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Guest Post: Gold Manipulation: The Logical Outcome Of Mainstream Economics Part 1

Tyler Durden's picture





 

Submitted by Martin Sibileau of A View from the Trenches blog,

This is the first of three articles I will post on the suppression of gold. What drives me to write about the topic? I am tired of seeing endless proof of suppression (i.e. the typical take downs in the price at either 8:20am ET or at 10am-11am ET, with impressive predictability) and at the same time, it is unfair that anyone who voices this suppression be called a conspiracy theorist. Therefore, these three letters will give a rigorous theoretical support to the claim.

The first letter will show that, under mainstream economic theory, the suppression of the gold market is not a conspiracy theory, but a logical necessity, a logical outcome. From the publication of this letter onwards, the onus to prove the contrary will fall upon mainstream economists. The conspiracy theory will actually be the opposite: To claim that suppressing gold is not necessary.

The second letter will show how that suppression takes place. For those familiar with the gold market, this letter will offer nothing new and perhaps, it will even be incomplete. But at the macro level, I will seek to offer an insight.

The third letter will examine the consequences of this suppression and rigorously, prove that the claim of the gold bugs, namely that physical gold will trade at a premium over fiat gold or gold paper is also not a conspiracy theory, but the logical outcome of the current paradigm.

Before I begin, I would like to say that I think proving the logical implication from mainstream economics that gold needs to be suppressed is perhaps comparable to Von Mises demonstration of the impossibility of economic calculation under socialism. Both are very intuitive, of consequence, and a necessary intellectual step. Without further ado, let’s start with the first thesis: The suppression of gold is a logical necessity, under mainstream economics.

Axioms of mainstream economics

1.-Policy makers believe that there exists a general level of prices, and it can be measured by a price index (Ludwig Von Mises absolutely demolished this notion, but this is outside the scope of this letter. What is relevant is that price indices are “measured” and published by every nation and the market trades on them).

2.-Policy makers believe that in the long term, growth in the supply of money is neutral (Even David Hume laughed at this notion back in 1752)

3.-Policy makers use the general-equilibrium framework introduced by Léon Walras

4.-There exists a gold market and within this market, there are investors who see gold as money, as gold has been money for thousands of year

5.-In global trade, there is no relevant single price index, but relative prices, affected by cross exchange rates.

Thesis

If axioms 1-5 hold, both a global monetary coordination (as opposed to currency wars) as well as the suppression of the price of gold are required, for the global economic system to remain stable.

Demonstration

Between 1874 and 1877, the works of Léon Walras introduced the notion of general equilibrium in Economics. Considered by Schumpeter as “the greatest economist”, in 1874 Walras published “Éléments d’économie politique pure, ou théorie de la richesse sociale”, as he was teaching in Lausanne. His work examined the conditions necessary to reach equilibrium in an economic system, based on a system of simultaneous equations. To this day, mainstream economists, including those at the helm of central banks, rely on the framework of general equilibrium to work out the theses on which their policies are based.

For obvious reasons, I cannot be exhaustive and therefore fair to M. Walras in this short article. Briefly, general equilibrium in an economic system with (n+1) markets implies that if the first n markets are in equilibrium, the last market, n+1, must be in equilibrium as well. In the same fashion but at an aggregate level, if the n markets show an excess of demand (supply), the (n+1) market must have an excess of supply (demand) large enough to offset the sum of the excesses of the n markets. This conclusion is known as the Applied to our context, if we think of the (n+1) market as the global money market and the same is oversupplied because every central bank is monetizing sovereign debt, it must hold that the rest of the markets, on aggregate, must be overdemanded for the world economy to be in equilibrium. That is exactly what policy makers believe they can achieve. To be precise, I shall call here the global money market to the aggregate of fiat currency markets.

<a data-cke-saved-href="http://en.wikipedia.org/wiki/Walras" href="http://en.wikipedia.org/wiki/Walras" _law"="">Later on, in 1949, another economist, Don Patinkin published a work titled “The Indeterminacy of Absolute Prices in Classical Economic Theory“, on Econometrica. Patinkin decisively demonstrated that under the Walrasian analysis, the absolute level of prices cannot be determined and that markets clear (i.e. supply meets demand) driven by relative prices. Indeed, the whole notion of a price index is flawed. As Rothbard pointed out:

“…After one commodity, say gold, is chosen to be the medium for all exchanges, every other good except gold will enjoy a unitary price, so that we know that the price of eggs is one dollar a dozen; the price of a hat is ten dollars, and so on. But while every good and service except gold now has a single price in terms of money, money itself has a virtually infinite array of individual prices in terms of every other good and service. To put it another way, the price of any good is the same thing as its purchasing power in terms of other goods and services…(…) In short, the price, or purchasing power, of the money unit will be an array of the quantities of alternative goods and services that can be purchased for a dollar. Since the array is heterogeneous and specific, it cannot be summed up in some unitary price- level figure…” The Austrian Theory of Money, 1976

In other words, agents do not bother about a price index, because they only look at relative prices. At this point, one has to make the following observations:

a)      We cannot blame Walras. When he wrote, the world was a different place. There was sound money and in 1879, the gold standard would fully blossom. Indeed, with commodity-based money and no aggregate leverage or re-hypothecation the sorts of which we suffer today, imbalances were less pronounced and relative prices were all what mattered (It is necessary to clarify here that the gold standard of 1879 did not enforce a 100% reserve requirement. These two conditions, as far as I know, where only met during the golden time of the Bank of Amsterdam).

b)      In the world of fiat money that Patinkin was familiar with, the illusion of the existence of a level of prices was relevant. It was a world of relatively closed economies, that ended with the birth of the likes of Wal-Mart. More than half its population lived under communism, there was relatively little outsourcing, no internet, no Euro zone, no NAFTA or other free-trade blocks.

But if axiom 5 is correct, in a fiat world with the integration which we still enjoy, Walras’ implied condition that markets can operate based on relative prices only, namely cross fx rates, should hold. Mainstream economists after all could not point to a global price index which does not exist. Most if not all goods are made with components/inputs produced in different currency zones with different local price levels, as measured by mainstream economists. There is no global consumer price index, unless one (like me) measures everything in ounces of gold.

In such a context, it is conceivable and necessary to look at the global economic system as a set of (n+1) markets where the last one, the (n+1) market is the global fiat money market. As long as this market remains balanced, the rest of the markets should not be impacted by global monetary policy.

To obtain the global money market in balance, there must be global monetary policy coordination. Currency wars should be clearly discouraged. Under mainstream economics, there is a benefit in achieving balance at an aggregate level, where the excess of demand in a currency is offset by an excess of supply in another currency. This is what we have observed between the US dollar and Euro currency zones. This is a direct implication of axioms 1-5…But what about the manipulation of the gold market?

When we consider gold as an additional currency, it is clear that its imbalance, for instance, an excess in the demand of it, has to be offset by the opposite imbalance in fiat currencies, if the global money market is to remain in equilibrium. If gold is demanded more than is supplied, fiat currencies will have to be supplied more than demanded. In similar fashion, if there is global coordination to maintain the global fiat money markets balanced at an aggregate level, gold must be also balanced.

