Blog

Gold is Manipulated (But That's Okay)

Wednesday, March 28, 2012, 11:00 PM

The price of gold is being actively managed by central planners and their proxies. The main culprit here appears to be the US authorities, as the manipulation is most apparent in the US open gold market. For the most part, this 'management' has resulted in letting the price of gold rise, but not too much, or too quickly. 

The price of gold has always been an object of interest for governments and central bankers. The reason is simple enough to understand: Gold is an objective measure of the degree to which fiat money is being managed well or managed poorly.

As such, whenever paper money is being governed poorly, the price of gold becomes an important barometer. And this is why the actual price of gold is a strong candidate to be 'managed.' Or 'influenced'. Or 'manipulated'. Whichever word you prefer, they all convey the same intent.

Some who are reading this are likely having an eye-rolling moment because they hold a belief that there is no conspiracy to manage the price of gold.

This is an interesting belief to hold because it runs heavily against the odds. It's similar to holding the belief that the house in Vegas does not have a statistical advantage.  

We could spend a lot of time discussing how a belief such as 'gold is not being manipulated' gets promoted and inserted into the popular consciousness, but we won't. Instead, we'll simply note that the people who hold this belief -- and you may be among them -- react to the concept at a visceral level, often with strong emotions such as anger or contempt, and even anxiety.

When a strong emotional response surfaces during a conversation of ideas, it usually means that beliefs are in play -- neither facts nor logic. Experience has taught me that when someone becomes dismissive or angry or hostile when the idea of price manipulation is discussed, it's best to simply drop the conversation and move on. No combination of logic or facts is effective against a deeply-held belief. It's better to wait until some new evidence calls that belief into question, opening the door for revisiting the topic.

But for those with an open mind, there is a very interesting trail of dots to connect.

The Logic of Gold Price Management

Unlike beliefs, opinions can be discussed and even modified without first running through an emotional thicket. They rest on data and ideas that can be consciously accessed and are therefore easier to change. 

It is my opinion that the price of gold is being actively managed and/or overseen by official parties. On a strictly qualitative level, I hold this opinion because if I ever found myself in charge of a system of money rooted in confidences, as is our current fiat regime, I would consider the active management of the price of gold one of my fiduciary responsibilities.

Gold is an important signaling mechanism, and our entire money system is faith-based. Of course anything and everything that could cast doubt on that system would be controlled if it could be controlled.

To emphasize the point: If gold were suddenly to spike up to $5,000 an ounce, all sorts of troubling questions would emerge for people. Such as, is there something wrong with the dollar? Is the world falling apart? A rapid spike in the price of gold would certainly cause people to question the current state of the world of fiat money, and that is an unpardonable sin when your money is, at root, faith-based.

Instead of asking why do you think the price of gold is controlled? I ask, why do you think the price of gold is NOT controlled?

Managed Prices and Signals

Aside from my opinion that our faith-based fiat money system mandates the management of the price of gold as a matter of fiduciary responsibility for those in power, here are some other facts that we have in our possession:

  • The quantity of money is managed
  • The price of money is managed (via interest rates)
  • Because interest rates are being managed (mangled?) to near zero, it means risk tolerances and preferences are being managed towards taking on higher risk
  • The price of oil is openly managed, with strategic releases from time to time
  • The price of food and energy are managed via subsidies, both direct and hidden
  • Official statistics (e.g., GDP. inflation, employment) are heavily biased, massaged, and managed to tell a rosy story vs. a more realistic version, which means that perceptions are managed

Out of all these efforts, certainly the one with the most dramatic impact is the management of the price of money. That sets the stage for nearly every ill that follows, especially including the encouragement of taking on additional risk and the inevitable malinvestments that result.

Bernanke on the Fed’s Interest in Stocks

In a Wall Street Journal op-ed, Bernanke openly revealed something that was already obvious to many: The Fed has been very carefully following the equity markets because of the importance of rising stock prices in fostering consumer spending. That is, the stock market is a signaling device, and the Fed is, naturally, quite interested that it signal the correct things.

More bluntly, the Fed is interested in seeing the stock market go up instead of down.

Here’s Bernanke in an op-ed placed in the Washington Post back in 2010 discussing the effects of QE2:

This approach eased financial conditions in the past and, so far, looks to be effective again. Stock prices rose and long-term interest rates fell when investors began to anticipate the most recent action. Easier financial conditions will promote economic growth.

For example, lower mortgage rates will make housing more affordable and allow more homeowners to refinance. Lower corporate bond rates will encourage investment. And higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending. Increased spending will lead to higher incomes and profits that, in a virtuous circle, will further support economic expansion.

(Source

Yes, Virginia, the Fed does watch stock prices closely. And it targets their efforts to assure that the ‘virtuous circle’ is in play. No real surprise there.

Given that big list of managed prices and signals, with literally nothing left untouched because of the price-of-money effect, we are again left to wonder how likely it is that anything has escaped the attention and efforts of our well-meaning (but certainly misguided) central planners.

To my view, gold is simply far too important to be left to its own devices. The evidence strongly suggests that it indeed has not been.

Evidence for Price Manipulation

Critics of the idea of price manipulation might scoff and ask, if gold is manipulated, as you say, then how do you account for the 590% price increase over the past 11 years?

The idea here is that if gold were manipulated or controlled, there's no way it would have 'been allowed" to increase by that much.

In the above chart, we can see that gold has been in a remarkably steady run for the past three years. It is almost as if a ruler has been drawn under the price of gold, which has rarely deviated by much from that trajectory.

Certainly some might argue that this is an extremely poor piece of data in support of the idea that the price of gold has been manipulated, unless we want to argue that it has been manipulated upwards to rise nice and steadily (like air being slowly pumped into a balloon).

A fair point, perhaps, yet it is one that not only completely falls apart, but bolsters the case for price suppression when we examine the price action of gold in the daily vs. the overnight markets.

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%.



As the chart above shows, the performance is dismal. For example, take a hypothetical gold investment fund starting with $100m in 2001, use it to buy gold only at the US AM fix and sell at the US PM fix until the present, and it would now be left with just $31 million, almost a 70% loss in just under ten years. Over the same time period, gold prices have risen over 590%.

Here we might ask a simple question: How is it possible that an asset that rose across all world markets by more than 500% fell during active trading in the most important market of them all (by volume) by 70%?

Trading is a zero-sum game, and for every winner there is a loser. Who was it that lost so much money in the daily markets fighting a tide that lifted the golden boat by more than 500%? How can there be such an uninterrupted series of losses for gold during this period?

There's a trading maxim that goes like this: Once a trend is established, other traders will identify that trend and either ride it or step out of the way. That is, sooner or later the trend stops, because too many people have caught onto it and its profitability gets traded down to zero. Yet selling gold into the daily market has been a sure-fire winner for over an entire decade.

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.

We can easily see the startling difference in the chart below. It compares the results of a simple 'buy and hold' investment in gold over the past ten years vs. a more active (and clever) strategy that both shorts gold during the daily hours and then buys gold long for the overnight session:

(Source

This strategy captures both the daily losses and nightly gains into a single, combined monster gain that has returned over 5,000% over the past decade with very few drawdowns, handily beating the price of gold itself by a factor of ten.

