Gold price manipulation -- evidence, not speculation
secondrepublic
Posts: 2,619 ✭✭✭
From scholars at NYU-Stern business school and Moody's. These are the same researchers who uncovered the LIBOR rigging scandal which has resulted in billions of dollars in fines levied against the big banks. Link to article in Bloomberg news.
Notable from the article:
"the empirical data are consistent with price artificiality"
"Large price moves during the afternoon call were also overwhelmingly in the same direction: down. On days when the authors identified large price moves during the fix, they were downwards at least two-thirds of the time in six different years between 2004 and 2013. In 2010, large moves during the fix were negative 92 percent of the time, the authors found."
"There’s no obvious explanation as to why the patterns began in 2004, why they were more prevalent in the afternoon fixing, and why price moves tended to be downwards, Abrantes-Metz said in a telephone interview this week."
Notable from the article:
"the empirical data are consistent with price artificiality"
"Large price moves during the afternoon call were also overwhelmingly in the same direction: down. On days when the authors identified large price moves during the fix, they were downwards at least two-thirds of the time in six different years between 2004 and 2013. In 2010, large moves during the fix were negative 92 percent of the time, the authors found."
"There’s no obvious explanation as to why the patterns began in 2004, why they were more prevalent in the afternoon fixing, and why price moves tended to be downwards, Abrantes-Metz said in a telephone interview this week."
"Men who had never shown any ability to make or increase fortunes for themselves abounded in brilliant plans for creating and increasing wealth for the country at large." Fiat Money Inflation in France, Andrew Dickson White (1912)
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Comments
"Who needs risk management when you’ve got guaranteed bailouts? - Jesse Felder
what people will do to complain and/or fantasize about a losing position and or trade to make themselves feel better...
and to all those who cry the manipulation mantra, you should have made more than enough money in the last 2-3 years to retire in style many times over...
Can this please be quantified?
Firms declare how many bars of gold they want to buy or sell at the current spot price, based on orders from clients and themselves. The price is increased or reduced until the buy and sell amounts are within 50 bars, or about 620 kilograms, of each other, at which point the fix is set
This sounds like market making or normal market activity, rather than collusion or manipulation.
Now supposedly these guys are college professors, so why cant they do a little research that a dumb country boy (me) could have figured out?....
They say..."There’s no obvious explanation as to why the patterns began in 2004"
I say.."SPDR® Gold Shares (GLD) offer investors an innovative, relatively cost efficient and secure way to access the gold market. Originally listed on the New York Stock Exchange in November of 2004,. http://www.spdrgoldshares.com/
I would not deny that any of this occurs. My contention with manipulation is the idea that gold was manipulated from 1900 down to 1200. The most comical of all is that this happened so the Chinese could buy on the cheap. The 2nd most comical is to give Germany its gold back (which I dont believe was ever "taken" in the first place).
If you want to be a believer in manipulation then you had better believe that the creation of the GLD had a lot to do with the increase in gold prices. It was demand for paper gold that pushed prices higher. If you believe that gold demand is still high or even increasing today but cant figure why prices dont increase, then you better start to believe that it is paper demand that dictates pricing.
Knowledge is the enemy of fear
<< <i> you better start to believe that it is paper demand that dictates pricing >>
Ya reckon?
And the fix is in the futures. Leverage is what makes manipulation even possible.
Now, about those nine dead bankers . . .
"Who needs risk management when you’ve got guaranteed bailouts? - Jesse Felder
I don't know what's magical about 2004, but it's not the establishment of the GLD ETF. Gold increased in price by 24% in 2002, and by 22% in 2003. In the 2004, the year GLD was set up, gold prices only went up 4%. Link. More likely, the central banks, after seeing gold shoot up 20+ percent in 2002 and 2003, and the accompanying media attention, wanted to tamp down the price in 2004. That's probably why the manipulation began in 2004.
Eventually the truth should come out. In the LIBOR rate setting scandal, there were emails from traders blatantly trying to push LIBOR in fake directions so their portfolios would be more profitable. If there are lawsuits brought and/or serious government investigations, we'll find out what really went on.
"Who needs risk management when you’ve got guaranteed bailouts? - Jesse Felder
<< <i>For years, people who suggested there was something amiss in the metals markets were labelled as crackpots, conspiracy theorists, wearing tinfoil hats, etc. Funny how a couple of high-level academics came to the same conclusion. The fact that these are the same scholars who uncovered what was happening with LIBOR suggests this scandal is going to have legs.
I don't know what's magical about 2004, but it's not the establishment of the GLD ETF. Gold increased in price by 24% in 2002, and by 22% in 2003. In the 2004, the year GLD was set up, gold prices only went up 4%. Link. More likely, the central banks, after seeing gold shoot up 20+ percent in 2002 and 2003, and the accompanying media attention, wanted to tamp down the price in 2004. That's probably why the manipulation began in 2004.
Eventually the truth should come out. In the LIBOR rate setting scandal, there were emails from traders blatantly trying to push LIBOR in fake directions so their portfolios would be more profitable. If there are lawsuits brought and/or serious government investigations, we'll find out what really went on. >>
It was also magical that they brought GLD on line in late November 2004, following a strong rally in gold from $370 to $455. After a week of dumping shares on to new buyers/bagholders, they whacked the price for -10% into February. The same bag holder tactic was used when the govt gave back public ownership of gold in Dec. 1974....just as gold was hitting $190+ following a 3 year rally. Then they crushed all those newbies for the next 19 months as they dropped gold down to $103. Funny, how these "great" new things for J6P come out at peaks.....lol. Same comment for silver and GDX. They brought those out in spring 2006 just after the gold and silver peaks. You can't make this stuff up. At least they threw J6P a bone by bringing out GDXJ and SIL near the 2010 summer lows. Someone must have screwed up and been fired for that one. But J6P was so gun shy of junior mining stocks after the 2008 crash that he probably ignored those new offerings. That summer 2010 period was the same point gold was showing that bearish rising wedge....and then fooled most everyone and broke out higher to $1300+.
GLD chart
SLV chart
GDX chart
Of course govts and their henchmen have been caught rigging Libor, interest rates, commodities (copper, grains, softs, etc.), currencies, derivatives, and stock markets. But they DON'T rig the gold and silver markets.