Wednesday, February 20, 2013

Gold and Silver prices are being manipulated down


Why do I believe that gold and silver prices are being manipulated down?  Because there are large sell orders placed in the market all at once and at inopportune times.  No seller trying to maximize their proceeds would place such large orders all at once because it drives down the price they realize.  So why are and who is placing large sell orders?  I can think of only one reason: to suppress the price.  

Some links to discussion about large sell orders of precious metals:
http://news.sharpspixley.com/article/ross-norman-flash-crash-in-gold-whodunnit-/145195/
http://www.resourceinvestor.com/2013/02/15/the-untold-reality-of-gold-and-silver-price-contro?ref=hp
http://harveyorgan.blogspot.com/



Interestingly gold lease rates recently turned from negative to positive for 3 month leases.  If lease rates are negative the lessor will pay you to lease.  You could lease gold, sell it, earn interest on the proceeds until the end of the lease term, then buy back the gold from the market, return it to the lessor, and collect the lease payment.  In the process you earn the interest and the lease payment.  Of course this would only be profitable if you can buy the gold back at a price near where you sold it.

http://www.kitco.com/lease.chart.html


The quoted and publicized prices are for 'paper' gold.  Paper refers to a price for a gold contract and not physical gold.  The contract can be an option or a forward, for example.  In general the contract specifies that the owner can receive the value of gold and not necessarily physical gold bullion.  Markets trade contracts instead of the physical commodity for convenience.  Traders could not move metal in an out of their vaults as quickly as the amount they buy and sell in a day.  

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