Best of the Week
Most Popular
1.UK General Election 2015 - Forecasting Seats for SNP, LIb-Dems, UKIP and Others - Nadeem_Walayat
2.UK General Election 2015 Seats Forecast - Who Will Win? - - Nadeem_Walayat
3.Gold Price Downtrend Looks Set to Continue - Clive_Maund
4.Commodity Prices Set To Plunge Below 2008 Lows - Austin_Galt
5.New Greece Drachma Revealed Amid Bank Runs - Greeks Buy Gold Sovereigns - GoldCore
6.Gold and Silver Stocks or General Stock Market Indices? - Rambus_Chartology
7.“Forgive Us Our Debts” – Only Way To Prevent Economic Meltdown - GoldCore
8.UK House Prices Trend 2015 and the May General Election - Nadeem_Walayat
9.12 Reasons Why Barry Ritholtz and Many UK Experts Are Mistaken On Gold - GoldCore
10.Recession is On The Way; Beat The Stock Market Crowd, Panic Now! - Mike_Shedlock
Last 5 days
UK Election 2015 - Cameron Housing Bribe - 200,000 Discounted Homes for 400,000 Voters - 6th Mar 15
The Anthropology of Finance - 6th Mar 15
Portfolios, Insurance, and Gold - 6th Mar 15
Gold and Silver Justice For Some - Currency Wars - ECB Deposit Rates To -3% - 5th Mar 15
How to Play the Big Broker Stocks When Interest Rates Rise - 5th Mar 15
Here's What Stock Market Bulls Might Be Overlooking - 5th Mar 15
U.S. Soaring Crude Oil Stocks - Cushing and Gulf Coast Storage Filling Up Fast - 5th Mar 15
Japan's Intelligence Reform Inches Forward - 5th Mar 15
Gold Miner Index Breadth Oscillator, Forward Reckoning® - 5th Mar 15
Gold Price Set To Plunge Below $600 - 5th Mar 15
UK General Election Forecast 2015 - Immigration Crisis, SNP Insurgency and Housing Mini-Boom - 5th Mar 15
Spock, Debt and the Kingdom of Denmark - 5th Mar 15
The Psychology of a Sideways Stock Market Trend - 5th Mar 15
Freedom from America - Getting Out Of Dodge - 5th Mar 15
What Top Hedge Fund Managers Really Think About Gold - 4th Mar 15
U.S. Dollar Strategic Backfire On U.S. Government Policy - 4th Mar 15
Canada’s Central Banks Orders End to ‘Spocking’ Of Canadian Dollar - Defacing Debasing Currencies - 4th Mar 15
Chicago's Only Possible Salvation: A Detroit-Like Bankruptcy - 4th Mar 15
Gold Price and Mining Stocks Decline Together - 3rd Mar 15
Financial Slaughter - The Silence of the Lambs - 3rd Mar 15
Bondholders “Bailed In” In Austria – New Banking Crisis? - 3rd Mar 15
How to Profit from the Coming Oil Price Crunch - 3rd Mar 15
Is Japan Zimbabwe? Could Japan go Hyperinflation? - 3rd Mar 15
Bill Gross Says Fed May Raise Rates 25 Basis Points in June - 3rd Mar 15
The Secret Behind My Hedge Fund Trade on U.S. Housing Market - 3rd Mar 15
BLS CPI Lie - How's That Dsflation Working Out for You? - 3rd Mar 15
Tesla Bonfire of the Money Printers’ Vanities - 3rd Mar 15
Gold Demand in UK, Europe and U.S. – Reuters Interview GoldCore - 2nd Mar 15
Watch the Skies... for Investor Profits - 2nd Mar 15
How Investors Can Identify the Best Small-Cap Stocks - 2nd Mar 15
Gold and Silver - What If the Precious Metal Stocks Bulls are Back - 2nd Mar 15
Students Getting a PhD in Subprime Debt - U.S. Debt Breaking Bad Part 3 - 2nd Mar 15
The Stock Market is in The Process of Major Top! - 2nd Mar 15
Stock Market Weakening Trend - 2nd Mar 15
Gold Price Glimmer of Hope - 1st Mar 15
Stock Markets Are Riding High on Thin Air - 1st Mar 15
Varoufakis vs. the Troika - Showdown in Athens - 1st Mar 15
Subprime Rising - U.S. Debt Breaking Bad Part 2 - 1st Mar 15
Gold CoT Improving, But ... - 1st Mar 15
UK General Election 2015 Seats Forecast - Who Will Win? - 28th Feb 15
UK General Election 2015 - Forecasting Seats for SNP, LIb-Dems, UKIP and Others - 28th Feb 15
Stocks Bull Market Continues - 28th Feb 15
U.S. Debt Breaking Bad - 28th Feb 15
NATO Frankenstein - When Centralization Scales Beyond Our Control - 28th Feb 15
Gold And Silver Insanity Prevails; Precious Metals Without Direction - 28th Feb 15
Fed Raising U.S. Interest Rates - Shovelin’ Schmitt Against the Tide - 28th Feb 15
Don't Let This Stock Market Myth Cost You Your Gains - 28th Feb 15
Recession is On The Way; Beat The Stock Market Crowd, Panic Now! - 28th Feb 15
Stock Market Indexes Creeping Towards the Edge - 28th Feb 15
GGD Going for Mexican Gold - 27th Feb 15
Foreign Real Estate Is the New Swiss Bank Account - 27th Feb 15
10 Reasons Washington Has War Fever - 27th Feb 15
Gold and the Euro Tragedy, Iraq 3.0, Ukraine Conflict Three Ring Circus - 27th Feb 15
Deepak Chopra - New Age Genius or Bullshit Expert? - Video - 27th Feb 15 - Videos
New Greece Drachma Revealed Amid Bank Runs - Greeks Buy Gold Sovereigns - 27th Feb 15
Will Month Long Stocks Rally Continue? - 27th Feb 15
The Only Public Hedge Fund You Should Own - 27th Feb 15
UK House Prices Trend 2015 and the May General Election - 27th Feb 15
Why America is Ungovernable - The Republicans’ Civil War - 27th Feb 15
Gold vs Gold Stocks: Bullish Anomaly Developing? - 27th Feb 15
I Heart Capitalism, Nasdaq Stocks, Then And Now - 27th Feb 15
The Fed’s History of Assassination - 27th Feb 15 i
Gold Bull Market Forecast - Money Will Rotate Into These Dead Investments - 27th Feb 15

