Gold Manipulation: Fact or Fiction? | Gold | Real Vision™

Gold Manipulation: Fact or Fiction? | Gold | Real Vision™

December 9, 2019 14 By Peter Engel


Because of its fascination for mankind, gold
has always been surrounded by conspiracy theories and stories of price suppression and manipulation. That’s really no surprise. After all, wherever you find
money, you inevitably find human beings trying to cheat in some way or another. Fake gold bars have frequently surfaced over
the years, with gold-plated tungsten, which has an identical
density to gold, being the most common substitute. Fortunately, any one of a number of very simple
tests will provide a conclusive answer as to whether
a particular bar is fake or not. Gold is unique. However, the most important questions about
possible manipulation of the gold price concern much
broader issues and occur at a much higher level. Well, look, the question about manipulation
is clearly a favored one, people like to discuss this. I do think that even a cursory glance at historical
fact will lead you in fairly clear direction. I mean, it’s not like this is a hidden thing. I mean, the London Gold Pool existed, it was
an overt way of managing the gold price in terms of
its price. It’s clearly in the interest of central bank
to manage, particularly in the monetary system as it
functions right now– whether it does function not being a slightly
separate point– it’s clearly in their interest to manage the risk-free rates. Would you influence the gold price? Well, it’s said that gold is the reciprocal
trust of central banks, you betcha it would achieve
the gold price, notwithstanding the fact that central banks are
the biggest holders of gold– 60% of their reserves are in gold, would you want to suppress
it? You
betcha. The problem’s too big. Are they doing it? I don’t know is the answer, but money– there’s
always a raising certainty, they probably are. Others, however, are far more confident, not
only as to the question of whether the gold price is
manipulated, but also who the culprits might be. Well, the gold price is absolutely manipulated. When I say that, I’m not, you know, implying
some deep, dark conspiracy. I don’t think Janet Yellen wakes up in the
morning and thinks about gold– I don’t think Janet Yellen knows anything about gold
to be honest with you. She’s sort of a geeky liberal labor
economist who worships the Phillips curve, so I don’t think Janet Yellen is behind some
conspiracy to suppress the price of gold. But there’s absolutely manipulation. I’ve spoken to several experts. One is a PhD statistician, so it’s not a
PhD in economics, it’s a PhD in statistics. Works for one of the largest hedge funds in
the world. He
looked at a 10-year time series and he took– like literately tick-by-tick information on
the COMEX gold futures for 10 years, and he said there is
no explanation for this data other than manipulation, it could
not possibly have happened through normal market forces. In particular, he knows that at the end of
the day, like on the last trading tick on the
COMEX, the price of gold got smacked down. And then at the
open the next day, it could kind of pop up again. So he said, well, this is the easiest trade
in the world, just buy gold right after the close and sell it the next
morning just before the open, and you know, just make consistent, steady profits. Well, anyone knows
anything about markets and how they operate knows that you cannot make consistent, steady
profit. This
is what Bernie Madoff said he was doing, right? So he said the probability that the price
naturally goes down at the close and naturally goes up the
next morning is like zero after 10 years. And this is not inference, I mean, this is
like DNA. Like, you know, you may not see the crime
being committed, but if you have the DNA evidence,
you can be pretty sure who did it. Governments everywhere throughout history
have wanted to manage– it’s a critical national securitywhether
you go back to the time of the Romans, et cetera, value of a currency is very, very
important to manage, particularly if you’re a government
that hasn’t managed your finances all that well. And
unfortunately, that is over time, most governments sooner or later find themselves in that position. And so the manipulation is right there in
the open in that it is a creation of a derivative market that
satisfies demand that would otherwise go into physical, and that was the goal of setting
that up and that’s not well understood I don’t think by many
market participants, but as I said, it’s there in black and white
in kind of the historical archives.