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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: craig crawford who wrote (110891)7/5/2001 5:31:50 PM
From: pater tenebrarum  Read Replies (4) of 436258
 
as i mentioned in my previous post, allegations of a conspiracy aside, there's a material difference between hedging in other commodity markets and forward selling by producers in the gold market. the difference is gold LENDING, which increases physical supplies, as opposed to the contractual zero sum swaps of risk that are common in other commodity markets.

the vast size of the extant gold loans compared to global annual production is also what gave rise to the conspiracy theories. the theme is MOTIVE. if you're exposed in the gold carry trade, you don't WANT the price to rise. however, it is my own position that if indeed there are instances of manipulation, they are a) highly unlikely to rise to the level of a global conspiracy and b) market manipulations ALWAYS fail in the long run anyway. i'm confident that a revival in investment demand is all it will take to inspire gold, regardless of the interests of the owners of mismatched lending books and participants in the carry trade.

i won't rule out market manipulation though - there have been well-publicized instances of manipulation in wheat, copper and silver (i'm sure there are more examples, but that's what i recall off the cuff), involving prominent investors and firms.
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