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Gold Market Rigging Transparent
By Andrew Hoffman
MidasLetter.com
Tuesday, March 10, 2009
We are now witnessing the implementation of what Fed Chairman Bernanke stated yesterday as the "forceful use of all available tools to achieve economic stability".
These tools including accounting chicanery, such as the suspension of bank mark-to-market rules so they can continue to value their assets way above true market values, enabling "dead men walking" such as Citigroup to today report "profits for the first two months of 2009, before taxes and special charges".
First off, nearly all enterprises are profitable "before taxes and special charges", and secondly, read the below article and decide for yourself if Citigroup was really "profitable" these past two months. Not to mention, why did they required $350 billion of cash and guarantees from the government since October if they are profitable? Or why has their stock has fallen from $50/share to $1/share?
Keep in mind that Lehman Brothers' derivatives book was liquidated for 8 cents on the dollar a few months back, and since then the economic/banking environment has worsened dramatically. Yet U.S. accounting rules were recently altered to enable banks to hold similar assets on their balance sheets at 100 cents on the dollar, or frankly whatever number they choose. Hence, the gist of the article below, as well as the reason that Citibank can report "profits".
In my view, there is absolutely, positively no way to "fix" what is wrong with the financial system, other than to let it resolve itself via free market means. It will in time do just this, but because of the non-stop government intervention the end result will be much worse than if it was just left to its own devices. Of course, we are in this mess because of government intervention (as free-market economics would never have let the current financial crisis develop), but that is another story.
Another "tool" in Bernanke's arsenel, of course, is the systematic bashing of gold and silver, the historical barometers of bad tiding, which in free markets call out the abuses of the system and force change (most importantly, prohibiting government's from printing money). Gold has been in a bull market since 2000, and is now up for the ninth year in a row (despite this month's $100 bashing), and will keep rising ad infinitum, likely to levels most readers cannot yet comprehend.
But the powers that be will continue to fight the rise tooth and nail with their less than subtle attacks at 3:00 am EST (when the entire investment world is asleep), 8:20 am EST (when the COMEX futures exchange opens), and 10:00 am EST (the London p.m. fix, when all physical, or real gold trading, closes for the day).
If you want to see this for yourself, as I have been seeing for seven straight years, simply go to www.kitco.com and click on "charts and data" at the top left of the screen. Then click on "live charts", "gold" on the left of the screen and you will see the 24-hour trading pattern of gold (and silver) over the past three days. The past two days are perfect examples of the manipulation, near mirror images depicting how gold was initially hit at 3:00 am, and then really bashed the second that real gold trading concluded in London at 10:00 am EST. And if you make a habit of looking at this each day, you will see exactly what I have seen for nine years, and why I am so bullish about gold over the longer term.
It is no coincidence that, over the nine-year bull market, the net change in gold price is actually down in New York futures trading hours, yet up in overseas trading hours. Make no mistake, these bashings are a big reason why, despite the rise to $1,000/oz just three weeks ago, sentiment in (and ownership of) the sector still remains so low.
Normally, I don't write any commentary about the actual machinations of the gold rigging, as to not put people off with the prospect of "conspiracy theory". But it is a real part of the market, and frankly the only material part of gold market trading. I stake my reputation on it every day, not to mention my net worth.
The key point here is to continue to protect yourself from the things I have been writing about. The powers-that-be (government, media, Wall Street bankers) are playing a delicate game of trying to influence sentiment, while at the same time their actions are only making things worse.
SOURCE: http://www.midasletter.com/commentary/090310-1_Gold-market-rigging-transparent.php
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Gold
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