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The Gold Price: Management or Manipulation?
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By: David N. Vaughn, Gold Letter, Inc.
How did gold do this past week?
It continues to do its own “thing” & right now that “thing” is primarily to continue to strengthen & to consolidate. And I know it gets very old to continue to hear the same ole’ thing, but it is this “same ole’ thing” that is eventually going to make a lot of gold stock owners a lot of money.
Gold is not moving too quickly up & it’s definitely not heading back down any time soon.
The powers that be are working diligently to keep gold from rising too fast. And while one power is attempting to cap gold’s rise another group of individuals are with haste buying every available ounce of gold when the price drops a little.
And what we just stated above are by definition the defining characteristics of a bull market. No matter how much effort Tony applies to keep that Jeanie in the bottle that Jeannie just pushes that much harder to get out.
Tim Wood at Mineweb.com is writing some good stuff lately. Read the following by Tim as he writes about Bill Murphy.
“He (Bill Murphy) is also prone to incendiary statements and imprudent foretelling that have made a pariah of the activist organization (GATA) in reasoned company.” Tim Wood, Mineweb.com, 8-24-2004
Sounds like Tim is struggling to say some kind words about his buddy, Bill Murphy. Personally, I interpret the text above as a complement. Let’s read part of it again.
“He (Bill Murphy) is also prone to incendiary statements…”
No one will ever accuse Bill Murphy of being a “patsy” & I respect anyone for having the guts to set the world aflame by making “…incendiary statements…”
But what does that last part say again?
“…imprudent foretelling that have made a pariah of the activist organization in reasoned company.”
Well, Paul Revere in his time was accused of “…imprudent foretelling…”
What’s that word used in the middle of the sentence?
“…a pariah…”
Wow! A strong word! How does the dictionary define a “pariah?”
Pariah - “…member of a low caste…” Funk & Wagnall’s Standard Desk Dictionary, 1976
[/B]Yes, one of the common folk! Nothing wrong with that.
Let me share a little secret here about Tim Wood & Bill Murphy. Ever seen the movie “Twins” with Arnold Schwarzenegger & Danny Devito? Bill & Tim don’t know it, but they are really genetic brothers accidentally separated at birth long ago.
Let’s read some more of Tim’s good writing.
“Interview: John Embry, Sprott Management” Tim Wood, Mineweb.com, 8-24-2004
John Embry: “…gold should be trading at least $200 higher than it is.”
And who is John Embry & should we be listening to his assessment of where gold should be?
John Embry runs Sprott Asset Management Inc., a private investment company, & manages over $1.6 billion in assets for various institutions, endowments & high net worth individuals. Well, if others have given the man 1.6 billion of their money to invest maybe we too should listen to him.
“John Embry: Well I’ve been on record for some time as thinking gold in the next, I said by the end of the year I might be right but I would say certainly in the next six months $500 & I don’t think there’s a great deal of difference between what we went through in the 70s & what we will go through in the rest of this decade so I think we’ve got a significant move way beyond that over the next five to ten years.”
Personally I do not like to predict how high the gold price may eventually climb or even when it may reach such & such a height. But what I will predict & place our emphasis on is the development of a “trend.” And the long term “trend” is for gold to climb dramatically higher.
Remember that ole’ bugaboo, inflation?
"Inflation isn't going away, and it's worse than the government says.”
Bill Bonner, The Daily Reckoning, 8-26-2004
And more?
“For example, the Bureau of Labor Statistics said that for the quarter ended in July, prices of food and beverages rose at a compounded annual rate of
around 5- 5.5%. Yet Sysco, the big food distributor, says that inflation last quarter, "as measured by the rise in our cost of goods," was 8%.” Bill Bonner, The Daily Reckoning, 8-26-2004
And I know we continue to tire of hearing the debate about inflation but please remember what our objectives are here. Our objectives are in outlining & pointing out “trends” & it would take a real idiot not to recognize inflationary forces at work in our world every day. And the “trend” is for these inflation elements to grow & grow.
You don’t believe me that inflation is real & a growing presence? Go to the grocery store & purchase a gallon of milk.
Now here is an interesting bit of news. Read the following & remember about all those thousands of good jobs our government is telling us are being created every month.
“The number of Americans in poverty & without health insurance each rose by more than 1 million in 2003, the Census Bureau reported Thursday.”
Peronet Despeignes, USA Today, 8-26-2004
Let me state something for the record here.
Good jobs pay their employees health benefits. The fact that the number of uninsured is growing by leaps & bounds is an indication that all of these new wonderful jobs our government is telling us about are all crap jobs that are basically subsistence type jobs that barely pay the bills.
And more?
“Ranks of uninsured grow to highest since ‘98”
“…the figures represent a stark reality for a growing number of Americans…” Julie Appleby, USA Today, 8-26-2004
Yes, the “…stark reality…” is that America is losing good jobs dramatically every year & not gaining them.
One night last week I was up late working in the office when I decided to get up & cook something in the kitchen. It was after midnight & everyone in the house is asleep. Well, I am busy doing my thing in the kitchen & of course the cooking smells began to permeate through the house.
The strong cooking smells actually awakened my wife. She hollered from the bedroom asking what was that horrid smell? She said she smelled an old shoe. She never has appreciated my cooking & I do try.
Are you familiar with the report John Embry with Sprott Management put out recently about the gold manipulation?
