Why the gold price is "managed"
derryb
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"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
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Fed and the Dollar
In God We Trust.... all others pay in Gold and Silver!
I can not get my head wrapped around that statement. If I bought 10 oz at $250/oz ten years ago (open or close of the US daily fix) and held, I'd have spent $2,500. If today I sold those 10 oz (again, open or close of the US daily fix), I would receive $17,500. How is that a 70% loss of my money? Your help in my understanding would be greatly appreciated here.
–John Adams, 1826
<< <i>"Note in this next chart that if one simply bought gold and held it only during the open and close of the US daily fix, one would have lost 70% of one’s money during the same period of time that gold rose in price by more than 500%."
I can not get my head wrapped around that statement. If I bought 10 oz at $250/oz ten years ago (open or close of the US daily fix) and held, I'd have spent $2,500. If today I sold those 10 oz (again, open or close of the US daily fix), I would receive $17,500. How is that a 70% loss of my money? Your help in my understanding would be greatly appreciated here. >>
"For gold to have fallen so much during the daily market, yet be up overall, simply means that gold must be up strongly in the overnight markets. Indeed, this is the case."
Buyers who bought at every US market open and sold the same day at each closing of the US market would have lost 70% overall. Author is using this fact to establish that manipulation is taking place only during the period the gold market is open in the US, therefore being beat down during US trading. This indicates when and where the manipulation occurs. Those that hold overnight are receiving strong price support from markets outside the US. He is insinuating that the overall 500% gain seen by those that buy and hold, supported by strong overseas buying, would have been much higher had it not suffered at the hands of the manipulators during US trading hours.
Based on this revalation, day traders in paper metals might consider buying just before the US markets close, holding overnight and selling the next day at the first sign of weakness.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
With such a vested interest in keeping the price of gold under control, I wonder why did the US Government decide to legalize gold ownership again?
I knew it would happen.
<< <i>Good article. You can only imagine that their methods for managing gold prices have been fine-tuned since the 1960's & 1970's. The article brings up many of the things we've learned over the years that may have seemed innocuous at the time, but the significance becomes apparent when you add them all up.
With such a vested interest in keeping the price of gold under control, I wonder why did the US Government decide to legalize gold ownership again? >>
I'm sure it was a decision heavily influenced by the bankers. And, I'm sure they have their reasons.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
–John Adams, 1826
<< <i>80% of physical demand for gold is from Asia. 7% of physical demand is from the U.S. For paper gold short sellers the ratios are probably opposite, 80% of short sellers in the futures markets are probably U.S. based hedged funds. Given that data what kind of trading patterns would an objective and rational person expect to develop? >>
The data shows US market gold transactions, on a daily basis, reduce the spot price and non-US market transactions increase the spot price. The much higher demand (more buyers) in the non-US market explain the overall climb in gold despite US market intervention. If the roles were switched and the US market represented most of the purchasing total gold would be in a bear market. In essence, the non-US market is responsible for the bull market despite stateside efforts to restrain it. I'm confident that it is being restrained at an "acceptable" level. If not, the "manipulation" would be much heavier to comensate for the strong non-US market influence.
I personally do not believe that US based hedge funds are shorting because they truely believe natural market forces call for a decline in price. I submit that much of the shorting is done on behalf of the FOMC and the hedge funds are glad to oblige since they will profit. While they might not be taking que directly from the FOMC, they are certainly watching the actions of those that do.
Both gold and silver are at the moment being hit on the NY NYMEX at approximately the same time they were hit the two previous days.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
minus fees of course.
Knowledge is the enemy of fear
<< <i>So why do people bother to invest in something that is so manipulated? Scratch my head. >>
same reason they invest in an equities market that is also manipulated: profit.
While US PM prices are being restrained, as pointed out below foreign buyers have been ensuring an overall bull market.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Over the last 8 months we have had Operation Twist, European bank bailouts, more QE from Great Britain, money loosening in China and Australia, yet the price of gold is flat and silver is down 20%.
Knowledge is the enemy of fear
<< <i>I expect to hear many more of these "manipulation", "held down", "conspiracy", "Crimex", "bankster", ect stories over the next year as the prices of PMs continue to stagnate.
Over the last 8 months we have had Operation Twist, European bank bailouts, more QE from Great Britain, money loosening in China and Australia, yet the price of gold is flat and silver is down 20%. >>
You either believe or don't believe that the Plunge Protection Team is manipulating many markets. I believe.
While authorized to manipulate bond markets, growing evidence points to their unauthorized efforts to prop up equities and knock down metals. I like their attacks on metals, it has been very profitable. With no volatility the only possible profit would be in long term holding. Those that recognize their efforts can profit, but of course not as well as those executing the trades on their behalf.
