Dear Clive:

Your commentary, dear sir, for all of those who have not read it; Since it was so short and in the interest of fairness, I have not omitted or included any extraneous information so as not to affect the veracity of your commentary.

All's fair in love and war - and markets...

07/01/04

Even I have to admit that the sudden turnaround in gold and silver following last week’s breakout was rather extraordinary. According to Bill Murphy of LeMetropoleCafe, Goldman Sachs had a mandate to kick the **** out of gold ahead of this week’s Fed interest rate meeting. This is, of course, the sort of explanation for the sudden reversal that would be expected from GATA.

There is an important point that needs to be made here. There is a saying that “all’s fair in love and war” which I believe can be extended to read “all’s fair in love and war and markets”. As a pragmatist I do not question that markets are manipulated, because, as I have said before, those who are in possession of power generally use it to their advantage. A dramatic and topical example of this is the Olympic Games industry. What should be a gathering of athletes from around the world competing in a few converted fields and only a costing a few thousand dollars, has mushroomed into a vast industry that manipulates the egotism and national pride of the ruling classes of the next host country in order to parasitise their taxpayers into financing this grotesquely overblown junket that lines the pockets of all those involved in this industry, and which leaves in its wake huge debts and white elephant facilities. So its no use a weakling complaining that a strong guy trod on him, as the world’s answer is “So what – what did you expect?”

Similarly in the gold market, it’s no use bleating about powerful vested interests capping the price and forcing it down – if they’ve got the power and they have a reason or reasons to do so, then that’s exactly what they’ll do. If we are bullish of gold long-term, then we have to be able to make a case for demand exceeding supply, no matter what source the demand or supply emanates from.

I am long-term bullish of gold, for the reason that I believe that bullish forces will eventually greatly overwhelm the bearish forces, including cabals, cartels, and nefarious manipulators of all kinds. So if we have a breakout that fails, for whatever reason, it means that the bullish forces are currently not strong enough to overcome the supply brought out by higher prices. It’s that simple.

So, again, Dear Clive,

We’ve known each other long enough to be on a first name basis. Yes? I would like to preface my statements with the full understanding that I am very fond of you and your work.  I believe you’ve helped a lot of people with your market analysis. That being out of the way, Se la guerre!

I almost fell off my chair when I read your 07.01.04 commentary. It is not that simple!

First of all, as pertains to your Olympic comparison, the world has said it wants a level playing field (pun intended) and therefore no steroids! That’s different than the world saying, Okey dokey, now all the big powerful countries may win the medals and the smaller weaker countries may not because we’re not going to test for artificial stimulants. In other words, this is another way of the world saying that it doesn’t want the strong suppressing the weak just because they can.

The world appears to be sending the message that in the games themselves; it doesn’t want the strong (aka large countries) to have an artificial advantage over the weak (aka small countries) or vice versa, just as it doesn’t want one athlete or competitor to have an unfair advantage over another. The message is clear.

However, The very crux of your argument states: "Similarly in the gold market, it’s no use bleating about powerful vested interests capping the price and forcing it down – if they’ve got the power and they have a reason or reasons to do so, then that’s exactly what they’ll do. If we are bullish of gold long-term, then we have to be able to make a case for demand exceeding supply, no matter what source the demand or supply emanates from."

You make substantially inferior arguments in presenting your case pertaining to gold and how we investors should not only anticipate but expect the idea that we stand aside and allow the stronger forces in the gold community to manipulate the gold price downward to accommodate their own ends.

No reason to bleat about it? Hear that noise? Listen, it’s getting louder. That's the sound of thousands, no millions of Americans bleating away AT HOW THIS FREE MARKET in AMERICA is NOT REALLY FREE AT ALL!!  Bleat Bleat Bleat!! That is not the sound of complaining or whining, that’s the sound of the suffering of millions of people who thought America was about freedom, integrity, and honest markets.

That’s not only the sound of the financial suffering Americans have endured, it is also the sound of the pain of betrayal those same Americans have endured. The bleating is emanating, not from the Central Banks or the inauthentic Federal Reserve, where the source of the gold and fiat paper is controlled as you infer, but it is from a country that is hungry for authenticity subsequent to wave after wave after wave of betrayal being thrust upon them. The bleating sound you hear is the sound of Americans being robbed blind. They are being literally robbed on almost every rung of the financial ladder that deals with the organizational hierarchy of government and investment. And it is a bleating shame.

Mr. Maund, (we regress to the more formal salutation as the argument becomes more heated) I know you can do better than this. Your argument is so filled with fallacies as to make any philosophy professor worth his salt give you a grade F on this little essay. Bleat Bleat.

