LIVE Gold Prices $  | E-Mail Subscriptions | Update GoldSeek | GoldSeek Radio 

Commentary : Gold Review : Markets : News Wire : Quotes : Silver : Stocks - Main Page 

 GoldSeek.com >> News >> Story  Disclaimer 
 
Latest Headlines

Price Extremes, The Trapped Fed and Scapegoats
By: Gary Christenson, The Deviant Investor

SWOT Analysis: Barrick Raises Its Dividend 40 Percent
By: Frank Holmes, US Funds

Widening Bid-Ask Spreads
By: Keith Weiner, Monetary Metals

Positive Action in the Gold Complex
By: Rambus

Precious Metals Update Video: Gold has had the highest close in years
By: Ira Epstein

Asian Metals Market Update: Feb-19-2020
By: Chintan Karnani, Insignia Consultants

Gold on the Verge of a Breakout (video update)
By: Gary Savage

Technical Scoop: Tireless melt-up, COVID-19 immunity, same themes, inconsequential debt, Greek yields, foreboding spread
By: David Chapman

Baltic Dry, Copper, Oil, Tech and China Continue to Call for Market Crash Soon...
By: Clive Maund

Gold Is Getting Ready For Its Next Breakout
By: Avi Gilburt

 
Search

GoldSeek Web

 
Yes, China Is a Currency Manipulator – And the U.S. Banking System Is a Metals Manipulator


 -- Published: Wednesday, 15 January 2020 | Print  | Disqus 

By: Stefan Gleason, Money Metals Exchange

The U.S. Treasury Department announced Monday that China is no longer on a list of countries deemed to be “currency manipulators.” The timing was awfully convenient, coming just ahead of an expected Phase One trade deal between the two powers.

Nobody actually believes China has stopped manipulating the value of its yuan versus the U.S. dollar.

But the Trump administration is apparently willing to accept a certain degree of currency rigging in exchange for other concessions on trade.

It’s not as if the U.S. government has a stellar record when it comes to heeding principles of free and fair currency markets. It (through the Exchange Stabilization Fund and other vehicles) is constantly trying to manage the value of the dollar versus the currencies of trading partners, too.

It’s not as if equity markets, interest rate markets, and precious metals futures markets are free from manipulation, either. Price rigging schemes of various sorts – ranging from small-scale “spoofing” to large-scale suppression – occur practically around the clock.

Occasionally, there are prosecutions.

Last year, for example, the U.S. Department of Justice criminally charged several JPMorgan traders for fraud and racketeering in a conspiracy to rig precious metals markets.

Yet previous criminal investigations by federal regulators have often gone nowhere, with evidence of manipulation inexplicably disregarded.

Congressman Alex Mooney from West Virginia has asked Attorney General Bill Barr to look into price rigging, particularly within the silver market which is regularly subjected to artificial volatility induced by large institutional traders (i.e., bullion banks) with outsized positions.

The manipulation may be occurring on an even larger scale if the Federal Reserve or the U.S. government or its agents are involved. It is widely suspected but difficult to prove since the Fed operates in secret and the government isn’t keen on investigating itself.

Regardless of what the motivation may be, it is an objective fact that the supply of futures contracts surged last year in both gold and silver markets.

Open interest in gold was up over 70%. Put another way, the supply of paper gold rose by 70% or 33 million new ounces – absorbing much of the growing demand for the metal and preventing prices from rising even more than they did.

Even as vastly more contracts for gold exchanged hands, the amount of physical gold available for delivery in vaults barely budged. Thus, while gold itself is scarce and highly sought after, futures contracts can seemingly be generated in unlimited quantities to divert buyers away from the real thing.

According to Dave Kranzler of Investment Research Dynamics, “Since the introduction of paper gold, the Comex – gold and silver trading – has evolved into what can only be described as a caricature of a ‘market.’ The open interest in gold contracts is nearly 10 times the amount of physical gold reportedly held in Comex vaults. It's 60 times the amount of ‘registered’ gold, the gold designated as available for delivery.”

Some gold bugs expect an eventual COMEX default – a force majeure, a run on the bank for physical metal that sends prices explosively higher. While such a scenario is possible, it is not necessarily probable.

The powers that be have been adept at playing the paper charade to their advantage for decades. They may be unscrupulous or even evil, but they are not dumb.

The campaign popularized briefly a few years ago of “Buy Silver, Crash JPMorgan” was based on a misunderstanding of the mega banks’ short exposure to silver.

The banks aren’t making an enormous long-term bet that silver will fall and risking everything on it. They are in the markets with complex hedges and trading algorithms that can generate micro-profits on minute-by-minute moves up or down.

Manipulation

Yes, the banks can suppress rallies and trigger sell-offs by going heavily short – even selling more ounces than they could possibly deliver. But the reality is, they will never have to settle their contracts in physical metal.

Financial institutions are playing in a cash market tied to precious metals, not the actual physical market.

The best physical investors can hope for is that the cash/paper markets for gold and silver lose credibility and diverge from real-world pricing for industrial users and wholesale bullion buyers.

Or, alternatively the powers-that-be could avoid such an embarrassment by standing aside while prices reset higher, and then choose a new level at which to try to hold the line.

Ultimately, however, the supply of physical precious metals cannot be manipulated into existence any bank or government. Either it’s real and it’s available or it isn’t.

The key to defeating market riggers – or at least rendering their paper shenanigans irrelevant – is for buyers to avoid derivative markets and insist on obtaining physical metal from physical sources.

Stefan Gleason is President of Money Metals Exchange, a precious metals dealer recently named "Best in the USA" by an independent global ratings group. A graduate of the University of Florida, Gleason is a seasoned business leader, investor, political strategist, and grassroots activist. Gleason has frequently appeared on national television networks such as CNN, FoxNews, and CNBC and in hundreds of publications such as the Wall Street Journal, The Street, and Seeking Alpha.


| Digg This Article
 -- Published: Wednesday, 15 January 2020 | E-Mail  | Print  | Source: GoldSeek.com

comments powered by Disqus



 



Increase Text SizeDecrease Text SizeE-mail Link of Current PagePrinter Friendly PageReturn to GoldSeek.com

 news.goldseek.com >> Story

E-mail Page  | Print  | Disclaimer 


© 1995 - 2019



GoldSeek.com Supports Kiva.org

© GoldSeek.com, Gold Seek LLC

The content on this site is protected by U.S. and international copyright laws and is the property of GoldSeek.com and/or the providers of the content under license. By "content" we mean any information, mode of expression, or other materials and services found on GoldSeek.com. This includes editorials, news, our writings, graphics, and any and all other features found on the site. Please contact us for any further information.

Live GoldSeek Visitor Map | Disclaimer


Map

The views contained here may not represent the views of GoldSeek.com, Gold Seek LLC, its affiliates or advertisers. GoldSeek.com, Gold Seek LLC makes no representation, warranty or guarantee as to the accuracy or completeness of the information (including news, editorials, prices, statistics, analyses and the like) provided through its service. Any copying, reproduction and/or redistribution of any of the documents, data, content or materials contained on or within this website, without the express written consent of GoldSeek.com, Gold Seek LLC, is strictly prohibited. In no event shall GoldSeek.com, Gold Seek LLC or its affiliates be liable to any person for any decision made or action taken in reliance upon the information provided herein.