Comments on: Gold Manipulation?

By: Frugal

Frugal — Sat, 23 Dec 2006 01:51:37 +0000

Larry,
I meant earning $500K inflation-adjusted annual salary. I didn’t mean buying homes in Berkeley or anywhere else (at whatever price). That I can always do assuming that I can carry the payment for whatever home or homes that I buy.

By: Larry Nusbaum

Larry Nusbaum — Fri, 22 Dec 2006 13:09:56 +0000

“I probably will not get such chance in my life….) ”
This is the part that is so hard to understand and to beleive. The prices I paid on houses in Berkeley did not seem “cheap” at the time. But, they always seem so with the passage of time looking back. That’s a no brainer. And, so, think about it theis way, everyone who came before you bought real estate at high prices. It’s just that they tend to continue higher over time.
Now, looking back at Berkeley, for example, we laugh and wonder why we only bought three instead of 33….
Now, where are we in the current cycle and can we have expectations of another 15 years of rising prices. I have no idea. I know, as always, the reward is wort the risk. And, that our population will grow from 300 million to 400 million by 2035. But, the answer is in the job growth.

By: Frugal

Frugal — Fri, 22 Dec 2006 02:43:42 +0000

No wonder you are so rich, . Even a couple of years help a lot! That was a good investment choice that you made. I would have done similarly (well, of course, I probably will not get such chance in my life….)

By: Larry Nusbaum

Larry Nusbaum — Wed, 20 Dec 2006 01:17:49 +0000

Frugal: My best years at Lehman Brothers were 1988-1991. I averaged about $200,000 ($500,000 equivalent today I guess). What did I do? That’s right…..saved about 1/3 and plowed it into Bay Area houses. (I didn’t know what else to do)

By: Frugal

Frugal — Tue, 19 Dec 2006 23:48:25 +0000

Thanks for your links Larry. I keep wondering about that $400K+ salary…. If I’m earning that much, I can probably save one million (after tax) in about 6 years, . Make things so much easier indeed.

By: Frugal

Frugal — Tue, 19 Dec 2006 23:32:09 +0000

ML,

I believe that things can be proven through statistical studies which was what the university professor did. Just like back-dated stock options. It was first discovered through statistical studies.

Definitely, for a long term investor, any drop is “welcomed” (if you pick up more). That’s why I have reserved my home equity for that purpose, in the case when PM drops a lot. I don’t trade short term, so I sit through such pull-backs most of the time.

I am sharing my personal experiences on the gold trading actions. I can pretty much count in one hand for vertical price drops in other international markets in the last 4 years. Maybe just once or twice. Certainly, the volatility in the US may be proportional to its liquidity. But counting big price drops (vertical or not), the US market still appears to be way too frequent.

Just my two cents.

By: Frugal

Frugal — Tue, 19 Dec 2006 23:22:53 +0000

Sanjay,

There are other articles on Fort Knox. I only wanted to put up the two links that I think are more neutral in their statements, instead of statements from gold bugs. I don’t know whether it’s true. But there MUST be an audit on the actual gold which in fact has NOT happened for almost 50 years. The last audit done was simply not a real audit.

By: ML

ML — Tue, 19 Dec 2006 20:40:09 +0000

Frugal,

The drops in PMs have always been fast and furious, but I doubt any collusion can be proven. Is this any different than market makers at the NYSE running the stops? As long as there has been pit trading, market makers and big players have tried such tactics. It just looks much worse in PMs because the composition of players is one-sided.

The manipulation theory is interesting (and I don’t mean to put down the works of Gata and Frank Veneroso), but how does it impact one’s trading/investing results even if it were true? If one is a long term bull then any suppression simply allows one to pick up more at a lower price. If one is a trader then the price drops have to be integrated into the toolbox of pattern recognition. Anyone following what I’ve been writing about PMs in the past week shouldn’t be surprised by Friday/Monday’s drop and least of all by today’s action.

By: sanjay

sanjay — Tue, 19 Dec 2006 17:21:13 +0000

The two links about fort knox gold are not true. The first link sounds like that of a conspiracy theorist and the second is speculative. I would heavily discount them.

By: sanjay

sanjay — Tue, 19 Dec 2006 17:12:57 +0000

http://scholar.google.com/scholar%3Fq%3Dgold+price+manipulation+study+professor%26hl%3Den%26lr%3D%26oi%3Dscholart

By: Larry Nusbaum

Larry Nusbaum — Tue, 19 Dec 2006 16:05:16 +0000

“and did another study in 2001, and then the median salay became $410K, while the median networth jumped to 4 million plus. Roughly 4X increase in the span of 5 years. Either the author’s study is somewhat statistically faulty, or that the very rich people are getting much further ahead than the rest of us, or both.”

Now add about $10 trillion in real estate equity from 2001 to present and the rich are getting richer.
1. http://millionairenowbook.blogspot.com/2006/09/why-arent-you-wealthy.html
2. http://money.cnn.com/2006/08/29/news/economy/wealth_gap/index.htm

By: Economic Edge

Economic Edge — Tue, 19 Dec 2006 15:05:49 +0000

Nice post, Frugal. When I first heard about gold price manipulation six years ago, I dismissed it as a crazy conspiracy theory. But, it appears to have a good deal of merit. In fact, the largest retail gold dealer (Blanchard) filed an anti-trust lawsuit against Barrick Gold and J.P. Morgan Chase in 2002 for “unlawfully combining to actively manipulate the price of gold.” Blanchard claimed that Barrick and JPM made(US)$2 billion in short-selling profits by suppressing the price of gold at the expense of individual investors.

GATA.org (Gold Anti-Trust Action Committee) writes a good deal about gold and the bullion banks. It’s a non-profit group that works to to expose gold price manipulation and prevent further abuse. Sounds crazy, but they actually have some good information, and have been featured in the mainstream media.

By: Rich Slick

Rich Slick — Tue, 19 Dec 2006 14:41:57 +0000

Golds manipulation days are numbered as the explosive growth in China, India and Brazil put pressure on gold production/consumption. I closely follow gold too and I’m seeing a lot of action in China that indicates it is quietly buying up gold mines, advising its citizens to purchase gold and building strategic alliances with gold producing countries.