Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Stocks Correct into Bitcoin Happy Thanks Halving - Earnings Season Buying Opps - 4th July 24
24 Hours Until Clown Rishi Sunak is Booted Out of Number 10 - UIK General Election 2024 - 4th July 24
Clown Rishi Delivers Tory Election Bloodbath, Labour 400+ Seat Landslide - 1st July 24
Bitcoin Happy Thanks Halving - Crypto's Exist Strategy - 30th June 24
Is a China-Taiwan Conflict Likely? Watch the Region's Stock Market Indexes - 30th June 24
Gold Mining Stocks Record Quarter - 30th June 24
Could Low PCE Inflation Take Gold to the Moon? - 30th June 24
UK General Election 2024 Result Forecast - 26th June 24
AI Stocks Portfolio Accumulate and Distribute - 26th June 24
Gold Stocks Reloading - 26th June 24
Gold Price Completely Unsurprising Reversal and Next Steps - 26th June 24
Inflation – How It Started And Where We Are Now - 26th June 24
Can Stock Market Bad Breadth Be Good? - 26th June 24
How to Capitalise on the Robots - 20th June 24
Bitcoin, Gold, and Copper Paint a Coherent Picture - 20th June 24
Why a Dow Stock Market Peak Will Boost Silver - 20th June 24
QI Group: Leading With Integrity and Impactful Initiatives - 20th June 24
Tesla Robo Taxis are Coming THIS YEAR! - 16th June 24
Will NVDA Crash the Market? - 16th June 24
Inflation Is Dead! Or Is It? - 16th June 24
Investors Are Forever Blowing Bubbles - 16th June 24
Stock Market Investor Sentiment - 8th June 24
S&P 494 Stocks Then & Now - 8th June 24
As Stocks Bears Begin To Hibernate, It's Now Time To Worry About A Bear Market - 8th June 24
Gold, Silver and Crypto | How Charts Look Before US Dollar Meltdown - 8th June 24
Gold & Silver Get Slammed on Positive Economic Reports - 8th June 24
Gold Summer Doldrums - 8th June 24
S&P USD Correction - 7th June 24
Israel's Smoke and Mirrors Fake War on Gaza - 7th June 24
US Banking Crisis 2024 That No One Is Paying Attention To - 7th June 24
The Fed Leads and the Market Follows? It's a Big Fat MYTH - 7th June 24
How Much Gold Is There In the World? - 7th June 24
Is There a Financial Crisis Bubbling Under the Surface? - 7th June 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Is Gold Price Manipulated?

Commodities / Gold and Silver 2015 Aug 07, 2015 - 02:17 PM GMT

By: Mike_Shedlock

Commodities

Reader Matt writes ...

Hello Mish,

I love your blog. I read it every day. You are my non-conspiratorial viewpoint on the economy. Your work keeping an eye on and analysis of Greece lately has been very helpful to me in understanding the way of the world.


One thing I seem to recall with your previous posts is that in general you don't think gold is manipulated like all the conspiracy advocates say it is. I was recently reading this article that makes me question your viewpoint on that. Perhaps you could comment on this article.

Thanks for your time and for your blog. I appreciate it.

Matt

Supply and Demand in the Gold and Silver Futures Markets

Matt writes in regards to Supply and Demand in the Gold and Silver Futures Markets by Paul Craig Roberts and Dave Kranzler and in general about the theory of physical gold demand vs. paper gold.

This article establishes that the price of gold and silver in the futures markets in which cash is the predominant means of settlement is inconsistent with the conditions of supply and demand in the actual physical or current market where physical bullion is bought and sold as opposed to transactions in uncovered paper claims to bullion in the futures markets. The supply of bullion in the futures markets is increased by printing uncovered contracts representing claims to gold. This artificial, indeed fraudulent, increase in the supply of paper bullion contracts drives down the price in the futures market despite high demand for bullion in the physical market and constrained supply. We will demonstrate with economic analysis and empirical evidence that the bear market in bullion is an artificial creation.