But balance is not what policy makers (i.e. central bankers) are looking for these days. They see an imbalance in the n markets for goods and seek to address it with another imbalance in the global fiat money market. They want to induce an excess of demand on the real side of the economic system through an excess of supply in the global fiat money market. But as money is simply another necessary good, people need sound money; a sound asset as a medium of indirect exchange. If  the idea of central bankers is to weaken the liabilities of the banks they lead, people will simply switch to gold. This, of course, is unacceptable to the existing rulers. Therefore, it is hereby demonstrated that to either keep the status quo (i.e. global fiat money market balanced) or to boost an excess demand in real assets, it is a logical necessity to manipulate the gold market; either to leave it balanced or oversupplied.

Corollary

Having demonstrated that if axioms 1-5 are true, the manipulation of the gold market is a logical outcome, I want to make a final observation. If global coordination of currencies would leave the global fiat money market balanced, the balance in the rest of the markets would entirely depend of fiscal policy.

But there is an inconsistency here, because the flow and stock of fiat money in most if not all currency zones today are governed by fiscal policy (i.e. by the monetization of fiscal deficits). Therefore, to enforce a balance in the global fiat money market via coordination of central banks is impossible. What may be feasible is to coordinate the expansion in the supply of global fiat money. But if that is the case, we fall back to my proposition: that the manipulation of the gold market to leave it oversupplied is the logical outcome. To pretend it is not…is a conspiracy theory! The onus is on mainstream economists, to prove me wrong.

 


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Thu, 02/21/2013 - 18:39 | Link to Comment LawsofPhysics
LawsofPhysics's picture

What a load of crap.  The thesis is simple really.  When fraud is the status quo, possession is the law.  Gold is only worthless if you really think that no one would be willing to share the fruits of their labor in exchange for some gold.  many years of history is pretty clear on this.

Thu, 02/21/2013 - 18:46 | Link to Comment knukles
knukles's picture

One of my uber-liberal statist pals asked me the other day; "Knuks, why the hell would you be investing in gold if it's a rigged market?"
Which for someone who is a gubamint worker, has everything handed to them on silver platters stolen from the public and knows little of economic reality is actually a very good question, no?
So I explained it to him.... 
He looked at me askance and asked why I just don't own stocks or bonds, then?  Implying no manipulation.
From thence I proceeded to explain how the ES, S&P, et al were manipulated, how bond prices are being manipulated...
And he said...

Naw, that can't happen here!
They wouldn't do that!
Why?

I didn't feel like explaining it all over again, so I took the skins I won from him and went home.

Which actually helped strike home to me that they're all bloody manipulated.  Free markets, pshaw.
While I'd known it, the true breadth and magnitude of the crimes had never been clearer.
Amazing....

 

And this is why we're frightened of a buncha rag heads in caves somewhere...

Thu, 02/21/2013 - 18:48 | Link to Comment fonzannoon
fonzannoon's picture

knukles if your buddy was a true lib gubbamint worker worth his salt he would be asking you that while he was not counting his 2 shots out of the trap and giving himself a 4 footer for the skin.

That's how they do it around here.

Thu, 02/21/2013 - 19:04 | Link to Comment knukles
knukles's picture

I have in the past pointed out to him on days he's having a great round and I not so much, why he won't take some of my strokes as in redistributing the wealth for purposes of more equal results, fairness and feeling good about himself.

He generally tells me to do something unnatural.
Point made.
Amazing thing is that the neo-cons and uber-liberals all try to sweet talk me and convince me to help gang up on the other guys and I just start explaining the Hegelian Dialectic and then float a highly controversial topic as an example.

They'll remain silent for a hole or two and then all of a sudden, BAM!, the argument between them (pure Dialectic) begins anew, they're distracted, play poorly and I'm a lovin' it.
Harvey Penick called it "the Needle".

It works, over and over... just like on the Big Stage with the Masses.

Thu, 02/21/2013 - 19:14 | Link to Comment disabledvet
disabledvet's picture

Exactly. The Fed has stated "they want to INFLATE assets." I can already here them in their "2008 Plunge Protection Team War Room" making the case for "massive purchases of gold and energy futures." it's not like the dollar was collapsing then (it was soaring actually)..."the only problem would be inflation" which is where QE came in. The rhetoric here is a Bankster's dream come true! "if you really want to make him shit his pants you'd be me" hehehehehe. "nice way of saying I realized I was really wrong early on" and maintained my equity exposure. (not the first collapse I've done this actually. Did the same after 9/11.) I think where we have the problem is NOW. If the Fed (as Buying Agent 7-320-1...and no the media cannot say who that is even though they know) ramps UP gold "to get those competitive juices flowing" NOW the "conspiracy" makes sense...especially when coupled with hammering energy futures "to the moon" while "making sure Detroit who we now own produces one gas guzzler after another." nay, veerily, alas..."the ugly reality of the non-recovery remains." so whatever was being promised the President he's still left with an even BIGGER pile of bullshit than before. So again while I'm out of the equity index (for now) I'm still rooting for it..."but I am taking the Zero Hedge investing Platform and going all in" by taking a long position in Treasuries...something that has thirty years of mo behind it "and a very compelling data set in the immediate term."

Thu, 02/21/2013 - 19:49 | Link to Comment FEDbuster
FEDbuster's picture

I'll take the Russian and Chinese side of this trade.  Keep pushing the price down, so I can stack more in my safe.  No margin, no re-hypothication, no leasing, no counter party, etc....

Thu, 02/21/2013 - 20:06 | Link to Comment The Second Rule
The Second Rule's picture

None of this will end until we stop putting money ($) on a a throne and granting it the power of divinity. Money has no magical power other than what we confer upon it. The Fed is engaged in what is now, post-Jeckyl Island, a century long burlesque act of plate spinning (coupled with a 95% real reduction in the value of the USD). Everyone knows that at some point the plates will come crashing to the floor. We've all seen the act before, and that's how the act always ends. But we never seem to grow tired of the plate-meisters spinning the plates. We're just fixated, thinking that somehow they will pull it off...this time. Of course, not true. At some point we probably will revert to some monetary system based on something that is real: maybe bbls of oil, maybe gold, maybe time itself (a la the movie). Who knows. I'll make another prediction. At some point the debt-slate will be wiped clean, Jubilee style, across the planet, for everything: student loans, home loans, credit cards, taxes, all of it. I hate using words like HOPE, but hopefully that will be the utter end of money that loses value over time--without a doubt the most insane human invention in the history of insane human inventions.

Thu, 02/21/2013 - 20:38 | Link to Comment Slightly Insane
Slightly Insane's picture

Knuckles,

If I had any uber liberal statist pals ..... either I would have eaten them ... or buried them (jokingly of course), but in the future, maybe not so jokingly.

 

In the future, when the deer run short, you may invite your friend over for dinner.

Thu, 02/21/2013 - 20:45 | Link to Comment Slightly Insane
Slightly Insane's picture

You fucked up again .... Gold is what you (the holder of it) deems it is worth ... no one else.  It is ... what will you trade it for ..... in times of utter starvation .... gold has little value .... unless there is someone willing to trade you food for it ..... so in an absence of food .... gold .... has little meaning.  The concept realy is simple ..... needs for wants.

Fri, 02/22/2013 - 04:41 | Link to Comment JOYFUL
JOYFUL's picture

you are correct LawsofPhysics...this baffling display of b.s. has all of the heavy-handed pendantry of "austrianism" at it's worst, and none of the graceful tracing of economic forces and the events of history that can be gained from reading the works of some of that schools' more cogent practitioners.

