Tuesday, June 21, 2011

Gold and Silver Manipulation

From the beginning of my journey in precious metals (about 6 years ago) until now, there have been many commentators that are adamant about there being manipulation in the silver market.

When you analyse a lot of what is written about gold and silver on the internet and elsewhere, one can find it difficult to sift out the 'vested interest' commentary. Those with agendas not holy pure are always out to distort facts in order to feather their own nests.

So who in the manipulation camp is right? On the one side, there are those who absolutely adhere to the idea that the big bullion banks and the likes of JP Morgan are using their financial firepower to manipulate the price of silver downwards, thereby profiting from large short positions. Others don't see any manipulation and see the large price swings, when these banks enter and exit, as being normal.

Perhaps though, there is middle ground to be had. Markets do not tollerate manipulation in the long-term. So any short-term manipulation can affect price and, if the fundamentals for that commodity are in place, then eventually a true (ish) price will be found. It's the basic law of demand and supply.

With precious metals, the secular bull market has been running for around 11 years now and the fundamentals are still in place.

During these 11 years, some institutions have undoubtedly used their size to manipulate price. If the regulators see this and deal with it, all the better. But these movements shouldn't really shake a long term investor out of their positions. If they have done their homework and the fundamentals are in place, then they will be relaxed about short term trading gyrations.

The market will reveal true price eventually, even with the fear and greed that goes on in-between.

Gold in New Zealand dollars: $1903.20 per oz
Previous all time high: $1955.10 per oz

Silver in New Zealand dollars: $44.29 per oz
Previous all time high: $48.58
per oz

The Anglo-Far East Company
The Original Private Bullion Custodian
Your reference: an-001

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