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Guest Post: More Forensic Evidence Of Gold & Silver Price Manipulation

Tyler Durden's picture




 

Submitted by Adrian Douglas of Market Force Analysis

More Forensic Evidence of Gold & Silver Price Manipulation

In two recent articles "The Gold Market is not "Fixed", it's Rigged" and “The Failure of the Second London Gold Pool” I showed how the gold trading between the London AM Fix and the PM Fix was unnaturally related in an inverse way to the trading between the PM Fix and the following AM Fix. I calculated that the probability of such a counter-intuitive correlation existing by happenstance was one in 2.6 times ten raised to the power 31. This is almost irrefutable evidence that some one is continually and deliberately dumping gold into the PM Fix to suppress the price of gold.

In this article I have unearthed even more forensic evidence in the form of a correlation between the gold and the silver price which again could not happen by random chance. It is necessarily a result of deliberate market intervention and what’s more it occurs on a continuous basis.

The fundamentals that drive the supply and demand of any commodity are so different from one commodity to a next that we would not expect there to be any mathematical relationship between their prices. For example let’s consider gold and copper.

Figure 1 Cross-plot of Copper versus Gold 2001-2010

They are both metals but that is where the similarity ends. Copper is used in many industrial applications for its superb electrical conductivity properties but also it is used for water piping because it is non-toxic, durable and corrosion resistant. Gold on the other hand has almost no industrial uses and is used for storing wealth as an investment and in jewelry fabrication. One would expect that there would be no long term correlation between the price of copper and the price of gold.
Figure 1 shows a cross-plot of gold and copper prices from 2001 to 2010. It can be seen that there is no discernible mathematical relationship between the prices of these two metals. The cross-plot of prices looks like someone randomly fired a machine gun at the chart.

Gold and silver are also two metals that have very different supply and demand fundamentals. Only about 10% of mine supply of silver is used for investment purposes while 90% is used in industrial processes from photography, electrical soldering and wiring to batteries and medical applications. One would expect that like copper there would be no particular relationship between gold and silver.

Figure 2 Cross-plot of Silver versus Gold 2003-2008

Figure 2 shows a cross-plot of silver versus gold from June 2003 to September 2008. This chart is absolutely shocking. It shows that gold and silver prices are almost perfectly correlated with an R squared value of 0.96 (1.0 is a perfect correlation). The best fit line to the data gives the relationship that

POS= 2.23*POG – 253…….…eq(1)

This means that silver prices in this five year period did not move with respect to the very different fundamentals of silver; they were entirely determined by the price of gold! If I had been on a desert island between 2003 and 2008 you could have called me on the phone and told me the price of gold and I could have told you what the price of silver would have been on that day. Let’s demonstrate it.

Let’s take today (September 21) back in 2006. The price of gold was $582.2. From the equation the silver price should be 1045 cents/oz. It was actually 1083 cents/oz so the synthetic price calculation based only on the gold price agrees within 3.5%.

Figure 3 Cross-plot of Silver versus Gold 2008-2010

Figure 3 shows a similar cross-plot but this time the data is from September 2008 to September 2010. It can be seen that yet again there is almost a perfect correlation between the price of gold and the price of silver. In this case the relationship is given by

POS= 1.92*POG – 431…………..eq (2)

Figure 4 shows the data set from June 2003 to September 2010 on the same chart. The two distinct correlations are shown with the black and green lines.

Figure 4 Cross-plot of Silver versus Gold 2003-2010

I have already demonstrated in previous articles that the price of gold is suppressed. What this chart demonstrates is that not only is the price of silver manipulated and suppressed but it is done so almost perfectly algorithmically. What can also be deduced is that the price of silver was creating a problem to the manipulators in 2008 so they hammered it down and subsequently instigated a much more aggressive suppression on the price of silver. This can be seen from the fact that since 2008 the correlating line (green line) is below the pre-2008 relationship (black line) and also sports a lower slope. Had the same pre-2008 algorithm been maintained until today the low for silver in 2008 would have been $14/oz and the price today (9/21/2010) with gold at $1288/oz would be $26.19/oz when it is only $20.90/oz.

In figure 5 the two equations eq(1) and eq(2) have been used to generate a synthetic price of silver from June 2003 to September 2010. This is the red curve on the chart. This curve is only derived from the price of gold and the correlation equation. There is no input of the price of silver. The real price of silver is charted for comparison and is shown in blue. What is really astounding is that one can generate almost a perfect reproduction of the price of silver by only knowing the price of gold. This is again “smoking gun” forensic evidence that the price of silver is not only manipulated but is done so algorithmically.

Such a perfect relationship with gold could not happen over a seven year period by pure happenstance. The silver price is completely false and has absolutely nothing to do with the fundamentals of silver.

Figure 5 Real & Synthetic Price of Silver 2003-2010

In figure 6 the price of gold and the correlation equations have been used to generate a synthetic gold to silver ratio from June 2003 to September 2010 which is shown in red. The actual gold/silver ratio is also shown. It can be seen that the two data sets match very well. This shows that the ratio only depends on the gold price because this is the only information that was used to generate the red curve.

Figure 6 Real & Synthetic Gold/Silver Ratio 2003-2010

This is simply an outrage. The bad news is that for the last seven years those who have been expecting silver to outperform gold or to march to its own drum have been sorely disappointed and it was hard wired into the trading that they were not going to see a freely traded silver market. The good news is that from the way silver has traded in recent days it is decoupling from gold. It is breaking the algorithmic shackles placed on it by the manipulators. There is not enough data to see this definitively in the cross-plots yet but it should be evident very soon. The artificially low price that has resulted from the creation of false supply through the sale of paper silver via unallocated accounts as a substitute for real bullion has led to a growing shortage. This monumental scam is in the process of becoming unraveled as investors insist on taking delivery of real silver.

Forward sales of silver through the LBMA OTC London market are approximately 8.5 Billion ozs. This is almost all the entire global reserves of silver that are yet to be mined! But the silver miners who own the remaining reserves are unhedged, so who ever has sold 8.5 billion ozs of silver forward by inference does not own 8.5 billion ozs of silver. It is a naked short position of 11 years of global production.

The interesting question is what will the free market price of silver be? Gold itself is suppressed by many multiples of the current price and the false silver price is just a derivative of a false gold price. I have previously estimated that there is only one ounce of gold for every 45 ozs that have been sold. If a similar relationship exists in silver than the eventual long term free market price target could be more than $900/oz. This is just a wild estimate but I think it is safe to say it will be many multiples of the current outrageously suppressed price of $20.9/oz.

Adrian Douglas

www.marketforceanalysis.com

 

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Wed, 09/22/2010 - 09:45 | 596966 Horatio Beanblower
Horatio Beanblower's picture

Great analysis, Adrian.

 

CNBS: Orange juice is up!  Take that, gold!

Wed, 09/22/2010 - 10:58 | 597213 B9K9
B9K9's picture

Sort of OT, but does dovetail somewhat into the topic of gold and the doomed $USD. I regret not getting a chance to reply to this comment by Shameful on a now stale thread:

I disagree about the importance of the USD. (In terms of maintaining power - the power-elite can simply change hosts. ed)

 

Big changes in society just don't happen without chaos. 

 

I'm inclined to think that real money would be made by riding the new empire on the way up, or sell the empire on the decline.

