Here Is The FT's Gold Price Manipulation Article That Was Removed ...

Here Is The FT's Gold Price Manipulation Article That Was Removed ...
Charts: Gold Likely Still Seeking A Lower Low | Precious Metals ...
FT Removes Article “Gold Price Rigging Fears Put Investors On Alert ...
The 2014 Gold Rally: The Real Deal, or a Flash in the Pan? | John ...

Posted: 25 Feb 2014 06:35 PM PST

Two days ago the FT released a clear, informative and fact-based article, titled simply enough "Gold price rigging fears put investors on alert" in which author Madison Marriage, citing a report by the Fideres consultancy, revealed that global gold prices may have been manipulated on 50 per cent of occasions between January 2010 and December 2013.

To those who hve been following the price action of gold in the past four years, gold manipulation is not only not surprising, but accepted and widely appreciated (because like the Chinese those who buy gold would rather do so at artificially low rather than artificially high fiat prices) and at this point, after every other product has been exposed to be blatantly and maliciously manipulated by the banking estate, it is taken for granted that the central banks' primary fiat alternative, and biggest threat to the monetary status quo, has not avoided a comparable fate.

What is surprising is that where the FT article once was, readers can now find only this:

And since we can only assume the article has been lost to FT readers due to some server glitch, and not due to post-editorial consorship or certainly an angry phone call from the Bank of England or some comparable institution, we are happy to recreate it in its entirety. Just in case someone is curious why gold price rigging fears should put investors on alert.

Gold price rigging fears put investors on alert

By Madison Marriage

Global gold prices may have been manipulated on 50 per cent of occasions between January 2010 and December 2013, according to analysis by Fideres, a consultancy.

The findings come amid a probe by German and UK regulators into alleged manipulation of the gold price, which is set twice a day by Deutsche Bank, HSBC, Barclays, Bank of Nova Scotia and Société Générale in a process known as the "London gold fixing".

Fideres' research found the gold price frequently climbs (or falls) once a twice-daily conference call between the five banks begins, peaks (or troughs) almost exactly as the call ends and then experiences a sharp reversal, a pattern it alleged may be evidence of "collusive behaviour".

"[This] is indicative of panel banks pushing the gold price upwards on the basis of a strategy that was likely predetermined before the start of the call in order to benefit their existing positions or pending orders," Fideres concluded.

"The behaviour of the gold price is very suspicious in 50 per cent of cases. This is not something you would expect to see if you take into account normal market factors," said Alberto Thomas, a partner at Fideres.

Alasdair Macleod, head of research at GoldMoney, a dealer in physical gold, added: "When the banks fix the price, the advantage they have is that they know what orders they have in the pocket. There is a possibility that they are gaming the system."

Pension funds, hedge funds, commodity trading advisers and futures traders are most likely to have suffered losses as a result, according to Mr Thomas, who said that many of these groups were "definitely ready" to file lawsuits.

Daniel Brockett, a partner at law firm Quinn Emanuel, also said he had spoken to several investors concerned about potential losses.

"It is fair to say that economic work suggests there are certain days when [the five banks] are not only tipping their clients off, but also colluding with one another," he said.

Matt Johnson, head of distribution at ETF Securities, one of the largest providers of exchange traded products, said that if gold price collusion is proven, "investors in products with an expiry price based around the fixing could have been badly impacted".

Gregory Asciolla, a partner at Labaton Sucharow, a US law firm, added: "There are certainly good reasons for investors to be concerned. They are paying close attention to this and if the investigations go somewhere, it would not surprise me if there were lawsuits filed around the world."

All five banks declined to comment on the findings, which come amid growing regulatory scrutiny of gold and precious metal benchmarks.

BaFin, the German regulator, has launched an investigation into gold-price manipulation and demanded documents from Deutsche Bank. The bank last month decided to end its role in gold and silver pricing. The UK's Financial Conduct Authority is also examining how the price of gold and other precious metals is set as part of a wider probe into benchmark manipulation following findings of wrongdoing with respect to Libor and similar allegations with respect to the foreign exchange market.

The US Commodity Futures Trading Commission has reportedly held private meetings to discuss gold manipulation, but declined to confirm or deny that an investigation was ongoing.

h/t Noel

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Charts: Gold Likely Still Seeking A Lower Low | Precious Metals ...

