Ted Butler on the recent takedown of gold and silver

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Ted Butler on the recent takedown of gold and silver

KWN gives a good interview of Ted Butler on this week's takedown of gold and silver prices.

http://www.kingworldnews.com/kingworldnews/Broadcast_Gold+/Entries/2010/7/3_Ted_Butler_on_the_Metals_Market.html

Butler suggest we continue to file complains about the price manipulation with the CFTC. Their email address:

[email protected]

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Re: Ted Butler on the recent takedown of gold and silver

Gold-bugs like Butler have absolutely zero credibility with me. 

Any drop in the price of gold and the only explanation is criminal activity? Yeah, there is a conspiracy in this market and its called PROFIT.

I have never seen an asset with so much dumb-money baggage before and I have no doubt this is going to end really bad for Joe Bug. I really regret ever buying into this charade. 

Its time to cash in my PM Insurance policy because the only thing it insures is emotion-induced investor stupidity and ridiculous theoretical constructs.

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Re: Ted Butler on the recent takedown of gold and silver

You think after living on this planet for the last decade that conspiracy isn't a huge part of the political/economic landscape? Enron was just business as usual and Goldman Sachs played an above board game in a pursuit of profits? How about AIG--not a ponzi? Jag, you write as if you may have overwhelming support for your anti conspiracy gold line on this forum, because 'conspiracy' threads are consigned to the digital basement . That seems to be in the interest of keeping people focused more on practical solutions to problems they can clearly get a handle on. But as far as "theoretical constructs" with no basis in reality, with regards to gold...the idea that the price is manipulated? It can't be clearly 'proven' but it can be suspected and it has to be figured into our approximations about where the price will go. Eventually the manipulators will be outgunned by panic buying. This hasn't happened yet, but is bound to in the near future. I feel it would be unwise to cash in  your pm's at this juncture.

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Re: Ted Butler on the recent takedown of gold and silver

LOL

Ridiculous theoretical constructs indeed.

1- Monetary system based on fiat/credit currency. A system that creates money out of thin air.

2- Fractional reserve banking.

3- A stock market with P/E's over 50.

4- Flash trading.

and finally for Independence Day

5- Life Liberty and the pursuit of happiness

Then I go to the sacred scriptures ( the CC) and see the hockey stick graph of what happened to money when Nixon closed the gold window.

Yep ridiculous theoretical constructs have no place here.

V

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Re: Ted Butler on the recent takedown of gold and silver
JAG wrote:

Gold-bugs like Butler have absolutely zero credibility with me. 

Any drop in the price of gold and the only explanation is criminal activity? Yeah, there is a conspiracy in this market and its called PROFIT.

I have never seen an asset with so much dumb-money baggage before and I have no doubt this is going to end really bad for Joe Bug. I really regret ever buying into this charade. 

Its time to cash in my PM Insurance policy because the only thing it insures is emotion-induced investor stupidity and ridiculous theoretical constructs.

Jeff,

I thought you were out of PMs.  For Pete's sake, get out of those albatrosses.  It's not worth the emotional duress they cause you.  You're just not a PM type person ... nothing wrong with that.

You could try my strategy.  I'm buying up massive quantities of Zimbabwean paper currency in the lowest denominations possible.  I figure the value of the paper is worth far more than the currency value and I'm planning on getting into the paper recycling business.  I figure that buying this asset at less than cost is a can't-lose strategy.  With all the BS being promulgated by TPTB, we're all sure to need lots and lots of toilet paper to clean up the mess. ;-)

 

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Re: Ted Butler on the recent takedown of gold and silver

Reminded me of the Feb 4/5 takedown when gold went from $1115 to below $1045 before recovering to $1065. I look upon these events as buying opportunities in a continuing bull market. The Feb $1115 price looks good now compared to Thursday's takedown price of $1200.

