TO MANIPULATE OR NOT TO MANIPULATE

Amazingly enough…or maybe it’s not so amazing, every time gold corrects we see the conspiracy theories flying thick and heavy. I’ve asked this question I don’t know how many times and I have yet to receive a logical answer. Now that I think about it I don’t believe I’ve ever received any answer.

If gold is being manipulated by the powers that be how in the world did it manage to rise from $250 to over $1200? I have to say if someone is manipulating the price of gold they are doing a damn poor job of it.

I have to ask when gold was rallying hard last November where was the manipulation then? I didn’t hear a peep from the conspiracy crowd all month.

When gold was rocketing higher in late 07 and early 08 where were the conspiracy buffs? Was there a conspiracy to raise the price of gold at that time?

How about the monster rally in 05 and 06? How could this possibly happen if gold is being suppressed?

Folks here’s the truth, virtually anything can be tampered with in the short term. It happens all the time. But no one and I mean no one can halt a secular bull or bear market. Case in point, Greenspan and Bernanke have printed literally trillions upon trillions of dollars in the vain attempt to halt the secular bear market and it has backfired every time. Just like it’s going to backfire this time too.

Let me show you three charts.

There’s nothing mysterious about the gold market. It’s simple, when the dollar is in its secular bear trend gold is in its secular bull trend. When the dollar is in a counter trend rally gold corrects or consolidates. It really is that simple.
When gold gets extremely stretched above the mean it regresses, just like every other market in the world. Actually regression to the mean is the one principle in the stock market, or any market, that you can bet the farm on.
When gold enters the final phase of a C-wave advance emotional traders spike the price irrationally far above the 200 DMA. Smart money when they see that happen start selling. There’s nothing evil about that. As a matter of fact it’s just good commonsense.
So unless you think some mysterious force is also controlling the currency markets and the law of regression to the mean all in an effort to manage the price of the pitifully small precious metals market I’m going to suggest one get on with the business of making money and forget about this manipulation nonsense.

44 thoughts on “TO MANIPULATE OR NOT TO MANIPULATE

  1. Natanarchist

    Gary;

    With the recent information that has surfaced, which backs the previous claims about price manipulation, it is kind of hard not to take notice. Price manipulation can occur even if the price is rising longer term. I will include a link and you can read for yourself the emails between the London trader outlining two days in advance what was going to happen to Gold/Silver almost to the minute in the future. No you tell me, how could any trader know what is going to happen in a supposed “Free market” two days in advance?

    yes it is short term manipulation which as we know and you point out has not stopped the rise in the price of Metals. However, how much money was “cheated” from traders in metals derivatives markets by these short term manipulations? How many traders stopped out or closed losing trades in mining stocks when the price of gold/silver is attacked short term by one or 2, at most, entities? How many of your subs threw in the towel or were stopped out on Feb 5th?

    read the email communications between the trader and the CFTC.

    “A London trader walks the CFTC through a silver manipulation in advance”

    http://www.gata.org/node/8466

    and this story from march 25

    25 March 2010
    Whistleblower Speaks Out On J. P. Morgan’s Market Manipulation – Reports Violations to the CFTC in the Silver Market

    http://jessescrossroadscafe.blogspot.com/2010/03/bombshell-whistleblower-steps-forward.html

    and then this story, after the trader went public…but it could be just a coincidence…

    27 March 2010
    Whistleblower to CFTC in JPM Silver Manipulation Struck by Hit and Run Car In London

    http://jessescrossroadscafe.blogspot.com/2010/03/whistleblower-in-silver-manipulation.html

  2. Gary

    N,
    large traders are always going to run technical levels and such to work the markets to their advantage. It’s one of the reasons I don’t trade exclusively based on technical signals.

    This is one of the reasons why I’ve advocated mostly just holding positions thru the C-wave. Now that we are possibly in a D-wave things become a lot more difficult. At some point one just has to take a position and hold on again.

    But I’m going to suggest that if people are going to try and trade short term swings in these volatile swings they are going to get knocked out often.

    BTW I still don’t by the whole “some trader said” as evidence 🙂

    The fact remains that the dollar is rallying and that is the most likely reaosn gold is consolidating and not some mysterious anti-gold league.

  3. jg

    “…If gold is being manipulated by the powers that be how in the world did it manage to rise from $250 to over $1200?…”

    Gary, the Fed has statutory responsibility for full employment. Yet, in February, U-6 stood at 16.8%.

