The Smoking Gun: Silver & Gold Manipulation Exposed

Tyler Durden's picture

Submitted by Dave Fairfax via PeakProsperity.com,

Gold price suppression!

The amount of ink spilled on this topic could fill a supertanker.  Goldbugs the world over believe in the suppression story as an article of faith, and indeed, the evidence that “something is happening” appears incontrovertible.

Given how important the subject is to the bullion-owning community, and the volume of energy we expend talking (and talking, and talking, and talking) about it, how much information do we really have about what is actually going on?  Has anyone quantified suppression?  Do we know how, when, and how frequently it occurs?  Once a month?  Once a day?  What does it even look like?  For many of us it might be like that old Supreme Court Justice's definition of obscenity: I can't define it, but I know it when I see it.

So, I'll take my best shot at defining suppression. Then armed with a definition, I should be able to discover how and when it takes place. To see how frequently it happens, and what the immediately observable effects are – as well as the apparent longer term effects of such events.  Does the fact that a suppression attack occurs means the price trend changes?  Is an attack prima facie evidence of successful control of prices over the long term?  And is anything else being suppressed, too?  Perhaps everything is being suppressed by our banking lords and masters!

The visible attacks that we have all seen involve “someone” dumping (or buying) large numbers of futures contracts in the market when activity is relatively lighter than usual, with the intent of deliberately moving price.  Most goldbugs like to say that gold and silver suppression attacks occur in the “wee hours of the morning.”  Loosely translated, I take this to mean during non-US and non-London trading hours.  So that's the time range I will use: 4pm-3am Eastern; from just after US market close through to the London market open.

So how do we define a deliberate act of suppression – or let me state it more neutrally - a “volatility event”?  The ones we have all seen involve a large spike down (or up) in a small increment of time.  I'll define this more specifically as at least a 0.5% move within a one-minute period.  So, at current prices, that's a $6 move in gold or a $0.08 move in silver that happens within one minute.  That's just the minimum amount – often the moves are much larger than that.

Goldbugs tend to believe they are a heavily persecuted lot, with their favorite metal singled out for routine beatings.  Is there a factual basis for this feeling?  Or do volatility events occur for other futures contracts also?

Others (including me!) have pointed out that volatility events happen to the upside as well as to the downside.  I have personally seen these spikes higher squeeze the shorts, thus driving prices even higher during non-US non-London trading hours.  Some goldbugs never seem to want to acknowledge these events; some have even claimed that “they don't happen!”  So do they happen?  That should be easy enough to prove or refute by looking at the trading records. And if such evidence indeed exists, how often do these volatility events take place compared to the downside moves?

To answer all these questions, I wrote some software -- as I'm a programmer by training. The program sorted through intraday price data for 9 different futures markets, with the data starting in late 2009 through today, and counted all the 0.5% 1-minute price spikes (either up or down) that happened during non-US non-London trading times.  Then, I entered them into a spreadsheet for analysis.  Let's take a look:

Legend:

total events: the total number of 0.5% 1-minute moves during the time period for that contract.

# ev down/up: # of moves that ended lower, or higher than the starting price.

chg down/up: aggregate dollar change for all up and down events for that contract.

total change: aggregate chg up – chg down, in either dollars or points.

So first of all, are there up events as well as down events?  The # ev up column says yes, definitely.  Silver had 402 up events, and 467 down events.  So it's not just a one way street down.  Those scoffing analysts are correct: the up-events really do happen.  And not just occasionally either!  That said, evidence also clearly shows there are more down events than up events for gold and silver (and also for Natgas, and the e-minis).

Next, are gold and silver the only contracts that suffer volatility events during the wee hours of the morning?  No.  Many contracts received hundreds of similar-sized volatility events during the time period.   While it is true that silver received the most total events at 869, Natgas, Wheat, and Crude have all received more total events than gold, with Natgas coming in at #2 with 489.

Could there be an active Natgas, Wheat, and Crude oil suppression campaign going on too?

No.  There is one last critical part: the aggregated total change column.   If you sum the price changes for all events: chg down + chg up, you get to see the net price impact of all the events.   So for silver, the total change over the period is $53 up - $71 down = -$18.  Compare this with crude oil, which had $43 up - $41 down = +$2.

