Chris has been talking about manipulation in the gold markets of late. I noticed gold is down over 1.5% today and wondered if anyone has insight as to why? Is it more manipulation? Some macroeconomic piece of news? Do you view this as a buying opportunity or a time for caution?
I was wondering to - I intended to buy some gold this morning, glad I didn't. Thought it was a bear raid again, but did some research. It's because the fiscal clif talks are going on and "everyone" thinks they will reach an agreement so they are moving away from gold and into to stocks.
Magnum
I was wondering to - I intended to buy some gold this morning, glad I didn't. Thought it was a bear raid again, but did some research. It's because the fiscal clif talks are going on and "everyone" thinks they will reach an agreement so they are moving away from gold and into to stocks.
Magnum
I am wondering just what sort of a connection there might be between the price of gold and the fiscal cliff?
Before I try and make any such connection, let me state that I am very sensitive to the fact that the media quite regualrly trots out explanations for why gold, or stocks, or oil did this or that in the markets today. But usually these are quite useless and unconnected 'explanations.'
The media seeks to explain; but the actual reasons for a market move are usually very subtle, if not hidden, and/or multi-factorial.
From my long time of watching gold, I know when it is time for a take down of the price of gold because quite obvious efforts are made to drive the price downwards. This takes the form of late night, very large selling efforts, that often simply destroy the bid structure. In the following days and weeks, these same efforts are continued.
As I have written extensively, there is no reason I know of to blast through the bid structure of some asset other than to make its price go lower. That is the very essence of price manipulation; as would the reverse which blasts through the ask structure.
Over the past several weeks there have been increasingly large efforts to blast the bids and that simply signals to all the usual gold traders to stand aside and let this act play out. Whomever is doing this has done it before, many times, and I assume they make money at it. Also they know that the regulators will never make one tiny inquiry into the practice let alone reveal the names of the entity(ies) involved.
Whether or not this has other official support, I don't know. But I do know that with the price of money now manipulated to zero, and with bonds no longer sending useful signals (which means equities are overpriced, and commodities are equally skewed), we no longer have a stable horizon to work from. When money is mispriced, everything is mispriced.
We simply live in a world where a very few people sitting around mahogany tables think they know best.
They know how much repair the banks require in the form of free money, they know which institutions should not fail, they know the price of money and they have targets for unemployment, stocks and mortgage rates.
Unfortunately, what they don't tend to have is any real-world business experience.
So they can blast the prices of this or that to here or there and I don't really care. In these uncertain times, I am going to have to trust my internal barometer of value.
For now, I note that the so-called resolution of the fiscal cliff involves smoke and (not even) mirrors; that the deficit will continue pretty much as before and that the Fed is effectively monetizing 100% of the debt. That is simply not satisfactory.
Perhaps I was to matter of fact or cavalier about it being government policy, but whether it is the FED, Treasury, one of the too big to fails, who knows. But it seems to me there is just to much at stake to let gold or silver rise. The fundenmentals (EROEI vs. structural inefficiencies) of the economy are so far out of wack, I doesn't seem possible that monetary policy can motivate human behavior sufficiently to take corrective action through the markets, which is all monetary policy can really do. Structural changes are required that are so fundemental that I don't think any fiscal policy can drive that type change. Chris, as you have pointed out before, policy is moving more in the direction of trying to keep the lid on a boiling pot, then doing anything to relieve the pressure.
The question in my mind then becomes how much force can they engage to keep the lid on, and how can you time the explosion. But then this becomes kind of crazy game of chance rather than rational investing. That why I am personally having such a hard time engaging in investing at all.
an environment where the fed is monetizing the debt, and committed to ZIRP long-term, that is an ideal situation to buy gold (and silver even more so, IMO). i'm trying to scrounge together enough cash to buy another monster box of ASEs, it's a gift at this price.
the fed has painted themselves in to a corner, they have no other choice but QE to infinity, they've locked us in to hyperinflation.
the bankster cartel will try to scare people away from gold and silver through price manipulation and fact distortion in the media, but they can only manage it for so long.
i would also like to add jim sinclair's words here, if i may, from today's column on js mineset:
"Dear Jim,
How should I read the negative pressure over gold and gold stocks? What’s going to change this negative scenario?
Respectfully,
Arlen
Dear CIGA Arlen,
This is capitulation everywhere. This event has been a manufactured market move since $1800, with clearly planned and executed intervention. The gold price take downs during low volume periods internationally is a known price moving only tactic.
I simply shut off the machine because all the regular causes for the gold price will make themselves effective with time. A manufactured market event will not change the trend. Even the most professional can be reduced to sheeple by their emotions.
I refuse emotions and emotional people in a market context. To save yourself from all this that has happened and will continue to happen requires commitment and courage.
You have it or you do not. Admit who you are and act accordingly.
Like every mistake made by Westerners, what you see today is simply driving gold into Asian control.
