from Peak Prosperity:
Gold price suppression!
The amount of ink spilled on this topic could fill a supertanker. Goldbugs the world over believe in the suppression story as an article of faith, and indeed, the evidence that “something is happening” appears incontrovertible.
Given how important the subject is to Peak Prosperity and the bullion-owning community, and the volume of energy we expend talking (and talking, and talking, and talking) about it, how much information do we really have about what is actually going on? Has anyone quantified suppression? Do we know how, when, and how frequently it occurs? Once a month? Once a day? What does it even look like? For many of us it might be like that old Supreme Court Justice’s definition of obscenity: I can’t define it, but I know it when I see it.
So, I’ll take my best shot at defining suppression. Then armed with a definition, I should be able to discover how and when it takes place. To see how frequently it happens, and what the immediately observable effects are – as well as the apparent longer term effects of such events. Does the fact that a suppression attack occurs means the price trend changes? Is an attack prima facie evidence of successful control of prices over the long term? And is anything else being suppressed, too? Perhaps everything is being suppressed by our banking lords and masters!
The visible attacks that we have all seen involve “someone” dumping (or buying) large numbers of futures contracts in the market when activity is relatively lighter than usual, with the intent of deliberately moving price. Most goldbugs like to say that gold and silver suppression attacks occur in the “wee hours of the morning.” Loosely translated, I take this to mean during non-US and non-London trading hours. So that’s the time range I will use: 4pm-3am Eastern; from just after US market close through to the London market open.
So how do we define a deliberate act of suppression – or let me state it more neutrally – a “volatility event”? The ones we have all seen involve a large spike down (or up) in a small increment of time. I’ll define this more specifically as at least a 0.5% move within a one-minute period. So, at current prices, that’s a $6 move in gold or a $0.08 move in silver that happens within one minute. That’s just the minimum amount – often the moves are much larger than that.
Goldbugs tend to believe they are a heavily persecuted lot, with their favorite metal singled out for routine beatings. Is there a factual basis for this feeling? Or do volatility events occur for other futures contracts also?
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