Gold & Silver price manipulation question

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JuanGalt's picture
JuanGalt
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Gold & Silver price manipulation question

What do folks here think about the price of Gold & Silver dropping or being heavily manipulated downward by the Corporate Banking/Wall Street elite during the next financial crisis?

I don't think the true value or legitimate supply & demand trends of the free market will be affected long-term BUT... the Banksters & Globalists can manipulate most markets (at least temporarily). Would love to hear your thoughts on that. Thanks in advance!

John

2OLD4OKEYDOKE's picture
2OLD4OKEYDOKE
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The fiuture of goldbuggery

For sure, gold was held down in the 1990s by a kind of international conspiracy of central banks (banksters?). Also, there's the historical original "Black Friday" (1869) when the U.S. Treasury dashed the greedy aspirations of Fisk and Gould, who had managed to put themselves in a position where they could call paper demanding more gold than existed (at least above ground in North America) ... and then the Secretary of Treasury managed to sober up President U.S. Grant to order the sale of U.S. Treasury bullion ... bursting the bubble ... and a minor depression followed ... but it would have been worse if Grant had not acted.

Aren't central banks supposed to keep the gold market from getting too crazy?

IMO, certainly they are supposed to do that. And if they fail to do so, then the government (in a well-managed nation) will step in and do it for them ... even if that means doing what FDR did ... make private owevership of gold (except for non-currency purposes) actually illegal.

But what we see today is that globalism has created a situation where neither Washington nor Wall Street is able to keep the gold market from going crazy. It's a global thing. Just as much as energy is now a global thing. But the tendency toward goldbuggery is just as strong as ever.

I call it goldbuggery. Gold itself tends toward insanity -- there's no secret about that. So, if we had a Wall Street corporate banking elite controlling things behind the scenes, YES, that would be their duty and they would do their duty and they would manipulate the gold market to keep it from going crazy ... but the question is whether there is a Wall Street corporate banking elite today that, in connection with Washington, is capable of keeping goldbuggery under control. The answer is No. That elite was effective in extorting the Great Bail Out of 2008, but it's one thing to create currency and another thing to create gold.

Anyway, the Bail Out was global, not national. So, the next question is whether there is a global corporate banking elite that, in connection with Washington, Beijing, London, Tokyo, Zurich, Moscow, etc., is capable of keeping goldbuggery under control. That may be, but it's problematic. On the other hand, didn't the Swiss Bank already do exactly that? Didn't they recently manipulate gold downward? Along with margin calls, didn't their action to distance the Franc from gold in support of the Euro somehow break the 'inevitable' rise in the price of gold?

Chris Martenson talks about the next 20 years will be very different than the last 20 years, and (although not mentioned much by Martenson) one of the differences (a minor difference really) may be that gold will be illegal. But that's like Keynes' famous "In the long run, we are all dead." Meanwhile, Chris Martenson also says that buying gold is betting on "the next financial crisis." And then Martenson has his big three E's -- energy, ecology, economy. And the big E economy part of it requires that there will always be some currency ... currency means nothing without an Economy.

That's really the heart of the problem: we have a global economy, but national currencies. But would a global currency really be any kind of solution? No, because look at the EU and Greece -- that situation being a microcosm of the greater problem. What we need isn't gold to step in as the global currency after all the national and regional currencies implode, because that won't cure the global ills of the global economy. What we need is to step back from the abyss of globalism -- not, to be sure, to put an end to globalism (we will still all be on just this one planet), but simply to bolster the national borders that should be acting to restrain globallsm. The most successful currency in the world today is the renminbi .. without one ounce of gold backing it!

The question right now is whether producers who are stockpiling gold will sell ... or why they would sell, when gold is perceived as only going up. Meanwhile, it won't go down as long as stockpiling producers don't sell. So that should be good enough, especially since the "next financial crisis" is any day now (as soon as Greece's debt is written down), and then gold will go up, I suppose.

The gold market has always been manipulated in modern times. And, if it becomes too much of a threat to social stability, there are only two ways it can go -- gold will rule the world or the world will rule gold. In the long run then, my bet would have to be on the world ... but who knows?

