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Understanding Manipulation Of Gold By The Media
Saturday, January 22, 2011, by Stathis
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While still working on Wall Street, I began recommending gold in late 2001 to my clients just when the bull market had commenced. As you might imagine, it was very difficult to convince older investors that gold was beginning to enter a bull market after it had done nothing for nearly two decades.

By 2006, I felt this bull market was still in the early stages when my gold forecast was officially published in America’s Financial Apocalypse. A good portion of this forecast included the effect of propaganda on the price of gold as the collapse began.

Up until the past couple of years there have been some real drivers of the gold bull market. In contrast, over the past couple of years the massive wave of propaganda delivered by an enormous network of gold hacks has been the primary driver of the bull market in gold. Nevertheless, the price of gold has largely remained within a permissible volatility range over that period. However, bubble-like price spikes threaten to end this bull market prematurely. We have already seen a few of these price spikes over the past couple of years. [1]

Fortunately for gold investors with a buy-and-hold strategy, these brief periods of mania and panic have been followed by price corrections. Most of these individuals have failed to recognize importance of these adjustments.

Let me explain.

These retracements have enabled the price of gold to lie within a more reasonable trend of price appreciation. Thus, they have served to strengthen the duration of the gold bull market.

Today we are seeing a similar although smaller correction in the price of gold. This is actually good news for those who wish for the gold bull market to continue.

 


 

It is important to understand that those who are committed to pumping up the price of gold could care less that they are jeopardizing the premature end of the gold bull market because they make money regardless whether the price of gold rises or falls.

So who is pumping up the price of gold?

By now it should be obvious. The main source comes from gold dealers who have been positioned as unbiased experts by the media. Many of these hacks have been preaching the same lines for two decades. Other gold dealers have bought off “analysts” and media talking heads with lucrative endorsement deals such as Glenn Beck, and the neo-con talking heads like Sean Hannity, Mark Levin and others who are essentially being paid by gold dealers for giving financial advice.

Even more disturbing is the fact that they are using their position in the media to spread myths and twist the truth while offering gold as the solution to their ridiculous depictions of Armageddon. Also included in this network are those who make money from gold ads (print and Internet media) and commercials (broadcast media).  

Remember, gold dealers make a living by selling gold rather than buy and holding onto it. This activity is contrary to what one would expect if gold dealers really felt that gold will continue to rise in price.  Thus, at the same time dealers are advising you to buy physical gold and hold it long-term, they are buying and selling it. In doing so, dealers are not only taking advantage of the price volatility, they are also maintaining a very liquid position in gold because they realize that one of these price corrections will represent the beginning of the end of the gold bull market. This means they are making money trading gold short-term, which reduces their risk, all while advising you to use a buy-and-hold strategy.

Moreover, those who make money from gold ads and commercials aren’t spending that money buying gold. Thus, those who own gold must keep these points in mind whenever they hear ridiculous predictions like the end of the dollar and hyperinflation as support for gold price “forecasts” because the best way to make money from gold is to sell it, or else sell the idea that the price of gold has no ceiling.

Now I’m not going to conclude that EVERYONE who has a web site that makes money from gold ads is naïve or dishonest. The best way to determine whether or not this is the case is to note whether these sites contain a balanced number of articles discussing the pros and cons of gold, written by those who have no financial interest in the price of gold. You should also look for articles discussing the advantages of trading gold’s volatility as opposed to holding the physical metal. As you might imagine, finding such sites is extremely rare because the gold promotion money tree is rooted on getting people to buy physical gold.

It’s very difficult to find articles discussing all of the realities of gold because telling the truth does not generate much money. This also applies to many other things, whether we are talking about the dangers of prescription drugs or the many problems with mutual funds.

The rule to remember is a simple one. Generally speaking, the larger the industry, the more myths, disinformation and censorship is likely to be disseminated by the media pertaining to each industry because the media serves those who buy ads and commercial air time. The media does NOT serve its audience. It only creates this perception.  

While I forecast gold to reach $1400 (with high certainty) and higher (with reasonable certainty) in America’s Financial Apocalypse, I also discussed the importance of trading gold’s price volatility, and the fact that gold serves as a pretty good hedge against stock market corrections. I also discussed that gold does not protect against inflation despite the fact that my overall conclusion in this book was that America would enter an inflationary (not hyperinflationary) depression.

