http://www.gold-eagle.com/article/forget-about-fake-newslet’s-talk-about-fake-markets The U.S. and other nations with “free market” economies got credit for defeating the communists in Russia. That is ironic, because it is now more clear than ever that western leadership actually shares the Soviet inclination for central planning, and they have been increasingly intervening in our markets since the collapse of the USSR. Our officials make economic policy as if healthy markets must be planned and coerced, much like the politburo. Some of this policy is created and run in the open; the government bailouts, Quantitative Easing, and zero interest rate policy, for example. Other programs are more secretive. Investors know the “Plunge Protection Team” exists to be the buyer in markets when all genuine buyers have left. But we can only guess as to what that crew actually does day to day. What these self-appointed market masters do in complete darkness is likely even more controversial and intrusive. They remain violently opposed to audits and other attempts to impose accountability. But, recently, some leaked documents have given a sense of what western officials do behind closed doors. They have actually been micromanaging markets since the 1970s. Ronan Manly with Bullionstar wrote a terrific piece outlining the coordination among western central bankers pertaining specifically to the gold market after Nixon shut the “gold window” and launched the era of purely fiat currencies. Wikileaks published a secret memo sent from London to the U.S. Treasury Department regarding the purpose behind the formation of the futures markets for gold. Officials wanted to create a paper market which dwarfed the physical market and encouraged volatility; all with the aim of discouraging investors from holding bullion. To wit: TO THE DEALERS' EXPECTATIONS, WILL BE THE FORMATION OF A SIZABLE GOLD FUTURES MARKET. EACH OF THE DEALERS EXPRESSED THE BELIEF THAT THE FUTURES MARKET WOULD BE OF SIGNIFICANT PROPORTION AND PHYSICAL TRADING WOULD BE MINISCULE BY COMPARISON. ALSO EXPRESSED WAS THE EXPECTATION THAT LARGE VOLUME FUTURES DEALING WOULD CREATE A HIGHLY VOLATILE MARKET. IN TURN, THE VOLATILE PRICE MOVEMENTS WOULD DIMINISH THE INITIAL DEMAND FOR PHYSICAL HOLDING AND MOST LIKELY NEGATE LONG-TERM HOARDING BY U.S. CITIZENS. The futures markets have served their nefarious purpose very well. Americans today view gold as volatile and risky, and almost no one owns any of the physical metal. So it is with good reason that many investors look at today’s markets and sense the disconnect from reality. We now know what artificial forces produce record high stock prices relative to earnings. We understand why precious metals investors have been driven to distraction wondering why prices never seem to reflect fundamentals. We can see why government regulators might intentionally turn a blind eye to clear evidence of bank traders rigging prices and cheating customers. What are the consequences of all this central planning? It would be impossible to list the full effects. But is easy to identify some of the winners and losers that have been hand-picked by the bankers and bureaucrats who run this show. The banking and finance industry has more than doubled as a percent of GDP over the past 40 years. The government sector is also just about double the size it was in the 1950s in proportion to the economy. Meanwhile, the gold and silver markets spend years with prices held at, or below, the cost of production – a playground for crooked bullion bankers. Western central planners aren’t going to be immune from the consequences of their actions. People are waking up to just how fake today’s markets are. After all the public interventions never end, the leaked documents are generating new awareness, and many fundamental investors now sense the markets are little more than Potemkin villages – even if they don’t fully understand why. These factors are eroding confidence, which means the ultimate consequence of all this central planning may not be so different from that which befell the USSR. The facade can be maintained no longer and therefore crumbles. We may be one big shock in the financial markets away from a collapse of confidence. The jig will be up. And, we can hope, responsibility will be pinned where it belongs. The central planners here in the West should be remembered for being just as inept and destructive as those who once set Soviet quotas for the production of ball bearings.
They have actually been micromanaging markets since the 1970s. That is amusing - all the $ on the planet would be exhausted trying to alter the market against a prevailing price trend for even a few years - let alone decades. We understand why precious metals investors have been driven to distraction wondering why prices never seem to reflect fundamentals. A lot of the gold/silver bugs are naive investors that see gold/silver as a kind of religion, they are manipulated only by the dealers that pump them up with infomercial like delirium - the dealers blame the invisible hand for price not doing as they had promised, this keeps them selling more & more. The metals rise and fall like any other commodity - These bugs got squashed by their own blind greed - they fell in love with their investments. They need to get wiped out before a new bull can begin. There are still to many hanging on to hope and blame.