Posted: 26 Feb 2014 12:00 PM PST

In recent months, we have been tracking three different scenarios for gold prices and have been numbering them Scenarios 1, 2, and 3 (see our prior articles here). Our Scenario 1 has fallen out of favor, so this post only describes Scenarios 2 and 3. As always, when we're discussing multiple Elliott Wave scenarios, the "what ifs" can become a bit confusing and convoluted.

Please ping us with questions if we can help clear anything up.

Scenario 2: Gold needs a lower low.

Of the surviving scenarios for gold, Scenario 2 would have price seek a lower low before much longer. This scenario has price tracing out a five-wave move down from the 2011 high, with the final wave "[v]" not yet formed. A good area for a downward reversal into the fifth wave would be near the channel boundary shown on the monthly chart below. This month, that is in the vicinity of 1,350.

If price seeks a new low, it is possible (although not certain) that it would be below the level of the 2008 high. For a variety of reasons, many traders will be watching that level, and there are likely to be stops placed just below that level by traders currently in long positions. Thus, if price slips a little bit below that level, it will surprise many traders, as markets often do.

A more detailed study of resistance levels and eventual lower price targets on a weekly time frame can be found on our website.

Scenario 3: The low is in (for now), and gold will climb for several months.

On the other hand, Scenario 3 says that an intermediate low was seated several months ago and that price will probably continue to rise for several months as part of a lengthy sideways-upward correction that could last years. If price rises much above the channel boundary shown on the previous charts, then it's quite possible that it may be reaching for an intermediate high "[a]" near Fibonacci target areas at 1,436 and 1,591. That would be followed by a lengthy down-up pattern, but it probably would not produce new lows for a few years at least. (Unfortunately for long-term gold bulls, this scenario actually calls for substantially lower lows far out on the horizon.) As we indicated above, this is not our favored scenario, but it is a viable alternate. The monthly chart below summarizes Scenario 3.

This article originally appeared on Trading on the Mark.

FT Removes Article “Gold Price Rigging Fears Put Investors On Alert ...

Posted: 24 Feb 2014 02:57 PM PST

In an article published on Sunday, a Financial Times editor explains how the London Gold Fix could be structurally manipulated. An important "break through" for a mainstream media outlet to release this type of info, as it is a confession that the last market standing (gold and silver) is also manipulated, after having evidence that almost every other market appears to be manipulated (think of LIBOR, energy markets, aluminium, currency markets, credit derivatives, and so on).

In a myserious way, however, the article disappeared shortly after getting published. Too late for Google's spider who already registered the article in its memory.

google FT Feb 2014 physical market

Google's cache still has the article available. For archiving purposes, we release it through the screenshots below:

FT article PartI physical market FT article PartII physical market FT article PartIII physical market

Courtesy of GATA for bringing this to our attention (source).

The 2014 Gold Rally: The Real Deal, or a Flash in the Pan? | John ...

Posted: 26 Feb 2014 12:00 AM PST

Introduction

Gold prices first found their way onto our radar screen back in July 2013 because of some unusual investor positioning data from the Commodity Futures Trading Commission (CFTC), which we first displayed and discussed in our July 23rd report entitled Gold Prices Test Their First Upside Obstacle: Watch the Smart Money.

These data showed that in late June/early July gold producers collectively moved to an essentially unhedged position the futures market for the first time in more than a decade. This rare, unusual positioning indicated that the smart money was collectively convinced that gold was undervalued at $1200 per ounce. Unbeknownst to us at the time was that gold prices actually bottomed for the year just a few weeks earlier, at $1180 on June 28th. Prices then proceeded to spike higher to $1419 by the end of August, a $239 per ounce or 20% advance in less than 2 months. However, prices then subsequently collapsed right back down to $1180 by the end of the year, convincing many investors that this was just a bounce in a bear market, and that the larger 2011 bear market had resumed.

Then something interesting happened at the end of the year: the gold producers moved right back to that unhedged status in the futures market, just as gold prices dipped below $1200 an ounce. This further identified the $1200 area (at least to us) as a value area by the smart money. So far in 2014 gold prices have again aggressively rebounded, rising by $151 per ounce or 13% just since the beginning of the year.