In order to understand the role massive inflation (not hyperinflation) will play in America’s current depression, one must be familiar with all of the economic forces exerting downward pressure on the U.S. economy. Inflation is not nor will be the primary enemy of this depression. It is both a side-effect and contributor. The larger elements of America’s Second Great Depression are the nation’s dysfunctional trade policies, its broken, outrageously costly and inefficient healthcare system, the effects of the inevitable reduction in entitlement benefits, tax hikes, the effect of corporate interests running Washington, mismanagement by Washington, a broken free market system, and other relationships and activities that have accumulated for many years, largely without notice by most Americans. [2] [3] [4] [5] [6] [7] [8]

America’s Financial Apocalypse (extended version) was focused on demonstrating how these problems have added to America’s decline, all while offering political, economic and investment solutions. As it stands today, more than four years after its release, the book has been virtually flawless in predicting every detail of the economic collapse.

Included in the investment portion of this book was a discussion of the importance of metals (basic and precious metals) as lucrative investment vehicles expected to deliver outstanding returns. In the section on gold I discussed the pros and cons of a buy-and-hold versus a more actively managed strategy. I also discussed the advantages and disadvantages of buying the physical metal versus the gold ETFs and gold stocks.

I attempted to provide a comprehensive and unbiased presentation because my only mission was to arm readers with all of the information needed to devise an investment strategy to suit their needs and objectives. Unlike many other books, this book was not written for marketing purposes. It was written to provide effective investment strategies. Based on the guidance contained in the book, the results have been spectacular.  

If you have read books that tell you how great of an investment gold is and how you can buy it from the author’s firm, you should take whatever the author writes with a very small grain of salt. In the end, you must distinguish between real research and expertise from marketing prowess and cheerleading. This feat, as simple as it may seem, remains as the primary hurdle for most investors.

I could have aligned myself with gold dealers like most others have, forming partnerships and other arrangements for the purpose of generating income in exchange for providing a slanted take on gold, all while telling people to only buy the physical metal. I could have begun selling gold as well.

At the very least, I could have posted gold ads on my site. I have not engaged in a single one of these activities because my place on the financial industry food chain is much different than those who have been inducted into the media club. The point of distinction that is of most importance is that I provide unbiased research and investment strategy to investors, both institutional and retail. And I do not sell securities or precious metals.

It’s much more lucrative to discuss all of the reasons why you should own gold because there are so many ways to receive compensation. This is a primary reason why you rarely find such articles. For the most part, those who understand the realities about gold work on Wall Street, so they aren’t concerned with spending their time to state the truth. When was the last time Wall Street came out and saved the sheep?  In reality, Wall Street works with the media to herd to the sheep into the slaughter house.

Furthermore, it is a rare event to find unbiased articles offering a balanced view of gold because gold bugs are cheering for gold rather than taking a more rational, informed and unbiased approach. When you have money invested in something, it is human nature to focus only on the benefits, while ignoring the risks. But if you allow human nature to dictate your investment decisions, you will eventually suffer huge losses.

Since the New Year began, gold and silver have shown a considerable amount of weakness. In response, gold hacks have been doing all in their power to stop the slide in price. A recent example comes from an article published by MarketWatch, which I consider as the “CNBC of the internet.” In case you haven’t figured it out by now, that’s not exactly a compliment. [9] [10] [11] [12]

As you read through the article, note that it contains interviews from very biased individuals, most of which lack real credibility or professional experience in my view. The vast majority of sources quoted in the article are gold newsletter publishers, gold dealers, gold analysts and individuals who work for gold companies. Yet, this article is typically what one sees when searching for articles pertaining to gold.

Have you ever read an article that presents a balanced view of gold? Even when I owned gold, I discussed the realities, risks and other important considerations, along with my bullish forecasts. As Wall Street has confirmed, cheerleaders make lousy investment strategists and analysts. Never forget that.

Just have a look at some of the sources quoted by the MarketWatch reporter - Gold Newsletter, BullionVault.com, Astur Gold, Agora Financial and the Daily Reckoning, GoldForecaster.com, Strategic Metals Research & Capital, USAGOLD-Centennial Precious Metals Inc.

Excuse me for a minute while I pause to laugh.

Does that article resemble responsible journalism or a gold pump piece?

The only people missing from the article to make it a more comprehensive gold pump piece are the views of Peter Schiff, Marc Faber, Glenn Beck, Max Keiser, Alex Jones and the gold hacks the later three individuals are always interviewing. All of these individuals make a good deal of money in some way by promoting gold.  Thus, they are biased. That means you cannot take what they or their associates say too seriously.

You probably run across articles like the one I have pointed to all the time. The problem with these kinds of articles is two-fold. First, they utilize questionable and biased sources. The end result is that rather than a balanced source of information, these articles represent marketing and cheerleading pieces.

But why would the media engage in such behavior?

If you think the media cares about providing its audience with accurate, unbiased information and analysis, you are living in a dream world.

It’s all about ad revenues.

Any article with the word “gold” in the headline is going to generate a huge number of reads. And because Internet ad rates are determined largely by the number of page views, you can see how any mention of gold serves to generate more revenues for MarketWatch and other sites. In the past, I discussed how the media uses Warren Buffett to make money. This general mechanism serves as a model for how the media works. [13] [14] [15] [16]

Even if the article presented a grim view of gold prices it would still generate a huge number of readers because gold is a hot topic. You can imagine how much more MarketWatch stands to benefit if the article is bullish. Gold dealers will take note and place ads on the site.

There are many other relationships the media has with its advertisers, from offering commentaries written by “experts” who use some of the money they receive from increased business as a result of the media exposure to buy ads, to revenue-sharing arrangements when readers sign up for newsletters. Some of these business arrangements are obvious to the alert reader, while others are less conspicuous.

Second, the unique thing about gold prices is that you can’t conduct a valuation analysis in order to determine if prices are too high or too low. I have discussed this on many occasions. As a result of this unique characteristic, the main force driving gold prices comes from gold hacks, as delivered by the media. [17]

If everyone thinks gold will continue to rise in price, gold hacks will have created a self-fulfilling prophecy because a good deal of people will buy gold in anticipation of a rise in price. But the anticipation in price relies on large purchases being made. This demonstrates the herding effect at its best.

Let me share a secret that some of you already know. Making money simply isn’t that easy. More often than not, when you rely on “information” from the media, you will lose money because the media is paid to represent the agendas of those firms that fork over the most money for ads and commercials. Thus, the relationship between the media and those who purchase ads takes the form of a soft-dollar arrangement, which in my opinion constitutes fraud. These longstanding soft-dollar arrangements between the financial media and their financial sponsors explain why the sheep always get slaughtered.

Remember, the media has no legal responsibility to ensure the truth is presented. And journalists have no code of ethics they must agree to. Just as CIA agents are scattered all throughout the media for the purpose of manipulating public discourse on key issues (as confirmed several decades ago during congressional hearings), Wall Street professionals and gold hacks are also aligned within the media. In each case, there are soft-dollar arrangements, hidden pay-outs, and other forms compensation in exchange for censorship and manipulation of the facts.

The real shakers and movers are almost always ahead of the curve. Therefore, they never rely on the media when making investment decisions, other than as a trigger to know when to sell after the sheep have been encouraged to buy, or when to buy when the sheep have been brainwashed by the media to sell. This game has been going on for decades. And all astute investors understand how it’s played.

Now let’s have a look at some of the more interesting comments from readers of MarketWatch’s gold pump piece.

“GOLD is OVER priced by X4”

“If your investment strategy depends on what the Chinese buy for New Year, take your money, convert it to quarters and go to a casino. You aren't investing. You are gambling. Folks - read the posts here. These are the voices of the doomed in full denial and trying to cheer each other up with words that have no actual meaning.”

“I truly cannot wait until the gold bubble goes kapoom. It should make the housing bubble collapse look like a soap bubble popping by comparison."

“. . .Quoting guys from some dot com "bullion vault" is a bit one sided to say the least. Not to mention that Adrian Ash is merely providing anecdotal statements from unnamed dealers as the basis for his conclusion as opposed to actual evidence on gold shipments into China or actual gold sales from gold mined in China which is the world's largest producer of gold.

“…I did some research on Chinese gold demand in the interim, and it appears that there are a number of statements going back to early December 2010 claiming that large gold shipments were flowing into China, but the common thread in all of those articles seem to be statements coming from the usual gold pumping sources without any actual evidence at all. I can't say the reports are false because I have no evidence to counter them, but they are certainly highly suspect.”

“There is no ‘real concern’ whatsoever about the value of the US dollar. It is around 79 today (which is a number in points, not dollars) on the DX / DXY and has been holding very close to the 80 mark for a while and it will likely be moving up towards 90 over the course of this year. Further, there is no such thing as "paper metals" and I would suggest that you learn about the forwards, futures, and spot markets which all trade in real physical metals with the differences among them being the timeframes of delivery.”

