Before the gold market was manipulated, an upward move|
The gold market has never been manipulated. No market can be manipulated. Only an amateur would think otherwise. They can be influenced briefly, but it is of no value to those trying to influence it. Commodity markets have been known to be cornered, but a corner by definition can't end up profitably to those trying to corner. Gould and Fisk tried to corner the gold bullion market in 1869. The exercise busted them just like Hunt's silver corner busted them 20 years ago.
How can we account for such a development? While the
speculators were pitching their shorts, the commercials ( the
trade ) went from mega long to net short almost overnight (
in two weeks they decreased their net long position by
40,000 contracts and increased their short position by
You can't make any such claim. You don't know who did what. All that you know is that short interest dropped substantially. By short interest is meant the number contracts outstanding fell. You don't if it was shorts covering or longs selling. It is reasonable to assume that shorts were covering. What does that tell you? It tells you that professional traders have been seeing that repeated selling isn't pushing the market down. They're not making money. Suddenly when a few guys start covering the market is sensitive to the upside, so they rush in and cover. This creates a group knee jerk reaction. However the covering isn't causing price to rise as though there is a short covering rally in a bear market. Instead the demand is filled with little price change by supply above. This condition is very bullish. When price won't make headway on the downside which means there is no demand below, no prices booked below, selling won't make price go down. Price bases. This is what has been happening and this is what gets all those shorts nervous. It doesn't help to be short and start seeing anecdotal evidence that inflationary pressures are rising.
almost the same amount ). The change in the technical
makeup of the trading types on Comex has to be an
unprecedented shift for such a small price move in such a
short period of time. We checked around today with the
sharpest minds that we know in the gold industry. They all
said the same thing. There is no rationale explanation of this
except there had to be collusive market activity to
orchestrate such an event.
The sharpest minds in the "gold industry" whatever that means are always bearish at the bottom. They're like Pavlov's dogs. Since they never understood why it is going down, they certainly can't see when it is time for it to go up. The fact that they presumably know something makes them all the more reliable.
Let us review the scenario for this blatant manipulation. Until
the past couple of weeks, Goldman Sachs led a ferocious
attack by the bears trying to break the gold market. The
If you made this claim to Goldman-Sachs the traders there would laugh you out.
The gold loan, borrowing crowd has had to borrow gold (
until the recent price run up ) at less than $290 the past
number of months. A sustained move above $290 would
create a risk that their low interest rate loans could become
very expensive ones. A move to $310, for example, would
Why is that? The loan remains the same. There might be a margin call if the price moves substantially higher, but these positions are almost always hedged. The hedge has a limited protection range, but it does hold the losses down for a graceful liquidation of one or both legs.
create a potential $20 principal loss. If that occurred, the
annualized interest rate of the loan would become
prohibitive. Here is the rundown of that reasoning:
The interest on the loan remains the same. You should say that they could lose 20/290 = about 7% of principal, if they were carrying an unhedged position.
Gold is borrowed at 1% for 3 months from a bullion bank. A
move from $290 to $310 is a $20 loss, which represents a
7% loss in three months time. If you annualize that 7%, it
means the loss of 7% x 4 (3 more quarters ) is really 28%
on an annualized basis. Thus, the real interest rate is 28%
plus 1% or 29% total. That kind of money is loan shark
The annualized calculation is specious and the extrapolated segue to loan sharking is deceptive or libelous. Since you aren't talking about anyone in particular, a hypothetical person whom you have dreamt up. that isn't the case. It is the case that your claim is misleading.
Therefore, it was in the interest of the big New York
financial houses not to let the price of gold run up too far up
The "big NY financial houses" can't manipulate a thing. They wish they could. Throughout history they tried and always lost. So long ago, 100 years, they gave up and just ran their so-called "loan sharking business" and found it pays the rent. If someone tried to manipulate the market whatever that may mean, they would call the SEC in immediately because it is those manipulations that hurt their hedged positions if taken too far. All executions involving commodity markets must go to the floor. That means the locals, the market makers, must get on the other side of the public trade. The houses are usually the main backing behind the locals, so they certainly are on the lookout for any shenanigans. Shenanigans of the Hunt Silver Debacle nature have nothing to do with attempts to manipulate. Those actions are big gamble based, not sure-thing manipulations. I believe it is utterly impossible to manipulate markets though some clown, usually a local or group of coordinated locals, tries some sort of pseudo-manipulating stunt from time to time. Almost always it deals with bending the rules and the public or the price is effected to such a small extent it is not detectable. These stunts can last for several months. They always end up with the perpetrators in jail. They loose a lot to possibly gain a little. It is so stupid it isn't worthy of comment.
now. We believe the spec short position ( a good bit of
which is leased gold ) is on average around 3,000 tonnes.
