Real-time Monetary Inflation (per annum): 7.9%
Sometimes it's "High Noon" on Blog Street. A seemingly casual observation in last week's column on gold ratios ("Gold, And Its Ratios, On The Move") prompted a torrent of comments - some reasoned, others not so much.
The column highlighted gold's fading luster as a safe haven. Investors, now seeming more confident, are poking their necks out of their risk-averse shells, as evidenced by declines in the gold/oil and gold/silver ratios.
Some readers took - how shall I put it? - exception to that observation. One, in particular, conjectured that a powerful cabal of "manipulators" is keeping a lid on gold prices. No facts, mind, you, were offered to bolster this argument. The manipulators were just posited.
The scenario theorized by our commentator? It's this, directly quoted: "Not only is
some unidentified entity doing what the Hunt bro's did [sic] and are getting
away with it. There is a host of spin bloggers all over the internet fear mongering against gold."
Hoo-boy! The Hunt brothers? Anybody old enough to recall the Hunts' thwarted attempt to corner the silver market in 1979-1980 would know their efforts were capped by the accumulation of COMEX silver futures. The Hunts' hoarding drove COMEX futures from $11 an ounce to $50.
We're not seeing gold hoarding now. At COMEX or anywhere else. Oh, I know there's a contingent of folks who believe COMEX warehouses are devoid of metal and that evil speculators are engaged in naked short sales, but that's not borne out by the cash market for bullion. London's gold dealers offer plenty of gold liquidity. There's a pretty good contango in gold forward rates. The contango is, in fact, wider now than it was at the top of the year. More contango implies more liquidity, not less.
How in the world can one equate the Hunts' corner with the current market? Gold futures are not being bid up by speculative purchasers. Trader commitments, in fact, indicate the opposite is true. Coincident with gold's price swoon since February, speculative long interest in gold futures has actually been on the decline.
This isn't "fear mongering against gold," dear reader. It's fact.
Now, where are YOUR facts?