Courtesy of Antal E Fekete @ Professor Fekete.com and as ever, he has a point:
This rejoinder was prompted by the Daily Bell interview with Bill Murphy of GATA (March 30, 2014).
I shall accept, for the sake of argument, Murphy’s premise that the dollar price of gold is heavily manipulated by the U.S. government in order to keep it in check. But while Murphy thinks that it is a great curse I shall argue, tongue in cheek, that it is a blessing in disguise. The difference between Murphy’s thinking and mine is the difference in financial survival strategies in the face of the U.S. government’s deliberate policy of destroying the dollar and, along with it, the savings and pension rights of people, to say nothing about destroying the world economy.
Apparently Murphy believes that there is only one reasonable investment strategy in gold, namely, buy and hold in the hope of huge capital gains. However, this strategy turns people into sitting ducks for the manipulators. They engineer violent changes in the dollar price of gold. They squeeze holders. They make them buy high and sell low. In a sense, people fall victim to their own faulty understanding of gold. True understanding makes a distinction between the price and the value of gold. The latter is constant (to the extent there are constants in human affairs); the former is the reciprocal of the wobbly value of the irredeemable dollar. When the dollar is down and falling, the gold price is up and rising, and conversely. The mistake most gold bugs make is that they identify the value of gold with its price. No wonder they fall victim to the manipulators’ tactics and consequently get separated from their gold, sometimes with severe losses. No wonder they consider manipulation a curse, even a criminal activity, and try to use legal means to stop it. That’s what GATA is about. Needless to say, this effort is an exercise in futility. It makes manipulation more pervasive, not less. The manipulators are emboldened by the success of their own tactics. Gold bugs get frustrated. Continue reading