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Gold Price Manipulation Proof, M3 Update

There's really not much to say, since the raw charted data is so obvious, but there are some facts.

  • The correlation between the European Central Bank's gold purchase and sale activity and the gold price in Euros is .97. That means that 97% of the gold price changes since 1999 can be explained by ECB actions alone.

  • The left hand scale on both charts is in metric tonnes. One metric tonne is about 32,000 troy ounces of gold.

  • As just one example of the very large size of ECB gold operations, during the gold price increase from early April 2006 to the peak in mid May 2006, the ECB sold 1,800 metric tonnes of gold. That translates to about 58 million troy ounces.During the fall from mid May 2006 to a bottom in June 2006, they bought back 2,345 metric tonnes, which is approximately 75 million troy ounces.

  • The total gold price increase from about 325 to 500 Euros caused the average ECB gold inventory to drop about 1500 metric tonnes or about 48 million troy ounces.

  • The quantity of gold trading by the ECB dwarfs the total 500 metric tonne sale limit of the Washington Agreement.

  • For those who might point out that futures trading quantities are far larger, that's true. But not only are they only paper trades and physical gold is seldom delivered, but also there are thousands of different traders and none consistently trade in quantities similar to the ECB.

  • The data is published by the ECB anywhere from 2-6 weeks behind the events, so it's not useful for trading.

  • Some might prefer to look at the data as evidence of control, as opposed to manipulation.

The gold trading record of the ECB, since 1999

The 2006-07 close-up gold trading record of the ECB

"The last duty of a central banker is to tell the public the truth."
-- Alan Blinder, Vice Chairman of the Federal Reserve, on PBS's Nightly Business Report in 1994


M3 update

Just last week, we broke above a 12% annual rate of change which is the first time that has happened since May 2001. For what its worth, the official recession started in March 2001.

 

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