E Gold Market Manipulation And The Federal Reserve

Some gold bulls have bought in heavily to the argument that gold price suppression has been an ongoing activity for years, even decades. Supposedly, trading in the gold market is manipulated in ways that depress the market price for gold.

Assertions are made that the manipulation takes place in a shroud of secrecy; and the unexpected lower prices for gold, or prices that don't meet wildly bullish expectations, are cited as evidence of conspiratorial activity.

The claim is made that the price of gold would be much higher if this manipulative trading activity were exposed, acknowledged, and prohibited.

ALL MARKETS ARE MANIPULATED

I don't disagree that there are forces at work in the gold market that can be disruptive; and may even be described as manipulative. However, the same is true of all financial markets - stocks, bonds, commodities, etc.

In addition, gold and silver bulls are one-sided in their arguments against manipulation and its presumed effect on prices.

When prices don't meet expectations on the high side, or an  'unexpected' drop in price occurs, finger-pointing at shadow figures is heightened.

Long-side investors in all assets, including precious metals, benefited from the manipulative efforts of the Federal Reserve twelve years ago and again just recently.

The recent recovery in prices for stocks, bonds, oil,  gold, and silver has been almost unbelievable. It is literally jaw-dropping, but nobody is complaining. Nobody cries foul when markets are manipulated for the purpose of driving prices higher.

Only a couple of years ago, JP Morgan Chase's accumulation of silver was assumed to be bullish for silver prices; and favorable comparisons were drawn between the bank's activities regarding silver and the Hunt brothers silver accumulation efforts in the late 1970s.

Both JP Morgan and the Hunt family are not "familiar fellows" when talking about purpose and motivation. Nevertheless, the expectation that the parties involved would help drive prices for silver higher than otherwise might have been expected, seemed to be enough to fan the flames of bullish sentiment in both cases.

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Kelsey Williams is the author of two books: Inflation, What it is, What It Isn't, And Who's Responsible For It and  more

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Laurent Eliane 1 month ago Member's comment

When I said, I have been told rich people are loading gold, make reference to a personal insider in a swiss bank and what they have now in their vault from private clients....and it is just a small private bank.

I have seen by myself in the 70ths the vault of the reserve in a major bank where it was a huge place with 12.5 kg bars, (all with the russian logo!!!).

If you can provide the reader with the external audit of physical gold detained by the fed and the total amount of paper gold they have issued, would be, in that case, very informative.

William K. 1 month ago Member's comment

The manipulation of the amount of available money for the benefit of some group is not new, The willingness of those in control to do things to benefit their "friends" while telling stories of how it is needed to benefit the rest of the population is not new either. Certainly the price of gold as a more stable form of wealth makes sense whenever the credibility of the USD suffers a bit. So it looks more like the price of gold is a secondary effect of other things, rather than a direct result of "secret actions by unknown persons."

Kelsey Williams 1 month ago Author's comment

Correct. The higher price for gold is a reflection of the corresponding loss in purchasing power of the US dollar; which is an effect of the inflation created by the Fed.

Laurent Eliane 1 month ago Member's comment

...they must also recognize that no institution has done more to pave the road to higher gold prices than the Federal Reserve....

Are you serious? Taking the Hunt brothers who really was market maker till a collapse, is one thing.

I am sorry but you article does not go deep in the subject but just a position of "fed defend gold like other assets" is just non sense. Yes, FED balance sheet has increased with whatever bond, TB, equities, BMS etc..

May be it has increase in paper gold issue by them (FED) and sold on the market.

Sorry but you look like propaganda....and you want the others looks like conspirationists. Bring me the total of paper gold issue by the fed and the real inventory of gold they have in their vault since dollar is not anymore valued with gold.?

When gold is going higher you give credit to FED. Come on. I have been reported that rich people are loading physical gold because they know dollar is going to the wall. And you know that. You can treat gold as relic of the old age,but this is a relic that still exist through war, revolution, bankruptcies, crises....you name the others.

A relic that survives is not a relic. It is an asset.

Thanks in advance for a more deep investigation on what you write, specially when it looks like fed is behind the soaring price of gold.

Kelsey Williams 1 month ago Author's comment

Point 1: I am not at all "defending the Fed", as you say. Nor, did I use the word "relic" in reference to gold; or say anything similar to that. The Federal Reserve has destroyed the US dollar over the past century by continually expanding the supply of money and credit. That debasement of the US dollar has led to a decline of more than ninety-eight percent in its purchasing power. That decline in purchasing power is the reason for gold's higher price over time from $20 per oz. to $1700 per ounce. Point 2: Some gold investors are way too price conscious; nay, price-dependent is a more accurately descriptive term. They seem to be constantly in need of higher prices to justify their predictions for gold. Point 3: The purpose of the article is to point out how each time higher price expectations aren't met, the price predictors trot out the price suppression argument. If they understood and accepted the argument for everything it implies, then they would already own physical gold and they wouldn't have to defend their errant price predictions. Point 4: The case for gold is not about price. It is about value. Gold's value is in its use as money and its value is constant and stable. It is the original measure of value for all other goods and services. Gold's price tells us nothing about gold. It tells us what has happened to the US dollar; nothing else.

Laurent Eliane 1 month ago Member's comment

I agree. I missunderstand you if you mean the price of gold reflect the failure of the fed, which i think will be bigger as the politician took over it. Not only in the US.

Thanks for your reply