Again, how is it possible for a single strategy to be such a reliable winner without being competed away to zero? A very simple explanation is that an entity that does not care about potential losses simply and reliably sells gold into the daily markets.

After a while, the self-reinforcing aspect of this behavior might entice other market participants to join along and sell into the daily markets. However, even if that were the case, in order to be neutral (as all trading eventually has to be) these positions would eventually have to be bought back. And given the fact that gold has risen by more than 500% over this timeframe, there would be no safe time to do this outside of the daily session. 

So the question persists: Who has been selling into this market, and how large are their positions? Put more bluntly, how much gold is actually left in Fort Knox? Alternatively, just what exactly is contained within the $180 billion “other assets” line on the Fed balance sheet? Deeply underwater gold futures positions, perhaps?

Prior Known Efforts at Manipulation

One other daunting challenge to the idea that gold is not being manipulated is that such a thought requires us to presume that all the past known and proven efforts at gold manipulation are just that: in the past.

One thing I know is that when a tool has proven to be effective -- whether it is secretive liquidity injections by the Fed, or MBS purchases -- that tool tends to get used again and again, and in increasing amounts if called for. That is, what works is never dropped; it is merely set aside when not needed.

The best we could argue here is that gold truly has no legitimate signaling mechanism at present, and therefore controlling its price has been set aside. For now…

Or, if we believe that gold indeed has an important signaling function, it becomes all the more difficult to argue that its price is simply left to ‘the market’ to set.

One example:

On June 3, 1975, Fed Chairman Arthur Burns, sent a "Memorandum For The President" to Gerald Ford, which among others CC:ed Secretary of State Henry Kissinger and future Fed Chairman Alan Greenspan, discussing gold, and specifically its fair value, a topic whose prominence, despite former president Nixon's actions, had only managed to grow in the four short years since the abandonment of the gold standard in 1971.

In a nutshell Burns' entire argument revolves around the equivalency of gold and money, and furthermore points out that if the Fed does not control this core relationship, it would "easily frustrate our efforts to control world liquidity" but also "dangerously prejudge the shape of the future monetary system."

Furthermore, the memo goes on to highlight the extensive level of gold price manipulation by central banks even after the gold standard has been formally abolished. The problem with accounting for gold at fair market value: the risk of massive liquidity creation, which in those long-gone days of 1975 "could result in the addition of up to $150 billion to the nominal value of countries' reserves."

One only wonders what would happen today if gold was allowed to attain its fair price status. And the threat, according to Burns: "liquidity creation of such extraordinary magnitude would seriously endanger, perhaps even frustrate, our efforts and those of other prudent nations to get inflation under reasonable control."

Aside from the gratuitous observation that even 34 years ago it was painfully obvious how "massive" liquidity could and would result in runaway inflation and the Fed actually cared about this potential danger, what highlights the hypocrisy of the Fed is that when it comes to drowning the world in excess pieces of paper, only the United States should have the right to do so. 

(Source

If the price of gold was not ‘controlled,’ monetary policy outcomes would have been somewhat removed from the direct control of monetary bureaucrats. Gold was a threat to an institution dedicated to increasing its effectiveness and power. To give up the battle to control the price of gold, we have to presume something that has never happened in history: the willing abandonment of bureaucratic power to an outside force. 

There is also the London Gold Pool of 1969 and the strong dollar policy of the 1980s, which reveal that in the past, the price of gold has been officially monitored and controlled in order to help direct either a desired interest rate or dollar strength outcome.

From Wikipedia:

The London Gold Pool was the pooling of gold reserves by a group of eight central banks in the United States and seven European countries that agreed on 1 November 1961 to cooperate in maintaining the Bretton Woods System of fixed-rate convertible currencies and defending a gold price of US$35 per troy ounce by interventions in the London gold market.

The central banks coordinated concerted methods of gold sales to balance spikes in the market price of gold as determined by the London morning gold fixing while buying gold on price weaknesses. The United States provided 50% of the required gold supply for sale. The price controls were successful for six years when the system became no longer workable because the pegged price of gold was too low, runs on gold, the British pound, and the US dollar occurred, and France decided to withdraw from the pool. The pool collapsed in March 1968.

The London Gold Pool controls were followed with an effort to suppress the gold price with a two-tier system of official exchange and open market transactions, but this gold window collapsed in 1971 with the Nixon Shock, and resulted in the onset of the gold bull market which saw the price of gold appreciate rapidly to US$850 in 1980.

(Source

The point here is that gold price suppression is a clear matter of history at this point and has been well studied. Somehow I think some people have forgotten that history and, quite oddly, consider it less likely that gold suppression is happening today than in the past. I say oddly because the number of overt market interventions has been increasingly enormously over the past few years, and one might think this would soften opposition to the idea that gold, too, is being actively targeted. 

Supply and Demand

So, if the price of gold is subject to manipulation -- or influence or control, if you prefer those terms instead -- in a way that reliably holds the price in check, then why should we buy it? In a few important ways, it's because of the very fact that gold remains the subject of so much official concern and secrecy.

The laws of supply and demand tell us that anything with a cheaper-than-market price will experience stronger-than-usual demand. In the case of gold, we might suspect that purchases of gold have been bolstered by a weaker-than-otherwise price. 

Among those benefiting from buying cheaper-than-otherwise gold would be anyone and everyone who has bought gold lately. Private and official purchasers alike have been getting a very good price, indeed. Where you and I can be thankful for less expensive gold as we add to our holdings, so, too, can India and China be pleased at the national level.

If a future gold standard is in the works, then whoever has the gold at that point in time wins. To any given nation, official gold stocks held by the central banks represent just one stock of gold, with that held by private parties representing another. India has always had a robust domestic gold market and is among the strongest of the strong hands. Gold goes into India and just never seems to come back out.

China legalized and then modernized the gold market for its citizens, and gold sales there have been increasingly robust over time. Germany recently faced a 'call from within' to repatriate the gold that is currently held in its name in reserve by the New York Fed, perhaps channeling the concern that said gold would be safer within its own borders than in the US.

Given the confidence-shaking rehypothecation fraud perpetrated by MF Global, a bit of caution on the part of foreign concerns regarding the US's trustworthiness is warranted.

All told, we are seeing a very interesting game play out around gold, and my suspicion is that it is the possibility of eventual re-monetization that motivates some of the moves. If this comes to pass, the gold price suppression will prove to be a most unfortunate mistake, providing short-term political and market cover for excessive money printing while sacrificing long-term advantage to those taking the other side of the suppression trade.

Conclusion

In Part II: How High and When to Sell?, we explore the most likely price targets for gold under the scenarios that we believe are most likely to play out over the coming years. Equally as important as understanding where the price will go is knowing when the time has arrived to exchange your appreciated gold for other assets. We investigate both, as well as which asset classes to start tracking now in expectation of rotating into them with your gold proceeds when appropriate.