In today's report, we display and discuss a number of different market metrics including investor asset flows, investor sentiment, relative performance, price and trend structure, and intermarket relationships in an effort to answer the following questions:

Is the 2014 rebound in gold prices just another correction with the 2011 bear market, or is this a sustainable new bullish trend?
How much higher can gold prices realistically go? Where are the next upside targets?
How long can the 2014 price advance potentially last?
What's the better place to be for bullish investors: outright gold or gold miners?
How is a sustained rise in gold likely to indirectly affect the prices of other US financial assets?

Investor Asset Flows

The red line in the upper panel of Chart 1 below displays the data series that first shifted our focus to gold prices back in July 2013, the Commercial Hedger category of the Commitments of Traders data. Once per week the CFTC breaks down futures open interest into three categories, Commercial Hedgers, Large Speculators, and Small Speculators, and makes the data available to the public via their website.

As the name suggests, Commercial Hedgers use the futures market to hedge the value of their physical holdings in a commodity, and thus they atypically accumulate a net position against the trend.

One of the first things that you notice when you look at this chart is that the hedgers are almost always net short, because they are holding the physical asset. The green vertical highlights between both panels show that least net short (least hedged) extremes in December 2001, February 2005, and November 2008 all coincided with important intermediate to long term bottoms in the price of the gold contract (lower panel). The most recent of these extremes took place in July and December 2013, just as gold prices moved below $1200 per ounce, which identifies this as a value area for the smart money.

Since December, the hedgers have become collectively a bit more net short, at 72,654 contracts as of the latest data. However, this still qualifies as an historic least hedged extreme that, assuming history repeats, suggests that significantly higher gold prices are in store over the next one to several quarters.

Chart 2 takes a more near term look at investor asset flows via the daily total assets invested in the SPDR Gold Trust ETF (GLD), which is plotted along with its 21-day (1 month, red line) moving average in the upper panel.

The green highlights point out that expanding total daily assets during August 2013 and most recently since January 17th, above their 1 month moving average, coincided with the two most significant periods of rising gold prices since July 2013. This chart tells us that, in addition to the smart money establishing value near $1200 over the past 9 months, enough investor assets are now moving into gold on a day-to-day basis to establish and fuel a positive price trend. As long as these assets remain above their moving average, we will expect the current 2014 price advance to continue.

[Hear More: Ross Hansen: All Quiet on the Precious Metals Front – Metals Ready to Roll]

Investor Sentiment

Chart 3 below measures investor sentiment according to a daily survey of near to intermediate term oriented individual futures trader bullishness on gold prices, which is plotted by the blue line in the lower panel. Unlike the commercial hedgers shown in Chart 1, these traders accumulate a position with the trend, which ultimately leaves them the most collectively bullish at market peaks and the most bearish at market bottoms.

The green highlights on the chart show that, at 67% bullish according to the latest data, these futures traders are currently becoming more collectively bullish following a least bullish extreme back in December, an extreme which had previously coincided with every important bottom in gold prices (upper panel) since 2010. However, the green arrow points out that these traders are only about halfway to reaching opposite most bullish extremes (red highlights) which have coincided with or led most of the significant peaks in gold prices during this period, which suggests that there is more near to intermediate term upside potential for prices from an investor sentiment standpoint.

Chart 4 below measures investor sentiment for gold prices from the more intermediate to long term perspective of brokerage and advisory firms and commodity trading advisors (CTAs) via the Market Vane survey, which is plotted since 2000 by the blue line in the lower panel.

The green highlights show that, at just 47% bullish as of the latest data, these professional trend followers are at a decade-long least bullish extreme, and that similar but less severe extremes coincided with or led important bottoms in gold prices in April 2003, October 2006, November 2008, and May 2012.

This chart indicates favorable investor sentiment for a much larger and more sustainable rise in gold prices than the one suggested by Chart 3 to emerge from at or near their current level near $1320 per ounce.

Outright Gold or Gold Stocks?

One common question that we have heard from clients over the past few months is, "should I be in outright gold or in gold mining stocks?" Chart 5 below plots the Market Vectors Gold Miners ETF (GDX) since mid 2010 in the upper panel (black bars), with a corresponding relative performance chart of GDX versus GLD in the middle panel (blue line), and quarterly momentum of GDX versus GLD plotted in the lower panel (black line).