Excellent observations - I feel like the 'real' conversation (that is, the end of the $USD, USA empire & identifying new areas of opportunity) is finally moving in the proper direction, and regret not having a chance to reply last night.

First of all, nobody likes change. That includes the Fed and the power-elite who are quite comfortable with the present status quo supported by the $USD. That's why so many people mistaken think/thought QE is/was an attempt to actually liquidate insolvent institutions and monetize the debt.

Nothing could be further from the truth! First of all, from a logical standpoint, at a 5/95 ratio, they could never hope to create enough new base money to offset the huge leveraged balance of private credit. So QE really was all about re-charging organic credit growth; hence the stock market run-up, gold suppression, endless propaganda, etc.

OK, so the power-elite tried to restore their present position underlying the $USD, but failed. What next? Well, this gets back to your observations: does one short the failing empire and/or go long the new, emerging empire? I would suggest both.

Domestically, it is clear (at least to me) that the Fed.gov is going to once again take over base money creation and regulate private credit. They will need to do this just to keep government running - if the Fed doesn't go along, then they'll just usurp the present function (Trav7777 portrayed it as parking tanks outside) or create a new greenback.

Either way is highly inflationary; actually it's hyper-inflationary, hence gold. And as you state, it won't be a smooth transition, rather it will be all out civil war, which explains my admonishment to "get out now". As to the Fed, I would imagine they have this completely game played - I mean, I always laugh when someone postulates they don't know what's going on.

So, as to option two, going long the new emerging empire, this is clearly China. The power-elite, while certainly comfortable in the present host (USA), have thousands of years of experience in these kinds of situations - they can read the signs. They are not going to want to be around when the SHTF + they want to get in on the ground floor of the new powerful host.

Quick recap:

The $USD is not critical to the equation underpinning the imperative of constant loan growth. Any monetary vehicle can do, but it's still hell even for the power-elite to get off their duffs and make the move.

Transition isn't clean - rather, it entails choas and perhaps civil war. Do you really want to be around when this fucker explodes? The US has been suppressing building class, race & regional resentments for decades. The blow off is going to be epic.

Ride the short ($USD) - go long gold. Ride the long - go long China.

 

Wed, 09/22/2010 - 11:47 | 597383 LowProfile
Wed, 09/22/2010 - 14:06 | 597813 fiddler_on_the_roof
fiddler_on_the_roof's picture

good read. I agree with your "Ride the short ($USD) - go long gold. Ride the long - go long China", but I would not go short USD now, wait till Jan 2011. I expect some fireworks, though I could be wrong.

Wed, 09/22/2010 - 11:22 | 597297 Diogenes
Diogenes's picture

"Orange juice is up!"

 

But sugar is down! Someone is manipulating the marmalade spread!

Wed, 09/22/2010 - 11:45 | 597375 SGTbull07
SGTbull07's picture

Here's Adrian Douglas in his own words:

MUST WATCH:  The Curious Case For $936 Ounce Silver

http://www.youtube.com/watch?v=Bru2tVghbqw

Wed, 09/22/2010 - 13:05 | 597653 JLee2027
JLee2027's picture

+++

Wed, 09/22/2010 - 09:47 | 596979 Troy Ounce
Troy Ounce's picture

 

Can I safely assume that september 14th was the date the cartel started pissing on their shoes?

Wed, 09/22/2010 - 11:29 | 597319 Ripped Chunk
Ripped Chunk's picture

LMBA is being raided of physical gold. Jim Willie of GoldenJackass.com has a recent interview with "On the Edge" with Max Keiser where he talks about some of the background battles that are heating up in the bullion world.

Here's the 3 part interview:

www.youtube.com/watch?v=IDuZmmz3dqg

www.youtube.com/watch?v=5OLyLifIkts

www.youtube.com/watch?v=MaWi5heq5mw

Wed, 09/22/2010 - 09:47 | 596980 wafflehead
wafflehead's picture

with the price of gold skyrocketing i cant even wear my gold chain anymore. I am afraid of getting robbed at gun point

Wed, 09/22/2010 - 09:50 | 596991 Horatio Beanblower
Horatio Beanblower's picture

Mr T is now living inside Ft. Knox.  Mr T IS the gold standard.

Wed, 09/22/2010 - 10:38 | 597143 JJ McApe
JJ McApe's picture

rofl

good one

Wed, 09/22/2010 - 11:29 | 597323 Ripped Chunk
Ripped Chunk's picture

I pity the fool........

Wed, 09/22/2010 - 10:21 | 597089 kathy.chamberli...
kathy.chamberlin@gmail.com's picture

do U think?

Wed, 09/22/2010 - 12:16 | 597502 Attitude_Check
Attitude_Check's picture

Why do you seem to have to be such an as**ole?  Sometimes you actually have intelligent comments, and then you make dumb-ass comments like this.  What is your problem - forget to take your meds sometimes?

Wed, 09/22/2010 - 14:26 | 597877 kathy.chamberli...
kathy.chamberlin@gmail.com's picture

you know i have never been an ahole before, starting to like it actually. i am telling people off in the street that try and approach me to sell/sign/solicit something to me. stop harassing me. i don't have to talk to you and i don't want you to talk to me, so there.

Wed, 09/22/2010 - 14:09 | 597818 fiddler_on_the_roof
fiddler_on_the_roof's picture

In India Gold chain snatching, I believe has gone up atleast 1000% since last 2 years. Now women folks are turning to Rold Gold chains.

Wed, 09/22/2010 - 09:47 | 596983 wiskeyrunner
wiskeyrunner's picture

The low overnight in the Dow Mini Futures was near 10650, so we will rise to 10750 before 3:15pm cst. Just watch and see. With out fail it moves 100 points a day 99% of the time.

Wed, 09/22/2010 - 09:57 | 597017 hdunn2
hdunn2's picture

of course. Not Dow, but got a good laugh at the q's this am. We had adobe and a few other negative headlines, come into the open down half a %, AAPL proceeds to rip up and carries the q's into positive territory. 

Wed, 09/22/2010 - 09:47 | 596984 scratch_and_sniff
scratch_and_sniff's picture

Anyone know if the POMO is expected to be significant today?...last one was huge, are they likely to repeat that in a hurry?

Wed, 09/22/2010 - 09:48 | 596985 fiftybagger
fiftybagger's picture

S

I

L

V

E

R

 

P

U

T

A

S

!

Wed, 09/22/2010 - 10:20 | 597084 A_MacLaren
A_MacLaren's picture

+25 ($)

Wed, 09/22/2010 - 11:14 | 597276 SWRichmond
SWRichmond's picture

http://www.zerohedge.com/article/matterhorn-asset-management-sets-three-...

"When silver hits $25.00 I'm sending Blythe Masters a thank-you note."

Wed, 09/22/2010 - 09:51 | 596992 Horatio Beanblower
Horatio Beanblower's picture

"JP Morg & Friends" ARE the government.

Wed, 09/22/2010 - 11:58 | 597427 DaveyJones
DaveyJones's picture

mission accomplished

Wed, 09/22/2010 - 19:05 | 598736 mrgneiss
mrgneiss's picture

Ted K you're an embarrassment to Zero Hedge.  Go back to the Yahoo financial blog.

Wed, 09/22/2010 - 19:09 | 598744 mrgneiss
mrgneiss's picture

Ah, my fault!  I didn't know the junk level had been raised to 50!

