Fascinating subject...

But why would anyone want to manipulate any market - especially to the downside?

Who benefits from a lower gold or silver price?

I guess its complicated.

I really don't understand how the hedging stuff works...You accumulate short positions, which stifles the price - sending speculators running and then buy back the positions at lower prices?? What good is that?

Can you make serious money that way?

Or what about derivatives that are tied to these 'positions'? I really don't get how all of that works either...

Butler is a silver guy -but no matter - I guess there are a group of people who believe gold is rigged as well.

They site public records where officials (like greenspan or summers/rubin) have stated one way or another that gold must be kept quite to quell inflation fears.

Or some watch the markets very carefully - on a daily basis -- for odd trading patterns --- stuff that doesn't make sense -- like the price of gold dropping 'counter' to news or just before bad news like before each labor announcement...

Or there are people like Don Coxe -- who goes on and on about the how and why of the July 2008 massacre - the greatest ever manipulative attempt at re-inflating banking equities...

The bugs 'think' gold is leased or sold into the market to quiet the price - when needed - which is somehow tied to interest rates -

I don't know how.

Oh yeah, and the treasury comparison you mention -- great comparison...I mean who would manipulate treasuries?? what good would that do?? Do these guys want to see the end of the world and run around trading coins for food?

Some of these bugs actually believe gold and silver (the barbaric relics) are enemies of the central bank because these banks need people to have faith in the dollar...since the dollar floats only in relation to other currencies...

These nuts think that there must not be much gold in fort knox because...get this...there have been no independent audits in years...for strategic reasons...hahahaha...

You should have someone check out GATA.org --- the ultimate tin-foil hat people - they have all these really organized looking articles neatly designed to lay out the 'facts' of manipulation. It's amazing. What creativity.

Again, what is the big deal. It's just metal.

And since you mentioned ted butler -the silver guy -he also thinks there is a lot less silver than gold above and below ground...yet everyone can see the real supply proof in the price ratio -- give me a break!

On and on every week for years about the same thing - silver supply is running out, the shorts are about to be squeezed, silver is used in everything and can cure this and power that...its a long term thing - only buy physical that you store. Its so cheap...Never trust anyone to hold it for you...take it out of the system...there could not be a more bullish scenario -- even without the futures manipulation -- which will end badly and is under investigation for the millionth time in 3 years....

Which is interesting because butler sites the 'supply fiction' as the reason the shorts will get squeezed eventually --- because there will soon be an industrial shortage....

I got side-tracked - your article was about gold manipulation...

(now even Richard Russel believes the markets are manipulated --- how old is he again? hmmm...)


It is amazing how much time and energy people put into this --- they all must be desperate ...I mean what kind of dividend do you get with silver or gold stored in a closet anyway??

 
Many thanks for your comments. Ted Butler does focus on silver, but he himself extends his manipulation contention to the gold market.

I'm more than willing to examine evidence of manipulation if indeed EVIDENCE, rather than supposition, is offered.

Mr. Butler's contentions have so far fallen short of real evidence.

 
As as interested participant in the metals markets I have read some of Butlers work, and as far as I can tell, every time silver goes down, it is somehow attributed to market manipulation. It is so repititious it becomes painful to read after 1 or 2 sell offs.

I have also had a lingering question in my mind regarding the basic mechanism of the price suppression -- the central banks leasing of Gold: Wouldnt the borrowers be buying futures to hedge their borrowed (short) positions, which would have a net nuetral effect on the price anyway?

Thank you Mr Zigler for an article that calls into question this widely read theory on price manipulation in the metals markets.

For all you folks that are convinced, fine. Buy more gold and silver at this artifially "low" price and reap the benefits when the "truth" comes out.

PS all markets are manipulated in some form or another anyway. Federal reserve buying Treasuries? Central banks and Forex?

 
Thanks Brad.

I'm really trying to understand this whole manipulation issue.

Can you check out this report? Maybe you can dissect it in another article...haven't really thought about your focus or what your readers want to know about...but anyway...

The link is in the home page section ---

They call it evidence...HAHAHA

Again, thanks for pointing out the Treasury futures example...There must be a bunch of other markets with similar 'short position' concentration, etc.

I think its useful to see how their accusations of naked shorting compare by using the reports from other markets.

You are right that this is a passionate subject. It seems to spread quickly....

Have currencies been manipulated? Or maybe its the definitions -- is quantitative easing a form of manipulation?

What is the difference between intervention and manipulation?

Is the FED a government organization or a banking cartel?

Makes my head spin.

Thanks for you article.

 
Here's the link:

www.gata.org/files/PIRATES-OF-THE-COMEX.pdf

 
Nate -

Gold leasing serves a couple of purposses for a central bank. First, it's a way to convert a sterile, non-earning asset into an income source. A modest interest rate can be earned by a central bank when it lends gold to its dealing bank "customers."

Second, lending gold serves as a stimulant. When gold is lent to dealing banks, it can be sold to raise cash. That cash can then be used to either buy securities or can be lent.
For a bank, the ideal scenario would entail a decline in the market price of metal such that the gold caould be bought back cheaper for redelivery to the central bank. The resulting profit would augment the interest spread earned.

