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ChrisGraley (29.86)

Some proof that Gold and Silver are being manipulated.

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June 12, 2009 – Comments (12)

First thanks to speedybure for turning me on to www.gata.org. I've been pretty sure gold and silver have been manipulated for a while, but never had much proof until now.

I'd like to start with the statement that the government has successfully substituted inflation for economic growth for more than 2.5 decades now and has had help from most of the world. Other than technology, (where we are losing ground, BTW) we have little else to export. Yet, we are still able to consume far greater than the rest of the world economies that contribute much more. We can do that because we have had an agreement to trade consumption for the growth of other key economic countries that contribute money to our politicians. I'd like to do a future blog post giving a broader perspective on our economy later, but I'd like to concentrate this one on gold and silver now.

Let's start with GATA's ad in the WSJ . Wow! a ton of bricks right there! Notice how they back up each and every statement though! 

Well the first link I clicked on was the Barricks link. It gives you  a level 1 perspective on how to manipulate a metal price. First, you loan the metal out from the central bank to the bullion bank. The bullion bank immediately sells the metal on the open market to dilute the price. You offset this by getting a contract bid from a metal miner to sell you metal in the future at a rate slightly higher than the diluted price. The bullion bank then returns the metal it got from the contracted miner to the central bank. Easy Peezy, Lemon squeezy! Now the bullion bank named in this lawsuit is JPM, but I believe that JPM is only one of the four horseman of market manipulation. The first horseman is the PPT, (plunge protection team) A government organization that was formed strangely enough about 2.5 decades ago. The second horseman has pulled up lame lately, but is AIG. I believe they were the strongest non-government entity before, but they are the weakest of the horseman now as they concentrate on just surviving. GS has taken over the role of the big dog now, and has been making money hand over fist because of it! It's the only reason that explains how a company that excepted tarp money to survive, can trade 5 times more out of their private account than they have ever traded before, multiple times, just a few months later, in one of the most volatile markets in history. JPM was the last of the 4 horsemen and they aren't very good at covering their tracks yet, just like GS wasn't a few years ago. One of the biggest things I got out of the court documents, was an estimation of the central bank gold temporarily on the market for the purposes of dilution, to be 4600 tons. That's about 14.7 billion dollars worth of gold for just the first step of market manipulation. Even if that is all the government did to manipulate the market, that's a huge amount of money.

Now on to market manipulation strategy # 2! Play the shorts! Normally shorting the market in any commodity is a bad idea, unless you know ahead of time that you have enough power to bend the market to your will. Market makers look at shorts before they look at futures and options. Well this guy points out that the shorts are concentrated in too few institutions. Let's see, a few banks controlling the commodity price of something, is there a pattern here? I'll bet I can guess the names of the few banks. An explanation goes on about how usually when there is a concentration of only a few banks like this, it is because the banks have a large amount of miners that are clients that are hedging their positions. It also makes a point to let everyone know that miners are not hedging at all at this point.

Market manipulation strategies# 3 and 4 are futures and options respectively. They are the easiest for a government to do, because they involve leverage. The government can easily give the appearance of leverage without risk, especially when they have a few banks under their control.

If anything I've posted so far shocks you, you should take a harder look at our government.

 Everything is wrong, and it's been wrong longer than you've been aware.

12 Comments – Post Your Own

#1) On June 12, 2009 at 2:51 AM, checklist34 (99.71) wrote:

if goldman sachs secretly controls all things and is making money hand over fist beyond anybodies capacity to believe it, by the billions and trillions...  as often touted by bears here on caps

why not go all in on GS?  surely they will report a $100B profit one of these days and the stock will go to 1000????

seriously, if GS controlled all things as often said, how would it NOT make sense to ivnest in them, and onl in them?

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#2) On June 12, 2009 at 3:28 AM, AllStarPortfolio (< 20) wrote:

Not longer than i've been aware. Where it's true that i know little about the markets, I was raised on subversive info. Without the details, i've had the gist of this thing for 25 or 30 years.

    Funny but every time a real crisis comes along, folks forget that some 'hippy' was warning them for a very long time. Remember when the greens said that GMO pollen could infect the organic seed base? We were told "that can't happen". Twenty years later you read in the newspaper 'All organic grain seed contaminated with GMOs. 

   Or when the greens said 'global warming could melt our ice caps!'.. we were told 'it's just a natural fluctuation'.  Now we're told 'we need to tax to take care of this problem immediately'. (it baffles me when folks don't believe in global warming. As a farmer i watch millions of acres get heated with outdoor heaters every winter. If that's not global warming, what do you call it?)

    Or when some folks said, 'there are no weapons of mass destruction', or 'Where is the plane that supposedly hit the pentagon', or,,,, well any crisis you could name almost.

I agree that MOST folks are blissfully unaware until the shockwave hits.