I thought it was just infinite now.  Now that JB is gone maybe 20 will be more than enough.

Wed, 09/22/2010 - 09:58 | 597012 Turd Ferguson
Turd Ferguson's picture

Wow, Theodore. Do you get tired of having to clean the sand from your ears and eyelids every day?

Wed, 09/22/2010 - 10:11 | 597067 EscapeKey
EscapeKey's picture

No, and the Fed MOST CERTAINLY don't artificially support the FREE MARKETS either.

 

Wed, 09/22/2010 - 10:32 | 597128 A_MacLaren
A_MacLaren's picture

Drink some coffee and read or listen to the words of Central Bankstas.

 

Paul Volker:

"It was probably a mistake to allow gold to rise so high."

"Letting gold go to $850 was a mistake."

 

Alan Greenspan on gold:

“... is the canary in the coal mine. It signals problems with respect to currency markets.”

 

Debt-based-Fiatistas know their time is coming to an end.

Wed, 09/22/2010 - 10:52 | 597194 truont
truont's picture

Alan Greenspan in 1998:  “Central banks stand ready to lease gold in increasing quantities should the price rise.”

Wed, 09/22/2010 - 11:56 | 597415 A_MacLaren
A_MacLaren's picture

Thanks for adding.  I knew that one had been spoken in the past, but couldn't summon the quote.

Here's another gem:

“The last duty of a central banker is to tell the public the truth.”
Alan Blinder, Vice Chairman of the Federal Reserve
… stated on PBS’s Nightly Business Report

So when Ben Bernanke says:

“Well, the signal that gold is sending is in some ways very different from what other asset prices are sending. For example, the spread between nominal and inflation index bonds remains quite low, suggesting just 2% inflation over the next 10 years. Other commodity prices have fallen recently quite severely including oil prices and food prices. So gold is out there doing something different from the rest of the commodity group. I don’t fully understand the movements in the gold price, but I do think there’s a great deal of uncertainty and anxiety in financial markets right now and some people believe that holding gold will be a hedge against the fact that they view many other investments as being risky and hard to predict at this point.”

http://www.youtube.com/watch?v=9SsPu1I_1po&feature=player_embedded

Either he is being disingenuous, or he is the CONfidence Fiatista's Fiatista

Wed, 09/22/2010 - 10:51 | 597191 tmosley
tmosley's picture

Wow, in the face of overwhelming evidence of manipulation, this is hte best you can come up with?  Handwaving!  

Now, if the correlation was perfect and had never changed, then one might have said that it was natural, but with one sudden change like that in the face of no structural change in the market, it looks totally artificial.

Wed, 09/22/2010 - 10:54 | 597196 RockyRacoon
RockyRacoon's picture

I junked you because you are stupid.

You have learned nothing here after 1 year 11 weeks.

Wed, 09/22/2010 - 11:37 | 597264 Cognitive Dissonance
Cognitive Dissonance's picture

Some people have nothing to learn because they know everything. Rock solid beliefs and conviction of purpose works wonderfully when charging machine gun nests and looking in the mirror.

Hum, who is that handsome raccoon? :>)

Wed, 09/22/2010 - 11:52 | 597401 NotApplicable
NotApplicable's picture

For those who believe, no explanation is necessary. For those who do not believe, no explanation is possible. -- Anon.

Wed, 09/22/2010 - 18:09 | 598608 iDealMeat
iDealMeat's picture

+1 to you Coon..  Claiming your junks is admirable.

Thu, 09/23/2010 - 23:05 | 601481 RockyRacoon
RockyRacoon's picture

I never junk 'n' run.  It's only polite.

Wed, 09/22/2010 - 15:48 | 597334 Ripped Chunk
Ripped Chunk's picture

Ted is on his way to 40 junks. Anybody? Anyone? Bueller?

Later:  He's at 45 can we see 50?  50 anyone?

Wed, 09/22/2010 - 11:39 | 597345 DaveyJones
DaveyJones's picture

Ted Kennedy is back from the dead! No wonder the statement makes no sense. Ted, now that you're "off limits," can I ask you something about Chappaquiddick? 

Wed, 09/22/2010 - 11:50 | 597392 Justibone
Justibone's picture

Gov't and big banking interests are correlated, with a p-value well north of .95, if one were to put a number on it.

New gov't (ditch the elitist scum) and watch for a gov't-bank decoupling.  Future-woot!

Wed, 09/22/2010 - 12:44 | 597598 Confuchius
Confuchius's picture

To Ted K;

 

Perhaps you might take the bag off your head once a year...

 

Tell us all you know about government intervention...

Wed, 09/22/2010 - 15:21 | 598078 JohnG
JohnG's picture

Riiiiight.

You should give up trading and go help some more retarded persons.

Wed, 09/22/2010 - 09:51 | 596994 Turd Ferguson
Turd Ferguson's picture

Again, Adrian provides great, great stuff. I waited and waited however to get to the crux of the matter and here it is:

"Forward sales of silver through the LBMA OTC London market are approximately 8.5 Billion ozs. This is almost all the entire global reserves of silver that are yet to be mined! But the silver miners who own the remaining reserves are unhedged, so who ever has sold 8.5 billion ozs of silver forward by inference does not own 8.5 billion ozs of silver. It is a naked short position of 11 years of global production."

This is the moment folks like Adrian and Harvey have been waiting for. The Comex is broken. It is shattering into 8.5 billion little pieces. If...and its truly a big if...the silver comex can forestall a collapse this month, they will only be postponing the inevitable. If not now, then November.

Do not monkey around with this. Awareness of the massive fraud that is the Comex will have global financial implications. Buy physical. Buy miners, they will surely move swiftly forward, too.


Wed, 09/22/2010 - 10:23 | 597097 kathy.chamberli...
kathy.chamberlin@gmail.com's picture

is Adrian, a boy or a girl?

Wed, 09/22/2010 - 11:05 | 597248 BearOfNH
BearOfNH's picture

Adrian is normally the male spelling. My sister uses Adrienne (OK it was actually her parents who spelled it that way, but they were educated).

 

Wed, 09/22/2010 - 17:33 | 598528 Al Gorerhythm
Al Gorerhythm's picture

Why? Do you want to trade fashion tips? 

Wed, 09/22/2010 - 17:53 | 598570 kathy.chamberli...
kathy.chamberlin@gmail.com's picture

no, i like to interrupt female or male writer. cause yves smith was on MAX KEISER last night. i didn't listen to them, cause i like to watch how M A X talks with his hands. he is very articulate fluently with hand gestures. so does stacy. i like to see that, passion in the words that speak and meaning coming from both hands and mouth. i didn't like yves hair up, though. she is pretty.

not like some people, i know†

Wed, 09/22/2010 - 17:58 | 598581 Al Gorerhythm
Al Gorerhythm's picture

I rest my case.

Wed, 09/22/2010 - 19:07 | 598738 mrgneiss
mrgneiss's picture

Like your new avatar, Kath.

Wed, 09/22/2010 - 20:12 | 598850 kathy.chamberli...
kathy.chamberlin@gmail.com's picture

new to U. old to some, that are still alive around here. i was a little chunky back in May 2010.

