OK, you don't believe in manipulation, check this out:
    http://www.shtfplan.com/precious-metals/the-great-etf-gold-scam_03312010
    Look and listen to the video link at the bottom. Of course GOLD and SILVER are manipulated, look at the abuse of the futures/derivatives position in the metal markets, THAT'S HOW THEY DO IT, MORON! GEEZ!!

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  24. John,
    If there is manipulation it will only cause price to go much much higher than it would normally. So for every gold investor we should hope there is manipulation going on it will drive the price of gold through the roof.

    Unfortunately I think most conspiracy theorists overlook that fact and prefer to hold on to their beliefs so they don't have to accept the blame for when a trade doesn't go in their favor.

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  25. BTW heresy testimony from "some trader" doesn't constitute evidence.

    Short term manipulation is alwasy going to happen in every market but it won't change the intermediate or long term trend.

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  26. Bottom line: Why will the fed not allow an audit of our gold reserves? The only answer is because much of it has been sold, swapped or lent out to control the market.

    If all the gold is there and unencumbered then I may believe they have not been manipulating the gold market. Also, they could induce foreign banks to sell tons of gold by providing $$ or giving our gold as collateral. We may have the gold but it may not be ours.

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  27. Which if true just means there's even that much less supply and the price of gold will go that much higher.

    I think way too many people are assuming manipulation is a bad thing. Personally I don't believe it's happening. Well let me qualify that, it certainly happens in the short term. Big players are always running trend lines and such to get retail traders to do what they want.

    But no amount of manipulation can alter the intermediate or long term trend and in fact will only cause the trend to extend much farther than it would normally.

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  28. Re manipulation in the metals markets : seems to me only common sense when every government in the world runs on fiat currencies. The only true measure of these unbacked currencies is the amount of gold and silver they buy. Besides obvious common sense there have been statements by Greenspan and others basically admitting that Central Banks work at controlling the PM prices. The March 2010 hearing at the CFTC was an eye opener. A London metals trader came right out and stated that PM trading is heavily manipulated. GATA is not comprised of fools or fanatics, they are exposing what governments/Central Banks need to be hidden. We've got a worldwide monetary system that is the biggest Ponzi scheme in the history of the planet. This is as plain as day for anyone interested in looking. The PM markets are perhaps the major component of this con. To state that there is no manipulation other than this or that private entity illegally boosting trading profits on the short term not only goes against all common sense and reason, it ignores the facts that are out there if one cares to look.

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  29. I actually took the time to watch the video of Murphy's session with the CFTC and I've got to say he came across as the most ridiculuos whiner I've ever seen.

    This stupid crap about some trader blowing the whistle is pure BS. The jackoff was just pissed because his trades went againsst him so he made up some stupid story about manipulation.

    Geez you people are about as gullible as they come.

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  30. Toby,

    You claim that those who "whine" about governmental manipulation (suppression) of the gold price only do so as a reaction to a losing trade or market position. However, the members of GATA among others have been complaining, and yes, exposing the officially sanctioned and orchestrated suppression of the prices of gold and silver since 1999, coinciding with the bull market in both metals. So do you think that GATA holds a short position in both metals, and are just "whining" about their losses?

    Further, governments and central banks have both the motives and the means to suppress the prices of the main competitors to their fiat currency franchises. Are you so naive as to believe that they would NEVER attempt or engage in such activities, when it is a matter of public record that they have done so in the past?

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  31. Alan,
    Answer me just a few questions.

    Is there any country in the entire world that uses gold as a currency? Is there any country in the entire world that backs their currency with gold?

    If you answered no, and you had to answer no because there are none, then why in the world do you think that gold competes against any currency. The vast majority of the worlds population couldn't tell you the price of an oz. of gold to within $500. Even if gold were to go to $5000 an oz. (which I think it will) no one would question their fiat currency. This notion that gold competes against all other currencies is just ridiculous. It's never going to compete against fiat.

    Second if gold is never going to be used as a currency then what possible reason could any governement have for tampering with the market. Especially when to do so would just unbalance the supply and demand fundamentals and cause price to go much higher than it would normally?

    Manipulation would only cause the very thing to happen that you conspiracy theorist seem to think the government is so afraid of.

    I can tell you that no one and I mean no one has the means to change either the intermediate or long term trend of the gold market. Why? Because no one can control demand.

