Moriarty can live with market manipulation; GATA chooses not to


5:41p ET Tuesday, July 30, 2013

Dear Friend of GATA and Gold:

With commentary the other day headlined "Out of the Ashes" posted at his Internet site, --

-- Bob Moriarty took some cracks at GATA that invite rebuttal even as he seems to be slowly advancing toward GATA's position and easing away his long insistence that nothing is amiss in the gold market.

Moriarty writes: "There has been an active subset of gold bugs working for almost 15 years now that has done a wonderful job of educating investors that the most important market force involves manipulation. This is in spite of the fact that not a single person in world history has ever made a cent off such a belief because even if it was the most important factor, it generates neither buy signals nor sell signals and as such is more clutter than signal."

... Dispatch continues below ...


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But can Moriarty identify a more important force in the gold market than central banks, which play it both directly and through their agent, the Bank for International Settlements, trading gold, gold futures, and gold options around the clock? What is the purpose of central bank gold trading if not market manipulation? Indeed, a BIS official formally proclaimed in 2005 that manipulating the currency and gold markets is a primary objective of central banks:

Moriarty says no one "has ever made a cent" from believing in gold market manipulation. But central banks sure believe in it. They don't do it for charity. They do it to sustain the values of their currencies and government bonds, which are reciprocals of the gold price.

"Nowhere in the mass of verbiage," Moriarty continues, "is there ever any mention of corrections or markets going both up and down. So we have tens of thousands of investors conditioned to believe that markets are supposed to go up every single day and the only reason they ever go down is because they are being manipulated."

But that's not what GATA maintains. GATA maintains that the gold market is manipulated by Western central banks every day as they underwrite the fractional-reserve gold banking system. GATA maintains that gold might go up or down on its own in a free market and that when gold goes down it is more often because of central bank intervention.

"A sincere belief in manipulation has cost investors billions of dollars," Moriarty writes. "At tops they are giddy with a belief that the dirty rotten bastards on Wall Street are on the run and silver is about to pass gold in value. They never take profits at tops because no one ever told them it's perfectly natural that markets go down now and again. At bottoms they quiver in fear because something called a 'correction' has taken place and maybe silver isn’t going to $200 next week. Why didn't someone warn us?"

Why didn't someone warn people? Huh? Warning people about central bank intervention against the monetary metals is what GATA has been doing for 14 years. Of course it is "perfectly natural that markets go down now and again," if markets are free. But was it "perfectly natural" on April 12 and 15 when what seems to have been a single entity dumped as much as 600 tonnes of paper gold on the market in the absence of any particular news relevant to gold?

Has Moriarty ever inquired of any central bank about its policy in the gold market and sought records of its gold trading, as GATA has done with some success? Or without ever having attempted such inquiry, is Moriarty simply confident that central banks do not participate in the gold market every day and that everything in the market must be "perfectly natural"?

But then Moriarty contradicts his insistence that what happens in the gold market is "perfectly natural." He writes: "All markets are manipulated. Live with it."

Maybe Moriarty can live with it; his business is stock promotion, where, after all, manipulation can be very profitable. But GATA finds manipulation of the gold market fraudulent and unjust on a cosmic scale and chooses not to live with it. GATA's business is to try to expose a fraud and right a wrong. That seems to be the essential disagreement here.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

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