Click here to access Part II of this report (free executive summary; enrollment required for full access).

Related content

37 Comments

hucklejohn's picture
hucklejohn
Status: Gold Member (Offline)
Joined: Dec 13 2008
Posts: 281
Excellent Article

Thanks, Chris, for an excellent article.  I have not seen this type of plan speaking analysis on this subject elsewhere.  You have exceeded your high standard.   

We_Have_An_Anomaly's picture
We_Have_An_Anomaly
Status: Member (Offline)
Joined: Mar 28 2012
Posts: 3
Et tu Chris?

If I were to read the "Evidence for Manipulation" with a completely unbiased attitude, I would conclude that there is indeed manipulation.  It seems obvious, based on the data, that the price is being manipulated upward. 

If someone told you that a mystery commodity was being manipulated during the day when it is the most liquid and the market has the most participants but the true price discovery occured overnight in thin trading, wouldn't you think that person was crazy?  How does that make any sense?  I think the conclusion based on this evidence would be that the commodity is being manipulated upward in thin overnight trading while true price discovery happens when the market has the most participants and the most volume.

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 1416
AM/PM fix

I believe the AM/PM fix data used by the sk options people was LONDON AM/PM data, not US data.  Only the LBMA uses the "fix" terminology, as well as the concept of an AM and a PM fix.  US futures markets would talk about open and settle prices.  That, and the LBMA data is free, while the US futures historical data costs money.

I ran the same calculations on the LBMA data and saw a gain of about 240%.  I factored in commissions, but not the spread.  With spread (0.20) added in, the strategy is much less effective although still makes money overall.

Does it make a difference to the case of manipulation if it was London data rather than US data?

London AM fix = 1030 UTC [0430 Eastern]

London PM fix = 1500 UTC [0900 Eastern]

It would appear that this bias is responsible for an average move of about 0.80 per day over the 10 year trading period (200k excess profits over 2500 trading days, 100 ounces per contract).

If I had access to US futures data I could easily re-run the calcuations on that, however such data costs money.

jonesb.mta's picture
jonesb.mta
Status: Silver Member (Offline)
Joined: Jun 11 2008
Posts: 105
Excellent

Excellent report.

SenGruber's picture
SenGruber
Status: Member (Offline)
Joined: Mar 23 2012
Posts: 2
Is this sentence written correctly?

I'm having difficulty parsing it.

For example, take a hypothetical gold investment fund starting with $100m in 2001, use it to buy gold only at the US AM fix and at the US PM fix until the present, and it would now be left with just $31 million, almost a 70% loss in just under ten years.

Shouldn't there be a mention of selling in there somewhere, not just buying at AM and PM?

acomfort's picture
acomfort
Status: Bronze Member (Offline)
Joined: Aug 7 2008
Posts: 45
The FIX? - The Night and Day Market?

Well . . . .     You lost me with this one.

I thought gold had a world market.  

If not a world market, which half does have a gold market.

If it is a world market, then when is day and when is the night market?

Using several dictionaries, I couldn't find the definitions of:

US AM fix,  US PM fix, Daily fix, AM/PM fix,  etc 

What is a fix in a this context? 

Thanks for some help 

The Amature.  

Adam Taggart's picture
Adam Taggart
Status: Peak Prosperity Co-founder (Offline)
Joined: May 26 2009
Posts: 1883
Good catch, SenGruber

It should read buying at the US AM fix and selling at the US PM fix. We've updated the text in the article above accordingly.

hucklejohn's picture
hucklejohn
Status: Gold Member (Offline)
Joined: Dec 13 2008
Posts: 281
Jim Willie's latest article

Here is Jim Willie's latest article:  http://www.financialsense.com/contributors/jim-willie/the-gold-groundhog...

Here is an excerpt:

"The battle has expanded. It is no longer solely on price. It has focus on draining the crooked camps of their physical gold. The latest wrinkle is the revelation that the derivative sector is as corrupt as the bond core, as banks are liable for hundreds of $trillions they cannot pay following years of hefty ripe fees taken in. The constant backdrop since 2008 is that the big Western banks are almost all hollow bankrupt insolvent and moribund operating zombies. The talk of tight lending standards is intended to conceal their deep insolvency and inability to serve as the economic credit engines. The lack adequate reserves to serve as system lenders. They are slowly having their gold removed, methodically bank by bank, as a consequence of their insolvency and ruin, aggravated by their derivative exposure. The newest agent in the game is the anonymous London Trader, whose activity has been nicely chronicled by King World News in a series of interviews. A central bank has been buying with both hands with lust for the yellow metal. What great news for gold investors, an enforcer.

"The Gold Wars have significantly changed in the last two years in particular. From 2004 to 2009, the battle was to win a fair higher gold price. No longer. The war has turned the corner and reached an end game scenario. The objectives have changed. The tactics used have been altered. The upper hand by the Good Guys against the Crooked Boyz is evident. Some new confusion has entered the room. The objective is to remove gold from the bullion bank inventories and major bank inventories, all of it. This is a new battlefield in the war. Being a Zombie bank means losing all the gold in reserves, in a time hourglass process that reflects the reality of their balance sheets. By the end of 2013, no big bank will own any physical gold. They cannot defend against off-side positions in the sovereign bond market and the currency market. See what happened to JPMorgan in such a case, as it preyed upon MFGlobal accounts. Other big banks are losing all their gold from the balance sheet. UBS is a dead body on the field, their false story of a rogue trader having provided a little distraction. Few if any financial press stories are honestly told anymore. Certainly not the Libya story, where 144 tons of gold were confiscated as war booty by London. That supply filled some gaps but only temporarily.

"Price implications are part of the sacrifice, as the Good Guys will help to push down the Gold price at times in order to kill a gold cartel player. Like right here, right now. Every couple months (the last being in January), a massive group of orders must be filled at a low price, for the benefit of the Good Guys, with an evil player in a vulnerable position, who knows he is dead and must forfeit its gold. The gold market stalls until the hairball is passed and another gold cartel player is gutted, carried off the battlefield under the cover of press darkness. Therefore the Gold price stays down until the order is completely filled, and only then will recover a couple hundred dollars in price per ounce, but only after this gold cartel player is killed off. The player will be identified later, in the fair market obituaries known to the internet journals. The tombstone epitaph will be carved by an Eastern hand. The US press would never report on a cartel bank having to sell $70 to $100 million worth of gold bullion to remove their big off-side position in bonds or currencies. The Good Guys have put in a series of escalating orders at low prices, from extremely well funded accounts whose war chests boast tens of $billions. The damage done to the gold cartel is immense, yet not adequately reported. The pattern showed itself in January, when after a similar event, the gold price moved from roughly 1600 to almost 1800. By February 29th, the cartel leaped on the day into position to conduct one of the largest naked short events in history. The press never seemed to catch wind, since paid not to notice."