The philosophers of goldbuggery would like us to believe that installing gold as the only 'true' currency can only result in a period of social stability, but that's just another delusitonal system -- gold is more likely to contribute to instabiilty than to do otherwise. We like to think that gold somehow represents eternal truth, but it's really a matter of perception just as much as any fiat currency is. The difference is that the amount of gold is limited. How much gold is out there under the ground anymore?

Will major players attempt to manipulate gold up or down, according to what they see as best for their interests? Of course, they will. Of course, they do. Chase recemtly bought gold, and then, holding gold, some Chase economist predicted gold over $2000 before the end of the year. So, some of the major players in the table-stakes gold game are banksters with central bank powers. And, of course, they don't make mistakes when they speculate ...        or, if they do, the rest of us will bail them out ...   

Silver is another story.

 

Travlin's picture
Travlin
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Welcome

2old

Welcome to the site.  I have a more positive view of gold, but you raised interesting points.

Travlin 

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JuanGalt
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Excellent response 2old4okeydokey

I agree with much of that. No doubt there will be more market manipulation against gold and silver. There already has been just recently, not tp mention plenty of historical precedent.

That's one reason to not have all your eggs in one basket. PM are important and priority but you need a very good plan as to how much of your Net Worth they make-up, what type to buy, where to store them and when to sell. 

Question is how drastically will manipulation affect physcial store values versus leveraged and papered ones and how controllable global demand will be.

With more war on the horizon, a debt bomb seriously ticking away and no political will in Washington to do anything that makes sense it appears disaster is already baked in the cake and the elite know it. They are simply raping and pillaging and positioning themselves as best as they can and as quickly as they can before the music stops.

These silly distraction campaigns and false wars are working like a charm on most of the public. Wonder when enough people who can and will do something about it wil wake up.

In the meantime, small effective community building with like-minded action groups committed to mutual protection, benefit and preservation is a good start.

More thoughts on all this later. Thx.

JG

 

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KugsCheese
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Marginal Cost?
Manipulation?   First what is the historical cost by year/decade to produce an additional ounce of gold?  It could be that persons value gold for much more than it costs to extract from the ground.  So low GDP times gold would still be produced for new buyers.   In a speculative environment, obviously gold miners will dig for more of it to get more profit while the market is hot.   I don't think the gold market can be compared to the oil market besides the normal broker shennnaigans.   If this logic holds, one could see gold price crash as economic activity crashes.   But an ounce of gold would still buy that fine silk Italian suit after the crash.    Comments?
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Jim H
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Beware of Pro-paper, Anti-Gold Psyops. This may be it....

The response by "2OLD4OKEYDOKE" leaves a bad taste in my mouth.. not because it is a well wrought argument against Gold (vs some other means of preserving wealth)... it is not, but because it seems to have NO  purpose other than to plant subtle doubts in the mind of a Gold holder.  I am not one who is prone to conspiracy theories... but two other PM-related website/blog operators have recently reported that troll activities are coming from some very eye-opening IP addresses - if you are not as much of a denizen of the alt-media as I... you may not be aware;

Turd speaks of it here, in the first of two videos;    http://www.tfmetalsreport.com/blog/2682/turd-speaketh

SGT gets very specific here;   http://sgtreport.com/2011/09/someone-at-bank-of-america-doesnt-like-sgtr...

So, my question is, who is 2OLD4OKEYDOKE?... an entity that joined 29 weeks ago (you can't monitor the member sections without joining) but only now jumps in to make a very detailed post that is clearly focused on planting doubt in the mind of a more sophisticated, educated Gold holder.  Clearly, if a poster (troll) were to jump in here and just yell, "Gold is stupid and sucks" as on a Yahoo board... the message would not get through.  But the above piece is much more subtle... maybe even masterful.  Let's take it a part a bit;

The history lesson in the beginning paragraph is meant to cement the author's bona fides vis-a-vis Gold and monetary history.  There are positive affirmations throughout as to the reality of Gold market manipulation... hey, he's one of us!  Two things then occur;