It amazes me that some people will acknowledge the covert theft of investor funds and taxpayer dollars but refuse that the same crooks might be controlling markets. Go figure. Has not Wall Street and their puppets not given plenty of evidence that they are not to be trusted? Why would these crooks not attempt to control markets?
Eventually CNBC will make us all believers.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
growing evidence points to their unauthorized efforts
Comments written as such do not lend themselves toward credible discussion. I like you derryb, but writting like that is only pandering to the uneducated masses. I know thats the way the newsletter guys like to write, but it really does not make strides toward rational and logical discourse.
With no volatility the only possible profit would be in long term holding. Those that recognize their efforts can profit, but of course not as well as those executing the trades on their behalf.
So when gold goes up its supposed to, but when it goes down or trades sideways its a manipulated conspiracy? Do you actually hear yourself?
Why would these crooks not attempt to control markets?
So lets see, 40 years ago gold was $35 and the DOW was 600. Now at $1600 and 13,000 respectively. Looks like they've done a great job and I hope they keep it up.
From a market psychology viewpoint, you are illustrating my points of discouragement precisely. IE--in the face of "obvious fundamentals" PMs havent moved, so there must be some conspiracy to explain this. This is typical investor behavior, and like I wrote before, I fully expect to see the manipulation and conspiracy theories blossom in coming months.
Knowledge is the enemy of fear
<< <i>So when gold goes up its supposed to, but when it goes down or trades sideways its a manipulated conspiracy? Do you actually hear yourself? >>
Gold price is being suppressed and equity prices are being propped up. Conspiracy in terms of aliens from mars? no. Conspiracy in terms of two or more people colluding to break the law? yes. Are these guys capable of breaking the law? wake up.
The FED has an interest in a strong stock market and does not want it challenged by a strong gold market. Face it, for quite a while now the value of gold has been a direct reflection of faith in the monetary system and those who manage it.
The data, charts presented in the OP link support my arguement, unless of course he's making it all up.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
If there is some interference, then so be it. The markets are larger than any banks or governments and will ALWAYS get their wishes.
But to blame a $1 drop in silver--like its the end of the world or something--on some conspiracy is ludicris. Afterall, just a day or so after this "manipulation" wasnt the price of silver higher?
Knowledge is the enemy of fear
I dont agree with this statement at all.
It sounds like a comment from someone who is 100% invested in gold and 0% invested in equities. Not saying thats you, but it sounds like crying. Sorry for the bluntness, just the way I am.
Maybe equities are up because corporate balance sheets have never been stronger and earnings are rising? Because the stock market has historically outperformed all other investment classes? Because many companies with fundamentals stronger than countries pay dividends exceeding 4%? Because the world is not going to end tomorrow?
Knowledge is the enemy of fear
Me thinks gold bugs place a much greater belief in this statement than the FED does as I really dont think Bernanke gives a dang about the price of gold. I do agree with you that the price of gold is a direct reflection of faith. Thats why I liken its perceived value to that of religion. And there is a reason why we have separation of church and state.
Knowledge is the enemy of fear
Hmmmm. I think you should include politicians in your list.
I knew it would happen.
<< <i>Gold price is being suppressed and equity prices are being propped up
I dont agree with this statement at all.
It sounds like a comment from someone who is 100% invested in gold and 0% invested in equities. Not saying thats you, but it sounds like crying. Sorry for the bluntness, just the way I am.
Maybe equities are up because corporate balance sheets have never been stronger and earnings are rising? Because the stock market has historically outperformed all other investment classes? Because many companies with fundamentals stronger than countries pay dividends exceeding 4%? Because the world is not going to end tomorrow? >>
I am 100% metals and 0% equities and it is based on fundamentals for each. I have not stated that there is an "attempt to fleece the people of their gold." I have gone on record that there is a successful attempt to fleece people of the gold profits that they should be realizing.
Crying? Not in the least. Because I do have my eyes open I am able to profit from what I see. For my own investments, I wouldn't have it any other way. Took me a while to figure them out, hate to see them change course while I'm winning.
To be clear:
Inflation or deflation? I'm in the inflation camp because I do the shopping in my household and I do know the coming effect of all the new money creation combined with the concentrated effort to convince consumers to absorb more debt. The fact that housing is deflating is irrelevent only because it was allowed to heavily overinflate.
Metals bull or bear? Bull because of the dollar destruction resulting from fiscal and monetary mismangement (they may actually be getting the results they desire). Additionally the FED has "allowed" steady, controlled price gains and shows no effort to not continue doing so. If and when they do lose price control, metal will go parabolic.