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 1416
Gold is traded on two main

Gold is traded on two main exchanges: the LBMA, and the Comex.  "Fixings" happen on the LBMA twice per day, once in the morning, and once in the afternoon - AM fix (1030 GMT), PM fix (1500 GMT).  Read about that here:

http://www.lbma.org.uk/pages/index.cfm?page_id=52&title=statistics_faqs

What is the guiding principle behind the London Gold and Silver Fixings?

The Fixings are an open process at which market participants can transact business on the basis of a single quoted price. Orders can be changed throughout the proceedings as the price is moved higher and lower until such time as buyers' and sellers' orders are satisfied and the price is said to be 'fixed'. Orders executed at the fixings are conducted as principal-to-principal transactions between the client and the dealer through whom the order is placed.

 
Chris was pointing out that, over time, the price of gold on average is higher on the AM fix, and lower on the PM fix.  So the trade is, buy in the PM, and sell in the next AM (and conversely, short in the AM, and cover in the PM).
While you can trade gold futures (the "GC" contract) almost 24 hours per day (I think there's a small window where trading is halted - maybe 30 minutes?) the vast majority of the volume happens from London open through NY close.
 
cpzimmon's picture
cpzimmon
Status: Member (Offline)
Joined: Mar 18 2012
Posts: 1
Gold Manipulation Article

This is the best explanation that I've seen about Gold Manipulation....Just excellent!  Articles like this is the reason I'm a member of this website and a follower of Chris Martenson.

macro2682's picture
macro2682
Status: Gold Member (Offline)
Joined: Sep 3 2009
Posts: 423
Nice

Best artical you've ever written.  Thanks.

freedomone's picture
freedomone
Status: Member (Offline)
Joined: Mar 28 2012
Posts: 1
Stockholm Syndrome

A good analysis of the state of the gold suppression scheme by the CBs and their front-running henchmen.

Yet, has the Stockholm syndrome taken hold of even the most astute and analytical minds, with the assumption that this is somehow “ok”?

We could possibly shrug this off with a sigh and a huff if we took the assumption that the past is a guide to the future. However evidence clearly suggests that the TPTB have now taken a firm stand and have drawn a line in the sand, which the price of gold and silver shall not cross!

The suppression of Au and Ag has now taken on maniacal proportions and is suppressed daily with almost constant attacks through their short selling, which they never have to cover in a meaningful way, or until they fix next major smash.

However these price smashes have also horrendous consequences for the honest hardworking men and women across the globe.

The major WS banks now have taken so much succour from the knowledge that their bought off “regulators” e.g. CFTC, are securely tucked away in their pocket that they blatantly brag at having managed a perfect quarter on their trading desk, with a profit exceeding 100,000,000 Dollars every single day; of course this is only possible in completely manipulated and controlled markets by the WS cabal themselves.

So with every price smash there are untold victims who loose their hard earned cash to these criminals who are profiteering with the blessing of the Fed, a thoroughly corrupt government and their bought off ‘regulators’.

These victims are real people who have their pension money pilfered, their savings stolen and their investments looted to the tune of Billions if not Trillions, through an activity which is illegal, unethical and immoral, but nevertheless conducted by TPTB, so it is “ok”. (How WS turns your hard earned into their bonuses)

One has to contend that this is nothing to be taken lightly and just shrugged off, but has to be fought vehemently and condemned in no uncertain terms and with the utmost vigour, lest we shall end up slaughtered, as all the ignorant and obtuse sheeples always are!

thc0655's picture
thc0655
Status: Platinum Member (Offline)
Joined: Apr 27 2010
Posts: 640
Confirming research

Here's some confirming research.  Too much math for me!

http://www.zerohedge.com/news/paul-mylchreest-presents-various-visual-ca...

bulldawg's picture
bulldawg
Status: Member (Offline)
Joined: Mar 29 2012
Posts: 1
Look to JP Morgan

I recently read a rather disturbing article in regards to a Whistleblower at JP Morgan and the scam that is going on. A   anonymous letter was addressed to the CFTC, but unfortunately it looks like the CFTC has already chosen to ignore it and it was pulled off the site, but not before it was downloaded. I had sent the information to many tip lines and the MSM still covers for the corruption going on. You decide after reading:

Dear CFTC Staff,

Hello, I am a current JPMorgan Chase employee. This is an open letter to all commissioners and regulators. I am emailing you today b/c I know of insider information that will be damning at best for JPMorgan Chase. I have decided to play the role of whistleblower b/c I no longer have faith and belief that what we are doing for society is bringing value to people. I am now under the opinion that we are actually putting hard working Americans unaware of what lays ahead at extreme market risk. This risk is unnecessary and will lead to wide-scale market collapse if not handled properly. With the release of Mr. Smith’s open letter to Goldman, I too would like to set the record straight for JPM as well. I have seen the disruptive behavior of superiors and no longer can say that I look up to employees at the ED/MD level here at JPM. Their smug exuberance and arrogance permeates the air just as pungently as rotting vegetables. They all know too well of the backdoor crony connections they share intimately with elected officials and with other institutions. It is apparent in everything they do, from the meager attempts to manipulate LIBOR, therefore controlling how almost all derivatives are priced to the inherit and fraudulent commodities manipulation. They too may have one day stood for something in the past in the client-employee relationship. Does anyone in today’s market really care about the protection of their client? From the ruthless and scandalous treatment of MF Global client asset funds to the excessive bonuses paid by companies with burgeoning liabilities. Yes, we at JPMorgan that are in the know are fearful of a cascading credit event being triggered in Greece as they have hidden derivatives in excess of $1 Trillion USD. We at JPMorgan own enough of these through counterparty risk and outright prop trading that our entire IB EDG space could be annihilated within a few short days. The last ten years has been market by inflexion point after inflexion point with the most notable coming in 2008 after the acquisition of Bear.

I wish to remain anonymous as of now as fear of termination mounts from what I am about to reveal. Robert Gottlieb is not my real name; however he is a trader that is involved in a lawsuit for manipulative trading while working with JPMorgan Chase. He was acquired during our Bear Stearns acquisition and is known to be the notorious person shorting in the silver future market from his trading space, along with Blythe Masters, his IB Global boss. However, with that said, we are manipulating the silver futures market and playing a smaller (but still massively manipulative) role in manipulating the gold futures market. We have a little over a 25% (give or take a percentage) position in the short market for silver futures and by your definition this denotes a larger position than for speculative purposes or for hedging and is beyond the line of manipulation.

On a side note, I do not work directly with accounts that would have been directly impacted by the MF Global fiasco but I have heard through other colleagues that we have involvement in the hiding of client assets from MF Global. This is another fraudulent effort on our part and constitutes theft. I urge you to forward that part of the investigation on to the respective authorities.

There is something else that you may find strange. During month-end December, we were all told by our managers that this was going to be a dismal year in terms of earnings and that we should not expect any bonuses or pay raises. Then come mid-late January it is made known that everyone received a pay raise and/or bonus, which is interesting b/c just a few weeks ago we were told that this was not likely and expected to be paid nothing in addition to base salary. January is right around the time we started increasing our short positions quite significantly again and this most recent crash in gold and silver during Bernanke's speech on February 29th is of notable importance, as we along with 4 other major institutions, orchestrated the violent $100 drop in Gold and subsequent drops in silver.

