I don't think GATA is very relevant to gold market anyway.
But they are probably right about controlling the gold and
silver market through derivatives. It's the highest volume
market that controls price. Derivative market for gold
and silver is the highest volume market, which, to some
extent, is controlled by derivative MM. There are as many
shorts in futures as there are longs. Always. So, what
moves the price then?
Actually, I don't think gold stocks are controlled by
derivatives. Derivative volume in gold stocks is very
small compared to stock trading volume. But the broader
stock market, currency market, and bond market are
definitely controlled by derivatives. Normal relationships
between stock, bond, and currency markets are screwed up
due to derivative trading. For example, the dollar rises
when bond drops, and vice versa. Why? As folks get long
bonds, they hedge against the dollar drop, so they
effectively short the dollar. When they sell bonds, they
cover. Derivatives are a huge bomb, waiting to explode.
Gold derivatives are a tiny portion of it, which, however,
could become a fuse, should a physical metal squeeze
materialize.
I honestly don't know what will happen to gold, should
there be a collapse of the credit derivative bubble.
This event will be extremely deflationary - the money
supply will shrink enormously. So gold might as well drop
sharply. |