    The President’s Working Group on Financial Markets (i.e., Plunge Protection Team) is charged with, amongst other duties, maintaining investor confidence (http://www.archives.gov/federal-register/codification/executive-order/12631.html). Yet, over Oct. ’07-Mar. ’09, we had a tremendous drop in the market and runs on investment banks.

    Yes, as with gold, The Fed and Treasury do a damn poor job of capping unemployment and maintaining investor confidence.

    I agree with you that any intervention efforts are effective in the short-term, only.

    But, that does not prevent the schmucks, shysters, and shylocks from trying their hand at surreptitious intervention.

    100% of my long-term money is in gold and silver bullion. I have complete confidence that they will rise in dollar value. But, I fully believe the historical record brought out by GATA and others documenting gold suppression efforts by The Fed and Treasury over the decades.

  4. Natanarchist

    Ok..so you do agree then that 1 larger trader or 2 larger traders working together can manipulate price. And what if that 1 or 2 large trader hold over 50% of one postions? 60%? 70%? 80%?…well if it it is the NY Archdiose, Middle East oil Interest and the Hunt Brothers, we know what happens.

    Now, the evidence isn’t just some unnamed trader. He names himself. The guy exists. read all the links. The point is the activity is illegal, criminal. Frankly, I find it disgusting to picture that a small group of insiders, just sit back and laugh, knowing they are stealing with full knowledge of our regulators/authorities, and nothing happens.

    Having said that, I agree with you about holding physical is better.

  5. jg

    Gary, I pointed to the failed capping of unemployment and the failed maintenance of investor confidence as two examples of failed government intervention efforts.

    I admit, though, that these two examples may be the ONLY things that The Fed, Treasury, or Federal government have failed at.

    You are right, The Fed and Treasury could never possibly fail, ever, at their gold and silver price suppression; they just have such outstanding track records for all of their other activities, such as bank supervision; forthright, complete, and transparent disclosure to investors; etc.

  6. Anonymous

    Gary

    As a point of reference. You are starting to make a little more sense lately. You have been rather all over the place lately. Follow your instinct and get back to the fundamentals. Your timing is horrible; we know this. You have lost your way. We do that. Your strength is in the big picture; get back to that. Frankly, you suck as a short-term guy, but you are acting like a short-term guy. Get back to fundamentals, and yes you probably screwed up with the C-Wave advance….I was looking at your records and the charts and 2008 really did a confusing number on the charts. So what! The fundamental story for gold is what? Your true knowledge comes from this.

    I really don’t like your tone lately. This short-term crap is not what I am interested in. If one year from now gold is up, then I am in gold. With you current approach, you are truly negating us buy and hold type guys. Buy and hold as being as defined as long as the bull is still kicking. Your short-term nature has proven to freak me out, and I am completely avoiding your blog (but for now). If you want to be a short-term guy fine, but stop acting like a long-term guy if you have short-term objectives.

    Anyways just my opinion…. I loved what you had to say before. Now its just pure noise.

  7. Anonymous

    Sure Gary, sure. No manipulation whatsoever /rolleyes

    “Joint intervention in gold sales to prevent a steep rise in the price of gold (in the 1970s), however, was not undertaken. That was a mistake.” – Volcker

    “Central banks stand ready to lease gold in increasing quantities should the price rise.” – Greenspan

    Fed admits Gold swap arrangements
    http://gata.org/node/7819

    Other documents proving past price control
    http://www.gata.org/node/8052

    End of the day you would be an idiot to ignore that controlling the price of Gold has a history and it’s likely still happening.

    I get the feeling Gary would be so stubborn as to not accept anything less than the Fed Chairman openly admitting publicly that they work to control the price of Gold…

    Joseph

  8. Gary

    Guys where were you in November? How could the government possibly let something like that happen? I’m mean really gold was going straight up.

    How could that possibly happen in a manipulated asset?

    Like I’ve said big money can and will run a trend line or support level from time to time to get in and out of positions but the secular trend can not be controlled. We saw a perfect example of that this fall.

    So like I said unless you think some mysterious force is controlling the currency markets and the law of regression to the mean in an effort to tamper with the tiny precious metals markets you will be better off just ignoring all these claims of foul play.

    Nothing is going to stop the gold bull from completing his journey.

  9. Anonymous

    “effort to tamper with the tiny precious metals markets”

    Tiny precious metals markets?

