It's getting hammered. In August 2011, it rose above $1,900 an ounce. It was an all-time high. At midday April 15, it was $1,364. It's a 28%+ decline.
Silver's also hit hard. In 2011, it exceeded $48 an ounce. It plunged to its midday April 15 $23.45 level. It's more than a 50% decline.
What's next for both metals remains to be seen. Volatility characterizes them. Major factors drive them.
Gold is a global thermometer. It reflects monetary, geopolitical and economic conditions. It's driven by supply and demand considerations.
It's the longstanding hedge against uncertainty. It's bought to do so against inflation, the declining value of fiat money, and disturbing global geopolitical conditions.
It has real value. It's the ultimate safe haven. It's been so for thousands of years. It's track record is unmatched. Views differ on what's happening now.
Wall Street manipulates all markets. Pumping and dumping reaps enormous profits. Bankers and insiders win. Ordinary investors lose out.
Market-rigging mechanisms are longstanding. On March 18, 1989, Ronald Reagan's Executive Order 12631 created the Working Group on Financial Markets (WGFM). It's called the Plunge Protection Team (PPT).
Its officials or designees include:
- the President;
- the Treasury Secretary as chairman;
- the Fed chairman;
- the SEC chairman; and
- the Commodity Futures Trading Commission chairman.
They focus on "maintaining investor confidence…."
"(T)he Working Group shall identify and consider:
(1) the major issues raised by the numerous studies on the events (pertaining to the) October 19, 1987 (market crash and consider) recommendations that have the potential to achieve the goals noted above; and
(2)....governmental (and other) actions under existing laws and regulations....that are appropriate to carry out these recommendations."
Government and Wall Street collude. They manipulate markets doing so. They move them up and down. Enormous profits are made both ways. Most people don't know what goes on.
Manipulation is as commonplace as investing. Tools get increasingly sophisticated. Market prices and true worth often diverge. Claiming markets move randomly doesn't wash.
In 1999, the Counterparty Risk Management Policy Group (CRMPG) was established. It came in the wake of the Long Term Capital Management (LTCM) crisis.
It's used to manipulate markets. It lets financial giants collude through large-scale program trading. They move markets up or down as they wish.
They bail out troubled members. They eliminate others. They do so to consolidate to greater size. They do what ordinary investors don't understand. Many lose out and get trampled.
Financial history is strewn with examples. Big players win. Small ones get crushed. Profits are privatized. Risks are socialized. Wealth is increasingly distributed up.
Financial oligarchs benefit most. Free lunch benefits are gotten at the public's expense. Wealth gets more than ever concentrated.
Paul Craig Roberts explained more. He discussed Fed market rigging. He was the first to do so. Among other reasons, it's done "to protect the US dollar's exchange value…"
Fed QE threatens it. By increasing dollar supply faster than demand, its "price or exchange value….is set up to fall."
Doing so raises import prices. Domestic inflation follows, "and the Fed would lose control over interest rates."
"The bond market would collapse, and with it the values of debt-related derivatives on the 'banks too big too fail' balance sheets. The financial system would be in turmoil, and panic would reign."
Rising gold prices reflect declining dollar valuation confidence. Fed-used "paper gold market" "naked shorts" offset "rising demand for bullion possession."
They drive prices lower. Naked shorts reflect what sellers don't have. They sell short regardless. "In the paper gold market," they don't plan taking gold delivery. They want cold hard cash.
Dumping hundreds gold tons on the market affects it greatly. It "drives down the price." Unwary holders lose out big. If things go as planned, naked short sellers benefit enormously. The dirty game works that way.
Roberts expects gold prices to fall further. It's hard knowing for sure. Plans perhaps could backfire. Generally, as gold goes, silver follows.
China, Russia and other central banks are loading up on gold. They'll likely jump in at bargain prices. Doing so would pressure "the dollar's exchange value."
Manipulative attempts to protect it may end up "hastening (its) demise." The fullness of time alone will tell.
It hasn't happened so far. On April 15, gold plunged more than $140 an ounce. Its 9.3% decline was the biggest one-day drop since February 1983. It settled at $1,361.10 an ounce.
What's a holder to do?
Investor Marc Faber "love(s) the fact that gold is finally breaking down because that will offer an excellent buying opportunity."
"The bull market in gold is not completed."
He expects a "major low in gold within the next couple of weeks."
"(Y)ou should actually buy (it) as a trade."
Before Friday's decline, it was way overbought. Faber now thinks we're "as oversold" as during the 1987 stock market crash. It proved a major buying opportunity.
For now, Faber recommends treading carefully. "From a longer term perspective, (he'd) give it some time." He maintains his long-term bullish outlook. He's not alone. He's not selling.
Market analyst Graham Summers blames the sell-off largely "on institutional liquidation in Asia where Japanese bonds are being sold."
Doing so followed the Bank of Japan's massive QE announcement. It's doubling down on previous policy. It's high-risk. What failed for over 20 years is being repeated.
"With this in mind," said Graham, "the move in gold looks to be several large institutions liquidating positions to meet margin calls or redemptions due to the plunge in Japanese bonds."
China's slowdown is another factor, he says. Its growth stimulated post-2009 recovery. Heading south now bodes ill. Graham expects an eventual financial market "bloodbath." It could come anytime, he believes. Commodities could crash with it.
Gold's technical damage is "severe." Prices may decline further. They've had a great run. Nothing goes up forever. Stay tuned for what follows. No one knows for sure.
Stephen Lendman lives in Chicago and can be reached at firstname.lastname@example.org. His new book is titled How Wall Street Fleeces America: Privatized Banking, Government Collusion and Class War. Also visit his blog site at sjlendman.blogspot.com and listen to cutting-edge discussions with distinguished guests on the Progressive Radio News Hour on the Progressive Radio Network Thursdays at 10AM US Central time and Saturdays and Sundays at noon. All programs are archived for easy listening. http://www.progressiveradionetwork.com/the-progressive-news-hour/
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