Wed, 09/22/2010 - 17:57 | 598576 Al Gorerhythm
Al Gorerhythm's picture

Very prescient indeed Turd. The COMEX is supposed to have tens of millions of ounces of silver available for delivery, according to their stockpile figures. They have to deliver this meagre amount into the jaws of an 8.5 billion starving demand beast. Good luck with that guys! 

They are scrambling to find metals for delivery NOW. All this while the market is relatively benign. Imagine last day notices when the September silver longs decide not to roll into Dec.

Ground Zero will look like a camp fire when this falls over.

Wed, 09/22/2010 - 19:49 | 598804 tmosley
tmosley's picture

I was thinking, another nail in the coffin might be to see if there is overnight divergence and a return to the set ratio during COMEX hours.  The analysis should be fairly simple to do.  It would be very similar to his analysis showing that you could make major money arbing the AM/PM fix.

Thu, 09/23/2010 - 00:40 | 599216 udecker
udecker's picture

+++

Also, timeplots from earlier (90's, 80's, as far back) to see if the correlation breaks down or gets "less sophisticated" the further back in time you go?

Wed, 09/22/2010 - 09:53 | 596999 Bearster
Bearster's picture

It is pretty silly to talk about the "supply" of gold as if mine production was it, and the "demand" as if jewelry (and maybe incremental investors) were it.  There is about 80 years of gold mine production in human ownership.  All of that is potential supply.  You can't analyze gold like any other commodity...

...save silver.  Silver is the other commodity whose stocks to annual flows ratio is a large number.  Everything else is a fraction of a year.

This leads to another egregious error that the author makes.  He would expect gold and silver prices to be uncorrelated?!?  This goes against some of the arguments of GATA and friends like Ted Butler.  Both have made the case that gold and silver are precious metals, that are being suppressed by the Fed, and which should trade at much higher prices.  Both have made the case that platinum, palladium, etc. are not manipulated.

If they haven't said it explicitly that gold and silver are money, they said it implicitly that central banks are interested in gold and silver.

Wed, 09/22/2010 - 10:16 | 597040 fiftybagger
fiftybagger's picture

Earth to dumb dumbs.  Do some reading about the long history of silver suppression before you start flapping your gums.  If you start by reading everything Charles Savoie has ever written, you won't look as stupid....

 

http://www.silverbearcafe.com/private/silverpres1.html

http://www.silver-investor.com/archives/index.html

Wed, 09/22/2010 - 11:03 | 597234 tmosley
tmosley's picture

Sorry, Bearster, there's no silver above ground.  We use about 50% more than we mine each year, and we are/are just about to hit the wall of inventory depletion.

Wed, 09/22/2010 - 11:22 | 597298 Rusty Shorts
Rusty Shorts's picture

This guy consumed the other half.

http://www.youtube.com/watch?v=Gq8C0GknwAM

Wed, 09/22/2010 - 12:18 | 597509 Buckaroo Banzai
Buckaroo Banzai's picture

Well, we don't know this for sure. Basically, the entire world demonetized silver at the end of the 19th century... except for China. Consequently, for about 50 years (until 1949), the world used China as a dumping ground for silver.

When the Japanese looted China with ruthless efficiency in the 1930s, they had their hands entirely full with so much gold, gemstones, and antiquities, that they didn't have time or energy to bother with the silver. So there is a LOT of silver in China that the communists got ahold of when they took power.

Some people think that this is the stockpile against which JPM and friends have been selling against. Antal Fekete has a few things to say about this.

Don't get me wrong; I am a huge silver bull. But China is a big, big wildcard.

Wed, 09/22/2010 - 11:16 | 597281 Roger Knights
Roger Knights's picture

"There is about 80 years of gold mine production in human ownership.  All of that is potential supply.  You can't analyze gold like any other commodity..."

 

That's true, but, OTOH, the sovereign debt holdings of funds, institutions, and (especially) central banks are potential demand. For 50 years that demand lay dormant, or was a source of supply. Now it's beginning to nibble at gold, and a new multi-decadal trend has begun. The old percentage holdings of gold were far, far higher than today's, so gold has a long way to go -- up.

Wed, 09/22/2010 - 09:53 | 597000 Spitzer
Spitzer's picture

I don't even necessarily blame the Fed for manipulating gold. The paper gold fighting machine is just how the dollar/Fed system was designed. It has to be done, its in the instruction manual. It will continue to be done until the dollar/Fed is system is replaced or marginalised.

The Euro/ECB on the other hand, has a different was of dealing with gold. They float the price of gold on their balance sheet so any time the Fed/Dollar system loses some ground(gold goes up), it is built right into the ECB balance sheet. That was by design too. That is why I am convinced that the Euro will out live the Dollar.

Wed, 09/22/2010 - 10:09 | 597058 centerline
centerline's picture

Whoever junked this ought to at least attempt to counter the point made, offer something to the contrary, etc.

Wed, 09/22/2010 - 10:28 | 597122 stollcri
stollcri's picture

Maybe he got his captcha math wrong.

Wed, 09/22/2010 - 10:29 | 597124 kathy.chamberli...
kathy.chamberlin@gmail.com's picture

where did U get that bag?

Wed, 09/22/2010 - 20:18 | 598859 kathy.chamberli...
kathy.chamberlin@gmail.com's picture

if you look closely at my picture you can see i have a brown paper bag over my face. i seriously was interested in where you got a rose tinted bag, honest.

Wed, 09/22/2010 - 21:55 | 599020 stollcri
stollcri's picture

They flagged me for being a socialist, or a republican, or being angry, or something else represented by red.

Seriously, people are visual and remember the picture more than the name, so having the standard picture makes a person less "memorable". I couldn't think of a better picture at the time, so I just changed the tint of the one they gave me.

Wed, 09/22/2010 - 12:26 | 597535 Snidley Whipsnae
Snidley Whipsnae's picture

Excellent point Spitzer. A few days ago I attempted to explain the relationships like simple electrical circuits.

Dollar and gold are in a series circuit

Euro and gold are in a parallel circuit

This probably only makes sense to those familiar with basic electrical circuits.

Wed, 09/22/2010 - 14:32 | 597892 fiddler_on_the_roof
fiddler_on_the_roof's picture

I understand the logic, that EUR plays 2 parts -

- store of wealth, can you redeem gold by giving ECB official price of Gold ?

- medium of exchange, for normal transactions whose value constantly depreciates, but then  the EUR bond interest rates should exactly reflect the Gold price increase.

Now what happens as Rickards postulates that USA goes into plan B and does the same as EUR ? Then Gold turns to currency overnight. Any thoughts from ZH folks ?

The comments by Spitzer was originally brought to light by "ANOTHER/FOA" some 12 years ago in Kitco forums.

Wed, 09/22/2010 - 15:51 | 598187 The Rogue Economist
The Rogue Economist's picture

" don't even necessarily blame the Fed for manipulating gold. The paper gold fighting machine is just how the dollar/Fed system was designed. It has to be done, its in the instruction manual." Excellent point! I think that this argument gets over-emotionalized way too much. But simple classical/Austrian analysis points to two inescapable conclusions. 1). The temptation to missuse a fiat currency is simply too great for ANY central authority to resist. In fact, the only reason to have a fiat (non gold backed) currency is that it CAN be manipulated in this way. And... 2). The abusing central authority MUST manipulate the markets to keep that fiat currency from revaluing itself and destroying or devaluing other parts of the economy it's in, thus wiping out the net benefit of the first manipulation. Like you said, it's in the owner's manual.