    ***************************
    From a recent interview with Adrian Douglas (see link at bottom of post):
    “The Gold market is considered by the uneducated to be just a small backwater, but it’s not, it’s the biggest commodity market in the world. The LBMA trades around 5.4 Trillion a year on a net basis, if you look at the gross basis it’s around 1.5x the US economy.”
    ***************************

    Gary, I agree with you that nothing will stop this bull market/secular trend, I’m certainly not saying that they will succeed at keeping the price of Gold at today’s levels, but I do think at times the market is being “managed” for lack of a better word.

    Link to interview (worth a listen):
    http://www.kingworldnews.com/kingworldnews/Broadcast_Gold+/Entries/2010/3/30_Andrew_Maguire.html

    Joseph

  10. Gary

    Well then it’s being managed when it would normally be going down anyway. To me that just sounds like normal selling.

    They certainly aren’t able to “manage” it when it’s in bull mode ie. last November.

    And they certainly can’t manage it when the dollar is falling. At best all they can do is manage it when the dollar is rising and even then gold often just consolidates…which would lead me to believe someone is actually supporting the price of gold.

    Ha, there you go, I’ve come up with a reasonable scenario explaining why the price of gold holds up so well during dollar rallies. It’s all due to some mysterious power supporting the gold market!

  11. Anonymous

    LMAO Good one Gary.

    I’m with you, these conspiracy nuts are a joke and of course they always show up when their trade is going against them.

    They were nowhere to be seen last fall.

  12. Michael

    Gary,
    If I am looking at 200% leveraged ETFs to take advantage of Gold’s next move up, what are my best candidates. I know that UGL tracks Gold price directly, but should I be looking at something else that has more potential for appreciation?
    Thanks.

  13. Chaim

    If anything is being manipulated by the criminal FED, it’s the stock indexes and the bond markets, as they can print paper money to buy their own debt issuance!

  14. Gary

    First off I wouldn’t be looking at double ETF’s until we either get confirmation that this D-wave has ended or that somehow a C-wave continuation is still in play. (I’m thinking this is less and less likely though).

  15. Anonymous

    Michael,

    Take a look at DGP for a double gold etf. It seems to have the most liquidity of the 2x gold etfs.

  16. Anonymous

    I apologize in advance if this is a stupid comment:

    Since gold is denom. in dollars, how does a chart of gold vs dollars tell you much? By definition, isn’t a “rise” in the value of the dollar synonymous with a fall in the dollar price of gold?

    Somehow I’m expecting to see a chart with a permanently flat gold line vs a moving dollar line. Or a chart of gold vs. the price of a Big Mac.

  17. pH11

    Anon at 7:58am –

    You’re right.

    This is divergence is most pronounced at C wave advances. But of course, in order to see that pronounced divergence necessitates that you see C waves [as I do].

    1. Oct 06 – March 08
    2. Sept 08
    3. April 09 – Dec 09

  18. pH11

    Anon at 7:58am –

    You’re right.

    These divergences are most pronounced at C wave advances. But of course, in order to see that pronounced divergence necessitates that you see C waves [as I do].

    1. Oct 06 – March 08
    2. Sept 08
    3. April 09 – Dec 09

    (pardon the previous mis-type)

  19. Anonymous

    Gold can be manipulated downwards. All you have to do is manipulate the dollar upwards.

    The dollar is going to $200, and you can say bye bye gold.

  20. Gary

    Blake,
    We do but as it would occur on week 14 which is very early and the sotck market still hasn;t corrected I wouldn’t count on it being meaningful especially since the daily cycle is very early yet.

  21. Anonymous

    “If gold is being manipulated by the powers that be how in the world did it manage to rise from $250 to over $1200? I have to say if someone is manipulating the price of gold they are doing a damn poor job of it.”

    This is faulty logic and pure puffery. The fact that gold has risen from $250 to $1200 says nothing for or against manipulation. For all we know, downward manipulation over that time period kept gold from going even higher than $1200.

  22. pimaCanyon

    Great post, Gary.

    The “market manipulators”, the “PPT”, “GS”, etc. is just whining in my book. Like I’m losing money, those [email protected] are at it again! (The implication being that if “they” would stop manipulating the markets, I could actually make some money.)

  23. Anonymous

    Some day I’d love the Fed-stole-my-lunch money crowd to explain how their clear-eyed manipulation insight has given them a trading edge.

    You draw a nice distinction, Gary, between a) a nefarious plot to keep the truth about gold prices from a quiescent public and b) the relatively short-term gyrations caused by the big money shoving their capital around, coupled with the currency effect.

