-- Published: Monday, 19 October 2015 | Print | Disqus
Dear Friend of GATA and Gold:
Sunday's market letter by Toronto market analyst and mining entrepreneur Michael J. Ballanger, whose work often appears at GATA Chairman Bill Murphy's LeMetropoleCafe.com, eloquently reiterates some points made often by GATA.
Particularly, Ballanger writes, technical analysis is useless in markets as rigged by governments and their agents as the gold and silver markets are.
"As I penned several times last week, gold enthusiasts around the blogosphere were all singing the same hymn with the main chorus being 'breakout!' I could list the advisers but it would take forever and my point is not to trash them. Their technical interpretation of the charts was correct; their understanding of the dark underworld of the Crimex'" -- that is, the New York Commodities Exchange -- "was not.
"Note the totals in the commitment-of-traders report from last Friday -- a massive reversal in large speculator positions from 'net short' to 'net long' totaling 30,340 contracts representing 3,034,000 ounces of gold valued at $3.56 billion was met with a nearly equal amount of selling by those heathenous 'commercials' who are undoubtedly acting for the bullion banks and the interventionists at the Federal Reserve, Bank of England, Bank of Japan, and of course the European Central Bank. ...
"That's why trading the gold market has become such a farce, and here is why: In the stock market, if you want to buy shares in a company, all you need is money. To short shares in a company you must have money and the ability to borrow the shares from one of the dealers in order to deliver it to the buyer. Because of the rules surrounding the 'loan post,' this prevents the unbridled and indiscriminate selling 'ad infinitum' of shares.
"Contrast that with the Crimex, where you do not have to borrow the gold in order to sell it; all you need is to have the backing of a central bank or large bullion banks to sell any volume of gold that you require to force price down. Unlike stocks, there is no governor on the creation of supply. There is no 'loan post.'"
That is, as Ballanger has put it elsewhere, unlike other traders in the gold market, central banks and their agents trading gold never face a margin call and thus can outlast everyone, at least until exhaustion of the small amount of metal necessary to be delivered to the few traders who take delivery of their gold futures contracts.
For decades now central banks have always been ready to supply that metal to the bullion banks and the futures market in the name of providing "liquidity" to the gold market when their true objective has been to control not just the gold market but the currency and bond markets as well. (Central banks don't provide "liquidity" in soybeans or pork bellies.)
This is why no analysis of the gold market -- technical or fundamental -- is worth anything if it fails to address these questions:
-- Are central banks in the gold market surreptitiously or not?
-- If central banks are in the gold market surreptitiously, is it just for fun -- for example, to see which central bank's trading desk can make the most money by cheating the most investors -- or is it for policy purposes?
-- If central banks are in the gold market for policy purposes, are these the traditional purposes of defeating a potentially competitive world reserve currency, or have these purposes expanded?
-- If central banks, creators of infinite money, are surreptitiously trading a market, how can it be considered a market at all, and how can any country or the world ever enjoy a market economy again?
Documentation responsive to these questions can be found in GATA's archive here:
Ballanger's Sunday letter is posted in PDF format at GATA's Internet site here:
To read Ballanger's comments regularly, consider a subscription to LeMetropoleCafe.com, which offers a two-week free trial:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
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-- Published: Monday, 19 October 2015 | E-Mail | Print | Source: GoldSeek.com