    Any artificial suppression of price would just bring in buyers from China, India, Europe, investors, etc.

    There simply is no way to supress price unless you can control demand and I'm here to tell you it absolutely can not be done.

    And by the way not only would the gold market have to be controlled but so would the currency markets because gold alwasy rises when the dollar is falling. Now if you think anyone is big enough to control the currency markets, the largest markets on the planet, I have an ocean front property I'd like to sell you here in Vegas.

    I'll also guarantee that GATA will still be claiming manipulation when gold is $5000+ dollars an oz.

    This is one of the oldest tricks in the book. Any mistimed calls are just blamed on the evil manipulators so they never have to take responsibility for losing trades.

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  32. price of gold and other PMs would be much higher if not for the need to keep their price from rising too fast and too high.

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  33. Actually it quite the opposite. Any attempt to manipulate price will only speed up golds rise. You simply can't skew the supply fundamentals without effecting demand. Like I said no one can control demand not to mention they would also have to control the currency markets (not possible).

    If the government is manipulating gold then gold is already much higher than it would be naturally. Not the other way around.

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  34. Toby,

    In answer to your questions:

    1) I am astonished that you attempt to deny that gold (and silver) is a competitor to government-issued fiat currency! The fact that no nation int he world (today, for the time being) backs its currency with gold is completely irrelevant. Gold has ALWAYS and continues to be a competitor to the fiasco of fiat currencies, which is why fiat-issuing governments have repeatedly attempted to devalue, suppress and prohibit it, our own government included. Have you NO sense of monetary history whatsoever, or do you automatically buy into the Keynesian lies that currently pass as economic learning?

    Gold is one of, if not the best and key, "barometers" of fiscal health or the lack thereof in any monetary system. A rising gold price is a classic signal of monetary debauchery and debasement, a signal which central banks and governments are loath to have broadcast. "Kill the messenger" is their typical response to any sign that their fiat currency experiment is failing, as all such experiments have throughout history. You may claim that Joe Sixpack cares not a whit about the price of gold, and he may not --- but those who DO matter WILL notice, and WILL care a great deal!

    2) You keep claiming that any officially sanctioned manipulation of the price of gold aimed at suppression would only lead to a higher price. Yes, of course --- but only EVENTUALLY. Of course all such attempts at price fixing distort the market and have an inevitable counterreaction, but such effects can be postponed to the medium to long term, and in the meantime, short-sighted psychopaths in government will vainly attempt to work against reality, as they are demonstrably doing in 100 other ways as we speak. Nobody ever claimed that such price suppression was rational nor practical in the long term!

    3) You also claim that " ... no one has the means to change either the intermediate or long term trend of the gold market. Why? Because no one can control demand." But you are wrong. Gold is not just any other commodity, like apples or wheat. Most of all the gold ever mined still exists, as most is not used in industrial processes. Gold has served one main purpose throughout history: money, and more specifically, as a store of value. By suppressing its price, and creating artificial volatility in that price, the demand for it as a store of value CAN be and often IS in fact diminished. We have already seen, in just the last few years, the overall demand for gold RISE along with its price, and demand fall along with a declining price.

    By controlling the price of gold, central banks and governments ARE thereby controlling demand --- although their methods are becoming increasing ineffective as more and more people become aware of them.

    As others have mentioned here, do you deny that the 1960s London Gold Pool existed? And if acknowledge it, just what was its purpose if not to support the dollar by holding down the price of gold?

    4) Once again, you make an error in logic by stating that, merely because the price of gold has been on a steady rise for the last 10 years, that this is somehow proof that no manipulation of its price has occurred. I don't know anyone who has claimed that our government and the Federal Reserve exercise COMPLETE control over the gold price! That takes nothing away from the idea or fact that they can and do INFLUENCE the price of gold. Please, burn that strawman argument already!

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  35. First off let me be clear I'm not a Keynsian. That has to be the stupidest theory of economics ever devised.

    The fact that no nation backs their currency is totally relevant. Gold is meaningless as a currency. The only way to use it is to exchange it for fiat. I dare you to go to the store and try to buy anything with a gold coin.

    Those who matter are the vast population, the voters, the people of any nation. The few people smart enough to notice gold already know what's going on with the money supply. The governement isn't fooling any of them by trying to supress price. That's just a ridiculous statement to think the government is somehow trying to pull the wool over the bank of China by supressing price.

