GATA’s Total Incompetence
Trader Scott’s Market Blog
January 29, 2017
How or where or when did this theory become institutionalized in the gold community – “gold is the answer to the world’s problems”. We see numerous articles, like this one from the stopped clockers at King World News, consistently touting this theory/belief/(hope?). They believe it’s mainly (only) gold which can extract us from this global debt and economic disaster. Where did this come from? GATA, which somehow became the respected leader of all gold bulls, almost seems to believe the world revolves around gold. And you can’t make this stuff up – GATA started in the Fall of 1998, writing about the gold market manipulation. Yet despite GATA’s weirdness and protestations, gold bottomed less than a year later,and rallied from around $250 in 1999, to around $1925 in 2011. So that whole time with the bear market in gold from the start of 1980 to the summer of 1999, GATA apparently sat around collecting “hard data” (evidence) of the manipulation, and they decide with less than a year left in the bear market to start informing the world. This group has done their best to make PMs a “fringe” asset class. Which is fine, because just as in 2011, a massive rally will suddenly make PMs less fringier, and allow for some profit taking for those who’ve used the big weakness to buy. But GATA wants us to believe gold should only go up. I asked them a question several years ago and amazingly never received a response. My inquiry was attempting to get an explanation as to how it was that both gold and the general commodity index (Monthly Nearby Goldman Sachs Index courtesy Moore Research Center, Inc.) had a major top in and around 1980. And then the index (and gold) generally traded in a range until they bottomed in and around 1999. There were certainly exceptions to this, but in general this was the situation, with some topping/bottoming earlier and some later. So gold traded along with the commodity index. Therefore, numerous other commodities were manipulated for about 19 years, just to hold down gold also? Is there another explanation as to why so many commodities were generally down. Or maybe gold was down, because of the explosion in the 1970’s and the general love affair with financial assets in the 80’s and 90’s. There are several “reasons” for the bear market/trading range if you will – mainly due to supply and demand.
Is gold manipulated – of course it is, as are all markets. But there’s nothing new there, it’s been going on as long as there have been markets. But the belief that somehow gold needs special attention is absurd. I have a suggestion for GATA. Stop getting folks emotional about gold, resulting in buying it at the very worst times. Stop claiming that every selloff in gold is manipulation. Start educating people about the most appropriate times to buy gold. Like when the sentiment is awful and the weak hands have been selling to the strong hands persistently en masse for weeks, or months. But that’s when GATA is usually the busiest with their press releases which only scares people into believing it’s hopeless to buy gold. And when gold is soaring is when GATA becomes boisterous about “commercial signal failures”, etc. Like last August, GATA leader Bill Murphy timed the top beautifully in this interview. But gold will have its’ day again certainly. And despite GATA’s total incompetence, gold will help many people to increase their wealth (only when bought well).
About
Trader Scott has been involved with markets for over twenty years. Initially he was an individual floor trader and member of the Midwest Stock Exchange, which then led to a much better opportunity at the Chicago Board Options Exchange. By his early 30’s, he had become very successful in markets, but a health situation caused him to back away from the grind of being a full time floor trader. During this time away from markets, Scott was completely focused on educating himself about true overall health and natural healing which remains a passion to this day.Scott returned to markets over fifteen years ago where he continues as an independent trader.
'Trader Scott’s Market Blog – GATA’s Total Incompetence – January 29, 2017' have 20 comments
January 30, 2017 @ 4:08 am Q
Hey Man. Forgive me for putting my contrarian two penneth in. Clearly, your geopolitical, socioeconomic and markets expertise is unique. But all I can say is that if all fiat currencies will fail within our lifetimes if we are lucky/unlucky… And given everything you quite rightly point out about intermediate to long term chaos with respect to bonds, derivatives and debt: surely PMS (and bitcoin) are better bets long term than anything fiat related, including equities. Am sure it’s dow 30k before then but longterm I mean ;-)
January 30, 2017 @ 8:20 am traderscott
No comment on bitcoin Q, just don’t know enough about it, but yes I don’t publish my views about where PMs are going LONG TERM, because it sounds too wacky. But it is about 2 things, eventually an end to the $ reserve status (official status) and the multi-decade bond bear market. In August 2014, there is a post about my lONG TERM Dow target. I actually came up with it in 2009, but it’s predicated on those two preconditions. That target is for the following decade – 2030’s. It sounded impossible in 2009, assinine in 2014, and still ridiculous now. In 4 years it won’t sound as ridiculous. The US will lose it’s premier status, and you see what happens to a country’s equity markets priced in local currency with a weak currency. I expect PMs to outperform the Dow.