A lease executed by a miner is typically a classic hedge. It's the cash market equivalent of a futures short sale. Mine production usually supplies the metal to close out the short.

Leases are also used by jewelry manufacturers as a source of consignment metal to meet fabrication needs. Borrowed gold doesn't have to be bought in until a jewelry purchaser is found.

 
Brad,

Thank you for the clarification. I wonder though, wouldnt borrowing bank want to hedge their exposure to gold price, and not rely on the risky assumption that their sale (to raise cash) will depress the market and they can thereby buy it back later cheaper? Wouldnt this hedge include buying gold forward, thereby nuetralizing somewhat the price depressing action of their gold sale?

Ive heard it said that the Central Banks dont really ever want the gold back, which I suppose could be true, and thus somewhat negate the need for the borrowing banks hedging, but it would seem that this would at least appear an sore liability on their books.

As for Ted Butler I do admire his diligence, and persistence -- I dont want to sound totally cynical about his work. Like you, I am just not making quite the same conclusions from the material he is looking at.

And for what it is worth I own physical gold and silver myself (more insurance than investment), and am rather skeptical of fiat currency systems in general.


Nate

 
Your article misses Ted Butler's point. It is the CONCENTRATION of position, not just the size. 2 banks control roughly 60% (don't quote me on the exact numbers) of the short position. This concentration is what is illegal, not the size of the positions per se. If you look at your examples above, they lack the concentration.

 
Their are no position limits for commercial participants. Their position may or may not be manipulative, but it is legal. A large (concentrated) position alone sure raises questions, but it is not evidence...

 
banks want to make the price of gold go down because then gold is competition with their paper money(printed out of thin air) and their wealth is threatened by rising gold prices. their huge short positions are illegal. where is the SEC . they look the other way. there is tons of evidence this article ignores. when gold around the world is scarece there are huge premiums everywhere . the us mint and others runs out of enough gold to mint coins but the price goes down. causing mineing companies to close people to go bankrupt so a few banks who lease out gold they dont even have(paper gold is a fraud)can make billions, only some-one who has a vested interest says well thats ok fraud is no big deal(this guy is not to be trusted). i wouldnt trust the article writer to walk my dog across the street even while i watched him, either he is a very convincing liar or very very stupid and blind to boot. if i was his client i would be very worried his arrogance is staggering.

 
I love how this issue allways gets everyone going! Let me say one other thing about the article -- it raises legitimate questions about the whole price suppression theory. I do not see Mr. Zigler as necessarily arguing against it, just asking for better evidence in order to find the truth of the matter!

 
This article strikes me as naive.

Of course treasuries are manipulated, just as the metals markets are. During WWII, the treasury and the FED (that was a lot less powerful than today) managed to keep long bond interest rates at about 2% despite the fact the price level increased about five hundred percent during the war. There are certain myths, such as the FED cannot control the long bond, that never seem to die, no matter what. That some markets are so large they have a will of their own. I guess to admit otherwise is to admit we all live at the whim of powerful bureaucrats instead of by our own wits.

Gold was strictly controlled before the US dollar went off the gold standard in 1971. To think that control stopped just because "officially" gold has no more role in economic affairs shows a basic lack of understanding about government power. It is never given up willingly.

Deeper still, if a person admits effective manipulation, he has to admit there is benefit for someone in a forum other than a free market that the majority do not have access to. He has to admit there is someone who profits not by his work, or his foresight, or his willingness to take risk, but merely because he controls the game. He has to admit this control could not happen without government assistance. Once you realize that, you realize the law is not applied equally. You realize there is a class of persons who are exempt from the trials and tribulations of the market, and when the market swings against them, they change the rules to swing it in their favor again. This situation is called injustice.

The first priority of any government should be to protect the rights of all individuals equally. Having a protected class violates this principle. It goes against the greatest myth of all, that America is the land of the free and the home of the brave.

 
I dont think any alledged manipulation of the gold price is meant to benifit a select few bankers, but the system as a whole -- to retain dollar legitimacy (and supremacy). Likewise with the Fed's purchase of long bonds today, to keep rates low. Just because it could be manipulation does not mean that the intentions are necesarily bad.

 
gold and silver earn money for the holders of the physical. it is achieved thru the options market. a big holder sells an option and the buyer pays a non-refundable premium to enter the trade. if the option closes out of the money the seller pockets the premium. simple! this is done repeatedly so it is in the interest of the option seller to ensure that the price of these monetary metals go up at a steady pace. these sellers like to remain anonymous. TU NE CEDE MALIS SED CONTRA AUDENTIOR ITO.

 
This article by Mr. Zigler is loosely written article, mixing apples and oranges(gold facts and silver researcher staeement)
Where is Mr. Zigler facts and research?