What does this mean?  Even though silver had $53 in support from the 402 up events it received, it was also hit for $71 from the 467 down events it got: net effect -$18.  That's significant for something with a current price of $15.  In fact, when viewed as a percentage of silver's current price (the % change column), silver was far and away the hardest hit of all 9 contracts I investigated.  Gold's price impact was #2, at $379.  Crude actually had a positive effect, while Natgas was dead flat.  Even though Natgas had a large number of volatility events, the net effect on price was a wash.  The same is largely true for wheat, treasury bonds, and the e-mini futures.  Some experienced a mild positive effect, others a mild negative effect, but the effects were quite small relative to the current price of the underlying item.

So goldbugs, take a victory lap!  Even though the scoffers were right – there are a large number of up events – the down events dominate for PM contracts and especially for silver.  You have been singled out for beatings!  Of course you already knew that, didn't you?  :-)

So now that we've looked at the last 6 years in aggregate, and we've established that precious metals have definitely been singled out for “negative attention” compared to other contracts, its time to look at these events across time, to see if we can get answers to the other questions, such as: When do these events take place? What effect do they have on the price chart? Are they still happening? And if so – how often?

First, let's look at the big picture.  Here are a pair of price charts for silver and gold over the five year time period, with the volatility events (red = down, blue = up, measured in dollars, weekly) overlaid.

For silver, we can see four main events: a huge spike right near the 2011 peak, another spike that seems to coincide with the low in 2011, and a couple more in early-2013 that happened during the great gold smash of 2013.  We can also see that the red (the down spikes) usually is larger than the blue (the up spikes).

Gold's picture is a bit different: a few smaller spikes appear during the uptrend, a couple appear right near the peak, and a massive spike appears right after the peak.  The largest spike in gold happens during the 2013 gold smash.  One last big spike occurs in 2015, about the time of the low at 1075.  As a general impression, gold has far more red than blue; this is borne out by the spreadsheet, which shows a 2:1 red:blue ratio.

Anatomy of a Top

The next goal is to dig deeper, and see how a volatility event storm affected price.  Does a volatility event line up with a big move down?  And what happens after?  Does price keep falling, or does it bounce right back up?  Do volatility events change trend?  If so – are there conditions?

Silver has received the biggest total number of volatility events, and has received the largest negative impact as a percentage of price.  Let's look at the biggest spike, the infamous 2011 peak at $50 through the lens of volatility events, and try to see what might have gone on.  Did suppression cause the top?  It seems like it should have – but did it?

On Sunday/Monday, April 25th , 2011, “someone” hit the market with 12 different volatility events totaling $3.15, which was at that time the largest single set of volatility events in the timeseries, the same day that silver ticked $50/oz.  As a result, silver printed a doji on the day.  Price fell the following day, but then a funny thing happened.  Price started moving higher again.  Three days after the big Sunday-evening silver smash, price was once again testing $50 – and in fact it had two shots at $50 without any volatility events appearing at all on days #4 and #5.  But those two shots at $50 failed, and on day #6 as price began to fade, “someone” came in with a truly absurd 51 events totaling $15.45 in impact that started the collapse in price down from the high.  Buyers still tried to buy the dip that day, and price only fell $2 – a minor miracle given the pounding - but the rock had started to roll down hill, and it didn't stop until price dropped a total of $15 over 5 days.

Was the top “caused” by these volatility events?  Its hard to say.  Had the bulls been strong enough to push price over $50 in days #4 & 5, its likely the volatility event on day #6 would not have worked.  They don't seem to work too well during an uptrend.  The silver bulls had two free shots to move price above $50,  completely unopposed by any volatility events at all, and they failed.  Once they failed, that's when “someone” launched the second volatility event storm.

Looking at the price chart alongside the volatility event chart, it does not look like a straightforward case of “someone successfully causing the top” through direct application of force.  First they used a stall to stop the upward momentum in a very extended market which resulted in the doji print, and then the buyers were unable to muster enough power to push prices higher, and then “someone” unloaded with maximum force once the buyer fatigue became apparent.  That's how I read the chart anyway.

What would have happened had someone not unleashed the volatility storm on day #6?  We will never know.  The market would have eventually corrected at some point – no tree grows to the sky - but its hard to know how much higher it might have gone.