Wed, 09/22/2010 - 17:04 | 598459 anonnn
anonnn's picture

"The temptation to missuse a fiat currency is simply too great for ANY central authority to resist. In fact, the only reason to have a fiat (non gold backed) currency is that it CAN be manipulated in this way...."

You speak soothe!

Use v. misuse depends on one's viewpoint...that of the duck or the duckhunter.

So your "only justification for fiat is to enable manipulation" [my paraphrase] is a tell of the villians, who are jointly banksters and energy [distribution] manipulators.

Re: TPTB maintaining their status at all costs, ultimate control of heat/light/power trumps gold/silver as money when both are paths are available [in-play].The former path is losing viability; the latter is the fallback.

Wed, 09/22/2010 - 09:53 | 597002 unununium
unununium's picture

The copper chart shows the same double-line structure.  Could be in 2008, gold got a bump up in stature vs. everything.

That the majority of trading money treats these assets as correlated does not prove that silver is manipulated.

Not saying it isn't.  Just that this does not prove it.

Wed, 09/22/2010 - 10:58 | 597214 RockyRacoon
RockyRacoon's picture

What evidence would you require to be satisfied that it IS manipulated?

Wed, 09/22/2010 - 11:14 | 597272 unununium
unununium's picture

The close bashing counts, big time.  Just not the gold/silver correlation.  Suddenly the fact that a gold/silver ratio exists is evidence of manipulation?

But I will also accept

 - Documents proving naked shorting

 - Emails tied to actions with intent to suppress.

 - Comex default

 

Wed, 09/22/2010 - 11:42 | 597369 Cognitive Dissonance
Cognitive Dissonance's picture

As long as it's in the interest of the powers to continue to manipulate, evidence worthy of a court case will not be available because all interested parties won't allow it. Look at what has been presented to the CFTC and yet nothing is done, not even a semi serious CYA investigation.

Lack of evidence isn't proof there's no evidence, just that there is no desire to produce it. When "the players" begin to be burned by their own flame throwers, suddenly all that evidence will float to the surface like my morning Cheerios in milk.  

Wed, 09/22/2010 - 17:08 | 598468 anonnn
anonnn's picture

Errrr...when that happens...isn't that like starting all over? ...reset?...revo?

Wed, 09/22/2010 - 11:54 | 597408 DaveyJones
DaveyJones's picture

as others pointed out above, we have admissions of party opponent, a hearsay exception, otherwise known as a confession. That, and an absolute motive to do so, can usually win the case. 

these guys might disagree with you and some of them have been on the inside

 http://www.gata.org/

 

 

Wed, 09/22/2010 - 16:01 | 598224 The Rogue Economist
The Rogue Economist's picture

Yes, both gold and silver serve a dual use as investment and jewelry metals, but the majority of silver is used in industrial, medical, and electronics applications. So nothing in the last 30 years changed in these fields to cause a shift in demand for silver relative to gold? REALLY? I could understand a correlation of .6-.7, but .96? If you want to prove that silver wasn't manipulated, then please supply the perfectly receprical PHYSICAL supply variances that could account for this. (Not the forward contracts.). Otherwise, the math doesn't work.

Wed, 09/22/2010 - 16:01 | 598228 The Rogue Economist
The Rogue Economist's picture

Yes, both gold and silver serve a dual use as investment and jewelry metals, but the majority of silver is used in industrial, medical, and electronics applications. So nothing in the last 30 years changed in these fields to cause a shift in demand for silver relative to gold? REALLY? I could understand a correlation of .6-.7, but .96? If you want to prove that silver wasn't manipulated, then please supply the perfectly receprical PHYSICAL supply variances that could account for this. (Not the forward contracts.). Otherwise, the math doesn't work.

Wed, 09/22/2010 - 17:11 | 598473 Al Gorerhythm
Al Gorerhythm's picture

Ever hear of Andrew MacGuire? 

Wed, 09/22/2010 - 09:53 | 597005 ArrestBobRubin
ArrestBobRubin's picture

Ted, I think you wanted the Zero Truth website, ya musta fat fingered it.

Everyone else:

Underwater Minions, Bitchez!

Wed, 09/22/2010 - 09:56 | 597016 Turd Ferguson
Turd Ferguson's picture

++

Yep, Bob, Turd can't help but smile.

Wed, 09/22/2010 - 09:54 | 597009 Horatio Beanblower
Horatio Beanblower's picture

CNBS: Larry Summers is going back to Harvard. 

Wed, 09/22/2010 - 10:07 | 597055 strannick
strannick's picture

 

Academics are much more tolerant of idiocy

Wed, 09/22/2010 - 10:15 | 597078 scratch_and_sniff
scratch_and_sniff's picture

You think?

Wed, 09/22/2010 - 10:27 | 597117 centerline
centerline's picture

Those who can't do, teach.

Wed, 09/22/2010 - 11:33 | 597340 centerline
centerline's picture

Ohhh, I'm hit.  Junked.  The pain - the pain.

 

I deserved it.  No offense intended to teachers amongst us!  Is a shame though that some hide in academia.  

Thu, 09/23/2010 - 23:08 | 601486 RockyRacoon
RockyRacoon's picture

Not sure who junked ya, but I would have for the simple use of what my high school English teacher called a "hackneyed phrase".

Wed, 09/22/2010 - 14:45 | 597944 Justibone
Justibone's picture

It has been my experience that academics can do the same stuff commercial types do, but they do it slower.  I can only speak for hard science fields, though.

Wed, 09/22/2010 - 15:16 | 598069 scratch_and_sniff
scratch_and_sniff's picture

...and those who cant teach, teach sports.

Wed, 09/22/2010 - 17:18 | 598494 Al Gorerhythm
Al Gorerhythm's picture

Those who can't discern the difference between information and propaganda, still need a teacher. I didn't junk you but your glib generalizations speak volumes.

Wed, 09/22/2010 - 10:22 | 597092 MsCreant
MsCreant's picture

Yeah, let him manage their money, heh!

Wed, 09/22/2010 - 11:58 | 597428 NotApplicable
NotApplicable's picture

I went back to Harvard

But my integrity was gone.

There was no sensation

of having done much at all.

Wed, 09/22/2010 - 09:56 | 597014 fasTTcar
fasTTcar's picture

Bullion bitchez!

Wed, 09/22/2010 - 09:58 | 597023 gwar5
gwar5's picture

Great stuff Adrian. The evidence keeps mounting, it's not a rigging conspiracy, it's a rigging fact. Andrew McGuire.

End of times for leveraged short monopolies? Take delivery of physical.

Wed, 09/22/2010 - 11:00 | 597222 RockyRacoon
RockyRacoon's picture

How come Gary Gensler's name has not come up so far in this discussion?

Wed, 09/22/2010 - 17:26 | 598516 Al Gorerhythm
Al Gorerhythm's picture

Not to mention the rest of the CFTC members, who over the years have proven their myopia. Their job as regulators in overcoming the (I know this is used frequently but it is not over-used) criminal position size of the "partner in government" banks, is waaaaaayyy too big for those woodchucks to handle.

Thu, 09/23/2010 - 23:10 | 601494 RockyRacoon
RockyRacoon's picture

He has been given the LAWS to fix this shorting business. 

It's about time he got on the job.