 
Brad Nigler, you only wish you were as astute as Ted Butler. The mechanism of "price discovery" on the COMEX is completely flawed. For instance, one can take unlimited short positions in gold, but size and ability to take delivery are severely limited. THAT'S NOT A FREE MARKET. As for the assertion that manipulation amounts to a conspiracy theory, I think anyone with a FUNCTIONING BRAIN can agree that banksters wish to discredit precious metals so as to maintain confidence in their crappy fiat toliet paper. Otherwise, WHO IN THEIR RIGHT MIND WOULD SAVE LARGE AMOUNTS OF FIAT AT NIL INTEREST WITH INFLATION BREWING AROUND THE CORNER!?!?!
As for the price action in the metals not matching the fundamentals and the supply/demand dynamics, I could write volumes. Ted Butler does on this as well, he does far more than cry out about the machinations of the central banksters who have destroyed our monetary system and MADE US ALL DEBT/TAX SLAVES.

 
To have the entire economy manipulated by OTC Derivatives and have them BAILED OUT BY TAXPAYERS and not believe a relationship between Wall Street and Washington exists is more difficult for me to belive than that gold and silver are mapipulated. How could Gold and Silver be the ONLY UNMANIPULATED MARKET in the world ??????????????????????????????????

 
Butler knows his stuff. The gold and silver market have been manipulated for a very long time.

Paul Volker suggested that not attempting to "manage" the price of gold was a mistake he made.

Butler has it right.

 
Paul X -

Thanks for your comment. I think, however, YOU'VE missed a point.

Mr. Butler presumes that this handful of U.S. banks holding short positions is a monolith. i.e, that it's always the SAME three insitutions reported evry month.

CFTC reports, however, indicate that the composition of market participants is not static, that there is a larger universe from which these banks are drawn. Simply put, the three banks in the April report may not be the same three institutions that appeared in the January analysis.

It should also be noted that the CFTC's large trader data indicates that participants may vacillate between being top-tier net short to top-tier net long from one-mont to the next.

One cannot presume, either, that the positions reported by these banks is entirely speculative. CFTC staff reports indicate that the majority of metal futures trades were undertaken as hedges to offset cash market transactions, OTC swap trades or other customer-related contracts.

You may be aware that there are no position limits imposed on bona fide hedge transactions. Thus large positions aren't prima facie evidence of illegality.

The concentration issue, I think, is a straw man.

CFTC reports indicate that large traders, driven as they are by their customer base actually tend to be market neutral.

We're only looking at one side of their business in the CFTC reports.

 
To other posters -

Many thanks for your observations. I wish I had more time to address each of your comments individually, but the volume of comments in this forum and others precludes me.

Please understand that I remain open to examine ANY evidence to support the notion that the gold or silver market has been manipulated.

That said, please respect the narrow scope of this inquiry. I'm not asking to engage in philosophical discourse on government intervention in the financial markets.

I'm asking, instead, for evidence that the commercial enterprises enumerated in CFTC reports have actually engaged in collusion to suppress the price of precious metals.

If you have such information, write in.

If not, save your comments for another day.

 
You American gold bugs - still struggling to understand what happened in '08.

It was your dollar that was manipulated not the price of gold. You have the reserve currency of the world - when your government wants the price of gold or oil to be lower for Americans it dictates that other countries must increase thier holdings of US dollars to repay debt (which, regardless of which country lends to which is always denominated in US dollars) or to buy oil (always traded in US dollars).

Under the instruction of the US government the Australian Government (I'm aussie that's how I know) increased it's reserves of US dollars by 40 billion from around our average holdings of 3 billion.

I know this happened with other countries as well and the amounts varied depending on the size of the economy.

The end result of this is, Hey presto!, all commodities take a dive in US dollars - gold included.

The main target of $ manipulation was oil not gold - oil, if you recall was trading at about $US150 a barrel prior to this.

I am also certain that gold is manipulated in other ways but in 08 it was manipulated through the strengthing of the $US.

 
opps a couple of things I missed out of key points I missed out my first post:

- other countries increasing thier reserves of US dollars increases demand for the US dollar.

- between July and October 08 gold rose 30% in Australian dollars.

- What happened with commodity prices in 2008 does not suggest that gold moves with commodity prices and is therefore "free" from manipulation

 
Brad, if GOLD wasn't manipulated, then your organization would not have had to close out its investments in AEM, ABX, AU and OZN. They'd be your winners, not losers. Interestingly enough, the major holders of JPM and GS are also the same major holders in those same companies. I wouldn't want to knock heads with those big dogs either.

 
Edward-

My organization?

 
My apologies, as the bottom of this web page states Van Eck Associates. Simply thought there was a connection.

 
I have no opinion one way or the other about manipulation. But you say the commercials held their largest short as gold peaked, as a counter argument. But that’s what would happen under a manipulation scheme. The higher the price goes, the more shorts you pile on, or the more gold you sell into the market. Just wanted to make sure you saw that.
That IS how you would manipulate the market. Buy low, sell high. It’s also called trading. But when you have the largest pocket, you usually end up manipulating as well.

 
Ok, Perhaps you can NOW tell HOW the commercials are making profit ... from years
of short excess contracts (versus their longs). Sure, some may be from clients that
sell mined gold ... but please address that
point. Otherwise, there may, indeed, be complex operations (fraud) going on.