“The US dollar is and will remain the world's reserve currency and the ultimate safe haven. By comparison, gold is an extremely risky and dangerous asset which poses huge hazards to your financial health and which can result in substantial financial losses just as people are vividly discovering this year with the 6% plunge in the value of gold just since the first of the year.”

It’s encouraging to see that not everyone has been fooled by MarketWatch’s gold propaganda. The problem is that these individuals represent a small handful of the population that still thinks they can rely on the media to deliver valuable and unbiased information and guidance.

The next comment comes from a typical sheep posting a silver-pump article from the gold and silver pumpers at Zero Hedge, written as a part of their campaign to sucker people into thinking silver is headed to $500 per ounce. [18]

“Chinese Silver Demand Surges Four Fold in Just One Year"

It’s sad that many people have been fooled to think the guys from Zero Hedge and their network of clowns are on your side. The same may be said about followers of Glenn Beck, Alex Jones, Max Keiser and many others (all of which run in the same circles). 

In my opinion, they are no different than the Wall Street and media scum who caused your losses because they are trying to exploit people using hype and pumping gold for the purpose of making money. You should ask yourself why so many of these “heroes” just popped up in 2008. Where were they before to warn you about the problems so you could have salvaged your investments? 

When trying to spot these faux heroes, you should note that many of them run in the same circles together, always mentioning others in their network, posting links to their websites and blogs on their own sites and in articles, and other activities that serve to strengthen their network as a force of propaganda. I can assure you, they all have a common goal, and it sure as hell isn’t to help you. Like so many others, all the really care about is helping themselves. While there certainly is nothing wrong with advancing your own income and opportunities, it’s a different ball game when you are doing so at the expense of those whom you claim to be helping.

These faux heroes can be found all over the media. It's easy to spot them if you take the time to use your brain. First, they position themselves to be on your side. They do this by discussing how criminal the Federal Reserve and banks are. They realize everyone is upset, so they appeal to your anger. This is how they hook you. Next, they offer you a "way to get back" at the criminals. They also try to scare you by telling you how these criminals plan to cause you more harm. The solution of course is to buy gold and silver. And you can bet they benefit from pitching precious metals in some way.

Sometimes the compensation is obvious and direct, as the case with Glenn Beck and other talking heads, who receive endorsement deals from gold dealers. Other times, the compensation is less direct and comes in the form of gold ads posted on their websites and attracting more readers (which leads to more ad revenues).

By going along with the gold pump, you will be interviewed by these hacks, and this will increase your exposure. That means you will make a good deal of money selling books, landing more investors, or whatever goods and services you happen to provide. The final element these hacks share is that they really have no credible track record to speak of, or their track record ranges from terrible to not so good.

If these hacks were really on your side, don't you think they would be discussing the fraud behind the WaMu seizure? Don't you think they might be interested to hear from someone who predicted the details of the economic collapse in advance and was discussing fraud before all of this happened?  [19]

Despite fact that they know who I am and they know about my SEC complaint regarding WaMu, this network of hacks, clowns and profiteers wants to stay as far away from me as possible, for if their audience was exposed to an unbiased expert they would not be as successful pumping gold. They would also face the risk of being exposed for what they are. They realize this and that is why they make sure that everyone in their circle has the same objectives; to exploit your anger, confusion and frustration in order to line their wallets.  So ask yourself the question; are they really any better than the Wall Street criminals who destroyed your retirement savings while lining their pockets?

If people took the time to study the track record, agendas, and tactics of those they use as a source of guidance and information, they would be in a much better position to realize who to avoid.

Today, very few people take the time to research these things. Instead, they have come to trust most of what they hear and read. Others are easily fooled by primitive psychological tactics.

Today, we live in a world that encourages people to be impulsive rather than thoughtful and critical. This conditioning is widespread and is delivered through the media, pop culture, the government, and the educational system.

Today, many prefer to spend more time texting and twittering rather than talking to others. They watch trash TV and spend time on social networking sites. As a result, their attention span has shrunk, which has served to shorten their memory. And if you have a poor memory, it can be very difficult to analyze what you are being told. 

Those who have media exposure have been selected for a damn good reason, and it sure as hell isn’t because they are on your side. If you threaten to harm the business of the media’s financial sponsors by speaking the truth or presenting verifiable facts, you will be banned by the media as I have been.