1)  Misinformation

2)  Planting negative associations

Let's start with the negative associations;  The term Goldbuggery, repeated 5-6 times for good measure, which the author associates with insanity, is clearly meant to be pejorative... the fact though, as we all know, is that many through history have been hurt based on their own blind faith in paper (do we call that paperbuggery?) .. and I always carry my Zimbabwe $10 Trillion bill as an object lesson in the hazards of blind paperbuggery.  While Gold has never gone to zero, all fiat currencies in history have eventually done so in time.    The author also makes very sure you know that Gold could be made illegal... certainly one of the most powerful and scary arguments against your protecting yourself with Gold.  I don't know about you... but if the US makes Gold illegal.. I am going to be on a chartered sailboat the next day heading toward a destination that has not made Gold illegal... and I will return a much richer man.  This does not scare me....there will be a very active black market if this happens.  So,  in summary, Gold is scary, and stupid.... check.  

So, on to the misinformation;

The author says, "Aren't central banks supposed to keep the gold market from getting too crazy?"  Um.. yes, they are... but not via direct manipulation of the Gold market.  No, central bankers are supposed to manage the scarcity integrity of their paper money such that it remains a  desireable store of value.  Volcker did this.. he raised interest rates to the point where cash made a positive real return..and Gold dropped... appropriately I might add.  Most of us at CM.com understand that Bernanke couldn't do this anymore without hastening the ultimate bankuptcy of the US.

And while we are on the topic of central bankers... if the pursuit of Gold is Goldbuggery, then why have central bankers been net buyers of Gold over the last two years (reversing a long trend of sales)?  Why in the world?  I can't imagine.

Here's a scary one;  Miners are stockpiling Gold.  Well.. there have been some recent arguments right here on CM.com (piece by Gregor) that suggest miners may not be as aggressive in extracting as they might otherwise be (i.e. leaving stores in the ground to appreciate), but we at CM.com also understand how increasing energy cost of extraction may color such a plan.  In any event, nobody has suggested that miners are "stockpiling" Gold... and even if they were to, recall that almost every ounce of Gold ever produced is sitting somewhere in a vault or around somebody's neck... my point being that the stock and flow are HUGE relative to new extraction.... the dynamics of new extraction are not what moves this market.  Fear (of paper) is what moves this market.  Again, my overall point here is;  Why does this author want us to focus so much on the reasons to fear Gold, while glossing over any of the very good reasons to fear paper?

BTW, did you know that if you are a Gold-holder.. then you are against social stability?  Yes, as per the author, this is true;

"The gold market has always been manipulated in modern times. And, if it becomes too much of a threat to social stability, there are only two ways it can go -- gold will rule the world or the world will rule gold. In the long run then, my bet would have to be on the world ... but who knows?"

So, it's not the Gov't debt binging, the private debt binging, the central bankers cheap money bubble blowing policies... etc that is responsible for the growing social instability (aka OWS, Arab Spring.. etc)... No, as per this author... it is this silly faction that wants Gold to rule the world.  See how subtle this is?  You think this is a normal poster?  I don't.

 

So, I am not going to go on.. though I could.  I am though going to challenge 2OLD to come out and publicly declare the roots of his/her Paperbuggery.  Explain to us more about how great unbacked fiat currency is, and how you came to your sincere beliefs...  because I think you very well may not be who you purport to be.      

     

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h2oBoy
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Anti-Gold Psyops

 Great response Jim. I fully agree as do the people at SmartKnowledgeUniversity, who I subscribe to and also sent out an email today about the constant manipulation. A partial section follows.

 
Despite the steep dive in gold/silver assets we experienced last month, one can see that even now, we are still near our aggressive buy signal that we granted during the middle of last May (again refer to the chart we have included in this letter). Right now, we still have a wonderful opportunity to buy gold and silver mining stocks and to buy physical silver. The reason why most gold and silver investors never make any money is because they allow bankers to manipulate their emotions of fear when bankers occasionally take down the price of gold and silver.  Sometimes the banker take downs can be countered with defensive strategies and other times gold and silver investors must be willing to wait out the banker take downs to turn huge profits in gold and silver in the future.  However, act impulsively and with fear instead of with facts and logic when it comes to investing in gold and silver and this formula nearly guarantees gold and silver investor losses.
 