Perhaps it depends on individual commodities. The actual use and consumption of Gold could be relatively small, when comparing to inventory kept by worldwide central banks that have to consider rates of interests, inflation, printing monies, employment, etc. Some other commodities, due to their large consumption and public demand, as well as relatively small amount of inventory kept by worldwide governments, might be quite different. Just 2 cents.
This is not a good argument. Keep in mind that the private hands involved in the manipulation stories are the same hands that create virtually all $ on the planet. It is not necessary to manipulate the long term trend for a campaign to be successful. Holding the tide long enough for the people that matter to get on board or out of the way, as the case may be, is enough. But aside from the campaigns done for a quick buck, there may be a valid excuse for a campaign done for the "common good". Confidence is the glue that holds many mental constructs that guide our modern world together. It is worth trying to preserve it because it is easily lost but only slowly gained, but then again at what cost. Can overwhelming and secret power be responsibly wielded? I don't know. Whenever talking about inconvenient topics such as this I keep in mind the words of Arthur Schopenhauer. "All truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident."
Short term manipulation of the markets have existed forever - such as stop loss gunning when price is nearing, painting the tape, etc,. That type of manipulation is constant but can not alter a trend. The fed/central banks can influence the markets, even create bubbles - they can not alter the markets indefinitely, nobody has ever been able to show any proof of that. The charts from the 20'-60's look very similar to those from the 70-s to present which is proof human behavior drives the markets - not some micromanaging invisible hand. What the gold bugs fail to get is the majority have to be wrong, when they are going against the trend they are going to lose $. Sitting on mounting losses while insisting they are right will make you broke. Blaming anyone but themselves is a sign they have not learned their lesson yet.
Of course this article would come from a goldbug source. Those morons have been screaming fake markets for the longest...only because their fantasy of economic collapse and skyrocketing gold prices hasn't panned out. Instead of chalking it up to being wrong, they convince themselves that the markets are wrong.
I think the impact to the market is much stronger. Consider that after 2008, nobody assumed interest rates could go so low and for so long. If interest rates truly were a function of market forces, would anyone lend someone else huge sums of money for a house that might not be worth very much for the duration of that loan? So many of these loans are packaged as an investment and sold off to someone else. If market forces were truly in play, money wouldn't be so cheap. And of course the minute you take away cheap access to money, the whole game changes. This might not be as direct manipulation as say the Fed having an account at the CME and buying up all the contracts available for sale after a quick drop, but its silly to assume the markets can be this strong when such fundamental forces are at play. Yes, they do look similar, and its obvious that someone is buying, but who is buying? Take Japan as an example. If the government wasn't directly involved in buying up huge amounts of stocks, where would those prices be? Do we really know who is buying all the stuff in the US? When you consider the QE was all about the government buying shit loads of bonds, is it a stretch to assume they also had a hand in buying securities directly? Once again though, even if you can't point a finger at an account at the CME with the Fed's name on it, their policies affect why people are buying all this shit at all time highs. Healthcare will be a disaster, the tax cuts aren't coming, and regardless of who is buying, its certainly not based on fundamentals. Now this of course doesn't mean that a trader shouldn't follow the trend, but eventually, fundamentals do prevail, and in my opinion, its only because of very strong manipulation of economic forces that the market can be this high given all the problems. I think its abundantly clear to most people that interest rates with either go up, which will crash the market, or they will never go up, which will crash a whole swatch of the sector such as insurance companies, etc. that rely on this, and cause a huge issue with confidence. When this will happen is of course the bitch in trading, but one of these two things will happen, and when everyone runs for the exits, things will get interesting.
I am over a decade long member of investment forum where these things are discussed on regular basis,group of people who think for themselves and was often correct in their previous predictions.Reasons for previous crash were debated as early as 2006 I read this y'day from one of it's member's post(can't post a link it is a non-public forum )