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

The State of the Global Markets 2015

How Goldman Sachs is Manipulating Gold Prices

Commodities / Gold and Silver 2013 Apr 12, 2013 - 12:41 PM GMT

By: Money_Morning

Commodities

David Zeiler writes: If you want a lesson on how to manipulate gold prices, you need only look at what Goldman Sachs Group Inc. (NYSE: GS) has been doing over the past few months.

Goldman set the table by predicting a turn in gold prices back in December 2012, which no doubt contributed to the precious metal's 5% decline in the first two months of the year.


At the end of February, Goldman issued a research report that said the big Wall Street bank had soured on the yellow metal, and dropped its three-month target for gold prices from $1,825 an ounce to $1,615, its six-month forecast from $1,805 to $1,600, and its one-year outlook from $1,800 to $1,550.

Then, just yesterday (Wednesday), Goldman doubled down on its negative outlook for gold prices.

The bank's new targets for gold prices are $1,530 in three months, $1,490 in six months and $1,390 in one year.

The double whammy - two downgrades in two months - had its intended effect, as gold prices fell 2%, to $1,558.80, after Goldman released its report. It was the biggest single-day percentage drop for gold in nearly six months.

"If you've ever suspected gold prices are being manipulated, you're not alone - and you're right, they are," said Money Morning Chief Investment Strategist Keith Fitz-Gerald.