Case in point:

There was sound money and in 1879, the gold standard would fully blossom. Indeed, with commodity-based money and no aggregate leverage or re-hypothecation the sorts of which we suffer today, imbalances were less pronounced and relative prices were all what mattered

Huh? "fully blossom..." And imbalances less pronounced? Commodity based money? GoldeN Age of the Bank of Amsterdam??? Put down the crac pipe son, and pull on a puff of Feteke:

"January 1, 1879, Resumption Day, when the payment of the greenback in gold (but not in silver) specie was resumed, coincided with the date when the Latin Monetary Union in Europe closed its last Mint to silver ? marking the end of the silver standard in the Western countries. The coincidence is ominous....

The silver standard did not die a natural death. It was deliberately killed. A proper search for the assassins was never carried out. January 1, 1879 (Resumption Day, when payment of the victorious Union’s currency, the greenback was resumed in gold specie ? but not in silver)." (http://www.silverseek.com/article/silver-saga-7861)

The author appears to be as deficient in knowledge of the most important elements of C19th economic history as he is in making a clear and cogent use of the English language. This whole piece has once again proven the timeless wisdom of that old adage - 'a little bit of knowledge is a dangerous thing.' This guy has had way too much schoolin, and way too little exposure to the real world...axiomatic...total fail.

 

Fri, 02/22/2013 - 11:36 | Link to Comment jmcoombs
jmcoombs's picture

JOYFUL hit the nail on the head and eloquently as well.  Only a person who has no idea what he is talking about would write such an incomprehensible piece.  Can you imagine writing a brief in a court case like that and expecting the judge to read it, let alone rule in your favor?  Absurd.  Would he rule in your favor because he simply thinks you are so damn smart?  It is like G.W.F. Hegel, who was proud that only a dozen people on earth understood his philosophy.  What a phony.  What is that saying, "To be great is to be misunderstood."  I was going to forward the piece to my buds after seeing the title (I got excited), then realized that the guy doesn't make an intelligible case.  It certainly isn't intelligible if you can't explain it to someone face to face....................Occham's Razor.  The simple answer or explanatoin is the best one. 

Thu, 02/21/2013 - 18:37 | Link to Comment fonzannoon
fonzannoon's picture

the onus is on main stream economists to be forced to give a shit.

Thu, 02/21/2013 - 19:23 | Link to Comment disabledvet
disabledvet's picture

Damn Skippy. "many an economist sells short." but will he take OWNERSHIP? (this is no mere question or rhetorical device either...

Thu, 02/21/2013 - 20:51 | Link to Comment Duffminster
Duffminster's picture

They don't teach the Austrian school theory in the "leading" modern universities so it is doubtful that the "mainstream economist" will "give a shit".

The article is compelling and in some ways but failed to mention the use of Gibson's paradox as a primary tool that central banks can use to help keep interest rates low (see: http://www.gata.org/files/gibson.pdf).   Of course being the primary consumer of recent US debt, has replaced Gibson's paradox as a primary tool in my opinion.  Flooding the TBTF with massively excessive liqudity (which never makes it to the broader economy via credit expansion to the lower echlons of business and consumers) is a residual side effect of all the related purchasing activity from the primary dealers by the Fed and a major problem for the broader economy.  It is this factor coupled with the Fed's belief that a higher stock market will be a primary driver for economic growth, rather than actually getting some of the credit into the hands of small business and consumers that is very frustating to me and which I believe is largely while the policy is failing.

"...Without getting too much into theory, Gibson's Paradox has been the orthodox explanation for movements in the price of gold for a good quarter century. This orthodox explanation was crafted by Robert Barsky and Larry Summers in a famous paper called "Gibson's Paradox and the Gold Standard", and it said that gold (and other metals, especially "non-ferrous metals") is inversely correlated to real interest rates. When real interest rates go down, gold goes up.

Gibson's Paradox is actually a fairly old phenomenon mentioned by Keynes who picked it up from Gibson. Gibson had pointed out that, contrary to expectation, interest rates were strongly correlated with general price levels rather than the rate of change in those price levels.

As Barsky and Summers showed, prior to the collapse of the gold standard, if interest rates dropped, so did prices. But, since the gold standard fell in 1971 (and shortly before), when interest rates drop today, prices are likely to slow in growth or stabilize, but not fall...."

This article lays out a case for price supression based on the thinking and possibly direct influence of Larry Summer's work on Gibson's paradox and possibly as a result of his time spent in high places in DC. http://news.goldseek.com/GoldSeek/1247554800.php

There are various possible explanations for the metals manipulation.  I tend to agree with the GATA theory that the largest Bullion banks and primary dealers in conjunction with funds work in concert to implement an un-published policy of capping gold and silver prices.  I believe additionally that the debt crisis can not be resolved within the current architecture of the financial system other than through long term currency debasement by the most indebted nations.  The logical path for the uber-wealthy to protect their wealth will be through holding non-rehypothicatible money such as Gold and Silver and that part of the manipulation in paper PM markets is to provide all monied interests to scare the weak handed longs into selling their gold at these super lower prices.   When the pressure boiler builds on physical demand it will eventually create a commercial signal failure.  

What really throws me is why the Fed isn't working to get some of the cash that it is supplying to the primary dealers into the hands of small business to create jobs, stimulate growth and innovation.   I guess its for the same reason they seem to be intent on destroying the US Postal service by making them the only agency that has to pre-fund its retirement fund, they want a world dominated only by large companies that they own a stake in?

Anyway, I believe we are close to a bottom here and I look at the 10 and 20 year charts, the level of debt, the fact the Fed is the only real buyer in US debt, the situation in Europe and the increasing corruption in government everywhere and the size of the derivatives markets and the associated growing total risk and physical gold and silver make increasing sence me.

http://www.duffminster.com/times

Fri, 02/22/2013 - 00:49 | Link to Comment Half_A_Billion_...
Half_A_Billion_Hollow_Points's picture

amazing comment

Fri, 02/22/2013 - 10:47 | Link to Comment Bicycle Repairman
Bicycle Repairman's picture

"The logical path for the uber-wealthy to protect their wealth will be through holding non-rehypothicatible money such as Gold and Silver and that part of the manipulation in paper PM markets is to provide all monied interests to scare the weak handed longs into selling their gold at these super lower prices.   When the pressure boiler builds on physical demand it will eventually create a commercial signal failure.  "

Who are the "weak hands"?  Certainly J6P.  But how much does J6P actually own?  Not much.  So who are the "weak hands" (other uber-rich?  Governments?) and what will it take to get them to capitulate?  And when will that happen?  Can any J6P survive the shakeout?  Who needs confiscation?

Thu, 02/21/2013 - 18:45 | Link to Comment Kirk2NCC1701
Kirk2NCC1701's picture

Lt. Uhura, translation please.

Uhura:  Captain, it says we're "screwed".

Dr. McCoy?

Dr. McCoy:  Jim, I think he wants to prescribe a New World Order, based on the New FRN -- the New Feudal Reserve Note.

Thu, 02/21/2013 - 19:35 | Link to Comment medium giraffe
medium giraffe's picture

If it's called the NFR, I'll buy you a beer, but if it's the Bancor, you get the round in.  Deal?

Thu, 02/21/2013 - 18:41 | Link to Comment pendragon
pendragon's picture

chips on shoulders

Thu, 02/21/2013 - 18:44 | Link to Comment mmc1968
mmc1968's picture

How come when gold moves up, is because of fundamentals.  But when gold is down, is clear manipulation?

All you preppers need to get a clue.

