Are Precious Metals Values Being Manipulated? posted by Jackson

[CSJournals-migration]

3 recent whistleblowers have come out from Wall Street

 

As I continue to see the gradual slide of gold and silver values from what were highs of $2000+ for gold and $50 for silver ( recently-not just 1979), I get filled with mixed thoughts.

 

First is the feeling of anger that the precious metals I have stowed away have been intentionally manipulated out of their value. We all know that Wall Street is a bunch of crooks but when the occasional whistblower comes out--like Greg Smith from Goldman Sachs or Andrew Maguire has from JP Morgan and lets you know the details of how they trend these markets at their whim to sell a bunch to investors and then they pull their own money back out when the price goes up allowing for quick millions in profits--well that's when I get ticked. On top of this, the "too big too fail" banks that got billions/trillions in our tax money and 16 trillion from the Fed ( yes, that is true-16 trillion that the Fed gave to Wall Street in secret loans during early 2009)-on top of the manipulation they already of a huge advantage. A company like Goldman can buy thousands of ounces on paper of silver with just a small percentage% margin required !! I think that it was in March or May of 2011 that Comex raised the cash deposit to acquire rights to 5,000 ounces to $16,000. This increase was followed by silver dropping from near $50 down under $30 within a few weeks.

 

It's still not a bad deal if you're a Wall Street bank because at $30 an ounce that is $150,000 worth of silver for just a $16K deposit. I always wondered what would happen to the price of precious metals if everyone who owned PAPER silver suddenly called their brokers and asked them to go ahead and mail them their physical silver. It would be the same as if everyone at once decided to withdraw their cash from their accounts--chaos. Obviously their are multiples and multiples of electronic money compared to actual physical currency and one of the untalked about subjects concerning precious metals is that they are buying and selling more than actually exists.

When JP Morgan buys 50,000 ounces of silver for their $160,000 cash deposit, you don't really think someone ships them physical silver or that there is a ginormous vault somewhere where they place big signs on giant stacks of bars with "Reserved for JP Morgan" on it do you? No, they sell what they don't have possesion of and quite possibly doesn't even exist.

 

Having said all of that--and I can send you links to verify this info and also about how the manipulations of market values are done, just PM me- after venting I also must admit mixed feelings. You see, I buy precious metals for one simple reason- they are a great hedge against the devaluation of our fiat currency.

Unlike some who have posted here and urged others to buy precious metals "cause they're going up and you can double your money" I'll never say that. If precious metals double in value it's a good chance that gasoline, groceries, clothing and keeping the lights on and air conditioned at home is gonna double in cost.

I always liked the analogy: in 1913, 100 years ago, a finely taylored suit would cost you $20 cash or a $20 gold piece. Today in 2012 it would cost you over $1,500 in Federal Reserve notes to buy that custom taylored suit-or you could still buy it with that same $20 gold piece. Salaries are no longer rising at the same rate as inflation and the devaluation of our currency- so I buy what little I can as part of a diversified retirement plan.

 

Note: I'm not talking any financial collapse or anything along those lines--just that if we can somehow figure out a way to continue our debt-based monetary system, and creatively find ways to prolong the inevitable indefinitely--well it seems obvious that inflation is going to continue as it has for the past 100+ years. It just doesn't seem to hurt as much if I can turnsome paper into metals that may keep relative pace with inflation.

 

So although I'm a bit peeved to find out about the precious metals value manipulation, at the same time I'm looking at this as an opportunity. I'm going to start buying bullion again. Silver may be headed for $20 an ounce and gold could drop under $1500..my guess ( and it is just that-a guess) is that 10 years from now I'll probably not be kicking myself for buying at current prices-I'll probably be kicking myself for not buying more.

 

Here's a nice little item I picked up recently. The 2012 new design British Sovereign. Gold will have to rise quite a bit for me to make any money on this one as bullion-but I didn't get this one for bullion, I loved the design the second I saw it.....Happy Hunting all

 

See more journals by Jackson

[RWB]

All commodities markets are subject to manipulation - direct and indirect. The big players balance to maximize profit, nothing else. They use spot and forward markets to cover activity in the unregulated bourse. That is much of why gasoline prices rise fast and decline slow.