 
 
So let's get rid of the emotions and look at the facts. The critics that said the recent pullback in gold and silver prices a month ago proved that gold and silver were bubbles that had burst merely demonstrated their utter ignorance regarding mechanisms that Western bankers utilize to manipulate gold and silver prices in the short-term.
 
 
(1)  Gold and silver prices are set in the Western world only (New York and London) and only in the paper futures markets. This will change as China gains more influence over setting the price of gold and silver but Western bankers still firmly control the price of gold and silver as of today.
 
(2)  Western bankers created futures markets in silver and gold specifically to suppress the price of gold and silver and to be able to produce rapid volatility to the downside at times, and for no other reason.
 
(3)  Western bankers literally trade hundreds more times paper gold and paper silver than real physical supply that exists. That means that the volume of IMAGINARY gold and silver that does not exist in the real world is literally what sets the price of gold and silver every day.
 
(4)  Supply and demand of REAL physical gold and physical silver have no bearing on the wild fluctuations you see in gold and silver prices. Bankers literally prevent real supply and demand fundamentals from driving the price of gold and silver higher even when behavior in the physical gold and silver world MERIT a rising price.
 
 
Travlin's picture
Travlin
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Take another look

H2oBoy

I consider the advice you quoted to be very shortsiighted and dangerous.  Listen to what Chris and Mish had to say today and my response in post 7.  They both think a market rout is very near.   http://www.peakprosperity.com/martensoninsider/cuff-proceed-caution

Here is my post in response.  This is certainly no time to buy more gold or silver.


Travlin wrote:

 

Chris and Mish – Thank you both. Your conversation was very helpful. Your subdued tone spoke volumes. Your knowledgeable assessments confirmed my view that a market rout is probably very near, and this is the time to get completely defensive.

Any member – Besides cash, my only holding is gold and I’m even reconsidering that. In the 08 crash that began in September, gold sank dramatically along with stocks, as it was sold to close losing positions in other markets. Gold prices also declined because the dollar rose in value. Gold did not hit bottom until late November. I see no reason for the pattern to be any different this time. If we are indeed near a rout in the financial markets I see little chance of gold rising significantly in the meantime.

I am thinking about selling half or more of my gold. I would use the cash to buy gold again when prices are lower. The US dollar will probably appreciate during a crash as the “least ugly nag at the glue factory”, so it looks like the safest place to be for now. You have to be committed to buy gold back for this to work to your advantage. If you can’t do that, just hold and take your losses. They will be made good eventually.

 

Travlin

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Jim H
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Anti-Gold Psyops

Travlin - I don't disagree that this is a good time to be holding some cash... especially in the brokerage acct...and I do...  but I personally would not sell any physical.  I will continue to buy small increments of physical as I can.  The danger here is that you take your cue from the paper markets, which at some point may radically depart from the real price at which you can acquire Gold/Silver.  The risk is that you sell now, and find that you cannot buy it back later due to either complete inavailability, or pricing far above the "spot" price.  

My point in commenting earlier is that the signals are getting more and more manipulated.... this is not 2008.. it's much, much worse, and the money printing will recommence.  We are getting to the point where the anti-Gold psyops is reaching a new plateau... the fact is, somebody is wrong.. either Gold is a buy right now, as Mr.Kim of smartmoneyU suggests in H2O's post... or it's going down hard along with all ships... I see absolute desperation on the part of TPTB in defending their paper vs Gold and Silver... this is the signal I see, and this is why I put so much effort to make my post above.  You can sell now.. and you very well might get your lower buy point.. but I still predict a parabolic phase ahead, and I am not going to miss it.  Good luck to all my fellow CMer's      

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Jim H
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The Cure for Paperbuggery....

Read this;

http://www.ritholtz.com/blog/2010/11/brodsky-on-gold/

Fascinating stuff... no wonder the FED stopped reporting M3 (sorry, no slides at this time)

Frame 2: This graph shows how the US economy levered itself through what we term “unreserved credit”. The green line is the growth in M3 and the blue line is output growth. As you know M3 was the only monetary aggregate that included overnight repurchase agreements Wall Street banks use to finance their balance sheets. We can see that from ‘94 through March 2006, (when the Fed stopped reporting it), M3 grew almost 12% annually.