Thu, 02/21/2013 - 18:47 | Link to Comment Confundido
Confundido's picture

Oh, it's simple, really: When gold moves up, it does not do so instantly at 8:20am ET or ar 10:30am ET....otherwise, the market would kill whoever does that move for profit. And certainly, the central banks would not be involved in that trade. 

Then, imagine who would be involved in selling at those exact times...and at the same time, does not care whether it does or not make a profit....clearly not someone in the private sector or someone in the private sector, with central bank's backing.

Thu, 02/21/2013 - 19:09 | Link to Comment lasvegaspersona
lasvegaspersona's picture

try asking for 10 metric tons of physical....you'll likely get a call

Ask for 100 MT and you will be laughed at....

Now ask where China gets 800+ MT a year without running up the price....

Once you start asking these questions you will begin to see the problem...

Academic proof will play no role in resolving this issue....as was mentioned above, it would be up to the bankers to give a shit...

Thu, 02/21/2013 - 20:44 | Link to Comment new game
new game's picture

one would think they would change up the time of day and at least be a little sneaky...

i agree with his thesis, though.

i think they(fed banks)just don't give a fuck, cause their policy sure doesn't

help the majority.

control freaks, and if you know one, they are sub-human...

Thu, 02/21/2013 - 21:01 | Link to Comment The Second Rule
The Second Rule's picture

The mysteries of gold manipulation elude me. Because when I cross-correlate gold, oil, and the S&P they all appear to be pegged over the long term. I don't disagree there is manipulation, but I see it as $USD manipulation vs. the broad market, not "gold" specifically. Yes, you can have spikes of volatility, but PMs have always been volatile. Or am I missing something?

And I am talking normative values. I am well aware that the market adjusted for gold would be priced much lower.

Thu, 02/21/2013 - 23:35 | Link to Comment jimmyjames
jimmyjames's picture

 

 Yes, you can have spikes of volatility, but PMs have always been volatile. Or am I missing something?

*************

Maybe you're looking at gold volatility on a micro scale?

It doesn't look very volatile over the long haul-remember-gold was in a bear market for 20 years prior to this-so not much volatility there either-i

http://tinyurl.com/ajqpgvs

Thu, 02/21/2013 - 21:48 | Link to Comment The Miser
The Miser's picture

The Libor scandal answers any question one may have about manipulation. 

Thu, 02/21/2013 - 18:48 | Link to Comment Motorhead
Motorhead's picture

Shhh, you'll piss off Eric King at King World News.

But, yeah, no shit...that's the shit you see on the Yahoo message boards...."obvious" manipulation.

Thu, 02/21/2013 - 19:11 | Link to Comment Whalley World
Whalley World's picture

your understanding of this market is truly underwhelming.

Thu, 02/21/2013 - 20:50 | Link to Comment new game
new game's picture

i am so mfk'g sick and tired of these book selling gold experts.  FUCK EM ALL.

they make money on bullion trade every which way, sell their service and pronounce themselves experts-fuck-em.

every last one of them can go suck donkey dick.

wake - up and delete these from favs and think for YOURself...

oh and the t-shirt to my left has calmed me way back down.  HONEY! are still awake :)

Thu, 02/21/2013 - 18:50 | Link to Comment Banksters
Banksters's picture

The paper gold to real gold is between 50/1 to 100/1.   If you think the central bankers don't have a vested interest in quashing alternatives stores of wealth, via leases, you are an imbecile.   

Thu, 02/21/2013 - 18:51 | Link to Comment mmc1968
mmc1968's picture

One of these days I am going to show up at your house and take all of your gold while you are sleeping.

Thu, 02/21/2013 - 19:03 | Link to Comment Banksters
Banksters's picture

You can't have my gold, but I'll gladly give you some lead.

Thu, 02/21/2013 - 19:14 | Link to Comment mmc1968
mmc1968's picture

Just for that, I will now take your gold and your woman.

Thu, 02/21/2013 - 19:42 | Link to Comment resurger
resurger's picture

take my woman, leave my gold

Thu, 02/21/2013 - 19:46 | Link to Comment FEDbuster
FEDbuster's picture

I am sure there are a few around here that would give you some gold to take their woman.

Thu, 02/21/2013 - 20:18 | Link to Comment Hulk
Hulk's picture

Naw man, thats what the Tungsten is for!!!

Thu, 02/21/2013 - 22:05 | Link to Comment WmMcK
WmMcK's picture

My woman will fill you with lead first/also.

Thu, 02/21/2013 - 18:52 | Link to Comment mmc1968
mmc1968's picture

One of these days I am going to show up at your house and take all of your gold while you are sleeping.

Thu, 02/21/2013 - 19:08 | Link to Comment lunaticfringe
lunaticfringe's picture

In order for a con to take place, there must be a mark. A sucker. If you look around and you aren't the con man, there is only one thing you can be. Savvy?

Thu, 02/21/2013 - 19:15 | Link to Comment mmc1968
mmc1968's picture

Is that what the guy told you as your were leaving the poker game broke?

Thu, 02/21/2013 - 19:45 | Link to Comment medium giraffe
medium giraffe's picture

Double post, ninja boy.

Thu, 02/21/2013 - 20:05 | Link to Comment IridiumRebel
IridiumRebel's picture

Judging by the crew of "Molon Labe" folks, that would probably be a very dumb idea. 

Thu, 02/21/2013 - 21:07 | Link to Comment jimmytorpedo
jimmytorpedo's picture

I will send you to my gold with 1000oz bar of silver attached to your leg.

Did I mention I lost it all in a dreadful ice fishing accident?

Fri, 02/22/2013 - 00:32 | Link to Comment e_goldstein
e_goldstein's picture

long submarines.

Thu, 02/21/2013 - 19:14 | Link to Comment lasvegaspersona
lasvegaspersona's picture

uhhh...you might want to reset you calendar .... central banks are not leasing anymore, they are net buyers....which is causal in this whole crazy market...

if we still had CB leasing we would not need  manipulation (as much) we could get by with good old fashioned price suppression thru increased supply. What we are witnessing now is what happens when there is NO way to increase supply. When the last seller (of physical) decides to quit selling it will be game over for the bullion banks....and the dollar.

Thu, 02/21/2013 - 22:56 | Link to Comment BeerBrewer09
BeerBrewer09's picture

perfect post. and if crude keeps climbing–think summer pricing–the miners will just stop producing at these supressed prices. has anyone tried to buy ammo lately?

 

the gun/ammo situation RIGHT NOW will be the precious metal situation in the next year.

continue buying.

Thu, 02/21/2013 - 18:51 | Link to Comment SilverIsKing
SilverIsKing's picture

Because the fundamentals dictate that the price of gold should be higher so when it goes higher, they are moving in the direction of the fundamentals.  When gold gets slammed at the same exact time every day to the point at which it is obviously being held down, those who have a brain call it how they see it...manipulation.

The above doesn't apply to each and every move up and down but there is clearly plenty of manipulation of gold (and silver) prices just like there was proven manipulation of LIBOR and the overall equity markets.  Since gold is a direct competitor to fiat currencies, it does make sense that the governments around the globe would like to maintain a competitive edge as they debase their fiat currencies.

One thing is for certain, it can't go on forever.  At some point, the supply of physical will eventually run dry.

Anything other questions?

Thu, 02/21/2013 - 21:51 | Link to Comment DaveyJones
DaveyJones's picture

quit making sense

 

Thu, 02/21/2013 - 18:53 | Link to Comment bobnoxy
bobnoxy's picture

Do those mini flash crashes suggest someone is hedging, or taking profits? I'm actually opn to those ideas as they are normal reasons for selling.