 

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Re: Ted Butler on the recent takedown of gold and silver

Dear Jag,

Sounds like there has been some pain involved in your PM investments? Yet, nice to see you are not bitter:-)

I should have kept my email to the CRTC to share, but do remember the last sentence:

"....so please do the world a favour, lock yourselves in a cell and throw away the key!" Tongue out

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Re: Ted Butler on the recent takedown of gold and silver

I think the proof to the commercials manipulation has been shown by enough people now. The banks are buying when they force the price down. This can be done if you have enough players working together. The oil companies did it for years until stopped. Apparently the CFTC has no interest in stopping it or they just can't. Like Peru Saxena said, "everything is manipulated in the markets today"

 My two cents only. Jon

Who Controls the Gold Market?

http://www.financialsense.com/node/1002

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Re: Ted Butler on the recent takedown of gold and silver

Thanks for the article, investorzzo.

I have spent time on the CFTC website searching out position limits for traders of the PM's. If I read correctly there are 5 unnamed institutions that are exempt from conforming to position limits, and this would seem the corruption if true. Especially, if these banking institutions can print money from nothing and can just over-power the market to their own profit motivations.

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Re: Ted Butler on the recent takedown of gold and silver

I hope they do push it down since I rather buy more & don't plan to sell anyway. Some where in the middle lies the truth.

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Re: Ted Butler on the recent takedown of gold and silver
idoctor wrote:

I hope they do push it down since I rather buy more & don't plan to sell anyway.

Exactly.  Unless you plan upon selling soon, having it cheap is helpful for accumulating a larger position over time.  I don't see anyway that gold does not go up in the long run but for now it is best for anyone that is not trying to retire on their current PM stash, for it to stay cheap.

This works very much the same for stock investors.  Unless you are planning upon retiring in the next 5-10 years, having the stock market tank now will be far more helpful to your long term financial security than a slow steady upward trend.  The path of stock prices over your accumulation period is just as important as the final price.

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Re: Ted Butler on the recent takedown of gold and silver
V wrote:

LOL

Ridiculous theoretical constructs indeed.

1- Monetary system based on fiat/credit currency. A system that creates money out of thin air.

2- Fractional reserve banking.

3- A stock market with P/E's over 50.

4- Flash trading.

and finally for Independence Day

5- Life Liberty and the pursuit of happiness

Then I go to the sacred scriptures ( the CC) and see the hockey stick graph of what happened to money when Nixon closed the gold window.

Yep ridiculous theoretical constructs have no place here.

V

Geeeese, and you guys call me a sheeple?

V, would you care to elaborate on the pricing mechanisms for the items on your list? Oh thats right, you can't because It's just speculation and we all know what happens to a market that is ruled by speculation. Look at how many theories/reasons there are that "explain" why the price of gold should rise, and look at the only reason ever given for the price of gold dropping; criminal conspiracy. Everyone thinks your crazy to be in the stock market, but somehow the gold market is safe

The price of gold is not determined by the metal's intrinsic value, it's determined by the market. If you guys want to invest in pipe dreams be my guest, just don't whine about market manipulation conspiracies when the Mr. Market wipes the floor with you. Boast all you want when the market moves in accord with your world view, just don't chalk it up to conspiracy when it doesn't.

 

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Re: Ted Butler on the recent takedown of gold and silver

Once again JAG you missed the point

V

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Re: Ted Butler on the recent takedown of gold and silver

Once again V, your pointless.

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Re: Ted Butler on the recent takedown of gold and silver

If I can throw my 1.5 cents into the ring, I believe all these markets are massively manipulated, yet I draw a distinction between paper manipulating paper, as in the futures on stock and bond markets, verse paper manipulating a physical commodity that has a finite supply.

I stand guilty as being a gold bug, and think 'bugs' have had a glimpse of the scam being blown open through physical supply disappearing. We read the US mint has discontinued all gold coins except for the Eagle because demand is so high; that almost all US mined silver is being consumed for the Silver Eagle production; that the Central Bank of Austria was recently sold out of bullion coins; that EU money has been flying into Switzerland and buying massive amounts of bullion. I know that Swiss banks have twice lower the amount of bullion a person can buy without having a receipt issued. I assume because of this demand.

So there is a hope that more and more people will take physical and expose the paper game for what it is, yet based on Thursday's activity, that time is not yet.

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Re: Ted Butler on the recent takedown of gold and silver

Auuuh when in doubt do what the smart money is doing (criminals) but do it legal LOL.

