“Market manipulation” meets Basel III

04 Jan

English: Wall Street sign on Wall Street

Wall Street (Photo credit: Wikipedia)

The manipulation of markets in the hope of manipulating people’s perspectives simply will not work to prevent further drops into the negative spiral . . . .  Manipulation is the sign of madness amongst governments suffering from egomania during a downward spiral. . . .” Jim Sinclair


If you follow the price of gold, you’ve almost certainly seen daily price charts that occasionally include a “waterfall event” where the price of gold suddenly plummets in a vertical fall that is both dramatic and hard to believe.

If there’d only been one of these waterfall events, it would be a remarkable and inexplicable phenomenon (somewhat like a “flash crash”).  But we’ve seen several such “waterfalls” in the last year and, by their mere frequency, we know they are not “inexplicable” but are instead the result of overt manipulation of prices in the gold market.

For most of the past decade, the Gold Anti-Trust Action Committee has warned that the gold market prices were being manipulated and intentionally suppressed.  At first, their warnings were hard to prove and almost impossible to believe.  Today, however, the manipulation is so blatant (as seen in “waterfall events”), that there’s no doubt:  the price of gold is being manipulated and suppressed by the Powers That Be.

We know that they’re manipulating.

They know that we know that they’re manipulating.

But, strangely, they don’t care that we know and go right on manipulating.  Manipulation that was once subtle, secretive and hard to prove has become obvious and undeniable.


•  Blatant market manipulation raises a big question:  Is blatant manipulation evidence of the growing power of The Powers That Be—or is it evidence of their growing desperation—or could it be evidence of something else?

John Embry, chief investment strategist at Sprott Asset Management, was recently interviewed by King World News. He said that a coming catastrophic loss of confidence will push gold and silver to price levels that most investors can’t even fathom.


“I have been following the manipulation of the gold and silver markets for over 14 years now, and I can honestly say that I’m not sure I’ve seen a more blatant attempt to drive prices lower.”

“I would love to know what the central planners are thinking here.

“I believe that this is all about confidence.  When you are running a pure fiat currency system, confidence is the only thing you have to keep things together.  And if confidence in paper and bond markets is lost, then this is going turn into a total debacle.

“The sad fact is they are doing QE [inflating currencies] all over the world and I don’t see how the central planners are going to be able to maintain confidence for much longer.  But the reality is they attempt to kill the messenger [gold], so they beat the hell out of gold and silver with paper shenanigans over the past month.  This has been a brutal, deliberate, and obvious attack.”


I agree that the current gold price manipulation is too blatant to deny, but the reason for that market manipulation remains a mystery.  Mr. Embry may be correct in supposing that the price of gold is being suppressed in order to maintain false confidence in the purchasing power of the fiat dollar.  I’d certainly agree with that analysis if the manipulation were still secretive and virtually unseen by the public.

But, the “waterfall events” (where prices suddenly plunge) are such blatant evidence of market manipulation, that they must ultimately diminish public confidence in not only the gold market but also in the powers of the manipulators, themselves.

I.e., we know that the stock markets have been supported by the “Plunge Protection Team” since the Reagan presidency.  That artificial support is “market manipulation”.  Given that our stock markets are manipulated, it should come as no surprise to learn that our gold markets are also manipulated.

Of course, in the stock markets, the Powers are pushing prices up rather than down (as in gold).  But how much confidence can anyone have in a stock where prices are artificially supported?  Isn’t it obvious that artificially high stock prices must ultimately fall?  Likewise, how much confidence can anyone hold in the value of a paper dollar that’s being openly and artificially supported by suppressing the price of gold?

Anyone who truly believes in the power of a free (unmanipulated) market, must believe that sooner or later, the true (unmanipulated) prices for gold and stocks will be found, as will the true purchasing power of the fiat dollar.


•  Confidence is key.  But confidence in what?

For most investors, it’s irrelevant whether the price of their investments rises because of the free market, market manipulation or Mercury being in retrograde.  As long as the price of their investment is rising, investors are happy.

People who lose confidence in gold or stocks may still find confidence in the “Powers” to continue to manipulate the markets.  So long as the Plunge Protection Team guarantees that there will be no waterfall events in the stock markets, people can purchase stocks with confidence.    But their confidence is not in the free market, but rather on the power of the Powers That Be to prevent a real stock market “crash”.


•  Therefore, in a world where market manipulation is overt and taken for granted, today’s investor’s primary question becomes How much longer can the Powers That Be continue to manipulate?  As long as the people have confidence in the manipulators, the price of gold can be artificially suppressed and the prices of stocks can be artificially elevated.

But the manipulators have a problem—and it’s growing.

Every time they try to drive the price of gold below $1,575, they’re quickly turned back.  Thus, the powers of the “Powers” are shown to be limited.  Recognizing the limits of the powers of manipulation reduces confidence in the government that wields those powers.