-solaris

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#3) On June 12, 2009 at 8:00 AM, silverminer (30.68) wrote:

Chris ... thanks for an excellent post on a very important topic. This is something all Fools need to understand.

checklist34

Who said manipulating gold and silver markets was profitable? To the contrary, it takes extremely big pockets and the ability to make money in other activities to counteract the losses ... because market-making manipulation of pm markets is a very costly endeavor that would not be continuing today had federal monies not been made available in spades to these bullion banks.

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#4) On June 12, 2009 at 8:30 AM, ralphmachio (25.66) wrote:

Nice post, and good reply All Star P.

The real question in my mind is, would we be in this position if GS and the rest of them were healthy?  I mean the crash in the first place, oct. 08.  If these corporations represent the very wealthy, how did they ever crash in the first place?  I have no proof that a giant entity such as GS didn't just funnel money somewhere else and say it took a loss!  On the flip side, maybe they are about to completely collapse!  GS is like betting on citigroup at 1.00, without the upside potential.  If enough people believe in them, they will continue to exist, sort of like the boogeyman.

What, do you think GS is going to 300 soon?  

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#5) On June 12, 2009 at 8:32 AM, ralphmachio (25.66) wrote:

Nice post, and good reply All Star P.

The real question in my mind is, would we be in this position if GS and the rest of them were healthy?  I mean the crash in the first place, oct. 08.  If these corporations represent the very wealthy, how did they ever crash in the first place?  I have no proof that a giant entity such as GS didn't just funnel money somewhere else and say it took a loss!  On the flip side, maybe they are about to completely collapse!  GS is like betting on citigroup at 1.00, without the upside potential.  If enough people believe in them, they will continue to exist, sort of like the boogeyman.

What, do you think GS is going to 300 soon?  

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#6) On June 12, 2009 at 8:47 AM, ChrisGraley (29.86) wrote:

checklist34, it's because what GS is doing requires too much exposure.

It's like the lion tamer that uses the whip too much. The lion will do what you want every time until the last time. In this market GS is surrounded by ticked off lions.

 

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#7) On June 12, 2009 at 11:30 AM, StopLaughing (< 20) wrote:

Actually manipulating markets is profitable. Further it is not just the US Gov that does it. The IMF plans on selling it's gold.  It will short the futures then start publically selling, panic will ensue in the gold pits and the IMF will buy back it's gold at a lower price.

Russia and China have a lot of gold production. They can take the output off of the market for a while (hoard it) by claiming they are adding to thier reserves. They of course will have taken a long futures position before they announce the restriction of supply. 

The same thing happens in oil all of the time. It also happens in cocoa and any other commodity where governments control the supply or has superior inside information.Terrorists manipulate the market. They take positions and then disrupt supply. Terrorism is about profit as much as it is about ideology.

It happens in wheat. China knows it will buy wheat. They place an order with one of the big trading companies with the understanding that the deal is off if the info leaks before a certain time.  China take a long position in wheat futures. The grain trader buys the physical wheat. China releases the info that they are buying and wheat jumps. China makes more than enough on the futures to pay for the wheat.  Free Wheat. 

Isn't it wonderful to be a government and fleece the rest of the traders?

All of the commodities are manipulated to some degree at some time, either by governments, large hedgers or sometimes speculators (oil at the moment with the blessing and help from the producing nations). 

The currencies are the most manipulated as governments control the supply and to some extent the demand.

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#8) On June 12, 2009 at 1:59 PM, Alex1963 (28.56) wrote:

StopLaughing

I believe you to be very knowledgeable guy but I do not believe for 1 minute that the IMF will be selling it's gold. Not in any significant quantites. If you have something to back this statement up, I for one, would be very interested to read it.

Thanks

Alex 

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#9) On June 12, 2009 at 10:31 PM, bullnada (< 20) wrote:

 When will all the fools learn..... You are all gambling at this point.  Nothing is what it seems!!!!!!!!!!!!

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#10) On June 13, 2009 at 8:03 PM, 100ozRound (29.50) wrote:

Big Rec Chris!

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#11) On June 13, 2009 at 8:54 PM, booyahh (< 20) wrote:

Wow, you're so smart. Who did you think you're dealing with? You're dealing with Geithner and Summers. Larry Summers is a genius, in the true IQ sense, and Geithner is his genius disciple. I was a Clintn supporter who saw the amazing tricks Summers played in the 1990s. Obama is amazing: by picking the Clinton economic team, he put the most brilliant minds to work at manipulating the market and economic system to make life better for the average American. 

 

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#12) On June 16, 2009 at 12:38 PM, carcassgrinder (38.23) wrote:

"Obama is amazing: by picking the Clinton economic team, he put the most brilliant minds to work at manipulating the market and economic system to make life better for the average American."

 

Hillarious....freakin' hillarious!! 

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