To hear 321Gold.com's Bob Moriarty tell it, GATA has conquered the world
and now has more influence on the markets than the central banks we long have
been clamoring against.
For in his commentary today, "Capitulation in Gold" --
http://321gold.com/editorials/moriarty/moriarty072715.html
-- Moriarty writes:
"Speaking of GATA, they have done billions of dollars of damage to
investors. Somehow they convinced tens of thousands of people that when gold
went from $252 to $1,923 it was being suppressed, and like the gold
derivatives time bomb, gold was going to explode one day soon. If someone was
manipulating gold from $252 to $1,923, it wasn't down. Actually if you bought
lumber or soybeans and they made the same percentage move as gold did from
1999 to 2011 and you didn't sell, it's because you are too stupid to
recognize the difference between an investment and a religion."
Yet throughout gold's price rise, the gold market was subject to frequent
interventions, most instigated by central banks, that panicked retail longs
and allowed the bullion banks, agents of the central banks, to cover their
short positions and begin the market-rigging cycle all over again, slowing
gold's restoration as a competitive currency. That's not so hard to
understand.
As for the investment and religion businesses, Moriarty is in the former
but GATA is in neither.
Moriarty continues: "On Sunday night a week ago someone slammed gold
when it was at $1,130 and dropped it to $1,080 in seconds. Billions of
dollars that nervous investors had put in stop-loss orders on their long
positions were wiped out in that time frame. It was deliberate and designed
to steal from investors. It is called 'running the stops' and every guy who
was ever a commodity broker or stockbroker understands what happened. It's
perfectly legal. All those guys who claim to believe that manipulation is the
most important issue in investing should have had buy orders well below the
November low in gold because that was really predictable."
But if it was "really predictable," where was Moriarty's
commentary predicting it? Indeed, where was the commentary of other
experienced market analysts predicting it? To the contrary, much commentary
following the attack on gold actually found it extraordinary because of the
sheer volume and suddenness of short sales, which implied central bank
involvement. Such involvement was quickly suspected even by analysts who have
never shown any interest in the possibility of surreptitious central bank
intervention in the gold market.
As for "perfectly legal," British authorities have arrested a
guy who trades S&P futures from the basement of his parents' home outside
London, accusing him of causing the May 2010 "flash crash" in the
equity markets. The trader has been charged with one count of wire fraud, 10
counts of commodities fraud, 10 counts of commodities manipulation, and one
count of "spoofing," and the "perfectly legal" defense
does not seem to have worked for him.
But it does work for governments, which have fully authorized
themselves to trade all markets in secret. That's what the U.S. Exchange
Stabilization Fund is about --
http://www.treasury.gov/resource-center/inter...ges/esf-inde...
-- and presumably that is why CME Group, operator of the major futures
exchanges in the United States, provides discounts to central banks and
governments for their surreptitious trading on CME Group exchanges:
http://www.gata.org/node/14385
http://www.gata.org/node/14411
Of course "perfectly legal" does not mean perfectly fair. For
should investors in countries purporting to have free markets have to be
trading in ignorance against government agencies that are authorized to
create infinite money?
Moriarty continues: "I doubt if any of the 'manipulation-conspiracy'
people actually care about making money."
That's a good point, though at least in regard to GATA it is not the
accusation Moriarty intends. In fact GATA is a nonprofit, federally
tax-exempt civil rights and educational organization based in the United
States that seeks to expose market manipulation and restore free markets,
particularly in the monetary metals. Of course as individuals we'd all like
to make money but you can't do that as a nonprofit, federally tax-exempt
organization. You do that as an individual or as a business.
Moriarty continues: "Gold shares have been on the block for the last
six months. If you were smart enough to buy them, you will be just fine.
Sure, some are going to disappear, but while the 'manipulation-conspiracy'
people are whining about how terrible it is for a financial product to be
manipulated, you are going to own a lot of 10-20-baggers from here."
So there's Moriarty's real grievance with GATA: By warning investors about
the rigging of the monetary metals markets and the challenges they face, GATA
is getting in the way of his touting the stocks in which he has invested,
like the touting contained in the paragraphs immediately preceding his
criticism of GATA today.
Moriarty concludes: "All financial markets are manipulated. Live with
it."
This observation by Moriarty is actually progress, since, when GATA began,
he and others like him denied any manipulation of the monetary metals markets
at all. Now that market manipulation is so obvious that anyone who denies it
risks losing all credibility, the former deniers can only try to minimize it.
As for "living with" market manipulation, Moriarty is welcome to
do so, and maybe he'll grant others the right not to.
In the meantime, no analysis of the gold market is worth anything if it
fails to address four questions:
-- Are central banks in the gold market surreptitiously or not?
-- If central banks are in the gold market surreptitiously, is it
just for fun -- for example, to see which central bank's trading desk can
make the most money by cheating the most investors -- or is it for policy
purposes?
-- If central banks are in the gold market for policy purposes, are
these the traditional purposes of defeating a potentially competitive world
reserve currency, or have these purposes expanded?
-- If central banks, creators of infinite money, are
surreptitiously trading a market, how can it be considered a market at all,
and how can any country or the world ever enjoy a market economy again?
GATA urges Moriarty and all others who claim to analyze the gold market to
answer these questions. Documentation responsive to those questions is
available here:
http://www.gata.org/node/14839