Jim"
From Zero Hedge:
In key news that may well be the missing puzzle piece to explain some of the very odd market moves in the past week, we just learned courtesy of CNBC, that Morgan Stanley's Wealth platform unit has finally, after months and months of considerations, pulled the plug on the fund that for the second year in a row is one of the three worst performing in the weekly HSBC report and is now redeeming. That in itself is not unexpected. What however is notable is that MS withdrawing hundreds of millions in feeder capital may well explain why gold has seen such a dramatic dislocation in the past week. Recall that at Paulson & Co, gold is not simply an investment - the bulk of direct gold investments at the once legendary investor are in the form of (largely underperforming) gold mining stocks - but an actual investment class. In other words, instead of being denominated in USD, investors are actually denominated in (paper) gold, with a fixed conversion into GLD at inception. This means that upon liquidation of gold-denominated shares, any gold-denominated shares, he has no choice but to sell GLD, and by virtue of this being the most liquid paper instrument in the PM space, gold.
A possible explanation for the big sell orders we've been seeing of late.
Though this doesn't explain those ones happening during the thinly-traded hours on the Asian exchanges (which would be a poor way to get out of a position without driving drown the price you're getting for it)...
From Zero Hedge - Silver Slumps To Biggest 3-Day Drop In Over A Year:
On the back of no news and no fundamental shifts in demand and supply, Silver has cliff-dived 7.5% in the last 3 days, its biggest drop in over a year, as the precious metal heads back towards unchanged on the year. We suspect that, just as with the NatGas story earlier this year (when it went bidless and was justified by endless chatter over what it meant, when in fact it was John Arnold unwinding his positions and closing shop), the moves we are seeing in not just precious metals but copper and across FX are liquidation-related (as we noted yesterday) as fundamentally facts remain the same, given central bank buying of gold into reserves and the Fed set to hit a $4 trillion balance sheet within the next year). Into the 2011 year-end we also saw dramatic 'liquidation-like' plunges in Silver (and gold) as it is very clear that whoever is 'selling' is entirely price-insensitive.
I just got off the phone with Eric Hunsader of NANEX.
He hasn't looked in depth yet at the recent price action in gold & silver, but while we were on the phone he took a look at the millisecond trading volume during the sharp takedown of gold upon today's market open.
Upon first glance, he saw an aberrantly big order (6x a typical 'large' order) that immediately hammerd gold down seveal $/oz. He sees little reason why anyone would trade that way unless their specific intent is to drive the price downwards.
He remarked that we've seen even more egregious examples of such price bullying, most notably the blantant raid in the after-hours market Chris decried two weeks ago.
I also spoke with a veteran precious metals dealer who simply sighed and says he's seen this a thousand times. He's not worried in the least - nothing has changed in the fundamental reasons to own gold & silver, so the current price action is just noise to him.
He did mention that he's seen substantial large-order purchasing from both old and new clients recently.
I am investing long term in precious metals. I don't intend to sell any physical assets for 10 years and no recently purchased precious metals EFTs for at least several years.
Over that timeframe, short term downward manipulation is a benefit. It lowers my buy price and will possibly delay a larger movement into PM investments.
I'm not a world class investor, but I can't see downward manipulation of precious being successful over year and decades given the debt bubble and other 3E pressures. When people finally loose faith in other markets, there will be a large pool of money seeking a smaller pool of assets.
....spare fiat buck$ lying around, I'd be taking advantage of this year-end sale in PMs. Need another chunk of that "junk" silver to balance things out. But alas. I wouldn't be surprised if the PMs stay on sale for months to come, so I may get my wish yet.
Viva -- Sager
If you are nervous about the recent price action in the Metals then please listen to the following interview with Andrew Maguire on King World News. He explains in laymans terms why propping up the dollar and other fiat currencies drives down the price of the gold and silver. Also why this manipulation can not go on for long. When the paper price of Gold and Silver is driven down China steps in to buy physical metal. My strategy is to buy on these dips while physical metal is still available.
Follow to the link to a great audio interview.
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/12/21_Maguire_-_Shocking_$2.89_Premium_For_Physical_Silver_In_China.html
I'm sure it's the government manipulating the precious metals markets to cover up the destruction of the dollar from QE3 and now QE4. They're trying to discredit anyone who questions their foolish behavior by trying to hide one of the best inflation signals we have. They can't hide it forever..don't be fooled!
As some have said, the reason we see dips in pricing is because of manipulation. The central banks and governments can only prop up the fiat currencies for so long. Look at the news, everday it is something new with regard to a foreign country's economy or our own.
The central banks and governments have to keep the price of metals down, if they didn't - it is over for them! The problem is that it is a zero sum game. Eventually it will come to a screeching halt.
Here's an article from Dec. 21 on Reuters talking about how investors in Switzerland, Austria, and Germany are getting jittery and buying gold.
I can't remember which famous investor said it - I think it was Warren Buffet "Buy when people are selling and sell when people are buying"
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