The point here is that Wall Street consistently tapped into an ever-increasing supply of overnight credit and then helped distribute term-funded debt throughout the system. From this systemic debt mismatch the entire global economy ultimately became dependent on the US Fed.

At first this term credit flowed broadly into financial asset markets. When equity markets blew up in 2000, it flowed into housing. When that credit finally blew in 2007 there was nowhere for it to go except back to the Fed. This is what we’re seeing today.

So while it may seem that great wealth was created from ’94 to 2006, we would argue the majority of it was not wealth at all. It wasn’t capital either. It wasn’t even money in the real sense. Ultimately it was overnight, unreserved credit.

Frame 4: We’ve found that in the current environment it’s best to ignore what policy makers say — or even what they may intend to do — and better to rely on logic and history.

There are only two ways economies can de-lever. Either the value of credit can deflate naturally, or the stock of base money can be expanded to an amount that would let debtors meet their obligations. Pick your poison. Credit deflation implies shrinking output and rising bankruptcies, unemployment, and maybe even social unrest. Monetary inflation, on the other hand, implies a general cheapening of the currency’s relative purchasing power.

In the end we think there’s only one outcome. Monetary inflation is the only politically practical answer because most voters are debtors, and most debtors would greatly benefit from having the burden of repaying their debts inflated away.

We expect politicians to be politicians and policymakers to execute policy. We don’t expect familiar post-War monetary policies, or true austerity measures, or a strategy of waiting over time for everyone to accept their fate.

Frame 12: We think we know what to expect: ultimately the Fed will formally devalue the dollar to gold and then it will conduct monetary policy on the much higher dollar/gold exchange rate, just as it has conducted credit policy with interest rates over the last generation.

A few years ago, Lee and I modeled gold using the old Bretton Woods formula and we came up with a “Shadow Gold Price”. When we divide today’s US Monetary Base by official US gold holdings we arrive at a dollar value of about $8,000 an ounce. A big number to be sure, but math is math. An $8,000 gold price would represent the magnitude of dollar devaluation necessary to reconcile all past monetary base inflation. It is a price based on fundamentals, modeled using post-War experience.

Is $8,000 a realistic target for gold? Why not? In fact we could see it rising even higher given the ongoing political imperative for monetary inflation.

We shouldn’t be price anchored. At its speculative peak in 1980, spot gold traded at a premium to the Shadow Gold Price. Today, it trades at an 80% discount. When gold was trading at $50 back in the seventies, who thought it would peak at $850, or who thought the NASDAQ would peak at 5000, or, for that matter, that 2-year Treasury notes would trade at 35 basis points today? As with all other multi-year bull markets, we think gold will go parabolic at some point before its bull run is over. Maybe it’ll look like this blue line?

Frame 13: And finally, despite all the chatter the data show that financial asset investors simply don’t own gold yet. Gold ETFs total about 67 million ounces, which is only about $90 billion. The aggregate market cap of gold and silver miners is less than Google’s. Only $2.6 billion flowed into all resource mutual funds in the third quarter.

These small figures compare to about $26 trillion in pension money alone – a sector that has dedicated only about 56 basis points to precious metals. If we include all investment portfolios, we get a gold commitment of just 15 basis points. If you want to round that it would be 0%!

Physical bullion is held in strong hands. Financial asset investors holding derivatives like Comex futures won’t be able to take gold’s price down for any length of time because fundamentals are not on their side and because they have no staying power in their positions. Besides, we know several central banks holding billions and trillions in paper dollar reserves that would have a bid for all they own – and more.

Frame 14: So it is with great humility and rationality that I admit to you today: my name is Paul Brodsky and I am a gold bug…at least until the ratio of debt to base money contracts to the point where we can get positive real returns in financial assets again.

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Travlin
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Thanks Jim

 

Jim H wrote:

[Edited by Travlin]

I personally would not sell any physical.  I will continue to buy small increments of physical as I can.  The danger here is that you take your cue from the paper markets, which at some point may radically depart from the real price at which you can acquire Gold/Silver.  The risk is that you sell now, and find that you cannot buy it back later due to either complete inavailability, or pricing far above the "spot" price.  