My Reply

Any time you see articles promoting the difference between physical gold and paper gold you are most likely reading a pile of crap.

I have debunked such theories many times. In fact, one can easily prove such talk is complete nonsense.

In spite of claims of shortages and price discrepancies, one can get physical gold near spot rather easily.

  1. GoldMoney is a means.
  2. BitGold is a new means.

One can use BitGold to accumulate "physical gold" in small amounts at 1% over spot price, up to $50,000 worth. One can use GoldMoney to acquire larger amounts at far less markup.

So, please don't tell me there is a difference in price between physical gold and paper gold. Right now, there isn't any.

Rather, there is a shortage of coins and other small denomination forms of precious metals. There is also a huge number of suppliers that depend on hype to make a living.

Here's my Reader Q&A On Bitgold.

Purposeful Lies

Claims that physical gold sells for huge percentage markups over "paper gold" are purposeful lies or blatant ignorance. There are no other options.

Such statements don't imply there is no manipulation. In fact, manipulation is everywhere in my opinion, just not in all the ways the conspiracy nutcases proclaim.

For example, there is no reason to believe the Fed is directly manipulating gold. Indirectly, however, the Fed certainly is. By suppressing interest rates and supporting the stock market, the Fed has indeed changed sentiment towards gold.

In regards to dumping futures, the Fed is certainly not directly behind that process either. But what about the market makers?

They could be, but I still suggest they do not care one way or another which way something goes as long as they make a profit. With that thinking, it would not surprise me one bit if the MMs manipulated gold to its previous high with the GATA advocates screaming all the way that the MMs were holding the price down.

It tiring to hear the exact same manipulation charges no matter what gold is going. And such screaming has gone on for years, even though gold has quadrupled since 2000 (certainly far more than the major stock market indices).

That said, someone sure benefits from these the middle of the night plunges at illiquid times.

So put me in the group wondering who that is, and what if any laws were violated in doing so. And if laws were violated, let's have an accounting, as well as a look at the laws.

I pinged my thoughts off Pater Tenebrarium at the Acting Man blog. He is one of my teachers on Austrian economics. He responded ...

"I agree completely. It is a waste of time to chase after the conspiracy theories. The overnight market dumps of futures definitely represent short term manipulation, but I don't believe it's illegal."

To that, let me ask, if it's illegal, should it be illegal?

To answer that, we need to know who did it and why. If it was a hedge fund seeking profits the answer may be different than if it was a mutual fund betting against the interests of those for whom it has a fiduciary conflict of interest.

We Waz Robbed

What isn't manipulated?

If the manipulation is illegal, let's see the case. And if there is a case, we then need to discuss if such actions should be illegal.

Purposely betting against clients you are supposed to be representing would cross the line.

Admission

Even though I was on the right side of the inflation/deflation debate, with hyperinflationists and death-to-the-dollar advocates looking extremely foolish along the way, I failed to see what "QE manipulation" would mean for gold.

And let's not pull punches: QE is blatant manipulation. To get rid of that kind of manipulation, one would need to get rid of the Fed.

Questions of the Day

Did anyone blaming "manipulation" fail to know the Fed existed? That the Fed supports the markets with QE? With talk? With suppressed interest rates?

The "we waz robbed" claim primarily comes from people who simply do not want to admit they analyzed the market poorly over the past two years.

I prefer to admit that I failed to see the complete implications of QE rather than make self-serving conspiratorial claims or plow into assets that I know are ridiculously overpriced.

By Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Click Here To Scroll Thru My Recent Post List

Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management . Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.

Visit Sitka Pacific's Account Management Page to learn more about wealth management and capital preservation strategies of Sitka Pacific.

I do weekly podcasts every Thursday on HoweStreet and a brief 7 minute segment on Saturday on CKNW AM 980 in Vancouver.

When not writing about stocks or the economy I spends a great deal of time on photography and in the garden. I have over 80 magazine and book cover credits. Some of my Wisconsin and gardening images can be seen at MichaelShedlock.com .

© 2015 Mike Shedlock, All Rights Reserved.

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Mike Shedlock Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in