Every now and then I see another analyst publicly claim that the gold market is being manipulated. And, the reason they come to that conclusion is because the market moved in way “they did not expect.”
Now, for those of us who are thinking people, we clearly see the issue with such a perspective. Why is it “manipulation” when an analyst is not able to recognize their own limitations?
Personally, I did not expect the metals market to spend all of 2017 in a consolidation, especially since the market had several set ups to break out. But, I simply understand that sentiment was not ripe for the market to break out just yet, and listen to what price tells me. Clearly, I do not suggest that my inability to foresee a year-long consolidation is a result of manipulation.
So, when analysts throw their hands up in frustration because they are wrong does not mean they were wrong because the market is manipulated. I believe that to be quite dishonest and only shows the extent of their ego.
But, we have a bigger problem in the market beyond inflated egos. You see, once they move into the manipulation theories, the “proof” they provide for such manipulation is just as dishonest as their perspective.
Specifically, they present statements taken out of context as "proof of clear manipulation." In the past, I have highlighted this commonly used method with an often-quoted statement by former Fed Chairman Alan Greenspan, which is used by the manipulation theorists as a supposed admission of manipulation by the Fed.
Quite some time ago, I wrote an article explaining why I did not believe that the metals market was manipulated by the Fed to drop by 40% in gold and 70% in silver. A commenter to that article argued that even Alan Greenspan, in his testimony before the Committee on Banking and Financial Services in 1998, noted that there was clear manipulation by the Fed in the gold market. In fact, he took this information from a GATA paper written on this matter. This opinion is based upon one line in that testimony, where Greenspan stated that "central banks stand ready to lease gold in increasing quantities should the price rise."
Sounds like he found the smoking gun, right?
Not really, if you read everything he actually said.
You see, these manipulation theorists quote only the sections of a proposition they feel supports their theory, while they ignore everything else said by that person. They simply take these quotes out of context in order to provide their own context and spin to the quotes. To hell with the truth.
In our example of this supposed quote by Greenspan proving manipulation, if one were to actually read the entire paragraph cited by the manipulation theorists, you would realize that Mr. Greenspan was not claiming that the Fed was actually leasing gold to manipulate the price. Rather, Mr. Greenspan was discussing a hypothetical methodology which MAY combat an attempt at market manipulation in the gold market. Yes, you heard me right. Mr. Greenspan was not "admitting" that the Fed leases gold to manipulate the price, as the manipulation theorists would have you believe. He was discussing a hypothetical methodology through which the Fed MAY use to combat attempts at manipulation by someone else in the market.
Again, it deserves repeating. Mr. Greenspan did not admit that the Fed manipulates gold. Mr. Greenspan did not even note that there was anyone who manipulated gold. Rather, he was saying that IF someone attempted to manipulate the gold market, the Fed MAY have a tool to combat such manipulation attempts. More importantly, he never even opined as to whether such a tool would or could be successful.
Now here comes the kicker, which will NEVER be cited by the manipulation theorists. Within that exact same testimony, and only a few paragraphs later, Mr. Greenspan not only noted that manipulation did not likely exist in the gold market, but even said that the market was not likely susceptible to manipulation at all:
"Even with centralized execution or clearing, the most relevant attributes of these markets would not resemble those of the agricultural futures markets and hence would not be susceptible to manipulation."
Yes, please read that again. Mr. Greenspan noted that the gold market "would not be susceptible to manipulation."
But, don't even attempt to show these people what Greenspan REALLY said, as they are the Foghorn Leghorn of the metals world:
"Don't bother me with facts, son. I've already made up my mind."
Sadly, intellectual honesty has left the building.