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Re: Ted Butler on the recent takedown of gold and silver

some here hope the enron pay off will happen.....LOL.

 

paladin

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Re: Ted Butler on the recent takedown of gold and silver

http://www.321gold.com/mustread/spotgold500_grrrrrr.html

 

paladin

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Re: Ted Butler on the recent takedown of gold and silver
ao wrote:
JAG wrote:

Gold-bugs like Butler have absolutely zero credibility with me. 

Any drop in the price of gold and the only explanation is criminal activity? Yeah, there is a conspiracy in this market and its called PROFIT.

I have never seen an asset with so much dumb-money baggage before and I have no doubt this is going to end really bad for Joe Bug. I really regret ever buying into this charade. 

Its time to cash in my PM Insurance policy because the only thing it insures is emotion-induced investor stupidity and ridiculous theoretical constructs.

Jeff,

I thought you were out of PMs.  For Pete's sake, get out of those albatrosses.  It's not worth the emotional duress they cause you.  You're just not a PM type person ... nothing wrong with that.

 

This hits the nail on the head VERY hard!  If you understand the purpose of owning PM's you'll know it's not for profit.  If you can't EVER get over this fact, it's not made for you.  And as has been stated, there's nothing wrong with that!  If you want to sell some, give me a PM, I'll buy some from you!  No joke!

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Re: Ted Butler on the recent takedown of gold and silver

Ah so true JAG but I tend to refrain from profanity.

V

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Re: Ted Butler on the recent takedown of gold and silver

I will post this without comment for what its worth:

http://www.commodities-now.com/news/power-and-energy/2942-gensler-on-brink

"U.S. Commodity Futures Trading Commission (CFTC) Chairman Gary Gensler appears to be on verge of achieving a big victory in his battle to impose stricter position limits on major energy futures contracts.

"Back in January, Gensler unveiled proposals for tough new limits on futures positions in U.S. crude, natural gas, gasoline and heating oil. Unlike previous limits set by exchanges, these would be set by the Commission itself and would aggregate all positions in economically equivalent futures and options for a particular commodity. The proposals were designed to limit exemptions for firms seeking to hedge financial rather than physical exposures and largely restrict financial and physical hedgers from also running speculative positions."

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Re: Ted Butler on the recent takedown of gold and silver
JAG wrote:

The price of gold is not determined by the metal's intrinsic value, it's determined by the market.

That's absolutely true!

I've stated previously that gold has no intrinsic value. But we keep hearing about gold's intrinsic value (without the method of valuation being defined other than by its history in relation to paper or stocks or whatever). I think the great value of gold is that it really has no use and so is available for use as currency. It also looks pretty as an adornment and has historically been accepted as currency for thousands of years.

If anyone knows what that intrinsic value of gold is that we keep hearing about please let me know what it is

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Re: Ted Butler on the recent takedown of gold and silver

I'd like to throw this in for comment, as I'm trying to keep an open mind on both sides of the argument and this is a 'different' angle.

I read on Daneric's Elliot Wave blog that in his opinion

a cycle wave event in gold is nearing an end and is due a cycle wave correction

http://danericselliottwaves.blogspot.com/2010/07/elliott-wave-update-1-july.html

This gives a long term target price of $500 or less. Now I'm not sure what to make of this as in the past I've tended to not give too much credence to these kinds of forecasts, but I've started to believe that Elliot Wave theory might be a useful tool, and that Daneric is a pretty good exponent. Now I'm sure that there are some people here who know more about wave theory than I do, and I'd be interested in hearing their opinions on this. One thing I find unsettling is that EW in theory should just give an unbiased, objective, technical picture.

I'm holding physical gold, and I'm not seriously thinking about selling, as for me it's a long tem position. One thing I wondered is whether there could be a crash to these levels caused by a major deflation, followed by a bounce caused by a hyper-inflationary event within a very short time period.

Any comments would be appreciated.

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Re: Ted Butler on the recent takedown of gold and silver
JAG wrote:

I have never seen an asset with so much dumb-money baggage before.