I've hedged before, but not is such large amounts that it would shoot the hell out of my long position. If I was taking profits, I wouldn't be dumping so hard as to reduce those same profits on my ownself.

Other than that, you're probably spot on with your rigorous analysis.

Thu, 02/21/2013 - 18:55 | Link to Comment knukles
knukles's picture

Why are equities at all time highs?
Why are interest rates close to historical lows?
Why is the West freeing holders of their natural resources throughout the world?
Why is the MSM so impartial, insightful, credible and altruistic?
Why has the War on Drugs not been won?
On Poverty?
On Illiteracy?
Why?

Everything's fine, go back to sleep.
And it has absolutely nothing to do with whether one is a "prepper" or even "preppy".

Thu, 02/21/2013 - 19:17 | Link to Comment lasvegaspersona
lasvegaspersona's picture

a golden pillow is firm, lumpy but firm, and it induces good REM and delta wave sleep.

Thu, 02/21/2013 - 21:55 | Link to Comment DaveyJones
DaveyJones's picture

dont forget the War on the Bill of Rights

wait, that one's successful

Thu, 02/21/2013 - 19:09 | Link to Comment Swarmee
Swarmee's picture

How come when an object falls towards the earth it is due to a fundamental law, but when it moves away from the earth it is due to imparted velocity?

Think about it. If the fundamentals say that due to various factors - e.g. Large central bank buying, reduced ore grades, increased production costs, etc - the price should be moving up, then a move up is in line with those fundamentals. But in the face of such factors, which traditionally in an unmanipulated market give good insight into the general trend, barring disruptive one-time events, the price moves the opposite direction (not one or twice, but constantly, regularly, and without regard to long term fundamental factors already outlined) then it would be best described as manipulation.

Perhaps you would do better to challenge the various fundamentals presented and point out why that analysis is faulty and therefore supports the moves down?

Or, even more simply, please explain what fundamental has been overlooked by the crowd here that legitimately explains why huge takedown orders are placed at regularly occurring intervals over long periods? And yet somehow never being front run despite hundreds of HFT algos in every market which not only look for such trends but do so on the microsecond level? How did all those front-running algos miss the minutes long dumps occurring without fail every 24 hours and close the arbitration window on them as they do down to the penny everywhere else these days?

Thu, 02/21/2013 - 22:47 | Link to Comment RockyRacoon
RockyRacoon's picture

Because if something cannot be explained, its existence must be attributed to nefarious activity.

Easy stuff!

Thu, 02/21/2013 - 19:13 | Link to Comment Being Free
Being Free's picture

How come when gold moves up, is because of fundamentals. But when gold is down, is clear manipulation?

Because the fundamentals haven't changed.

Get a clue.

Thu, 02/21/2013 - 19:16 | Link to Comment Whalley World
Whalley World's picture

Have you read Gold Wars by Ferdinand Lipps?  Aside from the evidence provided by GATA, Lipps detailed how Paul Volker threatened the Swiss if they did not abandon gold as the backing of the Swiss Frank.  That is pretty clear, as well as Volker stating their biggest mistake was not hammering gold more effectively in the 70's

Thu, 02/21/2013 - 19:27 | Link to Comment Mr. Fix
Mr. Fix's picture

Now I know why you wear a bag over your head.

Fri, 02/22/2013 - 01:47 | Link to Comment Lordflin
Lordflin's picture

I saw an article a few weeks back that made exactly this point.. That is, that as gold went up gold bugs considered the move based on fundamentals, but as it went down they complained of manipulation.. and that they couldn't have it both ways... and I wondered, who could possibly fall for such stupidity... well, seems there is at least one...

Gold and silver have, in times past, moved violently up on what would be considered bullish news... Such as the announcement of more or even unlimited money printing... The sudden moves down have had no such fundamental explanation... As of late there has been considerable selling into any news that would otherwise be bullish for metals. As a consequence premiums on bullion are increasing...

But I suppose it is easier to read an article and adopt it's opinion than it is to use your mind... Or perhaps your mind is not worth the effort.

Sorry, it is late and I am tired... You are probably a very good sheep...

Fri, 02/22/2013 - 10:50 | Link to Comment Bicycle Repairman
Bicycle Repairman's picture

Gold moved up on fundamentals (2001-2011), and then even though the fundamentals got better, it stopped moving up.  Why?  Gold drew enough attention that the manipulators stepped in.  And now the price is controlled.

Thu, 02/21/2013 - 18:47 | Link to Comment impermanence
impermanence's picture

Since all markets are severely corrupted, why is anybody surprized that this would apply to PMs? 

Stop whinning!

Thu, 02/21/2013 - 18:50 | Link to Comment IridiumRebel
IridiumRebel's picture

 

Axioms of mainstream economics:

Print dat shit.....

Thesis:

If we don't keep this ponzi rolling, we fucked; gold makes us look like assholes.

Demonstration:

Initiate 8AM Algo

 

Thu, 02/21/2013 - 19:05 | Link to Comment Mr. Fix
Mr. Fix's picture

Who cares? At least the precious metals are on sale for a little while longer.

 Just keep stacking, we don't have much longer.

Thu, 02/21/2013 - 19:36 | Link to Comment IridiumRebel
IridiumRebel's picture

I agree Mr. Fix

 

Thu, 02/21/2013 - 19:14 | Link to Comment Al Huxley
Al Huxley's picture

That was a more concise statement of the article, to be sure.  I could add a couple of other axioms:

- For the system to work, bank losses must be socialized

- For the system to work, bank profits must be private

And another thesis

- We can keep this fucking charade alive for quite some time, as long as we own the media and the govt and make all the rules in the markets.  And when it all goes to shit, we'll just institute martial law and call it a day.

Demonstration

- CNBC, CFTC, SEC, Fed, Congress, POTUS, NDAA, DHS, FEMA, Patriot Act, etc......

Thu, 02/21/2013 - 20:50 | Link to Comment Ignatius
Ignatius's picture

Nice summary, Al.

Thu, 02/21/2013 - 21:58 | Link to Comment DaveyJones
DaveyJones's picture

that is the necessary second part of the plan

Thu, 02/21/2013 - 18:48 | Link to Comment Motorhead
Motorhead's picture

P.S. - Gold, bitchez!

Thu, 02/21/2013 - 19:01 | Link to Comment thewayitis
thewayitis's picture

 Yep......Think of it this way...Now we are in stronger hands. Thankyou weak hands. Bought a 100 oz silver bar on the cheap for 3010. Silver Bitches .....

Thu, 02/21/2013 - 18:49 | Link to Comment Piranhanoia
Piranhanoia's picture

If central banks and nations are buying gold as fast as they can and no longer hiding that fact via proxies,  is that not enough information to see that it is being manipulated downward in price?   If that conclusion can be accepted,  then we need to ask why?   Some countries are aiding others in supressing the value of gold so that they can take advantage of it,  or we would have regulators stopping the sales,  closing the market down to stop the practice.   Since it is blatant,  and always based solely on the claim of selling paper and not real metal,  (we never see the amounts pass the comex that equalize the amount offered for sale per raid)  Is there anything left to guess about?   It is fair to say the US is manipulating it so it can assist China in acquiring it in lieu of ever getting repaid for their investment in our soon to be less valuable bonds?

