Submitted by cpowell
Dear Friend of GATA and Gold:
Claiming breathtaking omniscience with his latest commentary, the economist and market analyst Martin Armstrong asserts that market manipulation is nothing to worry about and that complaints of manipulation of the gold market are nonsense.
Armstrong’s commentary —
— is headlined “Market Manipulations: The Greatest Scam of All Time,” that headline being his first claim to omniscience, a claim to comprehensive knowledge of every scam in history:
He elaborates: “Throughout history, there has never been a market manipulated to alter its long-term trend — period.”
Armstrong thereby claims comprehensive knowledge of every market going back to caveman times when Og of the Rock People became the first commodity trader, offering to sell his tribe 10 pterodactyl feathers he didn’t own in the hope that this would intimidate Zug to reduce the price of the feather he was trying to exchange for a dozen mastodon-bone fish hooks, Og having only five fish hooks to trade.
Armstrong’s knowledge may be especially impressive because no record of Og’s trade was kept. But Armstrong claims to know the history of all markets for thousands of years before records were kept.
Armstrong’s commentary then descends to a lot of chest thumping about how two decades ago he was right about the silver market when some other bigshots were wrong. Apparently this assertion too is supposed to be dispositive about everything in history.
Armstrong’s mighty conclusion: “There is no secret plot to keep gold down to pretend inflation is lower.”
Armstrong thereby claims to know the minds of every market participant in the world, from central bankers right down to the Chinese “aunties” trying to put a little metal away for the grandchildren.
In the old days an assertion like the ones Armstrong makes was called an “ipse dixit,” Latin for “he himself said it,” as if the speaker presumed that his authority would be taken for granted without the slightest need for evidence. Armstrong may be a prodigy but he didn’t invent the swelled head. He’s just wearing one.
One doesn’t need to be omniscient like Armstrong to note the flaw in his premise: “Throughout history, there has never been a market manipulated to alter its long-term trend — period.”
That is, for starters, Armstrong fails to define his terms. For what is a “long-term trend” and what is a “short-term” one? And even if Armstrong defined those terms, would those definitions necessary hold for other people?
Armstrong acknowledges the possibility of short-term market manipulations contrary to long-term trends. He cites Soviet communism, a vast market manipulation that destroyed markets altogether. He might not deny that the U.S. government held the gold price at $20.67 and then $35 an ounce for many years, preventing any market in gold from developing.
Yes, market pressures helped bust Soviet communism as well as the U.S. dollar’s gold peg and a lot of other market manipulations, and the prices that followed might be called vindication of the “long-term trend.” But vindication for what and for whom?
For as Keynes noted, thinking of people like Armstrong: “The long run is a misleading guide to current affairs. In the long run we are all dead. Economists set themselves too easy, too useless a task if in tempestuous seasons they can tell us only that when the storm is past the ocean is flat again.”
After all, while Armstrong may consider the history of the Soviet Union to have been short-term, it nevertheless encompassed 70 years and damaged or ruined millions of lives. Even a market manipulation of much shorter duration — a few weeks or months, or just a few days — can cheat people substantially and do great harm.
Transcending space and time, Armstrong is too brilliant to understand that for mere mortals time is money. His empty pontifications evoke Mark Twain: “The less a man knows, the bigger the noise he makes and the higher the salary he commands.”
Armstrong’s analysis of the gold market — indeed, given the gold market’s connection to other major markets, his analysis of all markets — would be more useful if it addressed these questions:
— Are central banks in the gold market surreptitiously or not?
— If central banks are in the gold market surreptitiously, is it just for fun — for example, to see which central bank’s trading desk can make the most money by cheating the most investors — or is it for policy purposes?
— If central banks are in the gold market for policy purposes, are these the traditional purposes of defeating a potentially competitive world reserve currency, or have these purposes expanded?
— If central banks, creators of infinite money, are surreptitiously trading a market, how can it be considered a market at all, and how can any country or the world ever enjoy a market economy again?
Of course just a week ago another central banker actually volunteered that certain central banks are intervening in the gold market surreptitiously even as they are trying to increase their gold reserves, the intervention apparently meant to help keep the price down to facilitate their acquisition of gold:
More documentation responsive to these questions can be found in GATA’s archive here:
A summary of that documentation and the history behind it is in GATA’s archive here:
In his omniscience Armstrong may dismiss this stuff as being from another universe, but those who live in that universe may find it useful.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.