As regulators of the free people of this country, I ask you to uphold the most important job in the world right now. That job is judge and overseer of all that is justice in the most sensitive of commodity markets. There are many middle-income people that invest in the physical assets of silver, gold, as well as mining stocks that are being financially impacted in a negative way b/c of our unscrupulous shorts in the precious metals commodity sector. If you read the COT with intent you will find that commercials (even though we have no business being in the commercial sector, which should be reserved for companies that truly produce the metal) are net short by a long shot in not only silver, but gold.

It is rather surprising that what should be well known liabilities on our balance sheet have not erupted into wider scale scrutinization. I call all honest and courageous JPMorgan employees to step up and fight the cronyism and wide-scale manipulation by reporting the truth. We are only helping reality come to light therefore allowing a real valuation of our banking industry which will give investors a chance to properly adjust without being totally wiped out. I will be contacting a lawyer shortly about this matter, as I believe no other whistleblower at JPMorgan has come forward yet. Our deepest secrets lie within the hands of honest employees and can be revealed through honest regulators that are willing to take a look inside one of America's best kept secrets. Please do not allow this to turn into another Enron.

Kind Regards,
-The 1st Whistleblower of Many

RaviNathan's picture
RaviNathan
Status: Bronze Member (Offline)
Joined: Dec 15 2011
Posts: 31
Gold selling

Could some of the selling that occurs after open be attributed to miners who are the natural longs in the market.  Since gold, unlike other commodities is not consumed, the constant supply of newly mined gold should cause a downward pull on price all other things remaining constant.  

nedyne's picture
nedyne
Status: Member (Offline)
Joined: Jan 14 2012
Posts: 16
AM and PM fixes

So how can one profit from this trading strategy of buy at the PM fix and sell at the AM fix? Would it work in a GoldMoney or a BullionVault account? 

Is there a mutual fund that will do this for you?

By the way, I'm not asking rethorical questions. If you know the answer, please chip in. 

And a more philosophical question... how come that this consistently winning strategy has not been traded away? If it's a sure way to make money, no matter how big the pockets of the central banks involved in the manipulation, shouldn't it be traded away by really big money to the point where it stops being a winning strategy?

Woodman's picture
Woodman
Status: Diamond Member (Offline)
Joined: Sep 26 2008
Posts: 1027
manipulation and trading.

Ted Bulter on the Financial Sense podcast on March 17 2012 explained, at least for silver and maybe this applies to gold, the big commercials manipulate and drive the price dwon to get others to out, then the big commercials are actually buying

Woodman's picture
Woodman
Status: Diamond Member (Offline)
Joined: Sep 26 2008
Posts: 1027
manipulation and trading.

Ted Bulter on the Financial Sense podcast on March 17 2012 explained, at least for silver and maybe this applies to gold, the big commercials manipulate and drive the price down to get others to sell out, then the big commercials are actually coming in and buying

reviewerz's picture
reviewerz
Status: Member (Offline)
Joined: Mar 30 2012
Posts: 1
Gold Manipulation

The considered reasoning involved in the article prompted me to sign up as a free member.

As a retiree I have to watch my pennies. I have a bias to owning silver because gold is more likely to eventually be the focus of "confiscation".Reportedly, gold is being considered aspart payment for Iranian oil, by India and China. Chris mentions such an event leading to the possible confiscation of gold in Part II of the series.

It is noteworthy that after IMF boss Strauss-Kahn spoke of using SDRs and gold, etc. as a new international currency, that he was charged (it was later dropped) with improper behaviour with a hotel maid.

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 1416
how can one profit?

So based on my backtesting, it would appear that the impact of this downward AM/PM bias is on average about 80 cents per ounce per day over the period 2000-today.  In the more recent period (2008-today) its a bias of about $2.42 per ounce per day.  Spreads on the GC (gold futures) contract are 0.1, so you lose that once per traded contract - or 40 cents per ounce.  Commissions total another 0.15, so friction costs you about 55 cents of your $2.42 per ounce.

To trade this, you simply need to open a futures account; drop in say 50k, and make your daily trades.  Margin for a single GC contract is around $10k.  The timing of the trade is a bit annoying, since you'll have to wake up at 330am eastern to execute your short, and then stay in there until london PM fix at 800am eastern to close it out and go long.  At all times, you're either short 1 or long 1 GC.  Mechanics would look like this:

day 1: sell (short) -1 GC @ 330 am ET; buy (long) 2 GC @ 800 am ET

day 2-N: sell (short) -2 GC @ 330 am ET; buy (long) 2 GC @ 800 am ET

Risks:

As is the case with all of these market anomalies, as soon as enough people figure them out, they vanish - or they move.  So perhaps the timing of the moves down changes to perhaps 230am instead of exactly at 330 am, since some traders will start to front-run the shorts that kick off at 330, and that will end up decreasing your effective bias.

Also, futures provide you with lots of exposure.  A big drop in gold at the wrong time means you lose gobs of money.  1 GC contract = 100 ounces of gold; at current prices, your value at risk is $176k either long, or short, each day.  Drops of $100 in gold while you're long means losses of $10k - in one day.  Conversely, if gold breaks out when you're short, its also ugly.

In backtesting, the worst day: -6600; best day: +11000.  Worst week: -9200, best week +23000.  If you aren't comfortable with positions and movements of that size, probably best to just watch from the sidelines.  And if this stops working, the losses are likely to be pretty impressive.  With all these things, backtesting can give you a sense of the historical risk, but does NOT take into account black swans which by virtue of their nature, aren't events we've seen before.  Gold drops of $300, or a breakout of $300 are possible if something really dramatic happens.

Last risk: MF Global futures traders didn't get all their money back.  Who wants this outcome?

I don't know what the spreads on BullionVault are.  I'm sure you could make the same trades there, but the spreads would determine if the "friction" involved was worthwhile - additionally, the "friction" in your life of waking up at 330 am eastern each and every trading day is also something to consider.

I used to trade gold & silver futures contracts.  Futures were a good vehicle because trading costs are low (spreads are narrow and commissions are low) and the market is quite liquid. I don't anymore; although I made money, it was too much stress, I don't like the MF Global type risk, and I made a decision to focus on other things in my life that are ultimately more (spiritually) rewarding.  I only did the backtesting of this trade because I read about it, and wanted to know if it was real or hype.

JAG's picture
JAG
Status: Diamond Member (Offline)
Joined: Oct 26 2008
Posts: 2490
Eye-Rolling Moment

cmartenson wrote:

Some who are reading this are likely having an eye-rolling moment because they hold a belief that there is no conspiracy to manage the price of gold.

LOL, I had a hard time reading this post because I couldn't stop my eyes from rolling...

Speaking of beliefs, I have a hard time reconciling two very popular goldbug beliefs:

  1. The Fed suppresses the price of gold to protect the viability of its currency.
  2. The Fed prints money to devalue its currency for the "inflation solution" to the debt crisis.