Just what makes sense if we can all agree that the price is being supressed?   What else is there?

Thu, 02/21/2013 - 18:51 | Link to Comment caimen garou
caimen garou's picture

don't matter what your theory is, or how, why, and if they suppress the prices of pm's, the important thing is to fucking own some!

Thu, 02/21/2013 - 19:01 | Link to Comment mmc1968
mmc1968's picture

All you preppers are getting your @sses handed to you with your pm investments.

When will you learn that the world will not fall apart?

When will you give your conspiracy theories a rest?

Thu, 02/21/2013 - 19:06 | Link to Comment Confundido
Confundido's picture

I will learn that the world will not fall apart when the US treasuries or for that matter, the sovereign debt of the issuer of the global reserve currency is able to borrow money 100% from the private sector at a yield determined by a free market, without the interference of a central bank. If the central bank has to purchase 90% of the issuance like it has been doing....well then...why would it not fall apart? Over to you...

Thu, 02/21/2013 - 19:06 | Link to Comment falak pema
falak pema's picture

that won't happen until the past corruption has not been flushed out; too late to go back to past paradigm.

Fire with fire.

Thu, 02/21/2013 - 19:08 | Link to Comment caimen garou
caimen garou's picture

right, going to buy me some berkshire hathaway, ssssssssssssssshhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhh

Thu, 02/21/2013 - 19:11 | Link to Comment lunaticfringe
lunaticfringe's picture

There is a sucker born every minute. A few extra were conceived by hippies in 1968.

Thu, 02/21/2013 - 19:18 | Link to Comment Swarmee
Swarmee's picture

And when will you learn that not everyone started buying PMs just six months ago when you got your driver's license?

Many of us have DCAs in the low double digits or even single digits, got it?

Moves between certain prices have become so regular that offsetting paper positions can be used to increase stacks on such swings, bringing avgs even lower than the nominal purchase price. Eventually the paper game will end but until then it is a profitable hedge and as long as the hedge is smaller than the stack ultimately it doesn't matter if the paper goes to zero. Think of it as a dividend but requiring some effort. And what fun is there in a game that plays itself anyway?

Thu, 02/21/2013 - 22:56 | Link to Comment RockyRacoon
RockyRacoon's picture

Atsa fack!   I have 3 X 100 oz silver bars of various shapes/sizes.   All have buy-in prices below $700.   They make great door stops.   Next move is to roll them into some ASE rolls or a few fractional AGEs.   I don't fret the premiums on fractional gold Eagles because the premiums remain with the coins.  That same premium is recovered upon sale or other disposition... with the same increase as the spot price.

Thu, 02/21/2013 - 19:48 | Link to Comment medium giraffe
medium giraffe's picture

mmc1968: Are you blind, ignorant or just stupid?  (apologies if it's the latter)

So ok, here's a checklist, some of which you might agree with, some of which you will dismiss as BS, some I may have missed- thats fine, but lets do the mental exercise.

So, if we can just make it through:

Fascism

NWO

Increased geological activity

Near Earth Objects

Compressing heliosphere

Fukushima, Chernobyl (no it hasn't 'gone away')

Pollution and environmental disasters leading to a collapse of the food chain

Viral pandemics

Financial collapse

Over-population

Nuclear War

Famine

Energy crisis

..we should be just peachy, right?

AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAHHHHHHH HAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHA!

 

 

 

Thu, 02/21/2013 - 22:59 | Link to Comment RockyRacoon
RockyRacoon's picture

mmc1968 is one of the frogs that got into the pot early.  The water is getting only getting comfortably warm for him.

Fri, 02/22/2013 - 00:41 | Link to Comment StychoKiller
StychoKiller's picture

Hmm, once the Petri dish is full, the microbes will simply pack up and find another Petri dish! :>D

Thu, 02/21/2013 - 19:40 | Link to Comment Bandit und Buster
Bandit und Buster's picture

 

"When will you learn that the world will not fall apart?"

 

"‘We’ve been fighting a war for the past 18 months, which is the harbinger of World War III. The world is going to fight, whether they like it or not.  I’m sure,’ Ra’anan Gissin, a senior adviser to [Israeli Prime Minister Ariel] Sharon, said n an interview Friday." Stephanie Innes, Arizona Daily Star, March 18, 2003.

 

"We have exterminated the property owners in Russia.We are going to do the same  thing in Europe and America." (TheJew, December 1925, Zinobit) 

Benjamin H. Freedman was an insider in the world Zionist conspiracy. He was a successful Jewish businessman of New York City who was at one time the principal owner of the Woodbury Soap Company. He broke with organized Jewry in 1945, when by the grace of God he was saved and became a Christian. He spent the remainder of his life and the great preponderance of his considerable fortune, exposing the Jewish conspiracy against the United States and the world. "Mr. Freedman knew what he was talking about because he had been an insider at the highest levels of Jewish organizations and Jewish machinations to gain power over our nation. Mr. Freedman was personally acquainted with Bernard Baruch, Samuel Untermyer, Woodrow Wilson, Franklin Roosevelt, Joseph Kennedy, and John F. Kennedy, and many more movers and shakers of our times." In the following 1961 speech given at the Willard Hotel in Washington, D.C. on behalf of Conde McGinley's patriotic newspaper of that time, Common Sense, Freedman revealed the plans the Zionist Jews have for World War III.   Listen to him reveal in his own words the Zionist conspiracy against the United States.

http://www.antichristconspiracy.com/Sound%20Files/Freedman.mp3

Fri, 02/22/2013 - 06:48 | Link to Comment Fred C Dobbs
Fred C Dobbs's picture

Thanks for posting.

Thu, 02/21/2013 - 21:56 | Link to Comment The Miser
The Miser's picture

Libor scandal was a conspiracy.

Thu, 02/21/2013 - 19:05 | Link to Comment falak pema
falak pema's picture

its been done before and it will be done again "for the general good"...

Save the people not the accumulated corrupt wealth, as to save the people you have to destroy the augean stables...

Thu, 02/21/2013 - 19:05 | Link to Comment imbrbing
imbrbing's picture

Any one scared of Gold or Silver now needs to get out and sell it to me.

PS: I only take physical

Thu, 02/21/2013 - 19:07 | Link to Comment Anglo Hondo
Anglo Hondo's picture

All I know about is Gold Womanipulation, as in I don't have any left, because my three ex-wives now have it all.

Just like tornadoes, when they left I had no house, no car, no boat, not even a tomato plant.  Had all my silver hidden away though.  (Until the new boat accident).

 

Thu, 02/21/2013 - 19:12 | Link to Comment caimen garou
caimen garou's picture

you had it going on, until the new boating accident part

Thu, 02/21/2013 - 19:23 | Link to Comment Anglo Hondo
Anglo Hondo's picture

All true, except the 'new boat' bit.  Wasn't for trading the silver just for a piece of fiberglass, no siree.

 

Thu, 02/21/2013 - 20:47 | Link to Comment Teamtc321
Teamtc321's picture

Would you venture to say this is where the "Gold Digger" lingo came from?

I know some who don't own a boat but I don't think they would shine it out in the sunlight even if they did.........