I'm not convinced that this is entirely true, there are a lot of 'dumb' things said about gold, perhaps including the manipulation stories. However dumb money has not flocked to gold yet, it's been asked before on this site, how many of has have family or friends who own gold - for me it's zero.

My understanding of dumb money is that it is typified by numerous individual investors attracted in at the top, without much basic understanding of  fundamentals. On the contrary most gold bugs probably bought way below the recent top based on a set of beliefs in fundamentals.

With the bubbles we've had in recent years there must be lots of examples of assets with much, much more 'dumb-money baggage'

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Re: Ted Butler on the recent takedown of gold and silver

I am terribly unsophisticated, but here goes:

Who cares what the price of Gold is today?

Gold is not a dividend paying investment, and its only value is its quality as money.  It serves this function perfectly and always will.

If you want to speculate, buy something else.  To me, Gold is insurance against a currency collapse and a way to defend some of my previous profits from inflationary erosion over the long term and a catastrophic economic meltdown in the short term.  The big bet here is not that Gold will go up or down in value, but how soon, if at all, the SHTF and all other financial instruments and investments tank.

If I am looking for big returns, I invest in businesses that create wealth through production and innovation.

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Re: Ted Butler on the recent takedown of gold and silver

Gold is insurance against a currency collapse and a way to defend some of my previous profits from inflationary erosion over the long term and a catastrophic economic meltdown in the short term

With respect, the value of your gold holdings can go up or down, so how are you protecting your previous profits if they disappear in a deflationary collapse in the value of gold?

I'm broadly in agreement with you on all you've said, but are you / is anyone, absolutely sure how things will play out, surely it pays to consider all possibilities?

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Re: Ted Butler on the recent takedown of gold and silver
LogansRun wrote:

If you understand the purpose of owning PM's you'll know it's not for profit.  If you can't EVER get over this fact, it's not made for you.  

 

Profit: to derive a benefit from

LR,

Whether you recognize it or not, you are expecting a profit from your PM Insurance policy. You are expecting that insurance policy to pay-off in some future scenario, maybe not in dollars, but in some form of purchasing power. And your not alone in this belief. But let me ask you this:

What happens to the purchasing power of PM's in a situation where everyone is seeking the same pay-off that you are expecting?

I know that gold and silver are dear to everyone's heart here, but it is this emotional baggage that concerns me. Let me lay out a scenario on how this all plays out. This is just my personal opinion based on market herding dynamics that I have observed over the years.

 

Step 1: The bull market in gold continues until everybody is convinced that gold prices can only rise (sounds like housing in 2006 doesn't it?). People buy into this bull market out of both fear and greed, something no other bubble asset in our history can claim. During this process, people correlate the rise in gold to mean many different things:

  • impending war
  • government tyranny
  • looming currency crisis or hyperinflation
  • sovereign default
  • an increase in the base money supply
  • A breakdown of society into a chaotic mad-max nightmare
  • an opportunity to profit from a bull market
  • insufficient supply based on demand
  • etc

Those that seek to ride this bull market for profit will probably just click their mouse and buy GLD, while those that buy out of fear will be compelled to purchase physical PMs. But both parties are feeding this bull market based on speculation, as there is no objective method to determine the price of an asset such as gold.

 

Step 2: At some point, the major players in this market come to the conclusion that there is more profit potential on the short side of this gold trade than there is on the long side. Thus, they begin to seriously pursue the short trade in gold, just like they did in internet stocks in 2000, in housing in 2005-2007, in oil in 2008, etc. At this point, the price of gold is primarily of a product of the gold-derivative trade, and not a function of the physical market. And just as the mortgage derivative market distorted the price of real estate,  the price of physical gold is distorted by the gold-derivative market. 

The first to pile-out of the gold-ride will be the paper (ETF) traders, after all they are just in it for profit. So they will click their mouse and the price of gold will pick up speed on the way down, as they not only sell their positions, but actively short the market. The physical players will scream "criminal conspiracy!" and "market manipulation!" as they watch the purchasing power of their PMs disappear. Because the physical players bought out of fear they will continue to stubbornly hold their PMs, but this mindset will begin to degrade as a new fear takes hold. As the economy grows worse, no one will have the cash to buy PMs, and many holders of PMs will be forced to sell their next egg to raise cash for living expenses. A strong belief that "the market is totally rigged", combined with the fear that they will get less and less for their gold the longer they wait to sell, will cause the majority to capitulate on their PM Insurance Policy at the exact time that it proves to be nearly worthless.

