Paul Roberts: Market Manipulations Become More Extreme, More Desperate TNR.v, MUX, GDX, GLD, SLV

  

  Gold is hitting hard on the door of $1270 after which the Gold shorts will have the "religious experience." Gold market manipulation is still ongoing, but participants becomes more desperate by the day. You can find a lot of comments these days on the number of recent "suicided bankers" and some parallels drawn to the ongoing investigations in FOREX and Gold markets   manipulations. Quite a few FOREX head traders are already left the major banks or being suspended. These games can not last forever, particularly when China is buying the record amount of Gold and vaults in the West are empty now.

  Paul Roberts provides us with very good observations of the mechanics of Gold market manipulations and we continue our investigation started this weekend with Eric Sprott and Dimitri Speck.

Dimitri Speck Gold Price Manipulation And The Gold Cartel TNR.v, MUX, GDX, GLD, SLV, RGLD, ABX

"Dimitri Speck provides another view from Europe on the Gold Manipulation and it is very interesting that his revelations last Fall coincided with the investigations conducted by European authorities on Gold Market manipulation. Germany is not very happy with its Gold repatriation program and a lot of healthy patriotic forces over there are putting more and more pressure on the Gold Cartel. This historical factual information provides very good back ground to Eric Sprott conversation we have discussed earlier today."

Eric Sprott: The U.S. Gold Is Gone MUX, TNR.v, GDX, GLD, SLV, RGLD, ABX, GG

  "We continue our investigation of the Gold Manipulation. Last Friday Gold spiked well above $1270 on the huge miss in Jobs Report, but markets have found the good meaning of bad news again and Gold was trading down to unchanged in the midday. Interestingly enough Gold has closed just below crucial $1270 by the end of the day even with general markets in the rally mood again. Eric Sprott addresses this ongoing manipulation in his interview and provides his outlook on the things to come in Gold and Silver markets."

Paul Craig Roberts:

Market Manipulations Become More Extreme, More Desperate

Paul Craig Roberts and Dave Kranzler

In two recent articles we explained the hows and whys of gold price manipulation. The manipulations are becoming more and more blatant. On February 6 the prices of gold and stock market futures were simultaneously manipulated.

On several recent occasions gold has attempted to push through the $1,270 per ounce price. If the gold price rises beyond this level, it would trigger a flood of short-covering by the hedge funds who are “piggy-backing” on the bullion banks’ manipulation of gold. The purchases by the hedge funds in order to cover their short positions would drive the gold price higher.

With pressure being exerted by tight supplies of physical gold bars available for delivery to China, the Fed is growing more desperate to keep a lid on the price of gold. The recent large decline in the stock market threatened the Fed’s policy of taking pressure off the dollar by cutting back bond purchases and reducing the amount of debt monetization.

Thursday, February 6, provided a clear picture of how the Fed protects its policy by manipulating the gold and stock markets. Gold started to move higher the night before as the Asian markets opened for trading. Gold rose steadily from $1254 up to a high of $1267 per ounce right after the Comex opened (8:20 a.m. NY time). The spike up at the open of the Comex reflected a rush of short-covering, and the stock market futures looked like they were about to turn negative on the day. However, starting at 8:50 a.m., here’s what happened with Comex futures and S&P 500 stock futures:

At 8:50 a.m. NY time (the graph time-scale is Denver time), 3,225 contracts hit the Comex floor. During the course of the previous 14 hours and 50 minutes of trading, about 76,000 total April contracts had traded (Globex computer system + Comex floor), less than an average of 85 contracts per minute. The 3,225 futures contracts sold in one minute caused a $15 dollar decline in the price of gold. At the same time, the stock market futures mysteriously spiked higher:

As you can see from the graphs, gold was forced lower while the stock market futures were forced higher. There was no apparent news or market events that would have triggered this type of reaction in either the gold or stock market. If anything, the trade deficit report, which showed a higher than expected trade deficit for December, should have been mildly bullish for gold and bearish for the stock market. Furthermore, at the same time that gold was being forced lower on the Comex, the U.S. dollar index experienced a sharp drop in price and traded below the 81 level of support. The fall in the dollar is normally bullish for gold.

The economy is getting weaker. Fed policy is obviously failing despite recent official pronouncements that the economy is improving and that Bernanke’s monetary policies succeeded. A just published study by Jing Cynthia Wu and Fan Dora Zia concludes that the the positive impact of the Federal Reserve’s policy of quantitative easing is so slight as to be insignificant. The multi-trillion dollar expansion in the Federal Reserve’s balance sheet lowered the unemployment rate by little more than two-tenths of one percent, raised the industrial production index by 2 percent, and brought about a mere 34,000 housing starts. http://econweb.ucsd.edu/~faxia/pdfs/JMP.pdf

The renewal of the battle over the debt ceiling limit is bullish for gold and bearish for stocks. However, with the ongoing manipulation of the gold price and stock averages via gold and stock market futures, the normal workings of markets that establish true values are disrupted.