Thu, 02/21/2013 - 19:13 | Link to Comment deebee
deebee's picture

Gold has been in a strong bull market for > 10 years and corrections allow people the opportunity to participate. If you think it's being artificially supressed then buy the bitch, bitchez (and stop whining like a bitch)

Thu, 02/21/2013 - 19:22 | Link to Comment European American
European American's picture

"They" say that supply and demand dictates the price of precious metals. The reality is: There is a little guy (metaphoically speaking) who sits in a room (all by his lonesome) with a phone and a computer. The phone rings. He picks it up. He is told by "someone" on the other end to raise or lower the spot (of each metal) at a specific time of day. That action needs to be performed precisely on the second, always within an half hour time frame, from when he receives the call.

 

So, everytime you check the spot, know that that is how it works. No big deal. No complicated charts or theory to follow. "UP" or "Down", "X" number of dollars and cents based on what he is told by "them". 

 

If you want in on that action, hack his or their lines (without getting caught).

 

If you want to know who "they" are, well, not possible. That's the price we all pay for not being in their "club". Fortunately, though, they pile so much excess on their plates, the consequences of which, are, plenty of crumbs, some of which are quite sizable, fall off for those who know how to stealthfully navigate in their wake.

Thu, 02/21/2013 - 19:53 | Link to Comment Big Corked Boots
Big Corked Boots's picture

I don't think that's a metaphor. I remember seeing some guy in a closet in the 3rd sub-basement of 270 Park Avenue (you could hear the trains on the other side of his wall) a few weeks ago.

Thu, 02/21/2013 - 19:29 | Link to Comment Quinvarius
Quinvarius's picture

Eventually they will either run out of gold or remember that it is a really good asset to have around to balance debt.  My bet is that just like when they allowed gold to go to the correct price to fix the banking system in 1981, they will do it again.  In the end that is the thing that kicks the can.  That crap about Volcker raising rates was nonsense.  Inflation played itself out and we went to where we could have returned to a gold standard. 

Thu, 02/21/2013 - 19:30 | Link to Comment Downtoolong
Downtoolong's picture

I think anyone who launches a conspiracy theory which comes true should get $10 million. That way even the little guy will still have a chance of becoming a billionaire.  

Thu, 02/21/2013 - 19:31 | Link to Comment eddiebe
eddiebe's picture

Banksters have to prove nothing. They just lie to you, and take what you have one way or an other.

Thu, 02/21/2013 - 19:44 | Link to Comment q99x2
q99x2's picture

Tyler's taken off the boxing gloves. Getting serious now.

My bets on Tyler. Arrest them.

Thu, 02/21/2013 - 19:45 | Link to Comment buzzsaw99
buzzsaw99's picture

If it doesn't move in a straight line to one bazillion dollars per oz it is blatant manipulation bitchez! No down days ever, just like the non-manipulated stock market. [/HUGE SARCASM]

Thu, 02/21/2013 - 19:47 | Link to Comment Diamond Jim
Diamond Jim's picture

The gold market has gone up significantly over the last several years from that "U" shaped bottom on the charts (mid $200). Quite a ride. While I do believe that the Fed is running the printing machines 24 /7 and doing their $85 B per month in the MBS market...we will in the long run pay dearly for this and that having physical AU will be a smart play as fiat currencies devalue. There is something called a correction, something we all involved in these markets appear to forget about...is the Stock market due for one here, yes I think so. Or the long overdue correction or change due in the bond market

If one looks around why do people hold Au??? Inflation, safety from manipulated fiat currency stand out to me. I look at the Dollar index and see it has broken out to the upside, I look at the 10 yr bonds...possibly breaking up over 2%...portraying possible higher interest rates, putting a floor under the dollar...so to me it is a no brainer why gold is dropping. Toss in some technical selling as gold waffled around when sold off to $1600 hit a bunch of "stops" (which as we all know the locals love to do) under $1600 and now we are on the way back to 1500. I forgot to mention the crappy economy, and sequestion both of which could lead to a new recession or worse, deflation? so why should gold go up...because some went out and bought physical??? Because the Bernank is printing ? and the Feds are spending like drunken sailors ?  Come on, we are all supposed to be expereinced traders here.

If all the fundamentals of excessive printing and currency manipulation are true, we should all be ready to BTFD and if it goes to $2,000 we will have a nice profit margin. The key word here is patience, it will happen, you may not get the bottom but you can still participate on most of the new ride up. So quit crying, unless of course you have stood in front of the freight train and bought at the market top, like some did with AAPL ($700+). Realize that gold is a commodity and that markets change...this is why we have "sell-stops". Remember one can make money on the short side too.

Thu, 02/21/2013 - 19:50 | Link to Comment logicalman
logicalman's picture

I remember a story my dad told me about his grandfather selling some gold sovereigns he had for £4 - he was sure they'd NEVER be worth more than that!

£266 or there abouts right now!

Thu, 02/21/2013 - 20:03 | Link to Comment Bandit und Buster
Bandit und Buster's picture

"We will have a world government whether you like it or not. The only question is whether that government will be achieved by conquest or consent." (Jewish Banker Paul Warburg, February 17, 1950, as he testified before the U.S. Senate).

Thu, 02/21/2013 - 20:07 | Link to Comment seek
seek's picture

I think there is either a hacked account or a well-aged sock puppet troll amongst us. Member for 1 year, 10 weeks, 7 comments total, six in the past hour, one four days ago, all of them troll-like insulting comments aimed at getting a rise out of people.

Don't feed the trolls, folks.

 

Thu, 02/21/2013 - 20:17 | Link to Comment fuu
fuu's picture

Lot of that going around lately. Sleeper puppets.

Thu, 02/21/2013 - 21:17 | Link to Comment jimmytorpedo
jimmytorpedo's picture

I like to feed peanuts to the trolls.

With my slingshot.

When they're full I bring them ice fishing.

Thu, 02/21/2013 - 20:11 | Link to Comment ebworthen
ebworthen's picture

Axiom #1:  Usury is evil, but the money changers created economists to call it "credit", and central bankers to fund it via the taxpayer. 

Thu, 02/21/2013 - 20:12 | Link to Comment The Second Rule
The Second Rule's picture

I am the Walras.

(sorry, just had to)

Thu, 02/21/2013 - 20:17 | Link to Comment stateside
stateside's picture

I feel I am a rational person.  I believe Bernanke is a rational person.  If I was Bernanke and knew I needed to print to infinity then I would short the hell out of gold to try and mask the growing bubble and keep the sheep in the dark.  In other words, kill the canary before he even gets to the mine.  Since I would short the hell out of gold as a last resort, I have to believe Ben would as well.  Of course it will all end in a disaster but what other choice does he have?  He's praying he can buy enough time so that the ecomony will heal itself.  That is his irrational side thinking.

 

stateside

Thu, 02/21/2013 - 20:43 | Link to Comment socalbeach
socalbeach's picture

Repost from yesterday.  Housing priced in dollars (green) vs housing priced in gold (yellow).  Horizontal gold line is current value of 158 ounces of gold to buy a home based on today's price ($1,578.10).  You can see that US homes are historically cheap relative to gold:

http://research.stlouisfed.org/fredgraph.png?g=fNq

Now here's a chart showing gold (yellow) compared to the monetary base (red).  If gold stays where it is now and the Fed continues to increase the monetary base at $85 billion / month until the end of the year, gold will be as cheap as it was near the lows around the year 2000,

http://research.stlouisfed.org/fredgraph.png?g=fNs

A 2nd factor supporting the gold price is negative real interest rates (chart not shown). So as far as I'm concerned, I won't be surprised if gold goes nowhere for a while longer, and then takes off to the upside in several months.

Thu, 02/21/2013 - 20:31 | Link to Comment s2man
s2man's picture

My brain hurts!

