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Eric Sprott is right and Manipulation matters

 -- Published: Tuesday, 21 January 2014 | Print  | Disqus 

First a review is in order. The April collapse in gold followed the Yen/$ cross and it continues to this day. Janet Yellen is not being truthful in her testimony when she stated. “I don’t think anybody has a very good model of what makes gold prices go up or down.” Janet Yellen November 14, 2013.


The tight knit correlation is seen on a monthly chart as well.

Digitally dictated gold prices or paper prices move irrespective of supply and demand. They simply move with this FX cross but you know what they say about the best laid plans?

How many people in this store (photo from buying gold are looking at the Yen/$ cross?

How about these people?

As Eric Sprott states in his latest, he believes Western Central Banks pressured India into raising tariffs for the importation of gold because demand was simply exploding with the price drop. But why go to such great lengths. If the CBs are manipulating gold, where was the supply panic on the rise. The answer to that I believe is in the FX cross.

Western equity markets and the precious metals key off that cross.  The chart below shows the Dow Jones and the $/Yen (nb. Inverse of Yen/$).

What would have happened to the CBs best laid plans if gold had decoupled from that Yen/$ cross? That is a very good question! In a world where computers control trading globally and financial journalism invents reasons for how markets behave, we were not treated to anything other than rising equities, falling precious metals and a plummeting Yen/$ cross. Some of this was made possible by the extraordinary measures officials implemented to keep China supplied.

But can it continue? Can the Yen/$ keep plummeting? If so, then the correlation says gold MUST fall and equities rise. If that is true then how will officialdom keep the world supplied? I think the better question is what happens to world markets if we actually witness the demand for gold forcing the precious metal to decouple from Yen/$? Would this qualify as a “Black Swan?”

A final note on fundamentals is warranted. Mine supply sans China and India is seen at 2188 tons. At $1240 gold that market is worth $86.8B. In fiscal 2013, Apple generated $170.9B in revenue or almost DOUBLE what all the gold mined for 2013 would fetch at today’s prices. When Eric Sprott states that the manipulation cannot continue this year I believe him. But the real story will be the digitally created price versus the Yen/$ cross and the demand for gold from the two most populous nations on earth.

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 -- Published: Tuesday, 21 January 2014 | E-Mail  | Print  | Source:

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