To devalue the dollar, all the Fed has to do his create the impression in the market that the dollar is losing value. What better way is there to do this than to manipulate an INCREASE in the $ price of gold? If the price of gold is the most accepted measure of the dollar's value, why would the Fed want to surppress it?

If you want something to believe in, believe that Wall Street exists for only one reason...to take your money. And you don't have to be in the stock market to lose your money to Wall Street. How much of your money went to Wall Street speculators the last time you filled up your car? 

Instead of playing their game, again, why don't we focus on developing a strategy to insulate ourselves from Wall Street? Our survival will depend on how idependent we are from the Wall Street controlled markets.

I realize articles like this are great marketing for the site, but what value does this speculation have in the long run?

Best...Jeff

Johnny Oxygen's picture
Johnny Oxygen
Status: Diamond Member (Offline)
Joined: Sep 9 2009
Posts: 1441
JAG wrote: cmartenson

JAG wrote:

cmartenson wrote:

Some who are reading this are likely having an eye-rolling moment because they hold a belief that there is no conspiracy to manage the price of gold.

LOL, I had a hard time reading this post because I couldn't stop my eyes from rolling...

Speaking of beliefs, I have a hard time reconciling two very popular goldbug beliefs:

  1. The Fed suppresses the price of gold to protect the viability of its currency.
  2. The Fed prints money to devalue its currency for the "inflation solution" to the debt crisis.

To devalue the dollar, all the Fed has to do his create the impression in the market that the dollar is losing value. What better way is there to do this than to manipulate an INCREASE in the $ price of gold? If the price of gold is the most accepted measure of the dollar's value, why would the Fed want to surppress it?

If you want something to believe in, believe that Wall Street exists for only one reason...to take your money. And you don't have to be in the stock market to lose your money to Wall Street. How much of your money went to Wall Street speculators the last time you filled up your car? 

Instead of playing their game, again, why don't we focus on developing a strategy to insulate ourselves from Wall Street? Our survival will depend on how idependent we are from the Wall Street controlled markets.

I realize articles like this are great marketing for the site, but what value does this speculation have in the long run?

Best...Jeff

Slightly disrespectful in tone don't you think?

Denny Johnson's picture
Denny Johnson
Status: Gold Member (Offline)
Joined: Aug 13 2008
Posts: 324
JAG wrote:If you want

JAG wrote:

If you want something to believe in, believe that Wall Street exists for only one reason...to take your money.

Hi Jeff...........this is a constant theme of yours, as if most here disagree. Tho it may have been on occasion, I don't recall it being disputed here.

If you have ways to protect yourself from Wall Street better than what the good doctor suggests, please share them. That may help the folks that don't have access to Chris's suggestions in second part of these reports.

Dogs_In_A_Pile's picture
Dogs_In_A_Pile
Status: Martenson Brigade Member (Offline)
Joined: Jan 4 2009
Posts: 2491
Denny Johnson wrote: If you

Denny Johnson wrote:

If you have ways to protect yourself from Wall Street better than what the good doctor suggests, please share them. That may help the folks that don't have access to Chris's suggestions in second part of these reports.

Denny - the first and most important step is to become market neutral.  Then learn how to trade in whatever direction the market moves.    I am greatly simplifying, but it really is as easy as buying and selling calls during an upward move and buying and selling puts during downward moves.  By at least 5 months of time in the options and almost always buy in the money or no more than one strike out of the money options.  Develop a trading rule set that you will follow explicitly, get rid of being biased towards market moves one way or the other and take what the market gives you.

Denny Johnson's picture
Denny Johnson
Status: Gold Member (Offline)
Joined: Aug 13 2008
Posts: 324
Thanks

Thanks Dogs...............but I kinda doubt Jeff will agree w you.

Mark_BC's picture
Mark_BC
Status: Gold Member (Offline)
Joined: Apr 30 2010
Posts: 250
Dogs_In_A_Pile wrote:Denny

Dogs_In_A_Pile wrote:

Denny - the first and most important step is to become market neutral.  Then learn how to trade in whatever direction the market moves.    I am greatly simplifying, but it really is as easy as buying and selling calls during an upward move and buying and selling puts during downward moves.  By at least 5 months of time in the options and almost always buy in the money or no more than one strike out of the money options.  Develop a trading rule set that you will follow explicitly, get rid of being biased towards market moves one way or the other and take what the market gives you.

Do you use stop losses or go along for all the rides? What % of your portfolio is in a trade at a time?

Denny Johnson's picture
Denny Johnson
Status: Gold Member (Offline)
Joined: Aug 13 2008
Posts: 324
JAG wrote:How much of your

JAG wrote:
How much of your money went to Wall Street speculators the last time you filled up your car? 

Instead of playing their game, again, why don't we focus on developing a strategy to insulate ourselves from Wall Street? Our survival will depend on how idependent we are from the Wall Street controlled markets.

Jeff.......take a deep breath and listen to yourself, man............how do you expect to be taken seriously when you bash gold and one of Dr M's stratagies to insulate ourselves from Wall Street and then you point out how Wall Street is profiting from high gas prices for those whose store of wealth is dollars. It's really quite different for those whose store of wealth is gold.

Sorry the chart is a bit dated, but I think you get the picture.

Dogs_In_A_Pile's picture
Dogs_In_A_Pile
Status: Martenson Brigade Member (Offline)
Joined: Jan 4 2009
Posts: 2491
Mark_BC

Mark_BC wrote:

Dogs_In_A_Pile wrote:

Denny - the first and most important step is to become market neutral.  Then learn how to trade in whatever direction the market moves.    I am greatly simplifying, but it really is as easy as buying and selling calls during an upward move and buying and selling puts during downward moves.  By at least 5 months of time in the options and almost always buy in the money or no more than one strike out of the money options.  Develop a trading rule set that you will follow explicitly, get rid of being biased towards market moves one way or the other and take what the market gives you.

Do you use stop losses or go along for all the rides? What % of your portfolio is in a trade at a time?

Mark -

I never use stop losses.  Depending on which chart I used to enter (Daily, 233 minute, sometimes 55 minute) I will let the trade run until a few candles have closed.  Since I am rarely in at the exact beginning of the move - the chart is already moving in the direction I expect it to.  I never get the first best nickel or dime on the option price, but I am also not looking for it either.  If the trade starts to back up over me, I will assess what is going in in terms of market forces or stock/sector specific news.  If nothing is going on that is obvious, and the indicators don't give me a reason to leave the trade, I 'll typically let a couple more candles close.  If it doesn' t turn back my direction, I simply close it with a small loss and move on.  Generally speaking, the larger the charting interval, the more well established the trend is so some wobbling on a 55 minute candle isn't cause for too much concern if the entry was on a longer chart interval.