You can sell now.. and you very well might get your lower buy point.. but I still predict a parabolic phase ahead, and I am not going to miss it. 

Thanks Jim. This is the kind of response I was looking for. I am familiar with the concept of price departure for physical, but had not factored that into my thinking on this decision. You provided a good reminder. I was planning to keep all the bullion I have under direct ownership. It is the Sprott I may leave temporarily. I think the odds are high it will decline dramatically in a rout. I think the odds are low that I can’t buy it back at a better price. I think a parabolic phase is probably inevitable, but not emanate. I will consider your thoughts as I ponder this more.

Travlin

 

2OLD4OKEYDOKE's picture
2OLD4OKEYDOKE
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Posts: 72
Rejoinder to Jim H

Goodness, what I've stirred up here! Touchy subject, I guess.

Anyway, rest easy, I am not a troll for the silver miners association or any other special (or general) interest! Alas! I am not getting paid for sharing my wit and wisdom with this audience!

Think of me as a nobody who is responding to JuanGalt's request for "your thoughts," so I opened up and went a little crazy myself. Call it 'paperbuggery' or 'silverbuggery', if you like, but those don't work the way 'goldbuggery' does, because 'goldbuggery' naturally derives from the term 'goldbug' that is well established in English usage going back to the famous detective story by Edgar Allen Poe.

At any rate, I do not appreciate the sobriquet of "pro-paper" or the presumption that I am pushing fear of any kind! It's true that I am at the fundamental level a monetarist of the www.monetary.org school, although I can see the basket approach of Hayek too. Basically, the supply and distribution of gold is such that we aren't likely to return to a "gold standard." But that doesn't mean that gold isn't a store of value or that it's impossible to go out of the USD or even out of the USA and then return with gold, after a devaluation or monetary collapse, in an enviable condition.

One thing for sure -- I did not think that I would scare anyone off of gold by noting that in an extreme, private ownership of gold bullion probably would (will?) be made illegal ... but, since we seem to be talking about extremes these days ...  That extreme aspect of gold ownership is just one more factor that should legitimately be considered and, therefore, one of my "thoughts" as requested by JuanGalt. Part of my problem is that I am a little too old to think in terms of shelling out some of my gold to charter a sailboat, loading it up with my hoard and sailing off into possibly pirate-infested waters with my 50 cal. guns, RPGs and ample supply of ammo ... indeed, to my mind, that's an example of what I call 'goldbuggery' ... but that's just me ... and, hey, maybe that's the sane way to see things!

Second, I agree that central banks are supposed to manage money supply and that's what Volcker did well and hasn't been done so well since, except by the People's Bank of China and a few others. However, central banks do also concern themselves with the gold market and with manipulating the gold market, including sometimes selling gold to influence that market directly. Is it still possible today for a collusion of central bankers to hold down the gold rush as they have in the past? Probably not! And, yes, I am suspicious of (for example) Chase's increasing their gold bullion as one of their "economists" announces that gold will end 2011 at something like $2100, wasn't it?

Third, as to the question, "Why does this author want us to focus so much on the reasons to fear gold, while glossing over any of the very good reasons to fear paper?" -- thanks but no thanks for implying that I am in denial about reasons to "fear paper." (I don't think that fear has any usefulness other than to instill courage!) Especially with derivatives and flash trading, OF COURSE, there are many reasons to distrust paper (or EM storage media). I didn't think that was the topic here, that's all.

And again, thanks but no thanks to Jim H for implying that my thoughts include that goldbuggery is THE cause of social instability! I never said any such thing. Of course, the gold rush is more of an effect than a cause, but it's mainly a component of a dynamic system seeking some balance. Reading Jim H's quote of myself again, it's clear that my entire statement is conditional "IF it becomes too much of a threat to social stability," because, yes, I do think that what I call goldbuggery COULD become a threat to social stability. And then -- maybe I was a little too poetic in how I phrased it -- but then it's inevitable that either gold will rule in an anarchic or feudalistic world ... or governments of the world will act to restrain the influence of gold. That's all out there on the extremes, but goldbugs love to talk about extremes, so why not?