If the Powers can’t currently push the price of gold down to $1,300 or $1,400, how long will it be before the Powers are shown to be too weak to prevent gold from rising over $1,800?  And once gold breaks $1,800 will the Powers be able to prevent a dramatic rise in gold’s price (and correlative fall in the value of the fiat dollar)?

Thus, even confidence in the manipulators is being diminished by overt manipulation.  I.e., when the Powers turn on a “waterfall event,” it can’t be denied that they have much power.  But when the “waterfall events” not only fail to drive the price of gold below $1,575 but even fail to suppress gold’s price “permanently,” we also see the Powers’ limits.  Limited powers reduce confidence.

Suppose the Powers know that overt manipulation of gold prices ultimately serves to diminish public confidence in the manipulators’ power.  If the Powers nevertheless continue to cause “waterfall events,” are the Powers doing so out of desperation?  Are they like men in an airplane whose motor has failed?  Are they throwing their own property and even some of their members out of the plane in order to lighten the load and allow the plane to glide farther and perhaps land safely?


•  John Embry:  “The upside for both gold and silver are totally intact and, if anything, the upside is greatly improved because of the large physical offtake on this recent smash.”

In other words, when the Powers force the price of gold down, people not only buy more gold, but they also take delivery of underpriced, physical gold.  Some of that physical gold, perhaps much of it, must ultimately be supplied from the Powers’ own vaults.

Thus, the Powers can’t continue to support the perceived value of fiat dollars by suppressing the price of gold without sacrificing some of their own supply of gold.

We’re left to wonder how long the Powers will, or even can, continue to sacrifice their own gold to maintain the illusion of fiat dollar value.  Sooner or later, either the Powers will: 1) be forced to admit the self-destructive nature of their support for fiat currency; or 2) exhaust their own supplies of gold.  In either case, at that point, the manipulation of gold prices will end, public confidence in manipulated markets will fall, and the price of gold will jump, and the dollar and other fiat currencies will fall or even die.


•  For the past year, the US Dollar Index’s measure of the fiat dollar’s value has never fallen below 78 or risen above 84.  That Index has, more or less, hovered around 80.

I don’t think that’s an accident.  If the dollar’s perceived value falls significantly below 80, it will be evidence of significant monetary inflation.  The price of gold should rise dramatically, and the dollar could conceivably collapse.

On the other hand, if the US Dollar Index rises significantly above 80 and stays at something like 85 or 90, it will be evidence of significant monetary deflation and possible proof that we are caught in a genuine depression.

More, as the US$ Index rises, the dollar becomes more valuable, and the true size of the National Debt (as measured in purchasing power) grows.  The National Debt is already unpayable.  Any increase in size (as measured in purchasing power) could potentially ruin the federal government.

Therefore, I see the national government and Federal Reserve as caught between the rock and the hard place.  If they let the dollar fall well below 80 on the US$ Index, the price of gold may rise significantly, and the dollar might die.  If they let the dollar rise well above 80 on the Index, the purchasing power of the National Debt might grow high enough to push the federal government into an overt bankruptcy and the federales might die.  Thus, the government might be trapped in a scenario where they must maintain the US$ Index at about 80 and price of gold around $1,700.

What’s the probability that any market can be held in stasis for an extended period of time?  Zee-ro.


• Did the Powers recently push price manipulation too far?

John Embry:  “Without question.  I actually am amazed because I believe China as well as a number of Far-Eastern and Middle-Eastern operations, are looking to acquire as much gold as they can.  The Western central planners are making a ghastly mistake.”

In other words, in their determination to protect the fiat currency racket, western governments and central banks are “selling” their real money (gold) to Asia—and selling it for peanuts.


“The question here is why are they doing this manipulation so blatantly?  I believe these guys are trying to give the appearance that everything is fine in the short-term, but my instinct tells me things are far worse than anybody is letting on.”

Maybe things are even worse than Mr. Embry fears.  Maybe the end of the fiat dollar is so close that the Powers are resigned to its demise.  Maybe the Powers’ recent attempts to manipulate the markets have become blatant because they know the end of fiat currency is so near that there’s no longer any point to concealing their racket.


•  Casey Research offers a report that might solve the mystery of blatant market manipulation:


“Another source of demand from banks could be the change in Basel III regulations. If you haven’t read about it, gold could get promoted to Tier 1 status, meaning it would be considered a ‘zero-percent risk weighted item.’”

Currently, gold is unattractive to banks because it’s a “Tier III” asset.  I.e., if a bank buys $1 million worth of gold, it can only count that gold as worth $500,000 in its list of assets.  Under current regulations, gold is a losing proposition for banks.