Will I continue to recommend your site, continue to be a subscriber? Yes, absolutely. Your heart is in the right place but your words are not. And I personally take issue with the disparaging, demeaning way you refer to Murphy and GATA. Perhaps if you yourself would make a proper argument for the case that the strong have a right to suppress the weak, resplendent with empirical proof, it would be more palatable; but to say "This is, of course, the sort of explanation for the sudden reversal that would be expected from GATA" is to be disparaging without cause.

Clive, I can sense you "looking down your nose" at GATA. Of course GATA is nothing but a bunch of nut cases, but they are smart patriotic nut cases and America would do well do have more of them much as the early patriots of these United States could have used a few more Thomas Paines in their early struggles. The pen is mightier than the sword and all that, hey wot?

I'll tell you something else about the Murph. He writes volumes every day, just as Richard Russell does, in order to support his thesis about gold manipulation, market manipulation and why the USA is heading for some rough days ahead. He invites others (both advanced nut cases and simple basket cases such as myself) to join in the dialog. I, for one, believe the “principal players” (who are also “principled players”) at GATA, have done a bleating good job in explaining why they believe the gold market is manipulated and why that it is wrong. Bleat, Bleat.

Those sheeple are on the loose again, following the lemmings directly towards the cliff and the rocks below. But wait, what is that I see, is it a bird, a plane, no, why it’s a nut case trying to redirect them towards safer harbors. What nature of man, what kind of beast, what sort of organization would do such a thing?

I don't hear the Wall Streeters or Mr. Bubbles saying “bring your tired, your weak, your hungry, puny, investor types to our hallowed halls so that we might partake of your hard earned money.” Nor do they say “come on chumps, ‘invest’ in our crooked, manipulated, for sale markets.” If they said that, I would be bleatingly surprised to see anyone invest a dime in their clandestine operations. Would it not be better for us to simply travel to Las Vegas where at least we know the odds are against us and even so, they are better than what is supposedly being offered by “da boyze” on the Street? Why Las Vegas even offers free soft drinks and bottled water.

The Murph says, “hey this ain't right”. Perhaps he and GATA have saved several of those puny sheeples a few bucks by redirecting them away from those cliffs and those bleatingly powerful crooks, I mean investment gurus, I mean wall street-fall-street advisors. (That one goes out to Jimmey S. in Connecticut with a great big shout out – kinda sorta an inside joke that most of the gold community is following.) Gee wouldn't that be nice, I mean if it were all that honest—as in honest markets in America?  Unfortunately, at this juncture in American history, Honesty and American Financial Markets are inversely related to one another. Did I mention that’s a bleating shame?

Are there level playing fields in American financial markets or do we have to fight the markets, market makers, brokerage houses, government institutions, and each other in order to have just a slight semblance of fairness? That’s a bit of a rhetorical question.

Many of the financial writers with whom I stay in contact on a regular basis recognize that many of these financial markets are manipulated. However, too few of them are trying or even willing to try to do anything about it. Don't we all feel just sooo bleatingly helpless? The aforementioned Jimmey S. from Connecticut is one of those fellows who has tried to do something constructive and positive for the sheeples, such as myself, and asks for zip in return.

Thomas Paine would be proud, Jimmey S., God bless you. I ain't never seen you ask for nuthin except for that one time what you charged shipping for a CD Rom with information probably worth about $100. I think it was on T & A or TA or something like that. Couldn’t rightly reckon I could follow it anyway, but I stuck with it and finally got me a ruler. Don't you got no conscience? By the way, thanks--I found it well worth the shipping and a whole lot more! This fellow Jimmey S. appears to be just another nut case out to help save America from ourselves. Even worse, he’s trying to get us to think for ourselves.  Geeze, whattup wit deese guys anyway? Think for yourself, now there’s a novel concept! Where does he get off?

But kind Sir, I digress and for that I beg your indulgence. It appears that you believe it is perfectly acceptable for the strong to overpower the weak regardless of the source of that power, the reasons for its use, or the end result of that use. Long live the concept of "power corrupts and absolute power corrupts absolutely".

Argumentum ad false Cause is the most apparent fallacy I discovered in your reasoning. You constructed your case on an analysis that is fundamentally flawed, perhaps even incorrect.

Therefore, it would stand to reason, according to your arguments, that liberty and freedom are concepts our forefathers fought and died for in vain. It would stand to reason, after all, that our Fourth of July Independence Day is a celebration about nothing. Independence from what? But should we not consider that it was back then that the weak and under-armed militia headed by a rather common citizen named George Washington defeated the strongest military power on the planet at that particular time in history. Again, for what?

Just because the powerful have the ability to stomp on or manipulate the weak for their own advantage, does not make it the right thing to do. What Murphy, et al, are endeavoring to accomplish is to bring this sham of a gold market to the light of day. They are under-armed, under-manned, and under-funded.