Fourth, as to misinformation, Jim H says that "nobody has suggested that miners are 'stockpiling' gold" ... but what about Kyrghizistan? Oh well, I probably don't know what I'm talking about, I haven't actually visited Kyrghizistan or inspected their vaults! (Has Jim H?) It just seems to me that miners might not always dump gold onto the market as soon as they get it out of the ground. Of course, to some extent, they will hold onto it. Why not? The assumption that it has to be left in the ground or off to market it goes ... really? Is that a law of economics, or what? (Well, you may want to define it as somehow on the market as soon as it's out of the ground and smelted down.)

And then, the idea that I am ignorant of the fact that gold resources are dwindling ... I guess I just must be a real dufuss somehow. Gold a dwindiling resource? EXACTLY, that's the problem with gold.

But here's a question for all you that are bullish on gold and anticipating the collapse of every fiat currency in the world today --

How much gold is backing up the renminbi?

BTW: Hate to be nonconfrontational ... but I think that I am probably much more in agreement with Jim H than might be thought based on Jim's reaction to my comment.

 

2OLD4OKEYDOKE's picture
2OLD4OKEYDOKE
Status: Bronze Member (Offline)
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Posts: 72
Yes, h2oBoy, look at the margin hikes!
h2oBoy wrote:

 Great response Jim. I fully agree as do the people at SmartKnowledgeUniversity, who I subscribe to and also sent out an email today about the constant manipulation. A partial section follows.

 
Despite the steep dive in gold/silver assets we experienced last month, one can see that even now, we are still near our aggressive buy signal that we granted during the middle of last May (again refer to the chart we have included in this letter). Right now, we still have a wonderful opportunity to buy gold and silver mining stocks and to buy physical silver. The reason why most gold and silver investors never make any money is because they allow bankers to manipulate their emotions of fear when bankers occasionally take down the price of gold and silver.  Sometimes the banker take downs can be countered with defensive strategies and other times gold and silver investors must be willing to wait out the banker take downs to turn huge profits in gold and silver in the future.  However, act impulsively and with fear instead of with facts and logic when it comes to investing in gold and silver and this formula nearly guarantees gold and silver investor losses.
 
 
 
So let's get rid of the emotions and look at the facts. The critics that said the recent pullback in gold and silver prices a month ago proved that gold and silver were bubbles that had burst merely demonstrated their utter ignorance regarding mechanisms that Western bankers utilize to manipulate gold and silver prices in the short-term.
 
 
(1)  Gold and silver prices are set in the Western world only (New York and London) and only in the paper futures markets. This will change as China gains more influence over setting the price of gold and silver but Western bankers still firmly control the price of gold and silver as of today.
 
(2)  Western bankers created futures markets in silver and gold specifically to suppress the price of gold and silver and to be able to produce rapid volatility to the downside at times, and for no other reason.
 
(3)  Western bankers literally trade hundreds more times paper gold and paper silver than real physical supply that exists. That means that the volume of IMAGINARY gold and silver that does not exist in the real world is literally what sets the price of gold and silver every day.
 
(4)  Supply and demand of REAL physical gold and physical silver have no bearing on the wild fluctuations you see in gold and silver prices. Bankers literally prevent real supply and demand fundamentals from driving the price of gold and silver higher even when behavior in the physical gold and silver world MERIT a rising price.
 
 

 

 

Very good comments by h2oBoy. I heartily agree! Just recall what happened in August and again in September after the Merc margin hikes! "There oughta be a law!"

2OLD4OKEYDOKE's picture
2OLD4OKEYDOKE
Status: Bronze Member (Offline)
Joined: Mar 28 2011
Posts: 72
Agreeing with Travlin

"The US dollar will probably appreciate during a crash as the 'least ugly nag at the glue factory', so it looks like the safest place to be for now."

Yes, although it's a muddling through kind of thing, I agree!

"You have to be committed to buy gold back for this to work to your advantage. If you can’t do that, just hold and take your losses. They will be made good eventually."

That would be me, I'd do best to hold on for the long run.