Market intervention or no market intervention? Intervention because I study the fundamentals of both equities and metals and realize what is up should be down and what is creeping along should be parabolic. I also have seen (even on CNBC) what those in control are capable of doing and it is not short of lying, cheating and stealing.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>
<< <i>"Note in this next chart that if one simply bought gold and held it only during the open and close of the US daily fix, one would have lost 70% of one’s money during the same period of time that gold rose in price by more than 500%."
I can not get my head wrapped around that statement. If I bought 10 oz at $250/oz ten years ago (open or close of the US daily fix) and held, I'd have spent $2,500. If today I sold those 10 oz (again, open or close of the US daily fix), I would receive $17,500. How is that a 70% loss of my money? Your help in my understanding would be greatly appreciated here. >>
"For gold to have fallen so much during the daily market, yet be up overall, simply means that gold must be up strongly in the overnight markets. Indeed, this is the case."
Buyers who bought at every US market open and sold the same day at each closing of the US market would have lost 70% overall. Author is using this fact to establish that manipulation is taking place only during the period the gold market is open in the US, therefore being beat down during US trading. This indicates when and where the manipulation occurs. Those that hold overnight are receiving strong price support from markets outside the US. He is insinuating that the overall 500% gain seen by those that buy and hold, supported by strong overseas buying, would have been much higher had it not suffered at the hands of the manipulators during US trading hours.
Based on this revalation, day traders in paper metals might consider buying just before the US markets close, holding overnight and selling the next day at the first sign of weakness. >>
What if you bot the closing instead? Seems like the guy manipulates the facts here, but maybe not.
<< <i>I didnt say there was none, and in fact wrote just yesterday to watch the leading stocks today for "painting the tape" type of action. And I've made comment about options and market makers/specialists. However, I DO NOT believe there is a consistant and unadulterated attempt to fleece the people of their gold for the enrichment of the very wealthy and banksters.
If there is some interference, then so be it. The markets are larger than any banks or governments and will ALWAYS get their wishes.
But to blame a $1 drop in silver--like its the end of the world or something--on some conspiracy is ludicris. Afterall, just a day or so after this "manipulation" wasnt the price of silver higher? >>
I agree with you on most points here, but market makers and option specialists don't manipulate prices. They may clip a fraction here and there, but that's not manipulation. They hedge positions...
Hedge funds will paint the tape on the last day of the month...but only to mark up or down a stock...and they can only move a stock so far...a fraction or a point at most.
But there are so many hedge funds with so many hedges that they often counteract each other while trying to mark prices.
The markets are too big to manipulate, especially in mid and large cap stocks. Earnings, in the long run, determine stock prices.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>I expect to hear many more of these "manipulation", "held down", "conspiracy", "Crimex", "bankster", ect stories over the next year as the prices of PMs continue to stagnate.
Over the last 8 months we have had Operation Twist, European bank bailouts, more QE from Great Britain, money loosening in China and Australia, yet the price of gold is flat and silver is down 20%. >>
Bt that's the exact period where gold was coming off a massive overbought condition. Regardless of the programs that were to immediately follow, a correction was still going to
occur. You don't neutralize a 3 yr advance in just a couple of months. But if you read the TR report linked below they have examples of the computer trading algo's that took gold down hard last September. Gold is now 7 months into corrrection which is similar to the time that 2008 took to recover. Going forward, regardless of the anti-gold news being reported it will probably meander higher. Those money flows mentioned above will still come home to roost in future gold prices....but just not today. The Banksters made several billion dollars on gold's September takedown. The game is to let it rise far enough in order to make a killing on the subsquent takedown. Lather, rinse, repeat. If they just always tried to beat it down they wouldn't make as much money as the other side of the bet would just disappear. So a controlled 10 yr rise with numerous shake and bakes is the best method for them. And without any of this managment, it would have already visited north of $2,000 before 2011. The banks would be stupid not to manipulate gold as they do most everything else that is important to economies and the perception of those economies. And if I'm trying to manage/manipulate the huge forex and bond markets, what better way to do it than via the much
smaller gold market using leverage? A fiat buck goes much further in altering the gold chart than the USDX chart. Gold is still up 6% this first quarter despite all the continued efforts to take it down. Still on track to log its 12th straight year. All this debt-funny money eventually comes back to the gold price. If it doesn't happen this year, it will be next year.
Thunder Road report - 24hr gold algo's in play to manage price
<< <i>Over the last 8 months we have had Operation Twist, European bank bailouts, more QE from Great Britain, money loosening in China and Australia, yet the price of gold is flat and silver is down 20%. >>
are not these programs nothing more than manipulation of money and credit markets?
Charles Biderman: The Problem With Rigged Markets
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey