Wednesday, January 8, 2014

Are Precious Metals Being Manipulated Lower?

I do believe they are. If you take a hypothetical example, you could go into the futures market and sell short for, let’s say, several million dollars and move the price down $20, $30, $40. Then, turn around and go into the physical market and buy it and save yourself maybe ten times as much real money or cash that you used to move the market down.

As interesting as that sounds, think about it. Where has the flow of gold been going? It’s been going where? It’s going from west to east. It’s going from the Anglo-American access to the new big kid on the block, and that’s Chindia as Frank Holmes says, China and India primarily. Russia’s involved, so are the BRICS (Brazil, Russia, India, China, South Africa). That is the obvious truth.

The manipulation thing is very difficult to prove. Nonetheless, I think it’s very interesting that if you look back at Adrian Douglas’ work from GATA, he showed the LBMA and what the open and closing prices of gold was historically over years and years and years. And, it’s fundamentally impossible to have that kind of delta year over year, day after day, and not be manipulated.

There’s no random walk that could ever account for what’s taking place in reality. I think that’s strong enough proof. That would be one of the most important arguments to bring into a court of law.

You could get a bunch of mathematicians that don’t have anything to do with the precious metals market and ask them what the probability of that kind of a spread between the open and the close in one market, and gold is, and to verify that the probability is so astronomically impossible that that proves beyond a shadow of a doubt or beyond a reasonable doubt that it’s manipulated.

But, I think we should move on. I don’t mind talking abut the manipulation. Let me add one more thing, and that is the idea that a lot of people have, or my perception that a lot of people have are, “I’m staying away from the market, it’s manipulated”.

Number one, almost all markets are manipulated. So, get over that. Number two, that the one market that will probably blow up before any others would be the gold or silver market, and it looks like it’s gold. I mean the idea that Germany wants its gold back from the Federal Reserve of New York and it cannot get it for seven years, is right in your face. Something is drastically wrong with the physical gold market.

- Source, Sprott Money: