Will this manipulation continue on? Can they make the gold price crash, how much control do they have over the gold price in the long term? And if this manipulation is on-going how can I trust gold/silver to hold or increase in value? These a few of the questions that have been cropping up recently. With the LIBOR scandal breaking the concept of market manipulation seems to be the word du jour at the moment
No one really knows the answers to these questions, just as no one knows to what extent gold prices are manipulated or “managed”. Here’s two quite contradictory opinions on manipulation that we posted a little while ago:
It makes sense to us that “the powers that be” do not want an explosion in gold because that would alert many more people to the failings of the current monetary system.
So who knows how much control the powers that be have over the prices. We know they fell significantly back in 2008 but the precious metals were the first to rise afterwards as well and didn’t take too long to regain their previous levels.
In terms of if this manipulation is ongoing how can we trust them to retain or increase in value compared to fiat currency? We only have history as a guide for this. Assuming manipulation has been going on for the past decade, gold and silver have steadily increased in value nonetheless during this time (or rather paper currencies have continued to fall). So it could argue that all things being equal they will continue to gain in purchasing power in the future.
Some have called this a “managed rise”. So if there is manipulation, it seems there is a limit to how much the prices can be controlled. We have seen a fair amount of evidence which does suggest there is about a 100 to 1 ratio of “paper” gold versus actual physical gold. So this derivitisation of the gold market could help the powers that be “manage” the price to some degree. Of course we don’t profess to know all the answers, no one does!