I'm only interested in the chunk of the move in the middle.  I am always long gone from the trade before the last, best nickel of the move occurs.  I have an idea of how much the move is going to be before I get in so that helps target my exit point.  Exit criteria is a combination of several things - coming into a top or bottom Bollinger Band, coming up against a 20, 50 or 200 period MA or better yet, a 200 period MA laminated against a Bollinger Band.  I also use MACD, ADX and StochRSI to help identify trade entry decision points.  There are also market events that I will close a trade on.  I will very rarely (read never) take a trade through that company's earnings report.  I'll never go through a stock split unless I have a large profit on the trade and then I'll usually close enough of the trade to cover the initial trade and most of the profit.  Then I might go through the split with the market's money.

Rather than give you a % of portfolio number, I will tell you that I ALWAYS trade with the same dollar amount.  I NEVER have more than half of my trading account cash tied up in trades and I never put more than half of that in any one trade.  A typical month is 5-10 trades.  As profits accumulate, I move money to separate accounts for different trading techniques, that are done once a month.

Because I am 100% market neutral, it is very easy to remain emotionally detached from day to day market gyrations.  Cat is by far and away the better trader in the family.  For years, Goldman-Sachs was her whipping boy.  The only time she got burned on GS, was when short sells were suspended for a couple of days while she was in puts.  She lost all her profit but was able to close the position with a very small loss of principal.

It took a long time and a lot of practice trades on paper to get to where we are, but it sure is nice.  Market neutrality insulates you from the noise and distraction that shows up on big green or big red days.  The pundits on CNBC, Bloomberg are just white noise generators reading copy.  I may turn CNBC on just to verify that they are talking about the same old same old each day and then turn the volume off.  Every now and then though, they get a guest on or one of the jaw flappers says something that is a real nugget, but for the most part, 98% of what they yammer about is just noise.  High freq trade algorithms??  Meh......  What the FED says or does?  Meh....99% of the time I won't be in a trade before FOMC minutes or Bernanke-speak anyway.

I have a basket of stocks that I screen every night for upcoming trade entry possibilities.  All I need is a stock to move in price - up or down - and I'll trade the movement accordingly.

It gets fun when you see a stock about to turn over and drop in price.  Do you know how much fun it is to sell naked calls at the money, buy puts and watch the stock price drop?  As it approaches the end of the drop, buy back the calls to close the naked position, and sell the puts.  Twice the profit on the same price move.

Like I said in my earlier post to Denny, I greatly simplified and streamlined the very deliberate process Cat and I go through with our trades.  But at the risk of repeating myself, the first and most important step is to divorce you brain from market movement bias and become truly neutral.  150 points up......yawn.  235 points down......ho hum, whatever.  Trading in the direction the market is going, and taking what the market gives you is a lot easier and less stressful than entering a position and hoping that it goes up. 

ScubaRoo's picture
ScubaRoo
Status: Bronze Member (Offline)
Joined: Apr 18 2011
Posts: 37
So when is the next correction/manipulation - Easter weekend?

Heard rumours that Easter could be yet another quiet holiday period for an orchestrated take down of Gold and Silver?

Also here's a article on Silver manipulation..
Http://financialsurvivalnetwork.com/2012/03/silver-manipulation-acknowle...

Hope you all have an enjoyable weekend :-)

Cheers

Scubaroo

ScubaRoo's picture
ScubaRoo
Status: Bronze Member (Offline)
Joined: Apr 18 2011
Posts: 37
VampireBen Ben takes a Silver bullet :-)

Some entertainment for the weekend..

http://tinyurl.com/VampireBen

JAG's picture
JAG
Status: Diamond Member (Offline)
Joined: Oct 26 2008
Posts: 2490
Denny Johnson wrote: ...how

Denny Johnson wrote:

...how do you expect to be taken seriously when you bash gold and one of Dr M's stratagies to insulate ourselves from Wall Street and then you point out how Wall Street is profiting from high gas prices for those whose store of wealth is dollars. It's really quite different for those whose store of wealth is gold.

Denny,

You are comparing apples to oranges. I can't buy gasoline or anything else with gold. Right here, right now, gold is not money, and entertaining the belief that someday the big bankers will reward you for owning gold (by adopting a gold standard) is not a very convincing investment thesis. 

To buy gasoline, or anything else, with gold means that I have to liquidate it with a broker, who takes his cut, and then pay taxes on any capital gains I might have on my sale. And the price I get for my gold is determined by Wall Street. How is that insulating myself from Wall Street?

I could make the argument that my Apple stock will buy much more gasoline than gold, but what does it prove? Nothing.

As I have said many times before, the only investments that make practical sense are those that reduce your cost of living. This reverses the game, as every dollar that you save (ROI) in the future becomes more and more valuable and cannot be taxed. 

Now Denny, maybe you have a zero-energy home, can grow most of your food, obtain your own water supply, and generate your own electric power and liquid fuels, but my guess is the majority of us aren't sitting so pretty (including myself) in that regard. We have a  community of very smart people here, why don't we concentrate our energy on the problems that matter, instead of wasting it debating the latest Wall Street bubble and politics.

You can't beat Wall Street playing their game, and if you own gold, you are playing their game whether you recognize it or not.

Best....Jeff

ao's picture
ao
Status: Diamond Member (Offline)
Joined: Feb 4 2009
Posts: 2220
let's get real, Captain Sheeple

JAG wrote:

Denny Johnson wrote:

...how do you expect to be taken seriously when you bash gold and one of Dr M's stratagies to insulate ourselves from Wall Street and then you point out how Wall Street is profiting from high gas prices for those whose store of wealth is dollars. It's really quite different for those whose store of wealth is gold.

Denny,

You are comparing apples to oranges. I can't buy gasoline or anything else with gold. Right here, right now, gold is not money, and entertaining the belief that someday the big bankers will reward you for owning gold (by adopting a gold standard) is not a very convincing investment thesis. 

To buy gasoline, or anything else, with gold means that I have to liquidate it with a broker, who takes his cut, and then pay taxes on any capital gains I might have on my sale. And the price I get for my gold is determined by Wall Street. How is that insulating myself from Wall Street?

I could make the argument that my Apple stock will buy much more gasoline than gold, but what does it prove? Nothing.

As I have said many times before, the only investments that make practical sense are those that reduce your cost of living. This reverses the game, as every dollar that you save (ROI) in the future becomes more and more valuable and cannot be taxed. 

Now Denny, maybe you have a zero-energy home, can grow most of your food, obtain your own water supply, and generate your own electric power and liquid fuels, but my guess is the majority of us aren't sitting so pretty (including myself) in that regard. We have a  community of very smart people here, why don't we concentrate our energy on the problems that matter, instead of wasting it debating the latest Wall Street bubble and politics.

You can't beat Wall Street playing their game, and if you own gold, you are playing their game whether you recognize it or not.

Best....Jeff

Jeff,

You're a highly intelligent person and I alway value the insights and knowledge you present here, at least in part because you're an unconventional, outside-the-box thinker.  I agree with you that investments that reduce your cost of living make sense but to say they are the ONLY investments that make sense is unrealistic.  And regardless of what you do, in one way or another, you're going to play Wall Street's game.

You're using a computer and the Internet.  You're playing Wall Street's game (YPWSG).