A rising problem for the manipulators is that the West is running low on gold available for delivery to China and other Asian buyers. In January China took delivery of a record amount of gold. China has been closed since last Friday in observance of the Chinese New Year. As China resumes purchases, default on delivery moves closer.

One way for the Fed and bullion banks to hold off defaulting on Chinese purchases is to coerce holders of gold futures contracts to settle in cash, not in delivery of gold, by driving down the price during heavy Comex delivery periods. This is what likely occurred on Feb. 6 in addition to the Fed’s routine price maintenance of gold.

As of Thurday’s (Feb. 6) Comex report for Wednesday’s (Feb. 5) close, there were about 616,000 ounces of gold available to be delivered from Comex vaults for February contracts totaling slightly more than 400,000 ounces, of which delivery notices for 100,000 ounces were given last Wednesday night. If the holders of the other 300,000 contracts opt to take delivery instead of cash settlement, February contracts would absorb two-thirds of Comex gold available for delivery.

The Comex gold inventory has been a big source of gold shipments from the West to the East, resulting in a decline of the Comex gold inventory by over 4 million ounces–113 tonnes–during the course of 2013. We know from reports from Swiss bar refiners that the 100 ounce Comex gold bars are being received by these refiners and recast into the kilo bars that the Chinese prefer and shipped to Hong Kong. With the amount of physical gold in Comex vaults rapidly being removed, the Fed/bullion banks use market ambush tactics such as those we describe above to augment and conserve the supply of gold available for delivery.

Readers have asked if gold can continue to be shorted on the Comex once no gold is left for delivery. From what we have seen–the fixing of the LIBOR rate, the London gold price, foreign exchange rates, the price of bonds and the manipulation of gold and stock market futures prices–we don’t know what the limit is to the ability of the Fed, the Treasury, the Plunge Protection Team, the Exchange Stabilization Fund, and the banks to manipulate the markets.

Paul Craig Roberts is a former Assistant Secretary of the US Treasury for Economic Policy.  Dave Kranzler traded high yield bonds for Bankers Trust for a decade. As a co-founder and principal of Golden Returns Capital LLC, he manages the Precious Metals Opportunity Fund."

Bloomberg: London Gold Vaults Are Virtually Empty GLD, MUX, TNR.v, GDX

  Bloomberg quite suddenly provides some really interesting information about the state of the gold market and ongoing manipulations around it these days. Could the reports about JPMorgan being Net Long Gold now be correct in the end?

Government Interventions In Gold Market: "The Double Face of Gold" GLD, MUX, TNR.v, GDX

 "We have the second part of the interview with Dmitri Speck revealing the ongoing Government interventions in the Gold market. This view from Europe on the Gold Cartel and Government Interventions in Gold market is particularly important now with the announced investigations in the Gold Market manipulation by German and UK financial regulators."

Bloomberg:

How to Keep Banks From Rigging Gold Prices:

By Rosa M. Abrantes-Metz

Authorities around the world are gradually piecing together a shocking picture of how banks have manipulated benchmarks that influence the price of everything from mortgage loans to foreign currencies.

Another area deserves their scrutiny: gold and silver.

In recent weeks, Bloomberg News and others have reported on concerns, among market participants and regulators, that the process for establishing the price of gold may lend itself to insider trading and other forms of unfair dealing. The available evidence strongly suggests manipulation and, given the structure of the market, possibly collusion.

The price-setting mechanism, known as the fixing, provides an easy vehicle for manipulation. Twice every business day in London, representatives of five banks and some select clients participate in a phone call in which offers to buy and sell gold are put forward. These calls determine the morning and afternoon gold fixings, which serve as the benchmark for trillions of dollars in transactions around the world. Silverfixings work similarly, with only three banks involved.

Such direct communication is conducive to collusive pricing, especially when the group of participating competitors is very small. We now know that collusion distorted both the Libor and Euribor interest-rate benchmarks, which involved many more participants. In those cases the coordination occurred through e-mails and instant messages. In the case of gold and silver, an organized live call allows for real-time signaling of the desired prices, obviating the need for additional contacts.

One needn’t look far for a motive. The participating banks all stand to gain both from using the privileged knowledge they glean during the fixing process and from influencing the fixing itself. Aside from trading in the spot markets for gold and silver, they may have significant derivatives positions tied to the benchmarks. The system isn’t set up to identify, let alone deter, such activity. It is the participating banks themselves that administer the gold and silver benchmarks.