Thu, 02/21/2013 - 20:40 | Link to Comment El_Puerco
El_Puerco's picture

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/2/20_Th...

 

The Chart That Tells You All You Need To Know About Gold

 

Have fun with your theorie!....

 

:p

Thu, 02/21/2013 - 20:54 | Link to Comment EclecticParrot
EclecticParrot's picture

I'm apparently in the minority of ZH readers, who can discuss gold morning, noon and (especially) night, believing it to be simultaneously the best & worst investment, proof that all markets are rigged & free, at once evidence of both a great conspiracy and communual utopianism, the movements of which are the logical extension of the theories of Marx, Hegel, Nietzsche, various economists and several Kardashians, and the films of Robert Bresson.  In all honesty, I can say the various threads on gold topics produce, without question, the highest level of scholarship on this site, forcing one to marvel at the apparent IQs of the posters, who interrupt their Ph.D. dissertations to bless us with their time.

Still, I can't shake what is, for me, an inevitable conclusion:  GOLD IS FUCKING BORING AS HELL !!!  Yes, go ahead and hit the down arrow, but first hear me out:

As a part of one's longer term portfolio, or as the bulk of one's portfolio for conspiracy mavens, I take no issue. But as a short-term trading vehicle, given the ease in manipulation, issues with physical vs. ETFs, etc., for me it falls far short of, for example, the Russell 2000.  Yes, the Russell is manipulated and ramped, but in rather obvious ways for any trader spending the requisite 18 months staring at the screen for 6 hours a day.  With a little experementation and customization of a few standard trend, momentum and volatility indicators, as well as a few trader's secrets, wonders can be worked daily with TNA/TZA (closed out at 4:00, of course), not easily, but at least with less frustration, it would seem, than carry metals in a bag slung across one's shoulders.  I know, I know, it's like saying hunter green is better than lime green (which it obviously is, isn't it?), but I'm perplexed to say I just don't get it.  Friends have said gold traders are either geniuses or masochists.  I tend to think both, though I honestly enjoy your scholarship, but plan on continuing to pass through metal detectors without incident, with no desire to offend.   Carry on, then.

 

 

Thu, 02/21/2013 - 21:12 | Link to Comment Zola
Zola's picture

@Parrot. WHAT ABOUT INVESTORS ? The stock market /bond market and gold market is NOT about traders, but INVESTORS. that's why they were created. 

Thu, 02/21/2013 - 21:18 | Link to Comment EclecticParrot
EclecticParrot's picture

Ah, Emile, that was the point of my post -- gold is better as an investment, annoying as hell to trade, as least for me. 

Thu, 02/21/2013 - 21:21 | Link to Comment larry david
larry david's picture

Here is what idiots like every Cnbc talking head, Krugman, Obama, and Bernanke dont understand, or know and simply wont admit: "we" gold/silver/hard money bugs only have to win once. They can keep prices down 999 days out of 1000, but then on day 1000, either supply runs out and the paper price is meaningless, or the paper price explodes into the 5+ figures overnight, or it simply goes offerless.

 

They are fighting a constant, never ending battle to keep gold prices suppressed. Their "payoff" is getting smaller and smaller as every oz is moving into stronger and stronger hands by the day. Good luck douche bags. Im 27 years old and cant wait to come into a future zh article and join the other "idiot preppers" laughing and rating the post 5 fucking stars as your precious spy tumbles and all gold is out of stock at apmex. Tick, tock motherfuckers! We're waiting (and stacking)!

Thu, 02/21/2013 - 22:32 | Link to Comment loneranger
loneranger's picture

If LIBOR can be manipulated......it should not be too much of a mental leap to imagine.....

 

 

Thu, 02/21/2013 - 22:42 | Link to Comment rosiescenario
rosiescenario's picture

The general public views the price of gold as an indicator of inflation; therefore, the Fed must do everything in its power to keep it in check.

 

Having said that, the public at every gas station stop is reminded point blank that prices are indeed going up.

Thu, 02/21/2013 - 23:24 | Link to Comment Decimus Lunius ...
Decimus Lunius Luvenalis's picture

You buy gold, the federal government transforms police forces into paramiliatary arms of the federal government then curtails your supply of ammunition for the guns you bought.  You play checkers, they force you to play Russian roullette by yourself.  Equity, debt, deriatives on both, derivatives on the risk of both, derivatives on those derivatives, etc. are irrellavent.  Gold as money, gold as a hedge, or gold as the basis for money creation are irrelevatant.  The fundamental basis for a government's power, and those that control it, is its monopoly on the use of violence.  It's why the state can execute someone and you can't without having the government try to execute you. 

I own a single shot shotgun and it's pretty expensive to go out and shoot skeet with buckshot.  The government equips it's tax enforcers, with, at the minimum, semi-automatics equipped with hollow points. 

Thu, 02/21/2013 - 23:24 | Link to Comment Decimus Lunius ...
Decimus Lunius Luvenalis's picture

You buy gold, the federal government transforms police forces into paramiliatary arms of the federal government then curtails your supply of ammunition for the guns you bought.  You play checkers, they force you to play Russian roullette by yourself.  Equity, debt, deriatives on both, derivatives on the risk of both, derivatives on those derivatives, etc. are irrellavent.  Gold as money, gold as a hedge, or gold as the basis for money creation are irrelevatant.  The fundamental basis for a government's power, and those that control it, is its monopoly on the use of violence.  It's why the state can execute someone and you can't without having the government try to execute you. 

I own a single shot shotgun and it's pretty expensive to go out and shoot skeet with buckshot.  The government equips it's tax enforcers, with, at the minimum, semi-automatics equipped with hollow points. 

Thu, 02/21/2013 - 23:45 | Link to Comment ActionFive
ActionFive's picture

- and now after reading all those 'PMs won't move without QE' articles here on ZH while They hammered price for a few years- QE didn't move the price either..

This?

Fri, 02/22/2013 - 12:21 | Link to Comment DowTheorist
DowTheorist's picture

GLD is experienced big gold outflows on Feb 20 and 21. Contrary to conventional wisdom inventory drawdowns are bullish. So gold may be making a bottom soon:

 

http://www.dowtheoryinvestment.com/2013/02/dow-theory-update-for-feb-21-...

Fri, 02/22/2013 - 13:26 | Link to Comment SubjectivObject
SubjectivObject's picture

Members of the working public are advised to make regular contributions to their G01(d) account.

Wed, 02/27/2013 - 09:54 | Link to Comment Winston of Oceania
Winston of Oceania's picture

Of course there is global coordination. Why do you suppose all those American corps don't repatriate overseas profits? What do you think that would do to the banksters in Europe?

Thu, 02/28/2013 - 13:01 | Link to Comment NvrGivUp
NvrGivUp's picture

Time to buy more physical, it may be next month, next year or in a couple of years but it sure seems the shit is gonna hit the fan and those not holding what may become the worlds new currecncy are going to be weimer'd big time. You kick a can down the road long enough times and find the can disengratesand there is nothing left to kick, bang. You can fool lots of people for a long time but at some point a critical mass of non participation in the system will create boom #2.  More cracks in the veneer on everything seem to be showing up daily. We pray those in power can steer the ship clear of the rocks but fear the momentum is too great to divert. Erroring on the safe side, we chose diversification and prepearation, our newest addition is the Gusto wood fired oven We may lose power and we may lose other utilities but no one is stoping me from me from feeding my family and friends. 

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