The proof is right in front of us.

How Goldman Uses its Forecasts to Manipulate Gold Prices
In addition to the lower targets, Goldman's reports spell out why the bank thinks gold prices will decline, which are at least as important in the price manipulation strategy as the targets themselves.

Here's what Goldman said in its February report:

"The decline in prices since last fall and our updated forecast [emphasis ours] suggests that the turn in the gold price cycle is likely already underway. As a result, although our U.S. economic forecasts point to modest near-term upside to gold prices, we believe that a sharp recovery in prices to our previous price forecast is unlikely."

Goldman brazenly cites its own forecast as part of the evidence that the downward move in gold prices is happening. In other words, they're practically bragging about their manipulation of gold prices.

Then Goldman applies a Jedi mind-control technique to remedy the inherent contradiction in its forecasts for the U.S. economy and its targets for gold prices: "These are not the forecasts you are looking for."

Yesterday's report again advised investors to ignore economic realities and trust in Goldman instead.

"Despite resurgence in euro-area risk aversion and disappointing U.S. economic data, gold prices are unchanged over the past month, highlighting how conviction in holding gold is quickly waning," Goldman said in its research note.

Meanwhile, Fitz-Gerald said, the reasons gold is more likely to rise than fall - central bank money printing, central bank gold-buying, slowing production at gold mines, more Euro-zone troubles - haven't changed.

How Goldman's Gold Price Manipulation Works
The purpose behind all this, Fitz-Gerald explained, is to "get the weak money out, so they can accumulate more gold themselves."

In fact, this is a widely used Wall Street strategy that dates back at least to the 1920s.

For that matter, there's plenty of evidence Goldman uses this strategy to manipulate stocks and other commodities all the time.

Here's how it's done.

Often, the big banks are making subtle trades to help push the commodity - be it gold, a stock or anything else in the markets - in the direction they want it to go.

Issuing reports helps the cause by getting the media to transmit and amplify the message manipulators like Goldman are trying to send.

"Bigger firms like JPMorgan, Goldman Sachs, PIMCO or any of a dozen other behemoths simply release a "research report' that is interpreted as gospel by the mainstream media and swallowed hook, line and sinker by millions of unsuspecting investors as a reason to buy or sell," Fitz-Gerald said.

For example, the MarketWatch headline on its story about yesterday's Goldman downgrades of gold prices proclaimed, "Another blow to gold - Goldman Sachs slashes 2013, 2014 forecast."

That story noted that Deutsche Bank AG (NYSE: DB) also had lowered its forecast for gold prices just the day before.

In short, investors need to pay close attention to what the big banks say about stocks and commodities, because very often they are betting in the opposite direction. If you fall for the misinformation, you'll end up on the wrong side of the trade - losing money while Wall Street operators like Goldman reap the big profits.

How to Deal With the Market Manipulators
Fitz-Gerald advised investors not to get frustrated and angry about Wall Street manipulation of stocks and gold prices, but rather to try to understand what's going on and use it for their own benefit.

"Do what Wall Street does, not what it says," Fitz-Gerald said.

That's not as hard as one might think, he said, noting that retail investors don't have the pressure to move around large amounts of money every day and don't need to worry about major moves that could tip off their strategies to other big competitors.

"You can use tactics the big boys can't," Fitz-Gerald said.

One thing that retail investors can do to avoid becoming a Wall Street patsy, he said, is to dollar-cost average (buy a set dollar amount of an investment at regular intervals) into things like gold and stocks.

"Dollar-cost averaging forces you to buy more when the price is low and less when the price is high," Fitz-Gerald said. "Maybe you can't compete with the big banks, but you can beat them at their own game."

Source :http://moneymorning.com/2013/04/11/goldman-sachs-is-manipulating-gold-prices-right-before-your-eyes/

Money Morning/The Money Map Report

©2013 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2015 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Free Report - Financial Markets 2014