Technical analysis is useless in markets as rigged by government as gold and silver are
By: Chris Powell, Secretary/Treasurer, GATA
GoldSeek.com
Monday, 19 October 2015
Dear Friend of GATA and Gold:
Sunday’s market letter by Toronto market analyst and mining entrepreneur Michael J. Ballanger, whose work often appears at GATA Chairman Bill Murphy’s LeMetropoleCafe.com, eloquently reiterates some points made often by GATA.
Particularly, Ballanger writes, technical analysis is useless in markets as rigged by governments and their agents as the gold and silver markets are.
Ballanger writes:
“As I penned several times last week, gold enthusiasts around the blogosphere were all singing the same hymn with the main chorus being ‘breakout!’ I could list the advisers but it would take forever and my point is not to trash them. Their technical interpretation of the charts was correct; their understanding of the dark underworld of the Crimex'” — that is, the New York Commodities Exchange — “was not.
“Note the totals in the commitment-of-traders report from last Friday — a massive reversal in large speculator positions from ‘net short’ to ‘net long’ totaling 30,340 contracts representing 3,034,000 ounces of gold valued at $3.56 billion was met with a nearly equal amount of selling by those heathenous ‘commercials’ who are undoubtedly acting for the bullion banks and the interventionists at the Federal Reserve, Bank of England, Bank of Japan, and of course the European Central Bank. …
“That’s why trading the gold market has become such a farce, and here is why: In the stock market, if you want to buy shares in a company, all you need is money. To short shares in a company you must have money and the ability to borrow the shares from one of the dealers in order to deliver it to the buyer. Because of the rules surrounding the ‘loan post,’ this prevents the unbridled and indiscriminate selling ‘ad infinitum’ of shares.
“Contrast that with the Crimex, where you do not have to borrow the gold in order to sell it; all you need is to have the backing of a central bank or large bullion banks to sell any volume of gold that you require to force price down. Unlike stocks, there is no governor on the creation of supply. There is no ‘loan post.'”
That is, as Ballanger has put it elsewhere, unlike other traders in the gold market, central banks and their agents trading gold never face a margin call and thus can outlast everyone, at least until exhaustion of the small amount of metal necessary to be delivered to the few traders who take delivery of their gold futures contracts.
The Rest…HERE