 

*  *  *

In Part 2: How To Protect Yourself & Profit From This Manipulation, we look further into the recent data to determine whether or not the downward manipulation of precious metals can continue as it has over the past few years. Bullion investors will be heartened to learn of the signs we're seeing that $1,05/oz gold may have been the bottom, and that brighter days may indeed lie ahead.

True or not, though, the manipulation attempts are likely to continue for some time. We look at how bullion investors can position themselves to defend against the most predictable elements of these raids, and how brave souls interested in speculating may profit from them.

Click here to read Part 2 of this report (free executive summary, enrollment required for full access)

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
dimwitted economist's picture

Manipulation?

LOL!

you Mean you guys really Believe in that?

IT'S JUST ANOTHER CONSPIRACY THING!!!!

Like the stock market being FAKE! LOL!!!!

VinceFostersGhost's picture

 

 

Goldbugs tend to believe they are a heavily persecuted lot

 

Nobody knows the trouble I've seen.

 

It was a decade ago.....maybe more. Masked men rushed in and forced me to buy gold at $273. Then they mocked me as gold went down to $256.

 

It was a horrible experience.

Tonald J Drump's picture

hang on...so you're telling me that gold prices are manipulated ?!   Hahaha, right ....  next you're gonna try telling me that our president                       is a mus... 

VinceFostersGhost's picture

 

 

He's near?

 

Strike up the band!

Pool Shark's picture

 

 

NEWS FLASH!!!!!

Everything is manipulated...

 

The Pope's picture

I heard that it only costs $5 to wrap a gefilte fish in paper gold. (or something like that)

Pool Shark's picture

 

 

I think you're confusing your currencies...

It costs only $5 to mine a BitCoin out of the interwebs.

 

The Pope's picture

Bitcoin is a currency? Who knew?

BaBaBouy's picture

Want "Smoking Guns" ???

Just Check the WEEKLY comex cots...

Changes In Positions - Contracts:
Latest SILVER Commercials: LONG -3,922  SHORT  +5,202

Latest GOLD Commercials:   LONG -4,182  SHORT  +25,843

WHY ????????????????

http://www.cftc.gov/dea/futures/deacmxsf.htm

WOAR's picture

I know some people that need to smoke some guns.

Lloyd needs to open his mouth pretty wide for that one, but he's got practice.

Pinto Currency's picture

 

 

Dimitri Speck has already statistically shown where the price manipulation occurs - at the LBMA P.M. Gold Fixing time:

http://goldsilverworlds.com/price/gold-and-silver-price-manipulation-explained-by-dimitri-speck/

 

They are trading over 150 million oz. of digital (fake) gold per day in London - that is 1.5x annual mine production traded per day:

http://www.safehaven.com/article/36534/lbma-data-points-to-gold-and-silver-default

BigJim's picture

What's interesting to me is that every analysis I've seen on this subject ignores the elephant in the room - that just inducing volatility in a (supposed) "safe-haven" asset reduces overall demand for that asset.

Unlike every other "commodity" (bear with me here), only 10% of gold (and 50% of silver) end-user* demand is based on "use" as a commodity; in other words, 90% of the end-user demand for gold (or 50% demand for silver) comes from people who believe these metals will offer some kind of long-term storage of value.

If the paperpushers can knock the price sky-high and then smash it down to less than half its previous value, it doesn't matter if nett-nett they haven't changed the price overall; the real damage to the price arises from the fact that many people will be put off owning PMs as a store of value, because they perceive values to be too volatile. ie, medium/long term demand for the physical metal has been reduced.

This is why TPTB ignore these manipulations; because they reduce long term trust in the only real competitor to their chief product: fiat currency and other debt instruments.

*as opposed to paper speculators

Pinto Currency's picture

 

 

Agreed Jim.

Stay out of gold because it's way riskier than holding paper created by the trillions in the financial system.

For safety, nothings better than flammable paper.

OceanX's picture

A bitcoin represents a solution to a very complicated equation. One use is to demonstrated Irrefutible evidence of "chain of custody". Consequently, it is a very valuble method to "seal" transaction across a computer network!

 

Many are challenged with abstract resoning.

Iam_Silverman's picture

""chain of custody""

I'm not sure that I am comfortable with this.  So it's better because they can track it right to you?

"Many are challenged with abstract resoning."

And others, with spelling.  Your point?

TheRedScourge's picture

Chain of custody as in one can see the impact of any one wallet holder, so long as the impact is big enough. One cannot necessarily reveal who the true owner of a given wallet is however, but once that is known, it is indeed known for all time.