However, last Fall, the European Central Bank and the Federal Reserve simultaneously proposed that bank regulations in both Europe and the US be changed to elevate gold to the status of a “Tier I” asset—just like cash and government bonds.  As a Tier I asset, $1 million in gold would count as $1 million in assets on the banks books.  As a Tier I asset, gold would be at least as attractive to banks as cash or government bonds.

If the Basel Committee decides to grant gold a Tier I status, it will open the door for gold to compete directly with cash and government bonds on bank balance sheets.

But fiat currencies and government bonds can’t compete with gold.  Arguably, the central banks’ and market manipulators’ primary objective over the past 40 years has been to prevent direct and open competition between fiat currencies and gold.

To once again allow fiat currencies and government bonds to compete directly with gold is like throwing two featherweights into the ring with one heavyweight champion.  The heavyweight will pound those featherweights right through the canvas mat—and it won’t take long.  If they allow the heavyweight gold into the same ring as fiat dollars and US treasuries, the fight might not last a full round.

The fact that the Powers would even consider allowing the featherweights (fiat currency and government bonds) to step into the ring with the heavyweight (gold) is evidence that the “trainers” (manipulators) know that the featherweights’ careers are about over.

If the Powers already know that the game is over, maybe they’re pushing the price of gold down so the banks can buy more underpriced gold now, before Basel III opens the banks’ doors to own gold, increases demand and price of gold.  It’s possible that allowing the banks to keep gold as a Tier I asset may be the event that ultimately ends market manipulation, allows the price of gold to soar, and marks the demise of the world’s fiat currencies.


• I’m not predicting that all of these events (Basel III approved, manipulation stops, gold soars, paper dollars die) would all occur on the same day or even same quarter.  I’m simply suggesting that when the history books are written and they look back to the moment when Basel III was  approved, that that event may be seen in retrospect as having triggered the subsequent end of market manipulation, a rising price for gold and the eventual collapse of fiat currencies.

If so, the reason the Powers are so blatant in their market manipulation may be that they know that Basel III will be approved and thereby end the reign of fiat currencies.

Perhaps the Powers aren’t desperate so much as resigned.  If Basel III is expected to mark the end of the fiat monetary system, maybe they’re just disposing whatever fiat currency powers remain, before the fiat currencies are no more.  Perhaps market manipulation is so blatant because the Powers know that such manipulation must soon end.


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8 responses to ““Market manipulation” meets Basel III

  1. David Merrill

    January 4, 2013 at 5:18 PM

    I love your writings Alfred!

    “Confidence is key. But confidence in what?”

  2. Dean

    January 4, 2013 at 6:51 PM

    The threat that the described Basel III approval presents to fiat based monetary systems may exactly be the reason why the gold approval does not happen. It is to the benefit of all governments and banks to continue the fiat based system until countries can be forced to surrender their sovereignty. People must be made to demand a new system i.e. “global” currency based on the SDR. It may be that the only threat to this plan is if one of the larger based economies i.e. China, cheats the fiat system by printing more fiat money than the PTB formally or informally agreed to and begins to purchase gold with that fiat money. At that point, all countries would have to follow suit. The rise in the price of gold at that point may in itself cause the collapse of fiat currencies by threatening the very faith consumers have placed in it and their governments.

    • David Merrill

      January 4, 2013 at 7:43 PM

      Put out the fire with gasoline!

      “People must be made to demand a new system i.e. “global” currency based on the SDR.”

  3. jose-antonio

    January 4, 2013 at 7:38 PM

    I think Dean is on to something. The banksters know what they are doing. They will crash all fiat currencies by any means necessary and not appear to be the culprits . They will issue an International currency ostensibly backed by metals, for a time, in order to get everyone hooked. Then resume their harvesting of the labor/product of the cattle on a global scale this time around.

  4. David Merrill

    January 4, 2013 at 7:46 PM

    I prefer to find a functional RSA Factoring Algorithm and publish it. Let the corrupt destroy the corruption:

    Spoofing “Sneakers” with Robert REDFORD – remember that movie”


    No more electronic vaults.

  5. David Merrill

    January 4, 2013 at 7:49 PM

  6. Jeff D.

    January 9, 2013 at 11:29 AM

    What if the gold is being driven down so the Chinese can buy it at a great price, meanwhile bankrupting the West and ensuring it’s utter destruction.

    China is the NWO’s jewel and transferring the economic and military power to them is their ultimate goal.

    Once we collapse and if we are disarmed, the gold will be stripped away from the people again. We will bankrupt ourselves buying gold and then having it taken away by thugs with guns and official titles.

    We will be reduced to serfs instantly if our guns and gold are taken. The electronic currency and carbon credit scheme will be imposed.

    Freemen working the land will be easily spotted by the drones. In that scenario, we can only hope for a massive EMP from the Sun.


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