"You can always trust your government -- to do anything necessary to preserve itself."

Yes, that's one thing we can probably count on.

Jim H's picture
Jim H
Status: Diamond Member (Offline)
Joined: Jun 8 2009
Posts: 2385
Paperbuggery...

Hello Okeydoke... glad you have replied.  I will take you at face value... for now.

Not surprised you would agree with Travlin, as he is talking about trading some of his Gold for paper.  It could be a good trade... but given that his plan is to buy back later.. .meaning he still sees a long term depreciation of his paper relative to Gold.. I see the move as dangerous.  I could sell physical Gold too.. but will not be doing so.  I do not believe that Chris has given any signal that he would do so either.. correct me if I am wrong here.

I find the continued reference to the success of China's "unbacked" currency kind of silly...  fiat currency is always successful.. until it isn't, because it's use is enforced by law.   From what I have read they are nationalizing most of their mined Gold, and their "reported" National stocks of Gold took a big step up earlier this year.  They appear to be accumulating.. and while their ratio of Gold to currency is indeed much lower than that of the US based on the 8K ton number.... they do seem to be working in catching up.  Why would this be?

Anyway... my own militancy has nothing to do with an innate love for PM's.. it stems only from my intention to not let central bankers and irresponsible gov't representatives take away, through the well travelled path of currency depreciation, my 28 (working) years of hard fought savings.  You may not have savings.. or you may have a pension over which you have no investment control... hence you would be much more free to philosophize as you wish without feeling responsible for the outcome.  Defense of paper may be your way of feeling more comfortable with the position you find youself in.  Many are unable to face head on what is coming at us.. monetarily (see talking to family and friends thread).  I take ownership for my savings.. and although I don't back it up with 50 cal (what a monster that would be, huh?).. I can deliver quite a barrage of 9mm from my two Hipoint carbines.

Also, you mentioned, jokingly I think, that there should be a law regarding margin increases (used as a weapon in Silver price suppression)... and while I don't know how it affects margin hikes, you probably know that the CTFC finally voted ealier this week to fulfill their duties as prescribed in Dodd/Frank and impose position limits on the players.  This, and the democratization of the price setting mechanism for Gold by China's new PAGE exchange, will make for markets that trade more freely based on supply vs demand in the coming year.  I don't disagree that, as long as central banks hold vast quantities of Gold.. they can move the market by selling.    

Silver of course is another story...

2OLD4OKEYDOKE's picture
2OLD4OKEYDOKE
Status: Bronze Member (Offline)
Joined: Mar 28 2011
Posts: 72
Thanks to Jim H

Thanks for very good comments, especially the idea that maybe the PBC is preparing a gold standard for the renminbi. I hadn't given that possibility the attention it deserves. Also the comment on how the rules are changing for the better in PM markets.

plato1965's picture
plato1965
Status: Platinum Member (Offline)
Joined: Feb 18 2009
Posts: 615
Ring of Gyges

 

 Gold & Silver manipulation.. is ancient... starting with seignorage..

 

 http://en.wikipedia.org/wiki/Gyges_of_Lydia

 http://plato-dialogues.org/tetra_4/republic/gyges.htm

 

 

 

 

 http://www.youtube.com/watch?v=4s59oDfDoI8

 

 http://tolkiengateway.net/wiki/Two_Trees

xltoth's picture
xltoth
Status: Member (Offline)
Joined: Oct 27 2011
Posts: 1
market manipulation

Gentlemen,

If you believe the markets are manipulated, any markets not just metals, and you play them and lose, who is to blame ???

JohnMichaels's picture
JohnMichaels
Status: Member (Offline)
Joined: Nov 24 2011
Posts: 1
gold manipulation

The paper markets can be manipulated at will. Why did the CME reaise margins when gold and silver was going up, but not on other contracts? It reeks of paper market manipulation. It is so obvious it is disgusting. The phycical market, now that is another story altogether. With the USA printing money in large amounts there is nowhere else but for gold prices to go up. I just do not see any other scenario. Every central bank around the world is buying gold and increasing their reserves. I can not think of a time in the past few years where central banks were buying so much gold. It is absolutely crazy.

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