Who Cares If The Metals Are Manipulated!?

by: Avi Gilburt

Yes, yes. I heard it again. The market is manipulated. How can it be that gold drops $15 in minutes "when no one was expecting it?" Well, are you sure no one was expecting it?

I am not sure if those that believe that the market is manipulating them out of their money will ever be able to see the metals clearly enough to become profitable from it, until it does what they expect. But, as we have seen, it can take quite some time, and they will endure quite a bit of loss and emotional pain until the market does what they expect. But, isn't the definition of insanity doing the same thing over and over but expecting a different result?

So, rather than maintain their old expectations, which have clearly not helped them, but have only frustrated them, I still hope that these articles may help them see the light. And that light is that even if there is some form of manipulation in the market, it does not necessarily change the outcome of the direction of the market on the larger scale, or even the smaller scale.

Let me present you with an ideal example that we had this past week. Many were pointing to that fast $15 drop we saw on Tuesday as further "evidence" of manipulation. In fact, I believe several commented in my last article, telling me to explain how that was not manipulation. Well, on Monday, as the GLD approached the resistance region I have been mentioning now for weeks at 121, I put out a Wave Alert at Elliottwavetrader.net suggesting that I am looking for a pullback when we hit the 121 level, ideally to the 119.33 level, without breaking down below the 118.88 level, which were the two Fibonacci retracement levels highlighted in the blue box target region I presented in the chart. And, as we saw, we got our pullback, the market found support with a low of 119.14, and then proceeded to rally back to 121.

So, let me ask you this: Was I the one who caused that drop to the target? I mean, it must have been. I knew where we would top, and then I knew where we would bottom. So, clearly, I must have been the one who was manipulating the market.

My point is not to insult you, or even to dispel you from your thoughts that someone may be pressing the sell button faster than others, or dumping more metals on the market at one time or another. Rather, my point is to try to get you to see that it really does not matter, as it all happens within the larger pattern expectations. And, yes, even the "manipulators," if there are any, are sentiment driven.

And while I will not always see these set ups as clearly as the one we had this past week, it is quite clear to me that the metals market is patterned and follows distinct patterns, rather than being driven haphazardly at each turn by some invisible hand. The sooner you accept this, the sooner you can begin profiting from the metals, rather than being frustrated by them, or by "those screwing you out of your money." So, if how you have been viewing the metals has not worked for you, why not try a different perspective? Markets are not linear, so why apply linear thinking, or entertain "boogie-man" manipulation thoughts? Has that helped you make money in the past?

And, speaking of making money, it sure looks like the upcoming week potentially will be a wild one. For weeks I have been noting my "Main Resistance" region on my charts to you, and continually explaining that I need to see a strong break out through the 121 region, with follow through over the 123 region on strong buying volume to then target the 125/126 region, on our way to 131.50 and then to 136-140. And, take note at what level from which we have been continually backing away - 121GLD. In fact, I can count multiple attempts by the market at breaking through this important resistance region I have been citing for weeks.

The problem now is if the market breaks down below last week's low before strongly taking out the 121 region, we could be setting up a decline back towards the old 108-111 target below (with potential to drop as deeply as the 105.75 level). Clearly, it would take a strong break down below the 117/118 support region to get there. However, the set up for a strong break out is now in place. And, when the market has a set up to break out, and fails to do so, one must stand up and take note. But, make no mistake about it - a powerful break out set up is in place as we move into next week. Will the market capitalize on this opportunity? That, I am unable to guarantee. All I can tell you is that it is there for the taking if the "animal spirits" so chose.

Disclosure: I am long SLV. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I also own a strangle on GLD.