Saturday, October 12, 2013

Is the Plunge Protection Team Actively Manipulating the Gold Price?

This is what I wrote as part of Friday's  EPJ Daily Alert:

As I have said before, I am not one to call out gold manipulation withv every down move in gold. However, gold trading was temporarily halted on the CME for 10 seconds this morning at 8:42 AM ET for a "stop logic event," according to Bloomberg.

A big trade knocked $25 off the price of gold in a short, two-minute span.The trade was a 2 million ounces of gold trade hitting the market, and it was one trade, a sell order. The sell order triggered a stop loss orders, pushing the price even lower. Whoever is doing this selling is doing very sloppy selling and appears to want to trigger the stop loss orders. It looks very suspicious to me[...]

Although I continue to believe we are in a mild downtrend in gold, traders should go long after this price drop for a quick upside trade. Long term accumulators, continue to accumulate. Gold manipulations, whatever their origins are very short-term in nature.

Following the October 1 drop in gold, I wrote in the EPJ Daily Alert :
I am generally not one to shout out market manipulation every time there is a big move in a market, but the current down move in gold looks mighty suspicious to me. As I write gold  is down $40.00  an ounce.  That's 3.01%. We know from comments by Pippa Malmgren, a former Plunge Protection Team member, that the PPT watches gold and knows where its weak price points are. That is a big statement from an insider. It is not hard to jump from that statement to the idea that the PPT enters the market at key times.

Consider the current situation, overnight trading in gold saw some mild safe-haven buying interest due to the U.S. government shutdownt. This is the type of  action you would expect from the gold market, especially given that  overnight the US dollar hit a 1-1/2 year low against the safe-haven Swiss franc and a near 8-month low against a basket of widely-traded currencies, DXY.

It is thus very odd that gold did not move in tandem against the dollar. The selling in gold and silver (Silver is down 4.5%) didn't start until gold started trading in the US. The selling pressure in gold triggered sell stops  in quick fashion.  This is the way manipulators play the game: Start the selling just above stops and let the sell stops take over from there.

It's possible it was just locals taking out the stops, but given the timing relative to the government "shutdown," it smells an awful lot to me like PPT action attempting to suffocate any signal of panic in the markets over the gvt shutdown, by suffocating any gold climb.

Here's the UBS veteran trader Art Cashin commenting Friday on the recent activity in gold and reaching pretty much the same conclusion I have. He tells King World:
Well, it (gold) is under some pressure.  And while I am far from being a conspiracy theorist, I could see where some of the people involved in that asset class would be concerned because we’ve had several incidences of very large sales.

And they all seem to come at approximately the same time in the relatively early morning in New York, usually before the stock market has opened.  The question there is, why would you suddenly dump a large amount of gold?  Why wouldn’t you try to piecemeal it out over the (course of the) day?

So, if that happens once it could be an accident of technology, or it could be a simple error.  But when it happens 5 times over a period of months, it does raise questions.  Is it being done purposefully?  Is somebody trying to send a message?  Is somebody trying to influence the market?

We don’t have enough details, but as I say, as a guy who doesn’t ordinarily believe in conspiracy theories, I think there should be some further investigation as to who is selling, and why always at that time?


  1. This is probably one of three hundred articles I have read and digested on the subject.

    The President's Working Group should have been abolished years ago. Do you know who sits on it?

    Of course they manipulate gold. They have to. You can't construct a false economy with no inflation and then allow gold to run away and devalue your precious dollar. They will consistently flush the price of gold until such point that QE is dissolved.

    The price of gold plummeted when Argentina demanded theirs back- and the price plummeted again when Germany demanded theirs back. Odd. Until you realize that banks can use an endless paper supply to force the price of gold down and then acquire un hypothecated gold much cheaper for delivery elsewhere.

    It's all just one giant, banker manipulated market. All you can do is buy physical gold as cheaply as possible- park it safely away- and know that when the great meltdown occurs (and it will) you are protected.

  2. I think you and Cashin are being far too circumspect when it comes to these absurd price actions. No sane person or institution sells a huge amount instantaneously. This is clear and blatant manipulation.

    While I personally don't care how far they drive the price down (I'll just buy more), it is likely to scare individual Americans out of their positions at precisely the wrong time. When the dollar panic eventually occurs, these people will rue the day they had sold their precious metals.

  3. Interesting that an asset so easily manipulated is considered a safe haven by the far right. Is it a coincidence that "how old is the Earth" is also a gotcha question to this crowd?

    1. The Chinese are the far right? Poof goes your generalization.

    2. Far more coincidental than the correlation between simple-mindedness and the use of the left-right dichotomy to understand politics.

    3. LOL@JWolf!!!

      Only a submoronic tool like you could believe that printing trillions of dollars would not dilute the value of the dollars already in existence.

      Gold is subject to short term volatility, but 99% of that "gold" is paper gold, most of which has been infinitely rehypothecated. Actual physical gold at hand...well, when the dollar begins to collapse (and it will happen, and it will be violent and happen over a short time) that "paper gold" will be worthless.

    4. Jerry, gold has outperformed every asset class including real estate since the US came off the gold standard in 1973 even at today's pull back prices and even when adjusted for inflation. Gold is not considered a safe haven by any particular political ideology, it's been considered a safe haven for 6000 years of human history. It's long term buying power has vindicated its status as such.

  4. Sorry, almost every time some market drops, it is blamed on some manipulation. I've seen and heard this for most of the 30+ years I've traded futures, including when I mostly traded gold futures.

    Whether or not it was really caused by the plunge protection patrol, which makes little sense, given the relatively high stock market, and relatively low price in gold, if market demand/conditions were not in accord with a sell-off, prices would have recovered just as fast as they dropped.

    Sometimes duping a large amount in one feel swoop, gets a better price than constantly pressuring a market, which is good at smelling out a large, steady seller, and thus pushes the mkt down before the seller could do the necessary selling.

  5. Unfortunately, There's nothing I can do about it.

  6. I just don't get it. Why do otherwise intelligent people fail to recognize that silver gold are suppressed via the Comex? So cui bono? Who benefits most from the USD appearing stronger than it actually is? Most obvious candidate: the banking industry, which profits from the world's ignorance regarding their business model, i.e. credit based money created out of thin air. And their industry trade association, read cartel, would be the most likely source of the manipulation.

  7. OK Anon @ 3:58, do you also believe that Oil shooting to $150/barrel was simply supply and demand? Ridiculous

  8. It's possible it was just locals taking out the stops, but given the timing relative to the government "shutdown,"