    Sorry, no one can control demand if it's true demand. Can't be done my friend. Never has, never will. Any artificial supression of price will jsut bring in outsized demand which will lead to shortages and that leads to higher prices. Basic economics 101. Now it might influence the average dumb money trader trying to trade gold swings as most retail traders are unable to weather drawdowns and will sell but true demand accumulates at lower prices. That demand will not be affected by manipulation. As a matter of fact that kind of demand will be ecstatic at supressed price and will gobble up oz. by the truck load.

    In 1960 all currencies were backed by gold so certainly at that time governments would have a reason to try and manipulate gold they couldn't expand the money supply without doing so. And we all know how much politicians like to get something for nothing :)

    Manipulation never has and never will work other than to accelerate what would already happen anyway.

    I would say we got a real pretty view of that in action last year when the Fed declared their intent to artificially hold down interest rates and when the SEC decided to ban short selling in financials. both attempts immediately failed and just accelerated what was going to happen anyway.

    Like I said if the governement wants the price of gold to rise the quickest way to go about doing that is to try to hold the price down artificially.

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  36. This article has so many holes in it, I, quite honestly, don't know where to begin.

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  37. I'll say it again. All markets are manipulated to some extent. That certainly includes the gold and silver markets. But the fact remains that any manipulation will only serve to hasten what would already happen anyway.

    I do realize this is like trying to convince someone that global warming is a scam. When people make up their mind that something is so, no amount of "truth" will disuade them.

    I've had discussions with with irrate "environmentalists" who were just indignant that I would even think to question global warming. Despite the fact that nothing is happening today that hasn't happened umpteen times in the past. Despite the fact that the world has actually been getting cooler since the turn of the millinium.

    Facts don't matter. When someone has made up their mind then it's so.

    The fact is in a true bull market (which gold is) any manipulation that distorts price will only hasten what would already occur naturally.

    100 to 1 naked short selling? Great! As soon as they have to cover that position price will soar higher. Fed selling contracts short for gold they don't have? Even better, when that gold gets called price will go through the roof.

    This is just basic supply and demand people. Anything that artififcially depresses price will increase demand. If price gets depressed far enough you end up with shortages.

    Case in point during the crash we saw margin selling force the price of gold far below were it should have been under normal conditions. What was the result? All physical gold was taken off the market. The end result was that price rebounded violently and gold was the first asset to not only recover all of it's losses but to actually trade at new all time highs. It did that expressly because price was forced too low.

    Any manipulation to knock price below where it would trade naturally will just cause more demand. If manipulation is strong enough you end up with shortages. Then price soars.

    You say that price would be higher without manipulation but that's a ridiculous statement. How on earth can anyone know where price is "supposed" to be. The market "knows" where price is supposed to be and will take it there. Any attempt to force price below it's natural level will only result in price rising faster and further than it would naturally.

    It's like holding a beach ball underwater. The further down you push it the more violently it rushes to the surface when you let go.

    Gold has consistenly followed the ABCD wave pattern through out this bull market. So no amount of manipulation has been effective in changing that.

    Every C-wave has resulted in a parabolic move higher, several have resulted in massive parabolic moves. So no amount of manipulation has halted that process.

    And let's face it just like every asset gold must obey the laws of regression to the mean. There is only so far something can stretch before it snaps back.

    Gold only corrects when the dollar rallies. Now if gold were to drop when the dollar was falling I might buy the whole successful manipulation idea but that never happens does it?

    Since that never happens, then if you think gold is being manipulated you also have to believe the currecny markets are being manipulated. Please don't tell me you think the largest markets on the planet are being manipulated with the goal of taking down the price of gold.

    Folks if there is manipulation going on then it is directly responsible for those huge C-wave advances. So you should thank the government or Fed or JPM or whoever you believe is behind this for making you a ton of money.

    All that being said I realize that I will never convince anyone no matter how much I try. The conspiracy believers need to believe. Just like the global warming crowd needs to believe despite all the facts to the contrary.

    So go ahead and rail against whoever you think is screwing you. Personally if they are real I want to thank them for making me alot of money over the years.

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  38. I think it is time for a new blog post.

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  39. Toby - several times now I've gotten a virus warning when hitting your site. I'm using AVAST and its suggesting that the problem may be a trojan.

    I can't catch all of the implicated source's URL, but I see "the_inflationist dot com"

    Just a heads up to you and all.
    Cheers

    Pedro

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