 

When you put money into very tiny markets, such as gold or silver, the likelihood of manipulation rises.

 

[coinsbygary]

You know for the most part I am a capitalist, and I believe that capitalism has given us a prosperous middle class that is attainable by ordinary people. However, when I hear of schemes like this it just makes me want to scream. Especially since government exists to protect the people from the excesses of capitalism not to jump in bed with the fat cats! These facts have eroded the middle class over the years.

 

I agree with Jackson on his points and I love his analogy. For years I have been buying silver and gold coins because I love collecting coins, but I also realize that hard currency is a hedge. I have a 401k because it represents free money to me, compliments of my employer, but I also tell my wife that coins are another way to diversify for the future and have fun doing it at the same time. I know that my 401k will be zero before I start in on my collection during retirement, but when push comes to shove, I am comforted to know that should there be a crisis, my hard assets will be there for me.

 

Jackson, I may have to get that sovereign, because I agree, the design is awesome! The first thing I thought of when I saw it was The BRG Collection. I cannot see any design with a horse without thinking of his Horses set! All the best Jackson!

 

Gary

[Six Mile Rick]

Gary, I do believe that (BRG Collection) has put a brand in all our minds. I saw a shield nickle that was given to another member in the Money Market yesterday. There were a pair of horse shoes under the 5 on the reverse and I thought of BRG when I noticed the shoes.

 

Jackson, As (jp4gpo) put it yesterday it is election year and you will see the values drop a little more. I do think you will be very surprised at the true valuation on silver and gold after the manipulation is over. My thinking = the sky is the limit next year on precious metals and the value of USD will plunge. The USD right now at 82.25?? Seems like 72.25 or less so where is that high value coming from??

 

Honestly I think JP Morgan jumped the gun a little and should have waited another month. Yes there is probably a vault with JP Morgans name on it at Kitco. They sell pool shares of the load that is in the vault and he probably purchased the pool.

Must be nice!!!

 

Later----

[mkman123]

That gold sovereign has a great design!!

[Thane]

post of the year - great rant and well spoken

 

For something like silver, where there is a ton of supply and demand has fallen, the current spot price floats on not much more than air. All it takes is for the sellers to dump their inventory (eventually, warehousing is more expensive than selling now at a bad price), or for a margin call during a broad selloff, or some event to spook buyers into collectively believing silver is not worth its weight and it's not a viable investment or hedge.

 

So I'm still anticipating silver under $20 this year. And while I agree totally with INFLATION = INFLATION and the $20/$1500/1 oz gold suit analogy, I also think when the next leg up begins in the markets, precious metals with industrial applications will rise robustly, but the only thing propping up gold will be the reserves getting bought by foreign governments. I'm with Buffett on gold - you dig a hole in the ground, mine the gold, then you dig another hole in the ground to safely store it.

[Six Mile Rick]

Thane---If you dig a hole in your back yard and find GOLD I'll dig a hole in my back yard to store it in so that you don't make a mistake and dig it back up again.

[Thane]

I been diggin ever since I saw your reply and I ain't found gold yet

[CoinPulsive PCM]

That was worth the read 100%. Wall street needs more whistle blowers because once so many people come forward and do the right thing, I would hope somethings would change for the better. I remember my dad would tell me that the stock market is unpredictable, but how could that be when you have insider trading? I think he meant that the stockmarket will fluctuate with out warning, and only the smartest investors will "win" but I could be wrong.

 

I recently got a letter in the mail from an attorneys office in California that is one of the firms that is part of a civil suit against Walmart for creating fake promises about opening walmarts in places like Mexico and how well they would profit to make their shares go up high and then plummet way low by anouncing that they canceled their plans. I had shares in Walmart durring the period stated on the letter, but I honestly thought it was just the market, and not someone fixing the market. Now I could get part of the settlement for what I lost but it could take years.

 

Your article was good, and I think you are on to something.

 

-Dave