Wed, 09/22/2010 - 10:06 | 597031 strannick
strannick's picture

 

Statician Douglas again connects the dots and determines criminal manipulation, while the rest of us just see arbitrary guns and ski masks lying around 

Wed, 09/22/2010 - 10:01 | 597035 sharkbait
sharkbait's picture

This is a bad a case of reading into data what you want to see, not what it really tells you.

I am very bullish on PM's, particularly silver but this analysis does nothing to convince me that silver is being manipulated.  Maybe it is, but nothing here shows that.

Wed, 09/22/2010 - 10:54 | 597202 The Smith
The Smith's picture

Not only is this a bad case of reading into data what you want to see, it also reads like a poorly researched high-school science fair project. Adrian says:

"Gold and silver are ... two metals that have very different supply ... fundamentals" and goes on to link that to copper.

There is a serious knowledge gap here: copper ore body that's pulled out of the ground contains huge amounts of gold and silver that is extracted in the copper refining process. Geology 101.

Also:

"silver prices in this five year period did not move with respect to the very different fundamentals of silver; they were entirely determined by the price of gold! If I had been on a desert island between 2003 and 2008 you could have called me on the phone and told me the price of gold and I could have told you what the price of silver would have been on that day."

The prices of asset classes move together!?!? Shocking!!!

Since when did ZH become amateur hour?

 

 

 

 

Wed, 09/22/2010 - 12:26 | 597537 Buckaroo Banzai
Buckaroo Banzai's picture

You may wish to apply the rules of logic here.

If "A" is rigged, and "B" correlates perfectly to "A", then logic demands that we conclude that "B" is also rigged.

Wed, 09/22/2010 - 11:02 | 597231 RockyRacoon
RockyRacoon's picture

Maybe it is, but nothing here shows that.

What sort of data would convince you that it IS manipulated?

Wed, 09/22/2010 - 11:20 | 597290 Cognitive Dissonance
Cognitive Dissonance's picture

Bingo.

When in denial, there is never enough "proof" that will convince you you're not in denial. Because you and you alone determine credibility and the standard by which all "evidence" is measured. Even signed confessions wouldn't be enough because it's not the subject that's being debated, but the persons entire worldview. The goal post is always moved to avoid the winning field goal.

Of course, don't ever accuse someone who's in denial of being in denial. They will vehemently deny being in denial. And since only they determine if they are in denial, it can't be proven with "evidence".

Wed, 09/22/2010 - 12:03 | 597451 Dingleberry Jones
Dingleberry Jones's picture

Your introspection is wonderful, and this truth fits you perfectly.

Your eloquence softens your arrogance when you discount any opposition to your viewpoint of global market manipulation.

This guy presented a skeptical viewpoint, and you offhandedly discount him, ironically, in a way that often describes your responses. Reflexive and defensive and dismissive.

When you offer insight, I find it valuable, you are obviously a bright guy. When you are attacking someone, I feel it blunts your overall message as you come across like an angry, intelligent child.

Getting back to the topic, I think Adrian happened upon an interesting data point, but it's hardly damning information. The correlation periods seem arbitrary/cherry picked. Why not find an equation over a longer time period? One can find many strong correlations among assets if you retroactively cherry pick sampling periods.

And I'm not saying that the markets aren't manipulated (I believe they are). Silver is extremely important to our modern industrial base. Supply isn't growing at the pace of demand, yet this is not being reflected in the price.

Without further data points to back up the correlations observed, I feel that they are just interesting trivia, not damning info.

Wed, 09/22/2010 - 12:42 | 597558 Cognitive Dissonance
Cognitive Dissonance's picture

We are all in denial, including myself. Especially myself since I know myself better than anyone else. I don't try to defend my denial, but to continue to plumb it's depths, often quite publicly and somewhat embarrassingly. So I was speaking just as much about myself as anyone else. Of course, that makes me arrogant when I speak of universal denial as being....well...universal.

There is no doubt that people perceive me as arrogant and insulting. So be it. We are all experts on denial. I simply talk about it openly and frankly. And very often I speak using the first person, meaning "I" or "we" but sometimes "you". This also feeds into the belief that I'm arrogant and self centered. Would people rather I speak about them? Shall I make it personal? I never presume to accuse anyone of anything I'm not guilty of myself. Thus I do make it personal. Maybe you should read some of my articles. I lay myself open to the world.

This deeply disturbs some people, often because it cuts too close to the bone, other times because they are triggered. Rather that explore the triggering emotion and it's source, they attack me. The person who claims they aren't in denial or are bothered by my articles or comments are simply looking for excuses to avoid looking within. Yes, that statement alone can be considered arrogant IF I wasn't including myself.

Regarding the article, the very first sentence references two other articles regarding PM manipulation. The author then states he has found further evidence. He never stated this "evidence" was to stand on it's own as the sole example of evidence of manipulation, but rather as a growing pile of evidence. So for people to say that this article doesn't prove anything are using a straw man argument. The article was never presented as "proof" in the first place.

BTW, the use of straw man arguments is a classic defense of one's denial.

Wed, 09/22/2010 - 13:07 | 597660 GoinFawr
GoinFawr's picture

Heh, I dunno CogD, you sound so certain of all that.

Regards

Wed, 09/22/2010 - 14:06 | 597811 Dingleberry Jones
Dingleberry Jones's picture

I agree that we are all in denial. In the end, all of that denial stems from the truth of the tag line of the site.

The problem with your justification for being rude is that in the real world, you would not be able to get away with such speech for long. The anonymity of the internet is simultaneously a great thing and a bad thing.

I've read the other articles. And again, they are weak, and only slightly stronger taken as a whole. There are too many logical leaps. There is no depth, just some observations and inferences. The burden of proof lies on the accuser. And this is not to damn Adrian's work. In fact, I like it, but I want more thoroughness.

I do believe that there is manipulation, but I want to see the collective powers of the people out there looking for the truth actually dig it up.  Allusions will not work. Stuff that would pass muster in the courts (assuming the very unlikely scenario that such a thing would see a fair court) would go well to dissolving the hold that the powers that be have on society.

Perception is reality, and the key is to alter the perception of a strong minority in order to cascade that perception to majority.

Wed, 09/22/2010 - 14:26 | 597875 Cognitive Dissonance
Cognitive Dissonance's picture

My God. You're calling me rude? This is Zero Hedge. This is fight club. Do you actually read the other commentators here? I'm getting the impression that you don't like what I'm saying, that it triggers you in some way and that's why you're calling me out, not that I'm "rude" when all around me there is abject rudeness that you seem to be ignoring.

I never claim my articles to be factual nor do I link to "facts". My articles are opinions. Nothing more, nothing less. If they are weak, that's your opinion and I respect that. My articles are my attempt to take various dissociated and intangible perceptions and observations and find patterns. If they are weak, may I suggest it might be because they don't line up with the consensus reality of commonly accepted "truth" with regard to who we are and why we do the things we do.

I have talked with, studied and observed many so called "mental health" professionals. You don't go very far in this (or any other "professional" field) by rocking boats or straying off the beaten path. I walk very far off that path, even though I am not a mental health professional by any stretch of the imagination. I don't expect to be received well. Nor do I expect my opinions to be received well by people who have an enormous sense of prior investment in their worldview. Most spend a better part of their waking day defending their world view rather than expanding it.

