by Avi Gilburt, GoldSeek:
This past week, Chris Powell, from GATA, took issue with my presenting Bill Murphy’s admission that none of the “fundamentals” in the gold market have meant anything to the price of gold. But, it is quite clear that he did not understand my point. So, please allow me to clarify my point.
Let’s start with Mr. Powell’s presentation of GATA’s perspective:
“GATA’s work explains why fundamentals of supply and demand have not been manifesting themselves in the gold market — indeed, why neither fundamental nor technical analysis of the gold market is much use.”
Mr. Powell does not even realize that the premise upon which GATA “works” is completely erroneous upon its face, and ultimately useless to investors. You see, Mr. Powell clearly states that the premise upon which GATA works is that “fundamentals of supply and demand” are what is supposed to control the metals market.
But, even Mr. Murphy noted this to be an erroneous premise quite clearly: “[n]o amount of quantitative easing anywhere in the world has done the price of gold any good. Neither have near-zero interest rates. Nor has enormous physical demand from India and China. Nor the staggering debt in the United States. Nor a race to the bottom in many currencies.”
In other words, by their own admission, the fundamentals of supply and demand are not operative in this market. Moreover, the underlying premise that fundamentals control the gold market is wrong, ab initio. Thus, searching for a reason as to why fundamentals do not control the market – such as manipulation – will serve no one in being able to identify how the gold market is supposed to work. Let’s take this perspective apart step by step.
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