The news these days is filled with articles about market manipulation – is it really happening or not? There appears to be no general consensus on the subject. But everyone has an opinion – and I, dear reader, am no exception. For many years I have been convinced that the precious metals markets were manipulated. The evidence, to me at least, is self evident. Allowing a single entity to hold as much as 40% of the net short positions in any market is proof positive of manipulation.

So as far as I am concerned, the statement that markets are manipulated, as applied to precious metals, is a fact. That the government looks the other way, passively approving, is likely only the tip of the iceberg. It is in the government’s interest that gold – and silver – be subjected to price suppression. That paper money has to be protected to the extent possible.

Not we are hearing of FOREX and stock market manipulation as well. It seems that there are no free markets anywhere.

So what difference does it make to a short term trader? Some, but not nearly as much as might be expected. Long term, it makes a great deal of difference that markets are manipulated. Who knows what the real price of gold and silver might be without the manipulators.

But the effect on short term trading isn’t all that dramatic. Let me explain. When we enter a short term trade we always have a stop loss in place – if not a hard stop (an actual order to sell if a certain price is hit), at least a soft stop (a certain price at which we enter our exit order).

In the precious metals markets the manipulation is generally to the down side. Knowing that and also knowing the time of day that such manipulations usually occur can go a long way to keeping the damage to a short term trader to a minimum.

And getting long after the manipulation ends can quickly compensate for a small loss as the manipulators took the market down.

The manipulation in FOREX and stocks is probably a bit different. I do not short term trade stocks, but I dabble in FOREX from time to time. My feelings about manipulation of FOREX is not as strong as that of the precious metals markets, but the signs of manipulation can be seen if one really watches the markets – particularly in the bid/ask values. I once placed great value in the values of bid and ask – particularly quantity. No I only look at the spread I price and watch the tick value to determine the strength of the market move at the time.

I detest the fact that the manipulators, particularly the precious metals, are allowed to do their activity (it is actually criminal) with immunity. It is a disgraceful display of total disregard for legality and fairness. But it will not end until the government decides to do something about it – OR the manipulators lose control of the market (a paper market is ultimately susceptible to the physical market).

There is a bit of government activity in examining market manipulation in FOREX and stocks. Who knows, honesty day one day return to the markets.

In the meantime, I continue to trade – hoping to be on the side of the manipulators, or with a tight stop if I am not. But it makes me sad to know that I am associating with criminals. It is sad commentary on what our society has evolved into.

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Why I call it “Music of the Market”

Posted July 22, 2014 By Phil Elrod

Why I call it “Music of the Market”

Look closely at the price bar action relative to the horizontal lines.

Those horizontal lines were put in several days before the day of this chart.

It is not very apparent but there is a line at the top of the chart.

Those horizontal lines (like the staff lines on a music sheet) are a road map to price action. I cannot imagine trading without them.

The secret to creating these lines can be found in my eBook SEE THE MUSIC OF THE MARKET.

Figure 1 Copper Futures 200 Ticks per bar 7-22-2014

Wouldn’t you like to have such a roadmap when you trade?

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A brief message to my liberal friends.

Posted July 19, 2014 By Phil Elrod

I know you think you have good intentions.

But I have a message for you to think about.

Paving the road to hell with good intentions does not change the destination.

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Trading Gold and Silver – Part Two

Posted July 9, 2014 By Phil Elrod

When I trade it’s almost always a trade based on pure technical analysis. The one exception is when I trade gold or silver. As I discussed yesterday, the futures markets for gold and silver are ruthlessly manipulated by the bullion banks, led by JPMorgan, whose naked short position alone in silver is proof positive of such manipulation – and the government sits by with their thumb “you know where” and does nothing. Anyway, I do like to trade these markets from time to time, but technical analysis is not near enough in such markets. You have to be aware of the fundamentals as well. I try to enter long only after the bandits have done their damage by driving prices doiwn.

For the fundamentals of the gold and silver markets the best source available, without paying for the info, is Ed Steer’s Gold and Silver Daily newsletter. I read it daily and it is well worth the time – even if you do not trade them, but are only just interested in the precious metals markets.

Casey Research has a free publication worth reading as well, and Ed Steer’s newsletter is affiliated with them as well. If you want to trade gold and silver stocks, Casey Research has several good newsletters/advisory services that are possibly worth the money.

The point is that when the manipulators have attacked the price of gold and silver and driven it down, a very good trade is possible when the metals rebound. But it is a fundamentally initiated trade because technical analysis cannot tell you when the crooks have finished their attack and will back off and let the market rise for awhile.

If you want to subscribe to Ed Steer’s newsletter or any of Casey Research’s other offerings, the link is: www.caseyresearch.com.

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