Another technical analyst, newsletter writer Steve Saville of The
Speculative Investor, tries this week to defend TA by arguing that
manipulation of the gold market has not much affected gold's price.
In an essay titled "Four Charts that Invalidate the Gold-Price
Suppression Story" --
http://tsi-blog.com/2016/06/four-charts-that-...gold-price-s...
-- Saville writes: "Every experienced trader knows that the financial
markets are manipulated. They always have been manipulated and they always
will be manipulated. Railing against gold-market manipulation is therefore
akin to railing against the Earth revolving around the sun."
But are all markets always manipulated by the government? If so,
it's a story that has yet to be reported by mainstream financial news
organizations -- or, for that matter, by Saville himself.
Saville continues: "Moreover, the attempts to manipulate -- which, by
the way, will be designed to move prices upward just as often as downward --
will never be effective beyond the very short-term."
But didn't the gold standard of the late 1800s and early 1900s manipulate
-- that is, control -- the gold price for decades? Didn't the London
Gold Pool rig the gold price for most of the 1960s? How do either of those
periods qualify as "very short-term"?
Then Saville compares the gold price since 2007 against four market
indexes to argue that "gold has done roughly what it should have
done." But "should have done" according to whom, other than
Saville himself?
And is Saville sure that governments have not been simultaneously
intervening surreptitiously in those other indexes as well to ensure that
they too did what they "should have done" -- at least "should
have done" according to the needs of the intervening governments?
Will Saville deny that governments now are surreptitiously trading most major
markets? Will he deny their constant surreptitious and admitted
trading in the gold market particularly? What does he suppose the objective
of that trading is and has been? Will he dispute any document compiled here?:
http://www.gata.org/node/14839
Saville concludes that in recent years the gold price actually has been
doing pretty well. "If gold has been subject to a long-term price
suppression scheme," he writes, "the scheme has been totally
unsuccessful."
But how can he be sure that, without the constant interventions against it
by governments, and particularly without their underwriting, through gold
leasing and swapping, the creation of vast supplies of imaginary "paper
gold," gold wouldn't be priced far higher?
What first needs to be established about gold, before any judgment is
made, is what governments are doing in the market and why. As much as he
loves them, Saville's charts don't answer that question. Indeed, since he is
a technical analyst who wouldn't have much to sell if the gold market was
widely understood to be rigged, maybe that is why he loves his charts.