The red ellipse in the lower right edge of the chart shows that GDX (gold miners) is currently at a quarterly overbought extreme versus GLD (outright gold), while the red vertical highlights between all three panels show that similar instances of this coincided with the beginning of periods of relative underperformance by the miners in December 2010, April 2011, and September 2012.

Basically this chart suggests that, after outperforming (leading) gold prices higher since December, the miners may be becoming temporarily "played out" from a quarterly relative performance standpoint, and ready to yield the leading role back to gold prices in terms of upcoming relative performance.

Now that we've determine that GLD is amid favorable conditions to outperform GDX over the next 1-3 months, Chart 6 below looks at GLD by itself to determine trend and upside potential. The green highlights point out that, after "double bottoming" around $119 in June and December 2013, GLD has recently risen above its 200-day moving average (orange line, widely watched major trend proxy) for the first time in a year.

This suggests that a major bullish trend change is emerging in the ETF, and clears the way for an eventual, additional 8% rise to the next overhead resistance level at the 137.55 August 2013 benchmark high. Above there, the next resistance level is the 148.27 May 2012 benchmark low, which is 16% higher than GLD's current level.

Chart 7 below addresses another question we have been asked: "do you think gold will outperform the S&P 500 over the next several months?" To answer this, we utilize the same metrics used on Chart 5, but this time we measure the relative performance of GLD versus the SPDR S&P 500 ETF (SPY).

The blue relative performance line in the middle panel shows that GLD has underperformed SPY since August 2011. However, the green arrow in the bottom panel shows that quarterly momentum in the relative performance line is now rising, towards relative outperformance by GLD, even while GLD continues to underperform (red arrow, middle panel). This positive momentum divergence typically precedes a change in the trend of relative performance, which in this case would mean an emerging trend of relative outperformance by GLD versus SPY, while GLD (upper panel) continues to rise on an outright basis.

Intermarket Implications

Chart 8 below plots gold futures (black line) alongside the yield of the US 10-Year Treasury Note (blue line) since 2000, and shows that these series have maintained a tight and stable inverse correlation to one another over the past 22 years.

Per the correlation, a significant and sustained rise in gold prices is likely to coincide with a decline in long term US interest rates as long dated US Treasury prices rise which, by the way, is counter to conventional wisdom right now.

Chart 9 below takes this intermarket relationship tack a step further, by showing that the yield of 10-Year Treasury Note has maintained a tight and stable positive correlation to the S&P 500 since 2012, as an apprehensive stock market has looked to the bond market (and to the Fed trying to control interest rates) for direction.

Per these relationships, a significant and sustained rise in gold prices that indirectly puts downward pressure on US interest rates, as investors move back into defensive assets, also suggests the potential for upcoming weakness in US equities as investors leave more risky assets.

Conclusion, Investment Implications, Strategy

The latest investor asset flow data, plus surveys of retail and professional investors, concur on favorable conditions for the 13% rise in gold prices thus far in 2014 to continue at least into the 2nd Quarter, and potentially much deeper into 2014.

Relative performance metrics suggest that, although gold miner stocks have appreciably outperformed outright gold since December, this relative outperformance appears to be played out from a quarterly standpoint, setting up favorable conditions for gold prices to outperform gold stocks in the months ahead. Moreover, GLD's recent rise above its 200-day moving average, for the first time in more than a year, suggests that a major bullish trend change is emerging in gold prices and clears the way for an additional 10% rise to the next overhead resistance level.

Current and historic intermarket relationships suggest that a continuation of the 2014 rise in gold prices would likely coincide with a decline in long term US interest rates and, taking this a step further, current relationships also suggest that a decline in long term US interest rates would also likely coincide with a corrective decline in the US stock market. The common denominator in all these relationships, and what creates them, is investor asset allocation. A rise in gold prices, a rise in long dated US Treasury prices (i.e. declining long term US interest rates), and a decline in the US stock market are all defensive in nature, and collectively warn of a potential US stock market correction to emerge between now and early to mid Q2 2014.

Here Is The FT's Gold Price Manipulation Article That Was Removed ...