 

Step 3: At this point, in the midst of deflationary spiral expectations as far as the eye can see, the big players in this market (and a few lonely liquid investors) will begin accumulating PMs (and other real assets) at bargain basement prices, and the seeds will be sown for another round of this age-old game. Who knows, maybe I will be asking you if you want to sell your PMs to me at that point. No Joke.

The point of the fable is this; markets exist for one thing and one thing only-PROFIT. You may think that you are immune to this foundational market force because of your beliefs, but in the end, your beliefs will prove to be just another opportunity for someone else to profit. 

Best...Jeff

 

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Re: Ted Butler on the recent takedown of gold and silver

Jag, You can't seriously compare buying physical gold with the purchasing of internet stocks a few years back. There is very little speculative frenzy in gold, right now,  but if you are convinced that your scenario will eventually play out, just hedge gold with fiat currency. One of the reasons you gave for gold prices to collapse, actually supports the counter argument-- comparing gold based derivatives to mortgage based derivatives. Because there is a something like a fractional scheme going on in paper gold, the price for the real thing will be driven much higher. The big money guns buying gold currently and central banks, are purchasing bullion, not  paper gold. You may be correct eventually, but I'd say the liklihood isn't high and if you turn out to be correct, there are still several years left for gold to rise against fiat.  Could it outpace inflation? Sure. Then it becomes an investment. What would I personally worry about?  A windfall profits tax, on bullion.  That could happen. Confiscation..nahh.

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Re: Ted Butler on the recent takedown of gold and silver
Rector wrote:

I am terribly unsophisticated, but here goes:

Who cares what the price of Gold is today?

Gold is not a dividend paying investment, and its only value is its quality as money.  It serves this function perfectly and always will.

If you want to speculate, buy something else.  To me, Gold is insurance against a currency collapse and a way to defend some of my previous profits from inflationary erosion over the long term and a catastrophic economic meltdown in the short term.  The big bet here is not that Gold will go up or down in value, but how soon, if at all, the SHTF and all other financial instruments and investments tank.

If I am looking for big returns, I invest in businesses that create wealth through production and innovation.

Sounds good to me. People who fight for deflation theory, may as well don wrestling gear and go mano a mano with an economic history text. How fiat currencies will be restored to their former glory when the inertial force is clearly going the other way, particularly in the U.S., is beyond me. What seems like sound analysis supporting deflation doesn't work. If govts stimululate like crazy, internationals start to dump their bonds-- that's highly inflationary. What if govts, banking sector tighten?  Costs of business goes up because it's particularly tough to procure business loans. End result? Prices go up. I don't get how we get weakening prices in this atmosphere. Regardless of how fiat currencies play out one against the other is immaterial to most people. I'm focused on what a dollar buys.  The old canard, "businesses have to adjust to what people can afford" Really? "Where were you in '82?" They sure weren't hangin' in Canada! Ey?

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Re: Ted Butler on the recent takedown of gold and silver
agitating prop wrote:

One of the reasons you gave for gold prices to collapse, actually supports the counter argument-- comparing gold based derivatives to mortgage based derivatives. Because there is a something like a fractional scheme going on in paper gold, the price for the real thing will be driven much higher. 

Kind of like how home prices exploded in 2007-2008 when the mortgage derivative market imploded? 

But hey, I'm not trying to convince you of anything, I was just submitting another scenario for consideration. My opinion is worth exactly what you paid for it; nothing. But my time is worth something to me so I will not bother in the future.

 

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Re: Ted Butler on the recent takedown of gold and silver

On an iPhone, so this will be brief: all potential investments, commodities, or assets are subject to risks of bubbles and changes in valuation. What alternative wealth preservation technique do u suggest if not PM's? What other asset or commodity will perform better than PM's? The problem is that there is no better option in my book. Shall we do nothing because Gold will possibly drop in value? Everything else is worse!

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