 

My proposed solution to this is a wallet app which allows people to store several wallets with fixed amounts of bitcoin in each, and swaps these equally sized wallets with others randomly, to make it so that one cannot know for sure who is holding which wallet when, other than at the time of any one given transaction.

gimme-gimme-gimme's picture

Including the standard of living in the West... In our favor.

This article is called have your cake and eat it too. Something Gold bugs suffer from quite terribly.

Your Gold and PM's can't be worth a lot, yet your standard of living remain the same. Since this implies your currency is worth less. (Maybe ok if you are retired, but if you work in the worthless currency, having PM's will only subsidize you until you run out)

Considering the West are deadbeat nations that produce nothing and only export misery to the developing world -- you need to remember these key facts when reading these articles trying to sell you on BS.

zibrus's picture

While you are correct about the production in the West, many people miss this paradigm shifting point: That is, with robotics, there will come a time when production is cheaper here in the West with robotics than 'slave labor' overseas. At that time, production will return to the West or US simply because of economics and reduced shipping fees.

There is still a huge problem with wage distribution, which will also worsen with the rise of robotics and free labor... but that is another topic for another article. Gold and Silver are super relavent in terms of wealth protection AND advanced technology applications.

In order of my investing importance for me: Silver, Miners, Avanced Robotics, Solar Tech, Mining Tech (seafloor & asteroid), Bitcoin, other blockchain technologies, Gold, other tech/3dprint/companies... And... waiting for some good 'green stocks' once MJ is legalized in the US federally.

 

BTW ZHedgers... I'm a long time reader, first time blogger. I absolutely love all the insightful information and discussions you all post here daily. Thanks.

Reichstag Fire Dept.'s picture

I have a new anti manipulation app to un-manipulate the markets to make trading safe.

Fukushima Fricassee's picture
Fukushima Fricassee (not verified) Pliskin Oct 17, 2015 6:59 PM

Queer

PlayMoney's picture

Go to Kitco and follow along at about 2:15 a.m. EST and see. Almost every Sunday night and most nights during the week. I believe this was also the time "someone" dumped 2.7 million ounces all at once and dropped the gold price over $50 in about 2 minutes. Momentarilly shut down the gold market twice. Why would anyone dump all that at once at the low volume of the day? Only a select few culprits could even carry out that.

BurningFuld's picture

If I could sell 100 times the amount of Gold in existence I bet I could move the price at least a tiny amount.

agent default's picture

I think you will find they have been selling 200+ times all the gold in existence.

RaceToTheBottom's picture

I think the same solution should be applied to housing.  People don't need housing at the same time.  Some sleep at night some sleep during the day.   Some work from home, some don't.

I think that the housing bubble can be furthered....

litemine's picture

Paper Gold trading at over 250 times the Physical.

Silver who's trade vs. Gold has been 15 Oz. silver per one Oz. Gold.....Now above 70 times or

70 oz. siver = 1 Oz. gold.

I'll take 100 oz. Silver.........Physical  Alex. 

( Wondering since Jewish Bankers Control and buy out Governments...I think the American Gold has left the Building).

VinceFostersGhost's picture

 

 

Paper Gold trading at over 250 times the Physical.

 

Like a 100% are going to want their gold all at the same time.....think Mcfly think!

https://www.youtube.com/watch?v=kh9PYtmVybU

bombdog's picture

Errrr what do you mean "their gold"? Are you saying their gold actually exists? Mcfly probably thought about it more than you did smartass.

 

VinceFostersGhost's picture

 

 

/SARC <------forgot to give you that.

bombdog's picture

oh ok. just don't do it again :-)

BigJim's picture

 Silver who's trade vs. Gold has been 15 Oz. silver per one Oz. Gold.....Now above 70 times or

70 oz. siver = 1 Oz. gold

JFC, not this again. When silver and gold were both money, they traded - surprise! - at roughly the ratio they are found in the earth.

Silver started being demonetised before the end of the 19th C and its value relative to gold has dropped ever since.

IF silver and gold were remonetised, they would (probably) trade around 15:1. Do you genuinely think this will ever happen again? Gold is hoarded by central banks and the rich. Silver is not. If gold is ever monetised again, its value will rocket relative to silver.