Yet they continue on with the good fight even going so far as to allow Reg Howe to venture into a Boston Courtroom alone, without an entourage, and face down an army of opposing attorneys who represented the rich and powerful: the US government, the powerful gold companies, the ESF (Exchange stabilization fund) and of course, the BIS (Bank of International Settlements) aka the complete gold cartel-cabal-“powers that be” of the moment.  This was a real showdown at high noon. Did he win? Nooo, not that round; but his presence was certainly felt in the gold community. And to his credit he did open some doors that others with, “a more vested interest in the outcome”, and deeper pockets walked right through.

Gee Clive, I don't know if I'd have had the tennis balls to do that, even though it was the right thing to do. Now, I'm not trying to be overly acerbic, but I’m telling it like it is because a lot of fine, brave people have died for this idea of liberty, freedom, and honor because they felt in their heart of hearts that the strong should not overpower the weak just because they could do it. They had courage. Some people have courage, even today. It always takes courage to stand against the mob, face down your fear, and to try and do the right thing.

There has even been this thing in the news about the Middle East, but I won’t even go there. A different argument for a different time but still loaded with more fallacies. Good idea, bad plan, that sort of thing. Then more bad ideas and bad plans compounded by bad ideas, bad plans and made worse by people that might have otta known better?

Again, just because the powerful have the ability to stomp on the weak, or in this particular case to cap the gold price illegally, does not make it the right thing to do. And incidentally, it’s illegal because it’s not a level playing field with the same rules applicable to everyone participating in the game. It is illegal because it ultimately becomes a license for the rich to steal from the not so rich.  The old adage of he who owns the gold makes the rules, is cutesy as all ‘git out’ on paper; but in principle it should be called the poison rule.  Is America too obsessed with the poison rule? Can this Great Country change, I mean really change, and get back to the principles our founding fathers fought and died for? Most of those early patriots died penniless. They were hunted down by the British and they were vanquished. However, their ideas lived on and a country was founded upon them. These early pioneers of liberty were ordinary people at heart but they thought the golden rule really did mean “do unto others as you would have them do unto you”. Not, do unto others that which you have a 98.99 % probability you can get away with for your own benefit and to the detriment of others less powerful than yourself.

When I were a young whippersnapper of a boy scout way back in the day, I don't remember them teaching me to shove little old ladies aside so I could get into the movie matinee faster than they; nor do I remember them teaching me to kick little puppies aside if they were in my way. I remember being taught to help the weak and protect the infirm, to behave with honor, and to stand up for the underprivileged.

If you dig below the surface and observe where these shenanigans by the world’s powerful elite ultimately lead, we usually discover that they lead to the violation of principles far greater than the obvious superficial ones readily observable.

In the case of the militia of George Washington's day, the superficial reason everyone was so upset was “taxation without representation” but the underlying principal was freedom from the tyranny of the British. Should the patriots have said, oh well, the Redcoats are so superior, so strong and powerful, that we'll just go home and wait for them to come busting down our door, rape our women, and steal our livestock. Why not have a smoke and a beer while we're waiting. Gosh (glancing at the clock), look at the time, they should be here any minute now. We best invite them in so they don't get too mad at us.

In the case of Murphy et al, the idea is that the gold market is rigged and has been rigged for a good long time. In actuality, Mr. Robert Rubin, a Clinton Secretary of the Treasury, wrote a treatise on the entire concept in order to create an ongoing scenario for a strong dollar policy for that administration. The title of it was Gibson’s Paradox and I believe it was written around 1995. However, that same manipulation based concept eventually ran amuck, and now has negative ramifications throughout the financial foundations of our society.

Soon enough, those same people, you know the powerful ones we should stop bleating about, end up attacking the Constitution and the Bill of Rights. Why? Because it serves their ends and they can get away with it. They continue on in their process of eroding our freedoms while we sit around and bleat. That’s a bleating travesty.

Eventually our societal foundations, and our financial foundations start cracking because more people like Murphy, Chris Powell, Reg Howe, and the rest of the crew, didn’t “stand up and be counted”. Damn Clive, I just feel I have to stand up and be counted, although I would prefer to remain anonymous, low profile and all that—please refer to me as Everyman--not to be confused with Spiderman, Everyman--you know like from Shakespeare.

If you look around America right now, you see that it is under attack by those same powerful people; those same vested interests “that can” because we the people allow them to. (Of course it has been occurring for generations, but if not now; when do we stop them?) They use those same tired arguments. The ones riddled with fallacies. They do a lot worse than kick little puppies and push little old ladies around. They kick the puppies and steal the (little old men and) little old ladies' lunch money so ultimately they have to choose between food, medicine, and housing.

