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The magic charts of technical analysis can't penetrate central bank trading rooms

By: Chris Powell, Secretary/Treasurer, GATA

 -- Published: Thursday, 21 July 2016 | Print  | Disqus 

Dear Friend of GATA and Gold:

With his commentary written yesterday, "Damn Manipulators," posted today at GoldSeek and Gold-Eagle --

-- was Elliott Wave Trader's Avi Gilburt sneering about GATA?

Gilburt wrote of yesterday's trading: "As the metals market dropped today, I am quite certain that the evil manipulators have become the talk of the town once again. No one speaks of them when we are rising, because that is how the market is supposed to move (cough, cough). But now that we have dropped, it is 'clear' that it must be manipulation."

Gilburt adds that yesterday's smashing of gold and silver was ordinary market action predicted by his magic charts of technical analysis -- and maybe it was. But how does he or anyone outside central banking know that the market action had nothing to do with government intervention? Can Gilburt's charts penetrate trading rooms of the Federal Reserve Bank of New York, the Bank of England in London, the Banque de France in Paris, the International Monetary Fund in Washington, and the Bank for International Settlements in Basle?

Of course GATA has no entree into those trading rooms either. But we have compiled some documents from those institutions, confirming that they are heavily and surreptitiously intervening in the gold market or in facilitating the surreptitious intervention of other central banks and government agencies:

According to the director of market operations for the Banque de France, Alexandre Gautier, this surreptitious trading occurs "nearly on a daily basis":

Since central banks have the power to create infinite money, why would they bother holding and trading gold, except as has confirmed candidly in the annual reports of the Reserve Bank of Australia -- "primarily to facilitate policy operations in the foreign exchange market"?:

Gilburt is mistaken again when he writes that "no one" speaks about gold market manipulation when the price is rising. For many years, with the price rising and the price falling, GATA has addressed the possibility of an upward revaluation of gold by central banks, another form of market manipulation.

For example, since 2007 GATA often has called attention to the 2006 paper on this subject by the Scottish economist Peter Millar, who argued that central banks will have to revalue gold upward by as much as 700 percent to avert a catastrophic debt deflation:

We also often have called attention to the 2012 study by the American economists and fund managers Paul Brodsky and Lee Quaintance, who maintain that the major central banks are engaged in redistributing world gold reserves among themselves in advance of such an upward revaluation:

And we often have called attention to the 2008 appearance on Business News Network in Canada by former Federal Reserve Governor Lyle Gramley, in which he asserted that the Fed might reliquefy itself by upwardly revaluing gold:

Yes, manipulation of the gold market by central banks can be upward as well as downward, and since it defeats free markets either way, it's objectionable either way.

Odds are that since they are the biggest participants in the gold market, central banks know a lot more about the origin of yesterday's price smash than Gilburt's magic charts know. The central banks aren't telling and Gilburt isn't asking them and making a point of their refusal to answer, since it might be very bad for his newsletter business if anyone outside central banking knew exactly how central banks were intervening at any moment. For then people also would know that the data Gilburt is analyzing is no more genuine than Pokemon characters.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

* * *

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