• 19 hours Shell Oil Trading Head Steps Down After 29 Years
  • 23 hours Higher Oil Prices Reduce North American Oil Bankruptcies
  • 1 day Statoil To Boost Exploration Drilling Offshore Norway In 2018
  • 1 day $1.6 Billion Canadian-US Hydropower Project Approved
  • 1 day Venezuela Officially In Default
  • 1 day Iran Prepares To Export LNG To Boost Trade Relations
  • 1 day Keystone Pipeline Leaks 5,000 Barrels Into Farmland
  • 2 days Saudi Oil Minister: Markets Will Not Rebalance By March
  • 2 days Obscure Dutch Firm Wins Venezuelan Oil Block As Debt Tensions Mount
  • 2 days Rosneft Announces Completion Of World’s Longest Well
  • 2 days Ecuador Won’t Ask Exemption From OPEC Oil Production Cuts
  • 2 days Norway’s $1 Trillion Wealth Fund Proposes To Ditch Oil Stocks
  • 2 days Ecuador Seeks To Clear Schlumberger Debt By End-November
  • 2 days Santos Admits It Rejected $7.2B Takeover Bid
  • 3 days U.S. Senate Panel Votes To Open Alaskan Refuge To Drilling
  • 3 days Africa’s Richest Woman Fired From Sonangol
  • 3 days Oil And Gas M&A Deal Appetite Highest Since 2013
  • 3 days Russian Hackers Target British Energy Industry
  • 3 days Venezuela Signs $3.15B Debt Restructuring Deal With Russia
  • 3 days DOJ: Protestors Interfering With Pipeline Construction Will Be Prosecuted
  • 3 days Lower Oil Prices Benefit European Refiners
  • 3 days World’s Biggest Private Equity Firm Raises $1 Billion To Invest In Oil
  • 4 days Oil Prices Tank After API Reports Strong Build In Crude Inventories
  • 4 days Iraq Oil Revenue Not Enough For Sustainable Development
  • 4 days Sudan In Talks With Foreign Oil Firms To Boost Crude Production
  • 4 days Shell: Four Oil Platforms Shut In Gulf Of Mexico After Fire
  • 4 days OPEC To Recruit New Members To Fight Market Imbalance
  • 4 days Green Groups Want Norway’s Arctic Oil Drilling Licenses Canceled
  • 5 days Venezuelan Oil Output Drops To Lowest In 28 Years
  • 5 days Shale Production Rises By 80,000 BPD In Latest EIA Forecasts
  • 5 days GE Considers Selling Baker Hughes Assets
  • 5 days Eni To Address Barents Sea Regulatory Breaches By Dec 11
  • 5 days Saudi Aramco To Invest $300 Billion In Upstream Projects
  • 5 days Aramco To List Shares In Hong Kong ‘For Sure’
  • 5 days BP CEO Sees Venezuela As Oil’s Wildcard
  • 5 days Iran Denies Involvement In Bahrain Oil Pipeline Blast
  • 8 days The Oil Rig Drilling 10 Miles Under The Sea
  • 8 days Baghdad Agrees To Ship Kirkuk Oil To Iran
  • 8 days Another Group Joins Niger Delta Avengers’ Ceasefire Boycott
  • 8 days Italy Looks To Phase Out Coal-Fired Electricity By 2025
Alt Text

Did These Mining Giants Just Confirm The Next Gold Frontier?

After Ecuador’s President removed a…

Alt Text

Can Mali Maintain Its Gold Mining Status?

Mali could be about to…

Alt Text

Expect Mine Closures In This Key Gold Mining Nation

Major gold mining nation South…

Ronald Stoeferle

Ronald Stoeferle

Ronald is a metals analyst at Erste Group. Erste Group is the leading financial provider in the Eastern EU. More than 50,000 employees serve 17.4…

More Info

Gold Report: Manipulation vs. Intervention

Gold Report: Manipulation vs. Intervention

There is a thin line between intervention (normally by the government, government-related institutions, or more generally, politicians) and manipulation (negative connotation – as in “influence”). The (sometimes massive) interventions on the bond and currency (foreign exchange) markets are official and legitimised. The German minister of economic affairs, Rainer Brüderle, has recently confirmed that the Federal Reserve Bank intervenes on the foreign exchange market . He pointed out that it was normal and customary for the central banks to do so, as every central bank had a target band for the exchange rate of the own currency. It would therefore be naïve to think that this was not happening in the gold market.

“So far as manipulation was concerned, it appeared to have one of 3 objects: Making the public buy, sell or keep out. And I judged that the manipulators were endeavouring to do the opposite.” Richard D. Wyckoff

The gold sector is “blessed” with its daily dose of conspiracy theories. However, evidence has been found in the past years that clearly points to efforts to push the price of gold and silver down. It is obvious that a rising gold price signals a falling confidence in the financial and currency system. It is also logical to assume that neither the central banks nor the governments are thus interested in such a scenario. This means the motives for a lower gold price are clear and plausible.

The quotes of numerous well-respected protagonists are taking the same line:

“That’s why the possibility that gold would be sold caused the gold price to drop by $5. You don’t have to sell gold, you just have to breathe [that you may] one day”

„…Joint intervention in gold sales to prevent a steep rise in the price of gold, however, was not undertaken. That was a mistake”

“Nor can private counterparties restrict supplies of gold, another commodity whose derivatives are often traded over-the-counter, where central banks stand ready to lease gold in increasing quantities should the price rise.”

“If we are dealing with psychology, then the thermometers one uses to measure it have an effect. I was raising the question on the side with Governor Mullins of what would happen if the Treasury sold a little gold in this market. There’s an interesting question here because if the gold price broke in that context, the thermometer would not be just a measuring tool. It would basically affect the underlying psychology..“

The last statement is particularly remarkable because it likens the gold price to the thermometer of the financial system. The discrepancy between Greenspan’s line as scientist (compare “Gold and Economic Freedom”) and later as chairman of the central bank is enormous.

We can also substantiate the fact that the gold market is subject to interventions with numbers. The following chart shows the intraday fluctuations of gold in the past four years. The past approximately 1,000 trading days show a clear intraday pattern: while the gold price tends to rise in the early (Asian) trade, it falls dramatically after the first and second fixing in London (as New York starts to trade) and then slowly recovers throughout the rest of the day.

Average intraday pattern 2006-2010

Average Gold Price
Source: www.sharelynx.com

In April another piece was added to the big manipulation puzzle.  Andrew Maguire, a professional silver trader in London, explained the role of the large banks in interventions on the gold and silver market . On top of that, Maguire had warned the CFTC a few days in advance of manipulations in silver. The predicted price pattern came through 1:1. A few days later Maguire was severely injured in a mysterious car accident. According to the NY Post , an investigation into the manipulations on the silver market seems to be underway. Should the allegations be confirmed, a short squeeze would be the result.

That said, the primary trend in gold and silver is clearly headed upwards. According to the Dow Theory, the primary trend cannot be manipulated because the inherent market forces are too strong.

By. Ronald Stoeferle of Erste Group

Erste Group is the leading financial provider in the Eastern EU. More than 50,000 employees serve 17.4 million clients in 3,200 branches in 8 countries (Austria, Czech Republic, Slovakia, Romania, Hungary, Croatia, Serbia, Ukraine). As of 31 December 2010 Erste Group has reached EUR 205.9 billion in total assets, a net profit of EUR 1,015.4 million and cost-income-ratio of 48.9%.




Back to homepage


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News