Technical analysts have a right to be angry, but not at 'gold bugs'

2:42p ET Tuesday, January 27, 2015

Dear Friend of GATA and Gold:

In an essay headlined "Decoding the Gold COTs: Myth vs. Reality," market analyst Dan Norcini notes that futures markets have a huge influence on commodity prices and that market participants often place trades there first in anticipation of placing trades in the cash market:

http://news.goldseek.com/DanNorcini/1422282917.php

Norcini goes on to disparage complaints by "gold bugs" that the gold futures market particularly is corrupt.

But of course central banks and their agents, the huge investment banks -- entities that create or have access to essentially infinite money -- also recognize the influence of the futures markets and exploit it in pursuit of their objectives. Does Norcini really not understand this?

After all, it is now public record that central banks are secretly trading all futures markets in the United States, directly or through intermediaries:

http://www.gata.org/node/14385

http://www.gata.org/node/14411

http://www.gata.org/node/14818

It is also now public record that central banks are secretly trading the gold market "nearly on a daily basis." The director of market operations for the Banque de France proclaimed it a year and a half ago --

http://www.gata.org/node/13373

-- though it long has been acknowledged in the records of the Bank for International Settlements --

http://www.gata.org/node/11012

http://www.gata.org/node/12717

http://www.gata.org/node/8773

-- and those of the International Monetary Fund:

http://www.gata.org/node/12016

Since central banks are empowered to create infinite money as well as to trade in all markets in secret, and since they are trading gold so aggressively, are "gold bugs" or other traders really so crazy to resent having to trade against them? Can any market in which a central bank is trading so actively and so secretly be considered a free market at all? What is really being analyzed in such markets -- the conduct of a large number of participants or the conduct of central banks disguised by intermediaries?

... Dispatch continues below ...

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Further, does Norcini think that this surreptitious trading by central banks is undertaken just in fun? Or does it more likely have the historic policy objectives of central bank intervention in gold -- to control and usually suppress the monetary metal's price to support the value of government currencies and bonds?

Norcini is a technical analyst, and it's easy to understand why technical analysts do not want to address surreptitious trading and market intervention by central banks -- why technical analysts loathe the very subject of gold market manipulation. For such trading and intervention by central banks and their agents would mean that there really is no market to analyze, that technical analysis in such circumstances is a delusion.

Of course no one can be expected to admit cheerfully that his life's work has become obsolete. As a newspaper editor your secretary/treasurer feels this keenly, having spent most of his life in an occupation dependent on literacy and civic engagement, both of which are nearing obsolescence in the public mind in the United States.

But to call people "nitwits," as Norcini does, for complaining about something as comprehensively documented as the destruction of free markets seems awfully presumptuous. If GATA ever persuades enough people of this market rigging and thereby helps to end it, restoring free markets, maybe someday technical analysis will become useful again.

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

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