Monday night, Andy and I took Susan and Zhanna to see the Victor Wooten Band at the Dakota. He always puts on a wonderful show. It’s just wonderful being able to sit this close to world-class jazz and rock, and Wooten is a five-time Grammy winner, and in my opinion the best electric bass player on the planet! That’s him in the middle of the picture with the hat on and the white vest. Our normal table is directly in front of the vocalist, but I screwed up this time and had to “suffer” being 15’ from the stage. Tonight Susan and I are taking my daughter Betsey and her husband David plus… Backwoods Jack and lovely Judy to see Blood Sweat and Tears at the 7:00 dinner show. This time we will be against the stage, front and center. With stuff like this going on, who needs to worry about manipulation and the markets!
After the Dakota, when I got home around midnight, I checked my emails and there was an interesting one waiting for me from my friend Trader David R. Here is a portion of what he had to say (about manipulation and the markets).
I agree the gold and silver markets are being manipulated, but it’s by the Algo traders. These guys have so much capital behind them, they look at the technical levels in the market and leave their buying orders below the stops and then come in with a HUGE sell sweeps. (sometimes up to 9,000 lots of gold) and the market is not thick enough to absorb that kind of selling size at one time, so then, banks and customer stops are triggered at certain levels and the Algo’s buy back their selling above. It’s frustrating all of the banks and the traders in the market. I can guarantee you that the banks are not behind this. Many of the banks are laying off marketers and traders, budgets are way behind and there is a real fear in the market by the traders at the banks, as these Algo’s are destroying this market.
I agree that gold is going higher, but I think it’s going to go lower first. I think we are going to see another move lower in all RISK assets. This economy is coming to a stand still and I feel the same way now as I did in 2008. I think we are heading for a big fall soon in equities and commodities. But gold will outperform all other RISK assets on this move. I think silver is heading back to the $23 level by end of summer.
I can honestly tell you that you will never see anything about gold or silver price manipulation by the banks. I am willing to bet you or anyone else. I worked at some of the largest bullion banks in the world over my career and I ran all types of books and did a lot of business with Central Banks around the globe. I was involved in the largest gold hedge ever done in the history of the world back in 1996. I would put up my credentials against any one of the guys you listen to, as I have been on the inside and know every facet of this business. This has been my life for the past 18 years and like I said, I am willing to back it up with a bet from anyone who can prove otherwise.
Are you coming to the New York area anytime soon?
Trader David R acknowledges that the markets ARE manipulated. But where he takes a different stance from Ranting Andy Hoffman and the GATA camp is in attributing it to mega-Algo Funds instead of the bullion banks and central banks. Hoffman makes a big deal out of this difference. Ted Butler will never buy David R’s views because they do not address the heavy concentration of contracts controlled by JPMorgan. To me, it’s all moot. Interesting, yes but in the end manipulation is manipulation is manipulation. David R maintains that the bullion banks are willing or unwilling partners to the Algo Funds huge buy and sell orders but they are being battered around like the rest of us – to the degree that they are laying off traders and shutting down departments because it is so hard for them to compete with this “unlimited” supply of funds that enter and leave the markets hitting sell stops.
All along, people like Murphy (GATA) and Sinclair maintain that this will resolve itself, in time, as the PHYSICAL market will eventually overwhelm the paper (COMEX) market. In the end, there still has to be enough physical gold (and silver) to meet market needs. When that ceases to be the case, the paper game comes to an end. I absolutely go along with this line of reasoning!
Gold should “take off” no later than mid September, after Bernanke announces QE3. I could be wrong, but that’s the way it feels to me now. That gives all of us a couple of months to accumulate gold in the $1500 – $1600 range and then gold is off to the races. At this time, the downside for gold is not large and the upside is huge. Almost all other alternative investments are very risky and cash is a losing proposition with “negative” interest rates. As for silver… I would wait on any purchases for now, but I certainly would not sell any of my holdings and do not worry about its future. Silver will do very well and those of you who are bemoaning buying it last year at higher prices should be validated by the end of the year or the first quarter of 2012.
I own a lot of platinum at prices higher than the current offering. Platinum, along with Palladium are two of the “risk assets” that David R. is talking about. Gold should outperform both of them – for a while. I may buy some more, later this summer, if the price continues to drop. Platinum at $150 an ounce BELOW gold is a steal!!! But both may fall some more in the next few weeks.
If I am wrong, it will be because gold and silver take off sooner, not later. I am not worried about the bottom falling out of either metal now. Low prices are buying opportunities and corrections in a bull market are natural and nothing to lose any sleep over. The bull market is NOT over.