    If the latter is what is meant by “manipulation,” then it couldn’t be older news. In fact, that’s the whole point of trading: attempt to divine what the big money is doing and TRADE WITH IT.

    If it is the former, again I’d love to know: How, pray, does this peeling back of the curtain give you a trading edge in any way, shape or form? Absent an edge, it sounds like a big exercise in ego gratification to assuage the frustration of a losing trade. All of these revelations and exposes by GATA and others are interesting and might prove to have merit, but in a forum about trading and investing, they are IRRELEVANT. The market tells us so until it tells us something different.

    If the idea is to use its overwhelming advantages of information and capital to hide the True State of Things, you’d think a mighty cabal of secretive banks and government agencies would have focused their attention on a commodity most people actually gave a crap about, i.e., oil. Or employment. Those are just a wee bit more resonant to most adults than the fluctuating price of a shiny metal they don’t need and rarely buy.

    The fiends did succeed in knocking down the price of sugar, so now the imbecile sheeple can go back to their candy bars and chewing gum, oblivious to the cliff’s edge as they slide ever nearer … yadda yadda yadda.

  24. Frank

    I knew gold was going to be up today. I watched most of Fast Money on CNBC yesterday. We all know about smart money and dumb money. This show signifies what I call “idiot money”.

    Sure enough they screaming about brilliant plays to be long Pt and short Au…..

  25. Anonymous

    I think the dollar is manipulated to control gold and the stock market. If you looked into it Gary and you read some of the recent reports about a trader who sent several emails to the Comex president telling in advance how the minipultion was done, you might believe it too. And yesterday, the trader was hit and run. You really underestimate the “powers that be”.

  26. Gary

    I’ve been hearing this trader story for 7 years now.

    The stock market is too big to be controlled. So there’s no way I’m buying the whole currency market control thing. That market dwarfs all other markets.

    Besides the only control the Fed has over the currency is to print more of it, which would be a positive for gold.

    And let’s face it every time the dollar moves down for any length of time gold rallies.

    The whole manipulation thing would be a lot more believable if it were to happen while the dollar was falling. It never does though.

    So I have to conclude that gold is just following the dollar and of course it’s also being driven by its own supply and demand fundamentals.

    There’s nothing evil or manipulated about that that I can see.

  27. Anonymous

    I think the question of Manipulation and if you believe or not depends on what definition you use. Is naked shorting, 100x leverage and ledger accounting considered manipulation in your book?

    I believe the accusations that Andrew Maguire has made are real or at least possible. I suggest anyone with an open mind check out this blog which will keep you up to date and also link to KingWorld interview, etc.

    Of note in the interview is the idea that more and more metal investors around the world want to take physical delivery. If the books are cooked and delivery can’t happen, metal prices should explode higher.

    I don’t care what the “cycles charts” say. I wouldn’t want to be out of a metals/miners position, should a senario arise where delivery/availability is called into question.

    – KB

  28. Gary

    In my book 100 times leverage means someone is fixing to blow up their account:0

    We can only hope someone out there is using this kind of leverage because when they have to cover it will cause gold to rocket higher.

    However most big money traders tend to invest with the major trend (200 DMA) until things get too stretched then they revert to regression to the mean traders.

  29. Anonymous

    Hey Gary,
    I think you sure know what you are talking about, but so are some other experts in stock market cycles and I think these cycles are wrong more often than right. I am thinking specifically of two cycle experts. One never gives a clear opinion until the cycles have already past, so that’s not of much use. The other one forecasts everything with his cycles and is always totally wrong. I think we are at a problematic point. The stock markets seem perhaps due for some sort of corrective pause, but some sectors seem to be coming out of a correction including PM stocks. I see lots of double bottoms, rounded bottoms and what now. Chart-wise they look ready to go up and they have not participated in the recent lift. This cycle thing, I don’t know…

  30. Gary

    I think you are trying to make cycles do something they can’t do. It’s pretty hard to pick an exact top or bottom. What cycles are good for is letting us know when we should step on the gas and when we need to ease off.

    Right now the daily cycle in stocks is on the 37th day. That’s way too late in the cycle to initiate long positions.

    The best plan of action right now is to just wait patiently for the correction and then buy into it.