For people who's worldview would be rocked if they were to accept that there is massive manipulation occurring in the financial system, it's nearly impossible to admit to anything other than an occasional occurrence. Everything else can be passed off as random noise and happenstance, coincidence even. I don't expect to ever be able to show enough "proof" to those who would be threatened by such proof.  

Thank you for taking the time to write down your comments. And I think it was rather rude of you to call my work "weak". You could have been more PC. :>)

Wed, 09/22/2010 - 14:50 | 597961 GoinFawr
GoinFawr's picture

"For people who's worldview would be rocked if they were to accept that there is massive manipulation occurring in the financial system, it's nearly impossible to admit to anything other than an occasional occurrence..."

and not so very long ago they would vehemently deny even that possibility.

Now more and more often I am seeing those formerly railing against any evidence of manipulation adopt the following about-face,

"Markets manipulated? Of course they are. You didn't know? Sheesh what a moron. That's how you make money; it's just the way things are/have been/will always be."

How very Taoist.

Regards

Wed, 09/22/2010 - 15:06 | 598026 Dingleberry Jones
Dingleberry Jones's picture

Touche :)

I know that I'm just a random geek on a site that discusses things about which I only am starting to learn about. So I mean no offense when I critique your work. I have not taken the initiative to undertake such things in my field, and I wouldn't be happy if people railed on my efforts. Especially people that aren't educated or well-versed in my field. So, apologies, it was rude.

I agree that there are many shades of "proof", and that it's impossible to satisfy everyone. But in order to broaden the message, you need to be able to point to something, some evidence and say "There, XYZ did this."

Like I said before, I do believe the general theme of the site and your assertions: The markets are definitely being manipulated. Your work alludes to it, but on it's own, it falls short. It's a complement to the whole. Maybe it's a roadmap to point someone to do further research down a path you lead them towards.

For example, the HFT stuff is enough to throw one into a fit while we watch the regulators do absolutely nothing about it. But Nanex and others are unveiling the truth. The level of proof is growing to the undeniable point and is being accepted by a growing minority. Hopefully the tipping point hits soon and we can get enough people to bitch about it for at least a fake trial.

We need that with PMs. How? I have no idea, I'm a software engineer. I encourage those that are proactive to take it to the next level (not necessarily you).

 

Thu, 09/23/2010 - 23:18 | 601509 RockyRacoon
RockyRacoon's picture

We only know about HFT thru the graphs and charts which show it -- obviously.  You want to believe that, so the exposition of the graphics is enough "evidence".

Wed, 09/22/2010 - 14:20 | 597856 kathy.chamberli...
kathy.chamberlin@gmail.com's picture

get over your self, jeeze you sound like a woman†

Wed, 09/22/2010 - 14:31 | 597880 Cognitive Dissonance
Cognitive Dissonance's picture

Kathy

What makes you think I'm not a woman? And what exactly does a woman "sound" like anyway? Like you?

You seem to have very narrow sexual stereotypes Kathy. God forbid if we color outside your lines.

Wed, 09/22/2010 - 17:21 | 598502 kathy.chamberli...
kathy.chamberlin@gmail.com's picture

what does a woman "sound" like anyway?

YOU--------->

what in the heck is a narrow sexual stereotype? see just that sentence is gay.

color outside M Y line, dude get a grip. your B o r i n g . with a capital B

Wed, 09/22/2010 - 18:12 | 598617 Al Gorerhythm
Al Gorerhythm's picture

Mmmmm, love your shoes today Kathy, and what have you done with your hair. It's just divine.

Wed, 09/22/2010 - 19:05 | 598734 kathy.chamberli...
kathy.chamberlin@gmail.com's picture

oh thank you. i love my new fake snake skin pumps. i got a bikini wax and got my face treaded today, wish i could show you, tight. oh yea my hair, i really really like my new hair dresser, choli. wish i could see your hair, both places, if you have any?

Wed, 09/22/2010 - 20:25 | 598877 Al Gorerhythm
Al Gorerhythm's picture

Unnnghhh.

Thu, 09/23/2010 - 23:19 | 601512 RockyRacoon
RockyRacoon's picture

You asked for it...

Thu, 09/23/2010 - 14:13 | 600432 akak
akak's picture

.

 

KathyChamberlin: Putting the "idiot" in idiot savant for the last 35 weeks and 6 days.

Thu, 09/23/2010 - 17:15 | 600992 kathy.chamberli...
kathy.chamberlin@gmail.com's picture

hey,      a k   a k    thanks for the lead . i won't take it personally. tomorrow 36 weeks.

Wed, 09/22/2010 - 18:54 | 598717 Hephasteus
Hephasteus's picture

It means nobody is meeting her cyber needs. So she's laying down a challenge hoping you'll entertain her.

Wed, 09/22/2010 - 19:09 | 598746 kathy.chamberli...
kathy.chamberlin@gmail.com's picture

maybe you could cause your the closest i found, personality wise, as the cheeks on ZH. but i still am not sure how to pronounce your name. is it close to one of the greek myth gods?

Wed, 09/22/2010 - 19:58 | 598824 StychoKiller
StychoKiller's picture

Hephasteus - the Gods' blacksmith.  The Romans called him Vulcan.

Wed, 09/22/2010 - 20:15 | 598855 kathy.chamberli...
kathy.chamberlin@gmail.com's picture

i like Vulcan, that is very very cool and a little seductive.

Thu, 09/23/2010 - 17:22 | 601007 MsCreant
MsCreant's picture

I think it's hot too. 

Thu, 09/23/2010 - 23:25 | 601519 RockyRacoon
RockyRacoon's picture

And they keep telling ME not to feed the animals.

Wed, 09/22/2010 - 13:15 | 597685 Confuchius
Confuchius's picture

When we acquired most of our PMs with Au at $50 and Ag at $1.00 a certain amount of useful goods could be purchased by an Au or Ag coin.

The same coins today will still suffice to buy the same goods.

 

But look at how much paper "money" it now requires to accomplish the same purchases!

 

And the PM's "prices" are not controlled and manipulated?

 

If you really believe that one; we have a bridge for you to buy,,,

Wed, 09/22/2010 - 16:46 | 598404 The Rogue Economist
The Rogue Economist's picture

Good point about the data set. But looking prior to 1965 or so would be useless due to dollars being fixed in value relative to gold.

Wed, 09/22/2010 - 16:13 | 598271 The Rogue Economist
The Rogue Economist's picture

That's like saying that red/blue shifts in light from space doesn't prove relative movement. Most people would ask you to present an alternative, more compelling theory. So what do you think accounts for such a synthetic looking correlation? Do you have information that could explain this?

Wed, 09/22/2010 - 16:25 | 598315 TJ_is_annoyed
TJ_is_annoyed's picture

Maybe, maybe not, but throw in the Andrew Maguire story back in March and suddenly things come into focus much better.

Wed, 09/22/2010 - 10:04 | 597044 Bent Nail
Bent Nail's picture

Interesting article. It would have carried more weight if a historical scatter plot had been provided for the last couple of centuries to demonstrate that tight correlation of gold/silver prices is a recent anomaly.

Wed, 09/22/2010 - 10:04 | 597045 Catallaxative
Catallaxative's picture

Excellent article. Thank you Adrian and ZH for posting! It makes perfect sense for the authorities, at large, to manipulate these prices. Otherwise paper money would be shown to be more worthless than it already appears to be. After all, we must have "full faith and credit" to maintain the public's catatonia.