Mine supply in 1998 was 2529 tonnes. A significant run up in
You don't know what is speculative and you can't know the quantity. Even if you did, what would you know? squat.
the gold price could cause many financial institutions some
serious problems ( resulting from their own greed ). How
Wrong. There are many ways to profitably extract yourself from any short position as long as you get enough upside action. Enough could be as little as $30/oz. The 'Bugs say a move through $300 would be very significant. If these shorts see the price rising through $300, I guess they're going to send their locals in to cover. By the way the gold lease squeeze potential is very small. The squeeze would come from mining companies rushing in to cover their hedges. If you're short gold, you're sitting on a psychological time bomb. That's why the traders decided to clean up there mistaken downside expectation.
would the "Group" of them get their hands on so much gold
so fast without the gold price skyrocketing? They really do
not want a run up in the gold price now if they are using the
If you're still short, of course you don't want a run up. That doesn't mean you can do anything about it.
gold loans to finance other derivative trades that have nor
normalized since the Long Term Capital Management
Have you ever heard of segregation of shorts? Maintenance margins are segregated also.
The best laid plans of mice and men always do not turn out
like they are supposed to. The sellers and gold borrowers
ran into a brick wall of physical gold buying around the $285
area a couple of weeks ago. We have been saying for
months that any time gold approaches this level, gold
demand goes through the roof. In addition, our sources tell
Wrong. No one wants to buy below this level, so a little selling doesn't break price. This is the definition of a sold out market. No buyers, So sellers sit. It is buying underneath the market that causes price to explore the downside. Price moves in the direction of the book.
us the Bank of China has been a buyer around that price
You don't know this.
The collusion crowd was facing a dilemma. Everyone
following the gold market knew the size of the net spec
short position on Comex ( 7,000,000 ounces ). It is our
Everyone doesn't know that. No one knows if your figure is right. It is a complete speculation with no basis in fact. Even if it happened to be right, what do you think you would know then? Given the gold sentiment it could be supplied in ten minutes with no change in price. You have alluded to that elsewhere too. Indeed, local contract covering in quantity didn't run up the price. By the way that indicates there is supply above. That's what makes the market bullish.
Since the market would not break and was vulnerable to an
upside explosion due to the technical condition of the
market, it appears that the colluders called for a change of
strategy. Goldman Sachs became a noted heavy buyer of
gold on Comex around $285 to $87. We were then alerted
You don't know that. What are your sources?
that one of the largest producers intended to take on the
short the specs by covering some forward sales and we
were also told that one of the biggest hedge funds in the
world had entered the long side of the gold market ( they
No mining company in their right mind or fund would tell you anything. If one of their traders divulged anything like this, they would be gone toot sweet. Even if some fool did that, so what? Markets aren't determined by what some big guys do. It is determined by what all the little guys do. How many times in the past bunch of years have funds and mining companies made "real smart" moves, real smart based on judgements made by 'Bugs and the companies and experts were dead wrong. The public hasn't been wrong except the 'Bug public. They're always wrong anyway and they are the most unsuccessful participants in markets almost achieving the miserable performance of short sellers in roaring bear markets.
would not be alone ). As a result of receiving this
information, Midas du Metropole issued a bulletin on March
3 that read, "Major Gold Rally Imminent".
We then went up 6 days in a row before Friday's sell off. At
the end of the rally, we learned from 3 sources that
Goldman Sachs was going around telling producers to sell
forward. At the same time, they were noted bombers of the
gold market on Comex and helped to stop the rally in its
tracks. The selling by Goldman Sachs was noted by all.
So what? Even if your claim is true you don't know for whom Goldman-Sachs was executing the order. Goldman-Sachs executes orders for customers maybe mining companies or hedge funds. What does that tell you? Two orders might be on opposite sides. Are you claiming they are doing principal transactions? If so, you can't know that. In any event it is so unlikely that to make an unsubstantiated claim like this is silly. You accomplish nothing, but you are incurring risk. Goldman-Sachs knows you are a flea. They know they have to ignore you because it could invite trouble if they swatted the flea within their legal right. Perhaps even legal duty. The public would get up in arms because they would hear the press make a big deal about a brokerage house stepping on a bug. You could probably achieve the goal of your org by forcing them to pay you for the wrongful doing you have perpetrated on them. Such is the nature of our fairness based screwed-up legal system.
Then, yesterday the Commitment of Traders Report was
released after the close and we find out the big specs have
covered and the little guys have gone net long. Groans of
shock and disbelief were heard when the figures were
announced. Almost everyone thinks the gold market will be
trashed on Monday.
That's good news for the few "Bugs who are bullish.
This is clearly an outrage and example of blatant
manipulation and an obvious orchestration of trading in the
The only outrage is the purpose of GATA. It's purpose is to create notoriety for the founders since they're dead busted from speculating in the gold market. They're mad and they're going to make someone pay. Don't agree? So is GATA trying to get the gold price up or down? Neither? Oh, I see, they are dedicated to making markets fair by, by, by...reporting the facts!