Recently, researcher and statistician Dimitri Speck, based in Germany, released his book “The Gold Cartel: Government Intervention on Gold, the Mega Bubble in Paper, and What This Means for Your Future.” The book is available on Amazon and is a must-read.
“The Gold Cartel” highlights how central banks have secretly manipulated the price of gold in an effort to calm financial markets and control inflation. Using quantitative analysis of historic gold market patterns, author Dimitri Speck shows how and when central banks intervene in gold markets.
Lately, the gold price manipulation has become very actual because of Professor Rosa Metz who points to manipulation in the London Fix. Dimitri Speck, however, has exposed manipulation in the London Fix already in 2002. The method he used back then was minute-to-minute pricing data. It was only till recently, after the Libor scandal, that the awareness of the broad public was opened to manipulation in all sorts of financial assets (currencies, commodities, precious metals, etc).
In this interview with Kitco, Mr. Speck highlights some of the topics of his book.
Whether the five banks involved in the gold price fixing are rigging the price:
The five banks are doing the price fixing but they are not necessarily behind the manipulation that occurs during the fixing. It can basically be everybody, for instance someone who manipulates the price in the COMEX futures market before or after the fixing. I personally don’t know who is behind the gold fixing manipulation (of course I have some guess). The statistics I made up minute-by-minute show clearly that during the time of the PM fixing the price drops.
On the traders who argue that the LBMA price fixing manipulation is irrelevant:
There are still a lot of trades. There are contracts which are based on the fixing, so with the fixing you have a bigger influence. Some people argue that this is normal behaviour of the fixing but during this fixing process the price systematically drops which has not been the case in the 80ies and the 90ies. I checked the minute-to-minute data until 1986 but the manipulation has appeared later.
On the fair value of gold:
It’s difficult to say what the real value of gold is, because gold is a liquid store of value. Through the influence of price, many investors don’t want to be in this market. Gold has also a political price. Central banks are leasing gold for instance. It’s difficult to determine a fair price.
Manipulation cannot avoid gold to rise significantly. We are in my opinion in the first correction of this big bull market which started in 2001. Let be now or in one year, gold will continue to rise in the years ahead. It is connected with the problems of the financial situation of the world; the world is overly indebted in the US, Europe, Japan and China. Gold is a store of value, it is not credit based, so it can benefit greatly from this situation.
Whether gold is only manipulated downward:
Gold is mainly manipulated downwards. I have found only one case where gold was manipulated up; it was in May 2001. All other cases showed a downwards manipulation. You can see there is a gold bull market since 2001 but still gold has risen despite manipulation. There is no reason not to buy gold.
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