Gold / Silver May Be Breaking Free From Manipulation

The price of gold has rejected numerous attempts by the banks to hammer the gold price below $1400 using paper gold derivatives on the Comex and the LBMA. I have not seen gold behave with such resiliency in the last 19 years when the Comex banks have an extremely large short position in Comex paper.

The action in the price of gold is signalling that large buyers are accumulating a lot of physical gold. This is preventing the banks from using the Comex as a manipulative tool. Based on historical preferences, I highly doubt the buying is coming from the hedge funds, who have been content playing in the paper gold sandbox of the Comex.

Per the World Gold Council numbers, which are notoriously understated, Central Banks have purchased 374 tonnes of gold in the first half of 2019. This is the highest level of CB gold purchases in over 50 years. Note that western Central Banks – specifically the Fed, ECB, BoE and BoJ have been notably absent from the buying frenzy. The buying has been led by China, Poland and Russia.

“With governments everywhere itching to increase spending without raising taxes and as the global economy sinks into a trade and credit-cycle induced recession, budget deficits will fuel monetary inflation at a faster pace than seen before. Re-learning that gold is sound money is now the most urgent priority for all those charged with responsibility for other peoples’ investments.”

The quote above is from Alasdair Macleod’s must-read essay titled, “The Reasoning Behind Gold’s Breakout.”  The article dispels the common “Fake news” myths about gold. It would be a great article to read for Warren Buffet, who believes that gold “just sits there doing nothing.” Of course, students of gold and history know that gold has outperformed the Dow since 1971. Macleod revisits the math behind this fact.

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14 thoughts on “Gold / Silver May Be Breaking Free From Manipulation

  1. > Of course, students of gold and history know that gold has outperformed the Dow since 1971

    Yes

    As of 12.31.1971

    Gold: 44.60 ( https://onlygold.com/gold-prices/historical-gold-prices )
    Dow : 890.20 ( https://www.macrotrends.net/1319/dow-jones-100-year-historical-chart )

    As of 12.31.2018

    Gold: 1282.10 ( https://www.kitco.com/charts/historicalgold.html )
    Dow : 23327.46 ( https://www.macrotrends.net/1319/dow-jones-100-year-historical-chart )

    7.41% annually for Gold
    7.2% annually for the Dow

    Formula (Final value / Initial value)^(1/period) – 1 ( https://en.wikipedia.org/wiki/Compound_interest )

    (1282.1 / 44.6)^ (1/48) – 1
    (28.75)^ (0.02) – 1
    1.072 – 1 = 0.072 -> 7.2%

    If i am not wrong 🙂

      1. No, as you can see, but its truly remarkable that just keeping some coins and doing nothing you get nearly the same performance than managing 30 stocks positions (reinvesting dividends at the right time) during 47 years.

        1. So, one must ignore the cost of buying and selling gold, dividends and carefully chose the entry point(compare buying in 2011 gold and the S&P). Reminds me of the mutual fund and life insurance salesmen. Gold is a great hedge and insurance.

  2. These guilty pleas and lawsuits and ongoing investigations seems to be having an impact on these crooked banks from continuing to rig these PM prices. The spotlight is on them and they can’t like that one bit. Can it force them to stop the gold/silver price rigging suppression…….time will tell.

    John Edmonds, 36, of Brooklyn, New York, (at of JP Morgan Chase Bank from 2009 to 2015) pleaded guilty under seal on Oct. 9 in the District of Connecticut to an information charging him with one count of commodities fraud and one count of conspiracy to commit wire fraud, commodities fraud, commodities price manipulation and spoofing.

    7/26/2019 – Corey Flaum, 41, of Mount Kisco, New York, is cooperating with an ongoing federal criminal investigation, officials said as they announced his guilty plea to one count of attempted commodities price manipulation in U.S. District Court in Brooklyn.

    Flaum during his guilty plea admitted that from approximately June 2007 and July 2016 he “placed thousands of orders to manipulate the prices of gold, silver, platinum and palladium futures contracts,” according to the Justice Department.

    A former Scotia Capital and Bear Stearns trader pleaded guilty and admitted manipulating precious metals futures markets for nine years, the latest in a series of crackdowns on so-called spoofing trades.
    The trader, Corey Flaum, is cooperating with an ongoing federal criminal investigations into gold, silver, platinum and palladium markets, as is ex-J.P. Morgan trader John Edmonds.
    Federal prosecutors have lodged 11 spoofing cases against 15 defendants in the past five years.

    10/5/2016 – Antitrust and manipulation claims can move forward against Barclays Plc (BARC.L), Bank of Nova Scotia (“ScotiaBank”) (BNS.TO), HSBC Holdings Plc (HSBA.L) and Societe Generale (SOGN.PA), U.S. District Judge Valerie Caproni in Manhattan said in a decision made public on Tuesday.

  3. My 2 cents:

    1 – Flip-Floping Federal reserve.
    2 – Gold price breakout : 6 years resistance becoming a support.
    3 – Many investors missed the rally from 1300 to 1400, so they buy the breakout.

    According to Peter Schiff the US economy will be in recession for the next year election, so Trump accelerate the trade war with China to put pressure on Powell (not on China) to cut the rates avoiding a bear market that will cost him his re election.

  4. I don’t think they lost anything yet , future will tell us. Gold bullmarket maybe only for next 2-3 years.
    For now , everything is programmed by Masters of Universe.

    1. Really? You imagine that they are happy that gold is breaking out at precisely the time that the Fed has capitulated, and the number of dangerous geopolitical events rapidly increase?

      You imagine that they would not prefer gold to trade at a price hundreds of dollars lower?

  5. They have been preparing for this moment for last few years. That is why I knew gold would only go up.
    They invested a lot of money in Gold mining companies. Then why shares and not gold?
    I am leaving answer for you.
    How long will last bullmarket? , I don’t know really , but remember 2009-2011.

  6. It’s like coming tsunami.
    They knew it was coming , they tried different tricks to slow it down and fool people but they couldn’t stop. Since 2009 big banks got much stronger in USA and now history maybe will repeat unless I see Comex , London Fix and other big banks go bankrupt then I will believe they in trouble. I am not going into details , sorry.

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