Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24
How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - 17th Feb 24
Why Rising Shipping Costs Won't Cause Inflation - 17th Feb 24
Intensive 6 Week Stock Market Elliott Wave Training Course - 17th Feb 24
INFLATION and the Stock Market Trend - 17th Feb 24
GameStop (GME): 88% Shellacking Yet No Lesson Learned - 17th Feb 24
Nick Millican Explains Real Estate Investment in a Changing World - 17th Feb 24
US Stock Market Addicted to Deficit Spending - 7th Feb 24
Stocks Bull Market Commands It All For Now - 7th Feb 24
Financial Markets Narrative Nonsense - 7th Feb 24
Gold Price Long-Term Outlook Could Not Look Better - 7th Feb 24
Stock Market QE4EVER - 7th Feb 24
Learn How to Accumulate and Distribute (Trim) Stock Positions to Maximise Profits - Investing 101 - 5th Feb 24
US Exponential Budget Deficit - 5th Feb 24
Gold Tipping Points That Investors Shouldn’t Miss - 5th Feb 24
Banking Crisis Quietly Brewing - 5th Feb 24
Stock Market Major Market lows by Calendar Month - 4th Feb 24
Gold Price’s Rally is Normal, but Is It Really Bullish? - 4th Feb 24
More Problems in US Regional Banking System: Where There's Fire There's Smoke - 4th Feb 24
New Hints of US Election Year Market Interventions & Turmoil - 4th Feb 24
Watch Consumer Spending to Know When the Fed Will Cut Interest Rates - 4th Feb 24
STOCK MARKET DISCOUNTING EVENTS BIG PICTURE - 31st Jan 24
Blue Skies Ahead As Stock Market Is Expected To Continue Much Higher - 31st Jan 24
What the Stock Market "Fear Index" VIX May Be Signaling - 31st Jan 24
Stock Market Trend Forecast Review - 31st Jan 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Bitcoin Holders Are Today Learning Something Goldbugs Already Know

Currencies / Bitcoin Jul 17, 2018 - 02:42 PM GMT

By: MoneyMetals

Currencies

Precious metals investors have learned a difficult truth in recent years. The best way to control a market is to put Wall Street in charge of it.

Gold and silver futures were created in the 1970s with the admitted purpose of “increasing volatility” in the markets and discouraging the ownership of physical bullion. It is a lesson that participants in other markets would do well to learn – specifically the Bitcoin and cryptocurrency markets.


Officials were terrified that free markets built around the supply and demand for tangible (not paper) gold and silver would wind up destroying confidence in the fiat dollar.

President Richard Nixon defaulted on the Bretton Woods agreement with other nations to redeem dollars for gold in 1971.

The confidence in the dollar would evaporate if the dollar price of gold spiraled higher.

The COMEX launched trading in gold and silver futures in the early 1970s. The gambit nearly failed by the end of that decade as the gold and silver priced in dollars began rising exponentially. But the Wall Street insiders behind the COMEX, with the support of federal regulators, managed to regain control.

They were able to pin the blame for price increases on the Hunt Brothers’ attempt to “corner the market” rather than on failing confidence in the dollar and the rapid price inflation going on at the time.

Through their control of the exchange, COMEX officials used a one-sided tool and stopped accepting buy orders in silver futures, only allowing orders to sell. What happened to the price in a “market” which allowed zero buyers was predictable.

The central planners at the Fed also stepped in. Chairman Paul Volcker raised interest rates dramatically, helping stem the tide of people dumping dollars and taking the shine off of gold.

Today, the tools for market control are even more varied and powerful. We’ve seen the advent of high frequency trading. Machines can see trades placed by retail investors and punish them by front running those trades.

The bullion banks have developed ways to game the inventory system to avoid limits on the number of new futures contracts they issue. It is now routine for 100 ounces of paper metal to ride atop just a single ounce of actual metal during trading. There is no functional limit on the supply of paper gold and silver.

The same banks use newer technology, such as internet chat rooms, to coordinate price rigging in real time.

Only the most naive and uninformed still enter the futures markets expecting to get a fair shake in a long-term trade based on fundamental considerations – such as federal debt growing many times faster than GDP.

The metals futures markets are the opposite of free and fair. But, for now at least, Wall Street and their partners in Washington DC remain firmly in control. Gold prices are way below the 2011 highs. The U.S. dollar is, inexplicably, once again perceived as strengthening.

It isn’t hard to spot some parallels in the cryptocurrency markets.

Futures trading in Bitcoin launched in December, 2017. The uninitiated were thrilled by the prospect of institutional money flooding in. And it certainly has. Supporters just shouldn’t have assumed the money and influence would come from firms betting on higher prices with the best interest of Bitcoin at heart.

The list of exactly what traits Bitcoin and gold have in common is controversial. But there is at least one thing most sound money advocates can agree on: Bitcoin and gold share the animosity of bankers and politicians.

We won’t know the real price of either asset until both of those parties no longer control price discovery via exchanges they run, rig, and regulate.

By Clint Siegner

MoneyMetals.com

Clint Siegner is a Director at Money Metals Exchange, perhaps the nation's fastest-growing dealer of low-premium precious metals coins, rounds, and bars. Siegner, a graduate of Linfield College in Oregon, puts his experience in business management along with his passion for personal liberty, limited government, and honest money into the development of Money Metals' brand and reach. This includes writing extensively on the bullion markets and their intersection with policy and world affairs.

© 2018 Clint Siegner - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2022 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