Wednesday, March 31, 2010


I've got to say when I read this I had a good laugh. Apparently the whole premises for these nutty manipulation theories all boils down to the shoulda, coulda, woulda defense.

If it hadn't been for government manipulation then gold shoulda done this. Or gold coulda rallied to ... Or gold woulda been much higher if only....

I asked in my earlier post how gold could possibly rally from $250 to over $1200 and the best response they gave was a "controlled retreat" Seriously? A controlled retreat?

Either gold is manipulated or its not. Why would they retreat? That doesn't make any sense. Are they going to make a controlled retreat all the way to $5000 (which I think is probably a minimum target for the secular gold bull)?

Since 2001 the Dow:gold ratio has dropped from 42:1 to 7.5:1.

That doesn't look like a manipulated market to me. It just looks like a powerful bull doing what bull markets do.

I notice they failed to explain why gold manipulation only appears to work when the dollar is rallying. Now if gold was dropping consistently over a lengthy period while the dollar was also falling then I might buy the whole manipulation theory. But that never happens now does it. When the dollar is falling gold is rising.

If a C-wave wave was capped before it entered the final parabolic move higher then maybe I would buy the whole manipulation nonsense but that also never happens. During the final push in November gold rallied 19 out of 25 days as the dollar was dropping into its final intermediate cycle low. I guess the "cartel" was in uncontrolled retreat mode.

Since 2001 the dollar index has lost a little over 38% of its value. Gold on the other hand has rallied almost 400% in that time but according to GATA that's not enough. Don't forget that during this time oil rallied almost 1400%.

Obviously the first phase of the commodity bull favored energy and base metals. These sectors were rising the most in percentage terms so investors understandably concentrated on these sectors. Now that the second stage of the commodity bull is underway the laggards of the first phase should outperform. That means it's gold's turn to shine. There's nothing mysterious about that, it's just how commodity bulls work. The commodities that underperform during the first phase almost always outperform during the second. Gold is the one commodity that has recovered all of its losses and is now trading not only above the 07 highs but at historic all time highs. Gold is outperforming!

What I would really like is for someone from GATA to answer me why it is that gold can never seem to be manipulated when the dollar is falling? It would seem that the powers that be must not only manipulate the gold market but they also have to manipulate the currency markets all in an attempt to control the price of something that the general population not only doesn't give a damn about but one that the vast majority of the population have never even seen in real life.

This might give you an idea just how aware the general public is of gold. 

I believe that if Greece hadn't run into trouble and taken down the Euro that the dollar index would have rolled over again and we would have seen a second leg up in the gold C-wave.

So I guess the cartel had something to do with the Greek debt crisis in order to drive down the Euro, spike the dollar index, and ultimately bring down the price of gold (wink wink).

Trust me folks gold is going to finish its secular bull market. The Dow:gold ratio will ultimately continue down until we see a ratio of under 2:1 (I actually think we could see gold priced higher than the Dow at some point).

I doubt it will do it in the time frame that GATA has decided is appropriate, but it will do it. Let's face it, all we are talking about here is timing. The folks at GATA require the bull to move at their predetermined pace. Unfortunately this bull, like all bulls, decides just how fast he wants to move and our wishes and desires don't really come into play.


  1. What a stupid and shallow analysis. The Fed came right out and said they manipulate gold and currencies. What? You missed that?? Why put the link to your ignorant analysis I'll never know.

  2. Just give me one good reason why the government gives a damn about the price of gold. Our currency isn't backed by it anymore. We can debase at will.

    The fact is if we take away manipulation then gold bugs have no excuse for their losses other than their own fault.

  3. Admit it Gary, you don't know anything about the Gold market. Why don't you tell people about your horrible calls on the Gold market since the beginning of this year.

  4. "Just give me one good reason why the government gives a damn about the price of gold."

    HAHAHAHA!!! Seriously, are you freakin' kidding me? If you need to ask such questions, you shouldn't even be going near the gold market, much less present your useless commentary on it.

  5. Well let's see I got in on miners in Apr. with the HUI at roughly 300 of last year and held till mid November where I exited about most of my positions at about 470. I got back in at about 440 on the HUI, which as of today is around 410. Those positions that I haven't taken profits on I'm just continuing to hold.

    I don't see anything terribly wrong with that.

    Instead of blustering just answer the question.

  6. While you're at it answer why it is that gold can never seem to be manipulated when the dollar is falling. That one I would really like an answer to.

    If the government wants to dupe us then they really need to supress the price of gold during periods of dollar debasement so their phony inflation numbers will appear believable.

    That would be the one time when manipulation would be the most appropriate. Why on earth wouldn't the governement who is supposedly tampering with the gold market do so during the periods when it would do the most good?

    I would love it if someone, anyone could answer that one very simple question for me.

    Just so you know I'm not going to accept some idiotic "controlled retreat" excuse or for some reason the powers that be decided to abandon manipulation during that time.

    I used to use the "just because" excuse when I was 5 too but that doesn't mean we are still allowed to use it now that we have grown up.

    I want a logical reason why the governement woudl abandon it's manipulation strategies during periods of dollar weakness and only put them back on when the dollar rallies.

    And please don't tell me the gigantic currency markets are controlled for the sole purpose of manipulating gold.

    That one will get you deleted from the blog :)

  7. Hey Joe, I'll tell you why this blather is being linked:

    Toby's 'analysis' is so ignorant and naive, its just too simple to resist disparaging.


  8. E,
    Can't answer the questions can you?

  9. 'Yawn', I don't have the time to keep repeating myself Toby; my comment yesterday contained an answer to this inane question as well as others, but it was removed.

  10. Of course he can't. Because there is no logical reason.

    You can't take away traders excuse for why their losses aren't their own fault without getting hate mail.

  11. That's usually the answer I always get when I ask the question. "I don't have time"

    The truth is you don't have an answer.

  12. BTW I didn't erase your response. It's still posted right were you left it. As I matter of fact here it is quoted exactly

    "For that month the manipulation, for whatever reason, was halted"

    L:ike I said I'm not going to accept the "just because" excuse that only works for children.

  13. RE: "That's usually the answer I always get when I ask the question. "I don't have time"

    Yah, I bet... either that or you just delete the response; nothing stifles debate like knowing that any point you make, no matter how valid, will be erased for that very reason. Waste of time.

    Or, are you denying you removed my comments (containing zero expletives)? You answer that one.

  14. Your comments made under the Run Run Away post are still right there. It's where I copied your excuse from.

  15. I'm going to go workout now if anyone can think of a reasonable response to my question we can continue the debate in a couple of hours.

    BTW the demand for physical over runs the paper market doesn't fly either as there has been no shortage of [hysical gold for months and months.

  16. I'm going to go workout now. If anyone can think of a reasonable response to my question we can continue the debate in a couple of hours.

    BTW The demand for physical over runs the paper market excuse doesn't fly either as there has been no shortage of physical gold for months and months.

  17. First off, Gold is and always will be a monetary metal which is why it is the subject of suppression. The proof of this is that it is hoarded and not consumed. It has the highest stocks to flow ratio of ANY commodity. In a world of fiats it is the only credible alternative to the US dollar. THIS is what the US government/Fed fears. Gold price suppression hides the EXTENT of the dollar's debasement. By suppressing the price they are making it look like the dollar is worth more than it otherwise would be in a free market pricing. This is important because it affects how all other commodities like oil are priced since if the dollar is perceived to be worth less prices of everything in dollar terms will also rise thus killing off the consumption based US economy. This is also the reason why Gold and oil have been rising together.

    How's that for a reason for wanting to control the price?

    Now you say Gold has been rising for the past decade so where is the manipulation? Fact is the success of their manipulation depends on the dollar supply. Since 2000, the dollar supply has been so out of control that all they have been able to do is SLOW its rise, not outright suppress it.

    Do you think this guy is lying?

    Of course if you have already made up your mind and choose to be in denial, nothing I say will convince you since you will never find a headline in the WSJ/NY Times reporting that the Fed has admitted to rigging the Gold market.

    How about this Greenspan quote:
    “Central banks stand ready to lease gold in increasing quantities should the price rise."

  18. "as there has been no shortage of physical gold for months and months."

    Ummm.. why the hell then are the coins selling for $50 premiums above spot with American eagles almost $100 above spot. Signs of a healthy free market in Gold I'm sure. Buy all the Gold paper you can - GLD, Futures - because when it all blows, rest assured, I WILL be there to say "I told you so." Let's put our monies where our mouths are. I have.

  19. Nice, appy polly logies Toby, they're still there, congrats on having more integrity than your posts would indicate.

    "Just give me one good reason why the government gives a damn about the price of gold"

    I could give you ten, but here's the most important one: Price of Gold goes fair-market, and the USD index goes negatively asymptotic. The true levels of inflation since 1971 (1913, if you wanna get technical) get laid bare. Can you think of a group this might concern?

    Re:"While you're at it answer why it is that gold can never seem to be manipulated when the dollar is falling"

    What kind of a leading/loaded question is that? Who is saying that? Can't answer presumption...

    Just because a bull doesn't complain when the market is manipulated in his favour, doesn't mean it ain't. That ain't an argument, its an observation of the bleedin' obvious.

    There are organisations that have never halted their investigations, despite gold quadrupling in price since 2001; which kinda negates that question, no?

    Toby, I recommend you do just a bit of research, and maybe sign up for an epistemology class or two.

    Your foolish questions have all been answered, years ago...


  20. American eagles are selling at 3% above purchasing price.That's just a normal spread for any coin dealer.

    I'm not buying the whole supression to make the dollar look stronger baloney. The public knows nothing about gold, could care less about gold and has been conditioned to accept fiat currency as money for decades now. The nominal price of gold is irrelevant to the public as you can tell if you watch the Youetube video I posted.

    You are going to have to do better than that. And you still haven't answered my question of why the gold price isn't manipulated when it would do the most good...when the dollar is falling.

  21. And as far as going off the Gold standard is concerned, it doesn't really matter because Gold is and always will be the real money, not fiat pieces of paper. Even today the dollars existence depends upon the continued availability of the real metal via the futures market.

    What I have explained is only a brief explanation, There's a more detailed explanation of all that you have asked - why don't you do some of your own research to answer those questions instead of having everything spoonfed? It would really do you good too. Do you really think anybody has the time or inclination to provide 1000 word essays with all the links to answer your 20 word post? I'm afraid it won't hit home for you until you have taken the losses.

  22. Heck I guess I could make the case for a gold bug cartel manipulating the price of gold higher since gold made new all time highs despite the dollar not really even coming close to new lows.

  23. "I'm not buying the whole supression to make the dollar look stronger baloney."

    Like I said you have already made up your mind. I'm sorry I wasted my time.

    "why the gold price isn't manipulated when it would do the most good...when the dollar is falling."

    That's not always the case. And DXY falling does not mean the "dollar is falling". Go learn what the DXY is first.

  24. Better yet, put your money where your mouth is and buy GLD and/or Gold futures. We'll see how that works out. I DARE YA.

  25. GG,
    That's pure baloney. All currencies are fiat today. Nothing is backed by gold. If all the gold in the world were to suddenly disappear it would have virtually no effect on society other than a very short term blip.

    Just try taking a gold eagle into any store and purchase something with it. Odds are they are going to look at you like you are from Mars.

    The only way a gold coin can be used is to trade it for fiat currency first.

  26. I would rather buy silver or miners because they are very undervalued compared to the price of gold. The percentage gains will be bigger when the next leg up occurs.

  27. It's funny how you keep REPEATEDLY saying "nobody answers my questions" and when somebody does, you say "I'm not buying [whatever you said]".

  28. LOL I'm pretty sure the conspiracy theorist will still be pushing this argument when gold is pushing $5000-$6000.

  29. We'll see who's the "conspiracy theorist" soon enough.

  30. Physical Gold will outpace any and ALL miners by a wide margin.

  31. "That doesn't look like a manipulated market to me."

    How would you tell what a 'manipulated market" looks like? Are you an expert on them?

  32. The bottom line is that similar to how I cannot conclusively prove that manipulation IS occurring via the major brokerage houses, someone cannot conclusively prove that manipulation IS NOT occurring. We can all agree to disagree and trade and make money on gold as an asset class.

    I will turn the question of "How did gold go from $250 to $1,200 if there is manipulation?" to "How did gold not move to at least $1600 by now given the tremendous physical demand from retail investors and eastern central banks given the supply shortage?"

    While this topic may sell some newsletters we are all best served by acknowledging anything is possible and focusing our efforts on profiting from the current fundamentals of gold.

  33. I think that gold price has a relationship to a number of world currencies, like Sterling, Swiss Franc, Euro, etc. So when the USD moves in relation to other currencies, it's only natural that the USD based gold price is inversely correlated. (Dollar loses value -> you need to pay more of them to buy gold).

    What you perceive as the recent failure of the gold price to properly sink as the USD index has appreciated is actually just a reflection of the fact that the gold price in e.g. Pound Sterling has gone up dramatically.

    Thus, the price of gold can very well be manipulated in absolute terms. The fact that the price generally moves up and down in inverse correlation with the US dollar index has nothing to do with that. It's just currency math.

  34. I'll make a wager. I bet that if the dollar tops the manipulation in gold will cease :)

  35. Toby, great blog and great analysis. First, I'd like to point out that all of you are saying gold is going thru the roof, its just a matter of time. So at least you agree on something...

    Full disclosure, I posted the story and the audio link to the Kingworld interview on my blog. But I also said don't blindly buy this and take it with a grain of salt.

    Whether the market is being manipulated or not shouldn't make any difference to a good trader with a prudent trading strategy.

    There is a ton of money to be made when gold does move higher. Wait for your set-up and get long, if you are not already and trade with a stop.

    While I have no idea if the government is manipulating this market or not, they are publicly manipulating others, i.e. interest rates. That affects both currencies and commodities.

    Gold has been by far the biggest beneficiary on the commodity side with it being the only commodity trading above the levels of 2008.

    I can see both sides, but gold is significantly stronger than almost any other commodity right now. So I do have to agree if it is being manipulated they are doing a bad job of it...

    The moral of the story? Manipulated or not, trade your strategy and if there is truth to the story than the technicals will bear out and create a buying opportunity.

    Lastly, no one is right all the time and many of the best traders are wrong more often than they are right. The difference is money management, winner 2-4 times bigger than losers.

    Toby, keep up the great posts and whether you are right or wrong I enjoy your analysis. It takes balls to put your analysis out there in full public view...

  36. JD,
    Thank you. I think everyone kind of lost track of the big picture. We all think gold is going higher. I just don't think it's being held back by anyone. This just looks like a normal bull market to me.

  37. RE:"Whether the market is being manipulated or not shouldn't make any difference to a good trader with a prudent trading strategy."

    No, I guess not, just a whole lot less ethical. And it doesn't make fraud any more legal, either, just a lot more likely(eg naked shorting something into oblivion).
    Which is exactly why you should be up in arms about it. One set of rules for you and me, another for the insider oligarchs, and this doesn't bug you as long as you can make a buck while robbbing your neighbour.

    Nice religion you have there: I'm all right so ef all the rest...good luck with that whole 'eating your own tail' thing.


  38. First off I don't believe gold is being manipulated.

    But even if it is it would just make it go higher a lot faster than it would normally. What do you think happens when all these naked shorts have to cover?

    Like I said much higher much faster. I don't see anything wrong with that in my book. If there is manipulation then more power to them I'll just get rich faster.

    I dont understand why the conspiracy theorists are bellyaching about something that would make them a ton of money.


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