Speaking from the heart, one of my many weaknesses, I know that I am basically no different than my readers. I try not to talk down to you or take on an “air” of intellectual superiority. I’m just another guy, working hard, trying to figure things out for my family and me. Where I may gain an edge is that I have put so many hours, weeks, months, years and decades of study into the gold and silver markets. It’s been my job and my passion, a full time endeavor. I have made it a point to figure out who were the “experts” that were worth listening to. That knowledge comes with many years of observation, trial and error. There is a big difference between being a great writer and a great analyst. Few out there are both at the same time. There is no substitute for experience and I have a lot of it, 29 years to be exact.
I want to spend a few minutes discussing “investing.” Along with many of you, I too get confused because there are so many choices being offered to us. I can’t tell you how many times I get “a hot tip” on a sure thing that can’t miss. It could be a rare earth stock or a new start up tequila company or a new energy technology. They all sound so convincing. I have to remind myself why am I tempting myself to move funds out of, or away from what I now own, and UNDERSTAND, and I already have a guaranteed winner. How greedy do I have to be? Isn’t a “safe” double or triple enough? That, my friends is what awaits those of you who hold onto your gold and silver and I am being conservative. Don’t let those who don’t understand what is really happening, right before our eyes, scare you out of your precious metals. Don’t do it! Don’t let the rose-colored glasses CNBC crew convince you that the economy and the stock market will be fine. Don’t let the Deflationists convince you that things won’t be fine and gold will not do well in that environment. Don’t let these so-called “experts” convince you that there are other investments that will serve you better. You have already won. All you have to do is hold tight for another 24-36 months and you can bank your massive gains. Honestly, the grass ISN”T greener on the other side. It’s just human nature to think it is. Remember, these negative voices, luring you away from gold and silver have no skin in the game. If you lose they could care less. I do have skin in the game. My entire investment portfolio resides in this area. I do care about what happens. That should count for a lot.
Don’t try and bottom pick or trade these (manipulated) markets. It will drive you crazy and cost you money. Remember, most of the people you read are trying to sell you something, a product or a newsletter subscription. We here, at Miles Franklin try hard not to sell you anything – anything but knowledge and awareness. We hope that if we help bring you along toward understanding the issues and the solutions, you will reward us with a phone call to see if we can be competitive and help you reach your goals. We have several thousand clients who like the way we treat them and you probably will too…. but enough of that kind of talk and let’s move on.
I am not trying to sell you anything. I am speaking to you person to person with honesty and candor and trying to help as many of you as possible make a few simple decisions that will be life altering. I never ask you to do anything that I wouldn’t do myself or, in fact am not doing right now. I will not be wrong – worst case, just a bit early and that has been my history for the past couple of decades. I am cursed to see things before they happen and seeing around corners comes naturally to me. Most people only see what is right before them in real time. I push you to focus on the big picture, the primary trend. These are things that have not yet occurred, so it takes a bit of faith. Hey, we all have to believe in something and believing in gold and silver for the last 25 years, and for the right reasons, has served my family well and me. It will for you too.
I was wondering if the demise of PFG affected Miles Franklin? I know certain PM dealers hedged through that firm. Do you think these firms are being taken down on purpose to eventually drive PM dealers out of business therefore making it impossible for average citizens to buy gold or silver?
No, Miles Franklin was not affected.
I think there is a lot of dishonesty and stupidity taking place in this sector but no, they are not being taken down deliberately.
Price will make it impossible for the average person to buy gold. When the price rises to $3500 and up per ounce, few will be able to afford it anymore.
There is ambiguity in this logic that JPM is shorting their physical long hoarding. To what end? To defeat the purpose of gaining on the upside while loosing on the shorts?
The only logic is that they want to acquire more at a lower price, which is illegal in itself, it’s pure market manipulation.
Beyond that one would have to construe that it has the aura of also being for the purpose of criminal intent.
Dump massive amounts of shorts, shake out the longs and cover.
Somehow it is naïve to believe that David R. would tell the truth about who is behind the raids and rat on his former employers and become a complete pariah with no prospect of ever getting employment again in any company bar a janitor. He would have as much credibility as any other shill from the ‘inside’.
Given all the crimes perpetrated by JPM et al it is no stretch to assume that they are on the wrong side of the law in the silver manipulation game they’re alleged of.
JPM boasts of perfect quarters where they make 100m per day on their ‘trading desk’ alone, every single day.
Is that an indication that they are loosing big time on their silver plays and have to lay off traders because of it?