“Not Free, Not Fair concludes that there can be no other explanation for the apparently erratic behavior of gold but “severe long-term manipulation.” John Embry, Sprott Asset Management Inc, 8-19-2004
And what is this report about?
“…the more we investigated the gold market, the more readily apparent it became that the gold price appeared, in the politest of terms, to be managed. In fact, the price action seemed in many instances to be counterintuitive. On days when there were particular reasons for gold to rise, it often actually declined or was aggressively capped if the buying pressure proved to be too strong.” John Embry, Sprott Asset Management Inc, 8-19-2004
And whether you want to call this behavior appropriate management or give it a powerful word such as conspiracy the fact is that the central banks have a history of “managing” & controlling the gold price. Personally I don’t care if it is referred to as management or conspiracy our point is that the “management” of any commodity just so a group of elitist insiders & banks can make a lot of money is not right & it should not be legally allowed. The bottom line is that a handful of elitist folks made a ton of money for years off the backs of the “Joes & Janes” of the world. And that is not right.
The following additional text below is real good! Pay attention to the following & absorb it real well.
“A gentleman by the name of Brian Bloom attempted to explain the situation in a recent essay in which he stated, “I want to differentiate here between the meaning of the word ‘manage’ and that of the words ‘conspiracy’ and ‘manipulate’. The latter are emotive words that imply joint clandestine action, or anti-social behavior, whereas ‘manage’ implies joint overt and legitimate action”.1 John Embry, Sprott Asset Management Inc, 8-19-2004
The following text gets even better.
“He then went on to add that “there is no secret that the world’s central bankers are involved in ‘managing’ markets”2, suggesting that they were acting in the best interest of society and therefore their actions were justified. While appreciating Mr. Bloom’s attempt to clarify the matter, we at SAM are not terribly interested in semantics, believing that markets are either free or they are not free, irrespective of what terms are used to describe their lack of freedom.”
1 Brian Bloom, Managed Markets (July 30th, 2004): http://www.goldeagle.
com/editorials_04/bloom073004.html John Embry, Sprott Asset Management Inc, 8-19-2004
Wow!
Let’s read part of that text above again. Powerful words there.
“…markets are either free or they are not free…”
And remember, that when ever we observe this “management” you will always find a trail of blood suckers making a tidy profit off of this type of “management.”
And when ever I hear that this “management” is “…acting in the best interest of society and therefore their actions were justified…” I want to puke from the blatant hypocrisy.
And who else additionally benefits from the “management” of gold?
“Who are the beneficiaries of the gold price suppression? The central banks, who by virtue of their ability to control the gold price, hide from the public the true reality of their increasingly reckless monetary policies, and powerful financial institutions who continue to take advantage of unsuspecting investors laboring under the illusion that gold is indeed a free market.” John Embry, Sprott Asset Management Inc, 8-19-2004
Yes, let’s read part of that above text again.
“…powerful financial institutions who continue to take advantage of unsuspecting investors…”
And where are the investigators who were so quick to lock up Martha Stewart & prosecute the folks at Enron, WorldCom & other places?
“A government that fails to…maintain proper banking controls, such as in Brazils in the 1980s or present-day Zimbabwe’s, steals from its citizens as surely as Edward III & Stalin did.” William J. Bernstein, The Birth of Plenty, 2004
Yes, let’s use the word “steal.” Because when a government loosens it’s banking controls to allow a minority to profit at the expense of the masses then theft occurs.
“The absence of even one of these factors endangers economic progress & human welfare; kicking out just one of the four legs will topple the platform upon which the wealth of a nation rests.” William J. Bernstein, The Birth of Plenty, 2004
Yes, the wealth of a nation ultimately rests upon the pursuit of fairness & equality & when this collapses the loss of a country’s entire wealth is not far behind.
The following text below addresses well the issue whether it is of relevance if this “management” of gold is “tacit” or “overt.”
“GSA (Gold Stock Analyst) continues to believe that the gold price is manipulated by tacit, rather than overt, collusion; much the same as when one tobacco company raises prices, the others usually follow along.” John Doody, Gold Stock Analyst, September 2004, http://www.goldstockanalyst.com/sample/Sep04.pdf
Now I love John Doody to death & continue to recommend everyone to give his newsletter subscription a try if they are serious about gold stocks. But here I have to disagree with John.
This is the same line of reasoning we hear being repeated time & time again.
Is there really a big difference between whether our actions are “tacit” & “overt?”
If by our “tacit” (understood) actions we know that driving drunk may cause us to kill someone on the highway is the judge going to treat us more kindly & let us off scott free because our actions were “tacit” though it is understood well what type of outcome results from drinking & driving?
It’s OK if the central banks manage gold because their actions are “tacit” & not “overt.” Well, the courts state that ignorance of the law is not a defense. And in my opinion if you went about your actions with the complete understanding that someone was going to be hurt then the crime is just compounded that much more.
And the fact is that because of the central banks “tacit” management of the gold price a lot of “little” people have lost a lot of money & lives have been destroyed. If we are going to live in a society where excuses are going to be made to rob the little people then where is justice?
And really ultimately shouldn’t the law be determining if criminal intent is involved here & what crimes have been committed? We really should not even be splitting hairs on this issue as this is what the courts are designed to handle.
Fortsetzung folgt.......
for three months to get throughput up to a sustainable 350,000 tons a month at an average recovery rate of 90%, but we would be very happy to take over if AngloGold Ashanti doesn't want to run the mine," said Bristow.