So are prices being manipulated? Let’s take a look at the evidence. In his book “The Gold Cartel,” commodity analyst Dimitri Speck combines minute-by-minute data from most of 1993 through 2012 to show how gold prices move on an average day (see attached charts). He finds that the spot price of gold tends to drop sharply around the London evening fixing (10 a.m. New York time). A similar, if less pronounced, drop in price occurs around the London morning fixing. The same daily declines can be seen in silver prices from 1998 through 2012.

For both commodities there were, on average, no comparable price changes at any other time of the day. These patterns are consistent with manipulation in both markets.

It’s extremely odd that the prices of gold and silver are still based on such an archaic and exclusive system. Whether or not authorities seek and find conclusive evidence of manipulation, they should learn the lesson of the London interbank offered rate and reform the gold and silver markets in a way that will deter such behavior. Both metals are highly liquid commodities, so their benchmark prices could easily be set by observing actual trades. To ensure reliability, the process should be overseen by an independent institution with the appropriate governance structure and minimal conflicts of interest.

The best way to restore confidence in financial benchmarks is to remove the means, motive and opportunity for abuse.

(Rosa M. Abrantes-Metz is an adjunct associate professor at New York University’s Stern School of Business and a director in the antitrust, securities and financial regulation practices of Global Economics Group, a consulting company based in New York.)"

  

  Jim Puplava has made a great overview of the Gold Market and Gold Miners this week. These days he is hedging his money management business and is not so extreme in his calls to buy Gold and Gold Miners as other featured Gold Bugs on this blog, but this is where his guests are stepping in. 

  Mr Gold Corp. - Rob McEwen used to be the one of the experts in Jim Puplava's Gold Round Tables and he is putting his money where his mouth is now.

Rob McEwen: "We Seem To Be Near The Bottom Of This Correction" MUX, TNR.v

Jim Puplava’s Big Picture: Investing In the Gold Markets: Mistakes Made - Lessons Learned

Featuring Jean-Marie Eveillard, Ronald Stoeferle, Keith Barron and other industry experts

"In this special edition of the Big Picture, Jim puts a capstone on his series of interviews with gold industry experts, including gold fund managers, gold mining CEO’s, geologists, newsletter publishers and gold analysts. Using audio clips from the experts for emphasis, Jim discusses the struggles of the gold industry, and lays out the mistakes that were made, and the lessons that were learned. The list of experts include Keith Barron, Robert Quartermain, Ross Hansen, John Doody, Jean-Marie Eveillard, Ronald Stoeferle, Caesar Bryan, Jeff Christian and Sean Boyd. Jim also answers your Q-Calls in this segment of the program."

Ron Paul I m Buying Gold! Dont Sell Your Gold!

Turn The Page: Gold Is Solid As Rock - Distortion Against Manipulations

"Gold Market is not the place for any faint hearted - you need to have the Balls to play this Game. We will provide the digest of the most significant developments in the markets these days. Whatever the Spin - Read the Serve."

"The Illuminati Were Amateurs" - Matt Taibbi Explains How "Everything Is Rigged" From LIBOR to Gold Markets

 "Matt Taibbi continues his investigative journalism at its best - will his longly voice in the mainstream media be heard one day finally? With the recent Crash in Paper Gold market this new information clearly points out that Gold Shorts under the JP Morgan's management are in a Big Trouble Now."  

TNR Gold Corp. Completes Resource Estimate at Shotgun Gold Project, Alaska TNR.v

TNR Gold insiders continue to accumulate.

Why Did Silver & Gold Collapse? Mike Maloney and Chris Martenson

FED's Last Bullet In This Currency War - Gold Panic!?!

"Please make no mistake - we are all at war, this time it is The Currency War. Gold is The Ultimate Currency, which can not be produced at will - it can not be printed. In order to keep US Dollar at least in orderly decline market needs to be shaken from time to time. The magnitude of the shake up this time - Special Op Gold Wash Out - reminds us more like the use of a "nuclear option" - like the last resort for the FED to save the Cartel and Bullion Banks. Cartel was badly caught on the Short side of trade. More and more buyers in Gold are taking physical delivery - all paper gold short position was under very real threat of total annihilation in case if any Eventwould launch Gold from 1550 level Up last week.

  Do not read here more than it is written, but timing of the Gold Crash was very handy. President Obama met on Thursday with CEOs of largest banks, on Friday Gold was under attack, Panic Selling has continued on Monday with Asian Markets Opened and then we had Boston. Who knew what and when, front-running all others as usual - we do not know - we are not on the FED's list of Early Warning Alert.

  In the weeks to come two major things will define the destiny of the Gold Market - whether other Central Banks will continue the Attack to bail out FED and US Dollar as the only Safe Heaven and whether Buyers in the Real Physical Market of Gold will be stepping in using this opportunity.

  Article below is from Adam Hamilton - one of the best technicians in the Gold market, his observations are confirming what we have seen these days."