Archive for December 2012

Market Manipulation – Driving the Market Down

Banks or Funds
can profitably
drive the gold market down
by first buying puts or selling calls
or selling futures
then dumping large quantities of gold or gold stocks
in a short period of time.

09 17 2012 Volume Driv Dn

Then buying in, or covering
at the new lower price level.

There will come a time
wen they cant driv th mkt dn any further,
cause *sentiment is at an xtrm*
and no one wil buy their protective calls
or sel them protectiv puts
and no one wil buy their future cntrts
so they will not be able t hedge
a large short position
in order t continu th driv dn.
Then th mkt must rise
as they cvr their shts,
in order to reset sentiment.

But there r xceptns eg.
an investment bank/broker
could driv prices dn
without shorting from their own acct
by selling out [redeeming] client shares:

MORGAN STANLEY‘s Wealth platform unit has finally,
after months and months of considerations,
pulled the plug on the fund [A PAULSON & CO FUND] that for the second year in a row
is one of the three worst performing in the weekly HSBC report
and IS NOW REDEEMING.
What however is notable is that
MS withdrawing HUNDREDS OF MILLIONS in feeder capital
may well explain why gold has seen such a dramatic dislocation [ie BIG DROP]
in the past week.
Recall that at Paulson & Co, gold is not simply an investment –
the bulk of direct gold investments at the once legendary investor
are in the form of (largely underperforming) gold mining stocks –
but an actual investment class.
In other words, instead of being denominated in USD,
investors are actually denominated in (paper) gold,
with a fixed conversion into GLD at inception.
This means that upon liquidation of gold-denominated shares,
any gold-denominated shares,
he has no choice but to sell GLD,
and by virtue of this being the most liquid paper instrument in the PM space, gold.

“Does the massive gold dislocation [ie BIG DROP] in the chart below

Fund Redemptions

now make more sense
especially since Paulson was aware of MS’ intentions days in advance and traded,
or in this case liquidated, appropriately)?”