Wed, 09/22/2010 - 10:08 | 597056 Silverhog
Silverhog's picture

It always reads like an old article when they say photography is still a big user of Silver.

Wed, 09/22/2010 - 11:41 | 597366 Confused
Confused's picture

Funny, thats the first thing I thought of when I read that line. Regardless, even at the height of film use, how much could that have really consumed? If I remember correctly the amoutn of silver actually used is marginal.

 

On the flip side, I would imagine silver, has seen an increased use in goods like electronics. I'm guessing this would even out (or surpass) whatever demand film had for silver.

Wed, 09/22/2010 - 12:31 | 597555 Buckaroo Banzai
Buckaroo Banzai's picture

The vast majority of silver used in photography is recovered in processing and recycled, and always has been.

Wed, 09/22/2010 - 13:46 | 597744 Sancho Ponzi
Sancho Ponzi's picture

We've got a warehouse full of silver plated card slots, switches, connectors, grounds, wire, etc. When you transmit in the 1 gigahertz range, the low electrical resistance of silver is essential. 

Wed, 09/22/2010 - 10:21 | 597088 WaltzTangoFoxtrot
WaltzTangoFoxtrot's picture

Nice analysis Adrien.   Looking at Fig 1, a separate grouping (800/150 to 1200/350) appears to mimic the dual line structure displayed in Figure 4.  It would be interesting if those scatter plot data points correlate to the Sept '08 to Sept '10 as illustrated in Fig 4.  Could there be some less effective manipulation evident after the Sept 2008 events?  

Hmmmm. WTF!

Wed, 09/22/2010 - 10:54 | 597091 Charley
Charley's picture

Good work...

There seems to be two impulses:

  1. the primary impulse: devaluation of the purchasing power of currency against gold, and
  2. the secondary counter-impulse: the undervaluation of gold against the real decline in the purchasing power of currency.

What might account for this? The first impulse arises from the need to devalue wages, but the second impulse would flows naturally from the need to maintain fiat as the exclusive money. These two impulses contradict each other. Some other thing is at work here that determines the relationship between the two so that maintaining the relation between the two impulses becomes increasingly at odds.

While currency purchasing power must decline relative to gold, gold purchasing power must decline relative to its own value. Manipulation alone cannot account for the secular impulse that gold's purchasing power increasingly trails below its own value. Gold is actually being used as currency in some dark market and is being exchanged at below its value. What it is buying is not clear, but the price of that thing is not set as if it were a good; it is probably being set as if it were an asset -- that is, by what it can produce.

Wed, 09/22/2010 - 12:15 | 597501 Quantum Future
Quantum Future's picture

Perhaps it is foward oil sales from the Saudis with offsets for military protection and or equipments supplies.

Wed, 09/22/2010 - 14:26 | 597876 Charley
Charley's picture

That is one possibility. Another is raw land that is being priced not on its value (which must be $0) but on its potential to serve as a source of new value, i.e., land beneath which lies potential oil and other commodities. There is a dark market somewhere where this is happening, I think.

Wed, 09/22/2010 - 10:25 | 597111 Roscoe
Roscoe's picture

I heart physical silver.

I hope the manipulation doesn't unravel until I've exhausted my ability to purchase additional Eagles. I intend to conclude accumulation by the end of the year, unless the GOP wrestles control of congress and eliminates the $600 reporting rule, in which case the hoarding continues until manipulation entropizes (I made up that word!) and the true value emerges.

Oh, and did I mention that I heart physical silver?

-Roscoe

Wed, 09/22/2010 - 10:31 | 597127 kathy.chamberli...
kathy.chamberlin@gmail.com's picture

what does i heart physical silver, mean?

you know, any more gang this website has gone to the dogs. sorry.

Wed, 09/22/2010 - 10:36 | 597138 Roscoe
Roscoe's picture

It means that I am enamored with being able to tangibly lock in the purchasing power of my hard-earned wealth by taking physical possession of a commodity that has proven it's ability to withstand the nefarious machinations of governments for many hundreds of years, and will most assuredly withstand the current nefarious assault on it.

-Roscoe

Wed, 09/22/2010 - 10:43 | 597162 MsCreant
MsCreant's picture

Wooof! Woof!

Wed, 09/22/2010 - 11:05 | 597239 RockyRacoon
RockyRacoon's picture

I didn't think the site was going to the dogs until  j-u-s-t  after Kathy arrived.

Wed, 09/22/2010 - 12:50 | 597615 downrodeo
downrodeo's picture

This gal kind of reminds me of some angry trailer park girl who feels so powerless/worthless in her life that she has no recourse but to go down to the local denny's and give the waitress hell in order to make someone else feel worse. You kind of have to feel sorry for everyone involved.

Wed, 09/22/2010 - 14:14 | 597833 kathy.chamberli...
kathy.chamberlin@gmail.com's picture

well, with a pen name of downrodeo you probably know the ropes pretty well around trailer trash. i don't do trailers or dennys. never once have i ever waitressed.

Wed, 09/22/2010 - 14:23 | 597869 GoinFawr
GoinFawr's picture

Kat:

You don't have to live in a trailer park to be trailer park material (the inverse of that is probably true too).

Regards

Wed, 09/22/2010 - 18:18 | 598632 Al Gorerhythm
Al Gorerhythm's picture

Never once have I waitressed. Who'd hire your dumb ass?

Wed, 09/22/2010 - 19:32 | 598780 Hephasteus
Hephasteus's picture

Kathy what are you doing?

Do you know what an emotional vampire is? It's a person who withholds affection as a way to get what they want. They keep blocking and containing it and injecting a bad mood into the environment to try to get people to do what they want. But they eventually damn up their emotions to where they can never achieve a catharsis release of the pain.

A sexual vampire is the same thing but works with sex. They are unable to sexually release as they hold back what they truley like and what truley satisfies them. This causes them to feel sexually needy so they run around presenting the sexual neediness to everyone they meet. Eventually they find it a power trip so they get better and better at containing. But all they are interested in is finding out what satisfies them and will cause sexual release. So they run around trying to figure out how everyone else achieves sexual gratification and soak up sexual energy but never let it back out. Pretty soon they are running around with a cock or vagina full of sexual energy masterbating for hours on end dripping goo all over themselves or unfortunate people who don't understand what is going on. Other people sense the hopelessness of the situation and decide to "get theirs" and release to them. They then become more and more expert at putting sexual inadequecies onto other people as they become more and more experienced with holding and containing and annoying dozens of people with their needy cocks or vaginas. I've never had a deeply satisfying sexual release becomes.... I cum all the time. Constant leaking of sexual fluid becomes I'm cumming and releasing constantly. Until they become like a damp moldy saturated sponge that if you touch them they start leaving a snail trail all over the place or the fear becomes so great that they become like the sahara dessert around anybody that might actually stand a chance at satisfying them. Then it just becomes a rediculous game of olympic porportions over some fear of what horrible things people will do to you if allow them to satisfy you and you somehow need more of it.

The whole you guys are so great one minute, you guys suck one minute. You guys are so interesting talking about interesting things, you guys are boring talking about boring things, pay attention to me and what I want is getting old. Cheekies the biggest stud in the room though he's absent so live up to cheekies studliness.

Now you can tell me how badly I missed the point of it all.

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