They create avoidable wars so that certain companies can profit. They’ve created a means for foreign oil to be secured under questionable pretexts and they have completely fooled the American public into thinking that if they are opposed to aggressive reasoning and bellicose action, they are unpatriotic. Worst of all, they have created an atmosphere of fear and paranoia, which allows them to cap our civil liberties, while we sheeples thank them for stealing our heritage. That takes some big time spin machine to pull that off and that machine has gotten nothing but more sophisticated over the years! It might eventually backfire on them. Incidentally, Farenheight 911 is the opposing spin machine working on eight cylinders. But dare I say it? All’s fair, no I just can’t do it.

This should surely make the powerful ones very proud, knowing full well they are robbing the same generation of people who fought in World War II against true tyranny when there really was an enemy. Those same true heroes, like Richard Russell, then came home and built a strong America based upon the principals of truth, justice, and freedom for all. For all, that is, except for themselves when they needed help the most; in their golden years. The strong ones to which we have been referring, decided that those old and now weakened ones were no longer viable and could therefore be discarded—they could be “capped” as it were. Ain’t it grand!

In GATA's case, (and I'm not naive enough to believe there are absolutely no agendas here, because we all have agendas—money, love, power—how did that slip in there!) they don't believe there is a free market in gold, even though the government says there is; even though the government now invades sovereign nations against the will of the rest of the world. GATA seems to believe that it is wrong for the powerful to cheat, lie and steal. They are challenging the idea that these crooked markets in gold are used to support a corrupt fiat paper system, which is then used to pick the pockets of anyone who resides in America from Maine to California.

What's wrong with these people at GATA, don't they realize that this is America? This is the land of the Federal Reserve, which has nothing to do with our government, in other words it ain't Federal any more than you and I are. This is the land of our floor fathers (think NYSE) of Enron and Tyco and Wal Mart and hanky panky in the White House, and even worse illegitimate wars from the White House. This is the land of Pork and Congress and "who gives a damn" as long as it don't cost me while in the end it costs us all dearly, as in birthright dearly! This is the land of hospitals charging, $3000.00 per day, $12.00 per aspirin, and schools being closed down so money can be used for war instead of education and oh, I better stop before things get out of hand. You might get the wrong idea and think that I'm bleatingly disturbed.

Now if I can only get my hands on that damn clown with all those cheapo little toys that he distributes to the little kids from 2 to 12. He creates brand loyalty and you know who I’m talking about. You do realize that he uses the toys to get the kids to consume gobs and gobs of fat, to become lifelong “gobblers of gobs of fat” while the entire process is ultimately destroying the rain forest. Oh Happy day—fat equals fun! He is one powerful clown; actually he is a bona fide member of the powerful ones, ultimately stomping on the weak consumer via slick marketing! But once again, I digress, and much to my chagrin in so venting have proven to you gentle readers, that I am indeed disturbed.

Surely no one can believe the argument that gold will rise in price when demand exceeds supply. Hasn’t that one already been put to bed about a million times!?  I mean hasn’t it already been empirically proven that demand already far exceeds supply and the vaults that are supposed to be filled with the stuff, you know the gold stuff, haven't been inventoried in over 25 years and there are these things called gold swaps and I just could bleat on for a bleatingly long long time but I've made my point.

Well, at least I hope I’ve made my point.

Listen we’ve had a little fun but in all seriousness people, one final teeny weenie point. When you allow the strong to oppress the weak, the bad to overcome the good, the government to control the people instead of the other way around, you allow a pattern to develop, a process to unfold that ultimately destroys the conscience, the very fabric of our society. When we allow our financial, political, and sociological dykes to spring leaks and we don’t instantaneously muster the courage to begin the repair job, the ultimate outcome is one that none of us would even like to remotely consider.

The gold market has always been the financial thermometer of America; even the Founding Fathers knew the perils of fiat paper. It says so right there in the bleating constitution. The gold market is far more important than as simply a store of wealth. It is a psychological measure of the true nature of our economy, and to a large measure, the world’s economy. When we allow “them” to manipulate gold to their own ends, especially via paper and derivatives; we are allowing “them” to destroy, to smash, to stomp on the financial thermometer of America, the backbone of America and perhaps even the world.

That weakens us all to the point where there ultimately may not be a need, or even worse a desire, for a thermometer at all. Think about that! Then it’s all about promises, as in IOU nothing. Then, we have to start all over again—all the way back to point zero.

Happy Future Fourth of July! God Bless You, God Bless America, God Bless Every Nation and its People, every animal on the planet, God Bless us, everyone one.

Sincerely,

A Bleatingly Paranoid Patriot called .......(Hold the drum roll please).....Everyman!

D. Stewart Armstrong

Publisher

-- Posted Wednesday, 7 July 2004 | Digg This Article