You have a phone.  YPSWG

You have a home.  It is most likely insured.  YPWSG

You own a home.  You're paying property tax. YPWSG

You have a health care practice.  You pay for a license, malpractice insurance, premises liability insurance, and other expenses.  YPWSG

You most likely have health insurance.  YPWSG

You most likely have a car (or motorcycle or other motorized conveyance).  You had to buy it, you have to maintain it, and you have to service it.  YPWSG

I assume you're not making ALL your own clothing and shoes.  YPWSG

Self reliance with regards to food, energy, water, etc. all require purchases and maintenance expenses.  YPWSG

You have to use some elements of the banking system.  YPWSG

You're probably going to pay for some type of education for your children.  YPWSG

Etc., etc.

And are you saying you own no gold or silver whatsoever?  You either don't have much wealth to preserve or YPWSG even more so than the holders of the shiny stuff.  You can't leave your stuff just sitting there for years.  The holders of the shiny yellow stuff can bury it and sit on it for years and years and maybe just pass it on to the next generation.  It's unlikely that a many thousands year old strategy of relying, at least in part, on precious metals is suddenly going to disappear in a puff of smoke.

You're advocating withdrawing from the system and I agree with that in part.  But there's a problem with that philosophy taken to the nth degree.  If we're all withdrawn and ducking under the radar, you don't think TPTB are just going to let that continue, do you?  You can only "hide" for so long before someone or something comes after you with some new wealth extraction scheme or something worse.  Defensive strategies ultimately fail when, sooner or later, you're backed up against a wall and there's no place to hide.     

To survive and thrive, one is going to have to be flexible, nimble, and adaptable and keep one foot in both worlds, ready to shift at a moment's notice.  Personally, understanding and negotiating the Wall Street and political morass is just as important as becoming more food, water, energy, skill, etc. independent.  Putting all your eggs in one basket is never wise.  Having the options of multiple courses of action is.

ao's picture
ao
Status: Diamond Member (Offline)
Joined: Feb 4 2009
Posts: 2220
my compliments

BTW, excellent article Chris!  This article is a perfect example of why your services are so valuable. 

I'm still amazed by those who complete dismiss any element of manipulation in the PM markets. 

nickbert's picture
nickbert
Status: Diamond Member (Offline)
Joined: Jan 14 2009
Posts: 1125
JAG wrote:You are comparing

JAG wrote:

You are comparing apples to oranges. I can't buy gasoline or anything else with gold. Right here, right now, gold is not money, and entertaining the belief that someday the big bankers will reward you for owning gold (by adopting a gold standard) is not a very convincing investment thesis. 

I think you're right (the part in italics), but for a different reason.  It's very possible there can be a gold standard and at the same time the average gold owner will have a difficult time being able to reap rewards.  A harsh windfall tax, PM export restrictions, and mandatory reporting at bullion/coin dealers are all easily plausible.  The average gold owner will have a hard time reaping the rewards, unless one can arrange an under-the-table private party sale or do a deal in the black market (and that's certainly not impossible).  This is why it's a prudent move to have some of one's gold/silver outside the country, and if I remember correctly CM recommends this too.

Quote:

To buy gasoline, or anything else, with gold means that I have to liquidate it with a broker, who takes his cut, and then pay taxes on any capital gains I might have on my sale. And the price I get for my gold is determined by Wall Street. How is that insulating myself from Wall Street?

You don't have to sell at a dealer or broker.  I have been inquiring among select family and friends in the US if they are interested in purchasing a couple coins at straight spot price (we are finally approaching a point to put some of our liquid wealth towards productive assets), and I have three interested individuals, two of them very interested who want to buy NOW.  And this is just in the US... in Asia there are even more potential buyers.  So I'm not worried about dealers taking their cut.  And yes, for now the price is currently determined by the financial markets (not JUST Wall Street), but a number of outcomes (most likely resulting from government actions) may create two prices for gold or silver, the "official" price and the "street" price, and where Wall Street's influence over the prices will be lessened.  How many countries have or have had "official" prices for something (gas, consumer products, currency exchanges, etc) that bear little resemblance to what the average person on the street pays because of import/export restrictions, capital controls, or other disrupting economic factor at work?

Quote:

You can't beat Wall Street playing their game, and if you own gold, you are playing their game whether you recognize it or not.

The world and the markets are bigger than just Wall Street and the big banks.  They are a major player, yes, and one ignores them at one's own risk, but they are not the only player in the game.  This is pretty much why I have trouble accepting some of your statements.... to make the machinations of the banks and big boys on Wall Street as one's primary consideration to the exclusion of all else (geopolitics, foreign markets, resource scarcity) comes off as an over-simplification in this case.  As an engineer I can certainly appreciate how simplifying assumptions and approximations make understanding a problem easier, and I can see where your "trader mindset" has it's uses in some situations.  But like ao hinted at, I know it's also important that no one tool or assumption or mindset works for everything.  Keep the trader mindset, just maybe explore incorporating it with other perspectives as well.

- Nick

ejelect's picture
ejelect
Status: Member (Offline)
Joined: Feb 7 2012
Posts: 1
another explanation for above am/pm gold trend

Another explanation for the decade long trend of strong buying at night versus selling during the day would be that other countries, such as China (or citizens of other countries), are more interested in gold than people in the US on average. For example, if China were slowly accumulating gold in the hopes of one day backing their currency with gold, we might see the trend as described in this article.  Opinions regarding this thought are welcome.  

jonesb.mta's picture
jonesb.mta
Status: Silver Member (Offline)
Joined: Jun 11 2008
Posts: 105
Gold as Money

I may not be able to buy gas with gold but three years ago the contractor who built our double car with work shop($26K) would have accepted payment in Gold Eagles. It's also possible that if I searched for the right gas station I might be able to run a tab to be paid with Gold or Silver Eagles.I have a feeling that if we have hyprinflation you'll be able to arrange payment for most anything with PM's. Maybe we should call it bartering rather than buying.

Jim H's picture
Jim H
Status: Diamond Member (Offline)
Joined: Jun 8 2009
Posts: 1561
Jag

Hey.. some people are just anti-Gold.  Everyone has to make their own choices, but I don't find any of the arguments above convincing in the least.  Gold is money.. the very best for saving longer term.  I can't go to my local gas station and buy gas with Euros... does that mean that Euro's aren't money?  Absurd.  

Gold is actually the ultimate money, because it has no counterparty risk.. it represents payment in full.  If you don't like it, don't convert any of your paper money into it.  Just don't expect to have any "money" when the paper finally meets it's demise. 

Physical Gold is not Wall Street's game.. Paper Gold is their game.. and I would of course stay away from it in the form of GLD, SLV, and/or Comex futures trading.  To the degree that the banks that do bullion banking hold physical, you can bet that this asset has been subject to mucho hypothecation..i.e. in an endgame scenario there will be more "owners" than there are ounces. 

Plenty of smart folks dislike Gold... Denninger...Nicole Foss and Illargi... and Jag.  If you have savings, and want to still have savings post the coming global fiat currency debacle.. then you might want to hold some too. 

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Login or Register to post comments