January 30, 2017 @ 1:39 pm Q
;-)
February 1, 2017 @ 3:21 pm Harold
Ok, on gold .. . but you did not address that the DOLLAR is tied (forex)
or anchored ONLY to the US DOLLAR, (where/what is the proper anchor for the
world currency reference, Gold is NO GOOD … but it may be the best anchor !
January 30, 2017 @ 8:26 am traderscott
There is a video posted abot a trade in FCX last Thursday/Friday – click here or go to the blog home page, if you wish.
January 31, 2017 @ 11:51 am traderscott
To repeat a comment from last week, the 99.40 support area in the $ index is sitting out there like a sore thumb, meaning it’s hard to imagine “they” won’t take it below there and run sell stops. And then along with the potential for a bigger ending action below 99.40. TBD.
Also, an analyst at crappy Credit Suisse downgraded one of my favorite miners, Randgold Resources. I’ve had a lower bid in GOLD for awhile, but the stock rallied after the downgrade anyway, so no Randgold fill today.
January 31, 2017 @ 4:02 pm traderscott
Running stops onthe buy side today is silver. The first arrow on this chart is a sign of strength, mostly quality buying with some scaredy cat shorts, or people using trailing stops, covering shorts. But arrow 2 is a classic buy stop run.
February 1, 2017 @ 6:03 am John
If you want yo know how the gold price is controlled, Paul Craig Roberts who worked with Reagan has explained how its done. Have a look at his website.
February 1, 2017 @ 9:01 am stump
“Gold is money; everything else is credit.” JP Morgan
Von Mises, Rothbard, Paul, Grant, Bass and a slew of others agree with that opinion.
Before gold, there was barter and other inconvenient items used ‘as money’.
Gold is money; everything else in the general commodity index are…commodities.
You think the PMs are going to go to ‘wacky’ levels; wacky ‘fiat’ levels and I agree.
Gold is the numeraire; the value of everything else is based on it.
GATA & Leeb sound pretty ‘wacky’, I know, but they, too, understand Morgan’s statement.
Stump
February 2, 2017 @ 2:51 am Dale Holmgren
I’m so happy to see people commenting on Mises, Rothbard, Grant and the rest; I really believe that Austrian economics and libertarianism will spread like wildfire, and it’s always the same – you start reading them, and suddenly everything makes sense and you get very excited. Thank God for the internet.
February 1, 2017 @ 10:56 am Bill Brown
If it’s made by man, it won’t last. If it’s made by God it will last, until man destroys it. No monetary system devised by man is fool proof or safe from man. It was made by man and will be destroyed by man. Commerce with hard assets will always be around. Digital commerce, particularly in banking, is nothing more than a move for absolute control of all of your assets and the abolition of your privacy with a built in tracking system.
February 1, 2017 @ 1:10 pm The Seer
One wonders how long to finally be in free market(s) with wise economics and less government . . .
GATA – do you have a class action suit against those running the scheme?
February 1, 2017 @ 2:07 pm Randall
Randy J “Where did the theory that gold will solve all our problems”? Simple the coinage act of 1792, if President Washington was still around he would be glad to explain.
February 1, 2017 @ 3:34 pm traderscott
New post – The $ is a Piece of Crap.
February 1, 2017 @ 3:55 pm traderscott
I use good old HLC bars, otherwise totally agree. Bob’s book is great. There’s a review of it on this site.
February 1, 2017 @ 4:36 pm Henry T. Mortimer
I think that gold is indeed the answer to the world’s current problem: too much debt. The facts (so far at least) are that there are only two ways to get rid of an excessive amount of debt: undergo a period of inflation that reduces the economic value of debt or undergo a period of deflation in which debt is reduced through the process of debtor bankruptcies. In both cases there are big losers among both creditors and debtors. None of this is new and a study hundreds of hundreds of years of debt induced financial crises will back this up.
