Market Manipulation? It can’t be so!

In Greek tragedy they had a cheap trick to get the actors out of an impasse in the script: the deus ex machina. When the characters are painted into a corner, a crane backstage (“machina”) would lower down a character (“deus”, a god) who with a wave of his hand would overcome all difficulties. So deus ex machina or god from the machine is not great writing, just a contrived device to overcome a poorly planned plot.

In the same way, I could every day explain market movements by pointing to the Nice Government Men. More, a matter of notorious fact and law & government policy the US Treasury intervenes in markets through the President’s Working Group on Financial Markets (Plunge Protection Team, primarily for stock markets) and in the silver & gold markets (Exchange Stabilization Fund, Gold Reserve Act of 1934, etc.). Thus it is not conjecture but hard fact that your yankee government intervenes in markets.

But not every day. More, because markets are so huge, they can only manipulate at the margin, and never successfully long term against a primary trend, witness their “suppression” from $4.01 silver & $252 told to $20 & $1,290 today. If that “success” ain’t the hallmark of a government job, I don’t know what is.

Yet although they don’t manipulate every market every day, sometimes they do, especially when they want to skew public perception. To convict of a crime, you must show that the criminal had Motive, Means, & Opportunity.

Do the NGM have Motive lately to manipulate gold? Well, with a war brewing & the dollar tanking & $3+ trillion of newly printed money waiting to hit consumer prices, I’d say so. Nor do they want folks to see stocks tanking and gold rising. Even as great a nincompoop as Alan Greenspan knew that the public views gold’s price as the barometer of US dollar’s health.

Do they have the means to Manipulate? Go visit if you need proof, but they’ve been intervening in markets for over 80 years that I know of. And the opportunity arises whenever they take it up.

All this is my sideways explanation of why gold & silver MAY have dropped today: the NGM simply couldn’t stand to leave gold alone while the dollar is tanking & gold offers a safe haven from potential war. (I do not, by the way, put much credence into “safe haven premiums” on gold. They vanish as quickly as they appear.) On the other hand, gold & silver may be signaling some as yet unresolved weakness, some lingering doubt over both metals that requires time and lower prices to resolve.

By the way, the NGM let down a DEA magna et crassa ex machina today when Mother Janet Yellen spoke to congress. This assuaged all those panicky stock investors & pumped up the stock market, & apparently bopped gold on the noggin. Looking deeper, where she said anything in the blizzard of persiflage, she said they would keep interest rates low for a long time. That of course is GOOD for gold, because it lowers the opportunity cost suffered by receiving no interest while you hold gold. Never mind.

From Franklin Sanders Daily Commentary, Wednesday, 7 May a.d. 2014.


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