Market Manipulation

[MarkosChido]

Hello Brotherjohnf,
I am a noob when it comes to silver and i recently ran into an article which had some questions in the end of the article. I myself cannot answer them although i am very curious so i thought i would ask you. here are the questions from the article and the link to it at the end. I greatly appreciate everything you do. Thanks

PS i apologize if this has been answered before. if you could point me in the direction. Thanks

http://thesilvertribune.com/precious-met...ipulation/

Q: Why do these banks (JPMorgan, etc.) even give a damn, in the first place, what the price of the metals might be?

The only reason that makes any sense is that they are acting as proxies for the US Treasury; the Treasury doesn't go into the markets itself. But does it direct a commercial bank to act for it to buy or sell gold? It might. But there's zero proof of any sort it's doing that.

These banks have no dog in the fight; they couldn't care less what the metals prices are and have no reason to try manipulating the market.

Q: Why has there been zero word from their traders about how stupid their bosses are for fighting a gigantic 10-year bull market? These guys all know each other, and they gossip with the same delight as teenage girls.

It's hard to keep a long-term illegal collusion a secret. Two parties might possibly be able to keep a secret. But six or eight commercial banks acting in broad daylight? It's said that three individuals can keep a secret, but only if two of them are dead. But for a half-dozen trading operations to do so? Wall Street is the world's greatest rumor mill. But there's never been a rumor (outside of those created in conspiracy circles, who offer no sources) that the bullion banks are acting, in concert or individually, as agents of Timmy Geithner.

Q: If, as alleged, these banks have been short gold from the bottom of the gold bear market at $255 in 2001 and the silver bear market at $4.25, also in 2001, how can they possibly absorb tens or hundreds of billions of losses? Did they expect to take the metals to a fraction of their 1971 lows?

Trading desks make mistakes. But they don't stay short in one of history's great bull markets – it's not the way traders earn bonuses. How stupid are the supposed "not for profit" sellers of gold supposed to be?

Q: Exactly where and how do they supposedly get the capital to cover these losses? Haven't they ever heard the old saw, "He who sells what isn't his'n must give it back or go to prison"? No bank can tie up billions in capital fighting the market for a decade.

Q: Exactly who originated this idea of trying to suppress prices using the futures markets?

Here a well-known writer on this subject suggested the following to me, via an email, when I asked: "The big commercials, starting some 25 years ago, discovered they could dominate the market and force technical traders in and out of the market when they wished at great profits to the commercials. But they miscalculated and stayed in too long, and now they are trapped."

I don't buy that explanation for several reasons. Of course the big guys, like commercials, are always bullying small speculators. The small guys use technical trading systems, which make it easy to figure out where they're buying and selling. Small traders are always minutes behind the market. And small traders usually use way too much margin, so they're prone to being squeezed and panicked. This has always been true, not just for the last 25 years. It's part of why small traders are notorious for losing. The commercials are typically on the other side of the trade.

But one thing is for certain: nobody (certainly not commercials) allows himself to get in so deep he's trapped for 12 years in one of history's greatest bull markets.

Q: Why fight the market, and get trapped, in just gold and silver? Why aren't they trying to suppress copper, platinum and palladium as well? For that matter, every commodity?

I don't credit the people who run central banks or national treasuries with a great deal of financial acumen; they're basically just political hacks, flunkies that went to "good" schools, dress well and like feeling important in a safe niche in the bureaucracy. But they don't want to lose their jobs by being that wrong for that long.

Q: Why would the US Treasury (if it's behind a gold suppression scheme) make things easier for the Chinese, the Russians, the Indians and numerous other developing countries by suppressing the gold price? They simply take advantage of the lower price to buy more.

The arguments for suppression of gold make very little sense when you examine them. The arguments for silver make absolutely no sense at all; it's a tiny market that nobody cares about except for silver fanatics, who treat it like a religious icon. That said, I'm at least as bullish on silver as gold – but a discussion of that will have to wait.

If anyone could answer these questions, I'd appreciate it. I advise readers to buy gold – even at current levels – but I'd like to see them do it for the right reasons. And it seems to me the arguments about gold manipulation are more redolent of religious belief than economic reasoning.