The first step in the process is to devalue one’s currency in the belief that one can solve domestic debt problems through increased exports. That might work if you are alone in creating an unsustainable amount of debt, but generally you are not alone and your strategy will cause your trading partners to retaliate with the same strategy in which you (and your trading partners) derive no benefits from the strategy. This is where gold comes in: if you have a lot of gold, you can devalue your currency with respect to gold which will give you an advantage over those who have less gold or none at all – provided that you make a market in gold at the new rate. In this case, the unavoidable losses from too much debt will be shifted to those with little or no gold.
This is what happened in 1933 when the US devalued the dollar against gold. The reason to hold gold is to be on the winning side when this happens. I would have thought that it would already have happened, but continue to believe that the passage of time only makes it more likely that it will happen sooner than later.
February 1, 2017 @ 7:26 pm traderscott
To the legitimate comments about worries regarding fiat money, it’s not my stance, per se. The problem isn’t the backing by gold of a currency. The problem is the ones running the show. We’ve had every government/country throughout history who eventually reneged on all of their debts – gold/silver/whatever standard or not. The problem is those who end up seeking the adulation of leadership roles and the power of being in control of the rest of us, in reality and in their own minds. Gold will not save us – please. But what I do believe in is the power of a massive accumulation area in gold. It’s a big part of the reason I turned extremely bullish on gold, especially the miners in December 2015 – in this post.. And all thru last fall (after the election selloff, not before), it was my belief of a late 2016 retest of the December 2015 lows. But this retest would be at a higher level – archived many times. So if you’re long term bullish on gold, then we agree about that.
February 2, 2017 @ 10:40 am Steve Kopriva
With respect, Traderscott, the whole point of commodity backed money, such as gold, silver, etc., is to keep the “ones running the show” from controlling the value–up or down–of what we use ‘as money’.
Human nature is constant–a numeraire and, therefore, predictable. It’s the reason Von Mises titled his most famous tome Human Action, in which he described how economics really works.
Commodities are produced through the ‘sweat of man’s brow’, are not easily obtained, in short supply and, therefore, valuable. Gold happens to be the best of all forms of money for barter, divisibility, etc. as originally defined by Aristotle.
Yes, the gold standard can be debauched, as it has been many times throughout history, but those systems have always failed and returned to some form of commodity money. I believe we’re at the beginning of that return cycle now, which you have been masterfully charting for some time now.
There will be always be a parasitic class of human beings, trying like hell to take what they haven’t earned and trying even harder–as they are right now–to keep it. But there will always be the rest of us worker bees, actually earning an honest living through ‘the sweat of our brows’.
These cycles take a long time to play out. We forget how we got so wealthy and why life is so good, but eventually, misallocation of resources exposes the fraud. We wake up and a new cycle begins.
You are correct that gold will not save us; it will not save us from the pain we must endure as the system rights itself. But, until we find another barter commodity that fulfills Aristotle’s five requirements better, gold will continue to be the best material to use ‘as money’.
Stump
February 2, 2017 @ 11:24 am traderscott
Very well reasoned comment – much appreciated. Although I’m absolutely a libertarian, but not an Austrian, per se – more like a combination of Ricardo, Smith, Von Mises and of course Larry Summers (just kidding, don’t freak). And I get the argument about a gold standard. But what’s the point, the jackasses will find a way around it. And with the current crop of idiots there is zero chance. These people are truly insane. And you know my feelings about commodities. I completely disagree with the deflation/commodity supercycle. This is just the opposite. No one, NO ONE, in a a position of power is even contemplating what this world will look like with a 35 year bear market in bonds. As Marc Faber says we are doomed.
February 2, 2017 @ 3:06 am traderscott
First of all, I like and respect Bob, so your comment is false. Secondly, are you kidding me? You think this business is about always being right, and I don’t even know the circumstance in which you claim you bought the stock. And besides I have no knowledge about Novo, therefore I have no idea what Bob did do or didn’t do. Stocks/markets go up and down, so what’s your point. When I lose, it’s 100% my fault. I wouldn’t even consider blaming someone else. And you are completely off base with your knowledge of markets and economics.