  31. Josh

    Gary, you really stuck your neck out. If you can’t see manipulation in the gold market you are wearing blinkers.
    Don’t you ever notice gold never goes up more than 2% in a day ? Or !% the following day. It is allowed to go DOWN a hell of a lot more !
    I can’t believe you have never watched the price action on a 5min or less chart and seen price collapses at 5am EST (New York Time) when there are no traders around. There are stacks of examples of very unusual trading in the gold and silver markets. Why would there be an order to sell 6000 contracts at market at a time no one is trading ??!! If you are really trying to get the best price, isn’t that an idiotic way to do it !?? Panic selling at 5am NY Time ??? Give us a break !
    Why does price collapse around option expiry ? Month after month !!??
    How about the amazing goings on at the CFTC hearings followed by an attempt on Andrew Mguire’s life ?
    It really is time you woke up to manipulation that is so in your face it is ridiculous ! I hope I am not being offensive, because your blog is usually excellent and is one of my favorites, but I will get my own back a bit. The last time I posted I said I was a seller all the way to $1350 and you told me I was an idiot. That was November last year. What I didn’t say (and should have) was that I had been a buyer from around $900, and was not shorting but taking profits. I just did not get round to responding to you. I would say my trades worked out very well. I am a buyer now all the way to $600. In other words I have dry powder. I have been accumulating.

  32. Gary

    My gosh I don’t know where to start.

    Well let’s begin with the notion that gold never rises more than 2%.
    Take a look at Sept. 17, 18th and 22 of 2008 and see if you still want to make that statement.

    Josh this is just how all bull markets work. They climb a wall of worry when they go up and they fall off a cliff at a moments notice. There’s nothing strange about that. Every bull market in history has followed that pattern.

    As you will notice I clearly state that virtually all markets can be and are manipulated in the short term, that includes gold. But short term moves are usually just to run a trend line and get retail traders to cough up their shares so a big money player can scoop them up cheap. None of that effects the big picture.

    I read the report on the “acident”

    The fact is this guy got sideswiped by a car coming out of an alley. That car also hit two other cars. You want to know what that sounds like? A drunk driver. Only a conspiracy theorist could turn that into an “attmpt on someones life”. Geez!

    I most definitely did not say you were and idiot for selling in Nov. because I was doing the same thing.

    Lets face it people all this conspiracy bunk is just a real nice way for GATA not to have to take responsibility for any wrong calls they make.

    Hey if gold doesn’t do what we think it’s going to do then it’s not our fault the manipulators screwed you.

    It’s one of the oldest tricks in the book.

  33. Natanarchist

    Gary:

    I see that we are moving towards common ground on the subject.

    You say:”As you will notice I clearly state that virtually all markets can be and are manipulated in the short term, that includes gold.”

    Fine, lets say that is true. The next question should be, is it done through legal Market transactions? Are their rules that every entity, individual or otherwise, that everyone abides by? Is naked short selling…and this IS the issue we are really discussing, permissible? With 100-1 leverage to boot? And specifically the SILVER market which was the subject of all the links posters provided. Gold is a small market, with a small number of entities with big money. The biggest players because it includes Gov’ts.

    Silver is even smaller. And the BIG players are known. It is not a secret. It is not a conspiracy. it is a CRIME. To dismiss known criminal activity in public markets is exactly why we are so F*#ked now.

    That any outrage over this issue is nothing but “conspiracy nuts who lost money” is nothing but conjecture at best. I am in for the long haul, and I understand the short term swings. it hasn’t hurt me as my thesis is long term. I suspect so do most of Gary’s longer term subscribers. Some of us are fed up with the criminal activity of our gov’ts, politicians, bankster fraudsters,FED, and other CHEATS, but I guess some of you ‘anon” poster are ok with it all. it wasn’t on CNBC or other mainstream media so it can’t be true. To each his own.

    Listen to the interview on kingworld.

    here is another good link. You judge if she is more credible than than CNBC/CNN/FBN/BLOOM/NYT/WP/WSJ..etc..

    http://www.tavakolistructuredfinance.com/Gold.pdf

    http://www.tavakolistructuredfinance.com/

  34. Gary

    N,
    No one can control demand. Any move to artificailly depress price would just lead to more demenad from China, India, Europe, etc. which in turn would drive price up. If someone has a huge outsized short position that is just fuel for the fire when they have to cover.

    Trust me we can only hope someone is trying to manipulate the gold and silver markets it just means that price will go up much further than it would normally.

  35. Frank

    I think we have a breakout here, albeit short term. Up to $1200. But not much conviction since I didn’t buy any GDX calls.

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