You will even be banned by Google Adsense as has happened to me. This raises the question regarding the credibility of every website that posts ads.  Are these sites really telling you the truth? If so, Adsense and other ad platforms would ban them from this revenue-sharing arrangement.

Of course we cannot paint with a broad stroke because in order to present the truth, the source must be informed. In reality, most people who discuss issues on websites and blogs either don’t know what’s going on so or they don’t understand the full picture. Most of these individuals form their views after reading what others higher up on the media food chain have written or said. They are nothing more than puppets. Either way, such individuals do not pose a threat to ad sponsors.

Others censor or reject articles that threaten to upset ad sponsors so as to preserve their relationship with corporate America and Wall Street. This means that corporate American and Wall Street function as their employer. If you are reading this article on a website that has other articles about gold, it should tell you that the site has no problem with providing balance.

As you might imagine, the timeliness of the article published by MarketWatch was by no accident. It should be clear that MarketWatch is doing all that it can to reverse the slide in the price of gold, as it is now testing some pretty significant support levels.

Similar to the vast majority of articles discussing gold, the MarketWatch article isn’t focused on telling you where gold is headed in the short or intermediate-term. Its real focus is to ad to the litany of gold propaganda because this generates more page views, which ultimately translates into more revenues for MarketWatch.

 






The point of this article I have written is to remind you that you must keep things in perspective, and you must scrutinize the credibility and bias of your sources. While gold may very well reach new highs down the road, I will guarantee you that at some point it will come back down to $300 to $400, where it will largely remain for many years.

That means you need to devise an exit point in advance, and you need to stick to it. This is something you aren’t getting from the media. Instead, the media plasters myths and delusions created gold hacks. They have stated that gold protects against inflation. Some have even stated that gold will NEVER again fall below $1000 per ounce (Marc Faber). Others have stated that gold is headed to $10,000 if not higher (Peter Schiff). 

I’m not going to offer a prediction on how high gold will rise beyond what I presented in America’s Financial Apocalypse because, beyond what I regard as reasonable price levels, additional upside will only depend on how successful the gold hacks continue to manipulate people using scare tactics.

There are only two types of people who will offer such predictions for gold; those who have a crystal ball and those who are trying to manipulate its price. I certainly don’t have a crystal ball. And I don’t engage in price manipulation of anything. In fact, some have called me the “price manipulation police” after having read my recent piece, “Goldman Sachs and the Facebook Pump and Dump.” [20]

The only way gold will remain above $1000 forever and the other only way it will reach $10,000 per ounce is if the gold hacks convince you of this because YOU will be the force that ultimately determines the price of gold. 

Gold is not a stock. It has no earnings potential and it pays no cash dividends. Therefore, there is no way to determine an accurate long-term valuation. The most one can do is determine the current value based on the price at which it is sold. And this price is likely to be significantly lower a few years from now once the gold bull market ends. [21]

I encourage you to spread this article around the Internet. Do your part to rescue the sheep from being slaughtered by hacks.

For those who hold gold or silver ETFs, I have released a trading analysis report. More information about this report can be found here.

 

References

[1] http://www.avaresearch.com/article_details-555.html

[2] http://www.avaresearch.com/article_details-74.html

[3] http://www.avaresearch.com/article_details-444.html

[4] http://www.avaresearch.com/article_details-663.html

[5] http://www.avaresearch.com/article_details-668.html

[6] http://www.avaresearch.com/article_details-672.html

[7] http://www.avaresearch.com/article_details-622.html

[8] http://www.avaresearch.com/article_details-154.html

[9] http://www.avaresearch.com/article_details-148.html

[10] http://www.avaresearch.com/article_details-151.html

[11] http://www.avaresearch.com/article_details-165.html

[12] http://www.avaresearch.com/article_details-205.html

[13] http://www.avaresearch.com/article_details-144.html

[14] http://www.avaresearch.com/article_details-416.html

[15] http://www.avaresearch.com/article_details-461.html

[16] http://www.avaresearch.com/article_details-612.html

[17] http://www.avaresearch.com/article_details-680.html

[18] http://www.avaresearch.com/article_details-659.html

[19] http://www.avaresearch.com/article_details-391.html

[20] http://www.avaresearch.com/article_details-674.html

[21] http://www.avaresearch.com/article_details-291.html  

 

 

 

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