Half of all silver is used up in industrial processes. That still means half a BILLION ounces are hoarded as bullion/coins/tableware, EVERY year, and ready to be dishoarded if the price rises sufficiently.

Silver production is RISING every year, too. Look it up.

I keep hearing, YEAR AFTER YEAR AFTER FUCKING YEAR, about the imminent silver "shortage"... yet it never seems to arrive. I see the COT stats, the charts, the backwardation, tales of the US Mint's inability to deliver Eagles (as if that is somehow indicative of a worldwide shortage, LOL) yada, yada, yada, endless breathless tales of how silver holders are gonna get rich ANY DAY NOW.

I own a shit load of silver and wish I didn't.... but it's a small market, so the banksters may manipulate its price back up, like in 2011, in which case I'll be selling it hand over fist to buy gold... depending on the GSR, if that's still above 70 and we get back to USD30/oz I'll buy something else.

Wake up, people, most of us have been had. We may not get our money back for a very long time. If you bought at $4, $5, $10, congratulations. But a lot of us paid rather more.

There are as many charlatans selling silver and gold as there are stocks and bonds. Yes, I know the dollar will ultimately lose value vs PMs. But in the long run we're all dead.

withglee's picture

Given how important the subject is to the bullion-owning community,

And that's a really really tiny community. Kind of like talking about the Picasso owning community.

blindman's picture

The Dynasty of Rothschild | The Only Trillionaires in the World - Full Documentary
https://www.youtube.com/watch?v=5rtRL0vvUBQ

Conax's picture

Silver is the walking wounded here. There has never been a commodity with the massive open interest, gigantic commercial bank shorts and continuous asswhuppings silver has suffered.

It's all perfectly legal, the USG has given itself permission to interfere in all our markets long ago.

What can be done?

BUY BUY BUY

Midas's picture

I have been assumming the pecious metals were going down in dollar terms because of the amazing economic recovery of the United States.  You know, the budget surplus, the trade surplus, all the job openings even though we are already nearing full employment, the wage growth, and of course, the dwindling number of people on government assistance.  Did I miss anything?  I don't have time to think of more, I have to get back to watching Rachel Maddow....

BigJim's picture

Sorry Conax, the imminent silver shortage is a myth. Tha fact it gets trumpeted every year, but never seems to arrive, should clue you into analysing the figures a bit more closely. They're pretty sobering. Yes, half of all production winds up being dissipated in industrial use, but that still means half a BILLION ounces are hoarded every year.

There's no shortage of silver. Maybe there will be - assuming industrial use continues at its present rate and mine supply eventually drops appreciably - but it could be YEARS away.

There's no reason to believe that $15/oz is particularly cheap when half of all demand comes from small-time buyers like us.

JonNadler's picture

 just becasue they sell stuff that doesn't exist in reality only iin a paper contract which they have no way to deliver on and they multiply one ounce of physical into 100 ounces of papers that does not mean it's manipulated! come on

Pool Shark's picture

 

 

Jon,

Does Kitco know you're away and posting on ZH?

 

VinceFostersGhost's picture

 

 

Daniela is coming for you Jon...and she doesn't look happy.

Bay of Pigs's picture

Jon is a long time ZHer. One of the good guys here.

I might add that the 2011 and 2013 shellackings of PM prices occured simultaneously with the Bin Laden and Boston Bombing false flag events (for those who need moar tinfoil). You really can't make this shit up it is so over the top and bizarre.

Hidden in plain sight too.

delacroix's picture

looks like they're fixin to kill bin laden again.

BigJim's picture

 I might add that the 2011 and 2013 shellackings of PM prices occured simultaneously with the Bin Laden and Boston Bombing false flag events

I guess that proves that OBL and the Dunderhead Brothers were manipulating the price up; once they were out of the picture, the price fell to its genuine value.

JonNadler's picture

Pool

I told Kitco it's some loser pretending to be the real Jon Nadler, not really me, a fake me if you will, which when they think of  a fake Jon Nadler it makes them thnk it's really the real Jon Nadler, but not in a real way. Anyway sell gold because it's for losers and you can't eat it

Doubleguns's picture

You missed the 'margin' manipulations. I wonder how that would have added to the story. 5 margin calls in 8 trading days was real significant in effecting silver prices. 

 

http://www.reuters.com/article/2011/05/05/businesspro-us-markets-silver-...