How “The Little Guy” Can Profit in Manipulated Gold and Silver Markets

As the gold and silver price suppression tactics of the US government and its trading partners become more blatant and predictable, that enables smaller investors to take advantage of the patterns for financial benefit.

Here is a real life example that occurred for one of our customers in the past two days.  Every month, in the week that the options and commodity contracts expire on Tuesday and Thursday, there is a significant effort to push down gold and silver prices in advance of the COMEX closings.  The price suppression ends after the last Treasury debt auction on Thursday afternoon.  For February, the options and commodity contracts expired this week.

We were contacted late Wednesday by an elderly customer who, for storage space and weight considerations, wanted to swap a large quantity of silver into gold (note:  in the current market, this is the opposite direction of a trade that I would recommend).  When we were planning to execute the swap Thursday morning, the price of gold was $1,094 and silver was $15.79, which is a gold/silver ratio of 69.28.  I mentioned to the customer that the price of gold would probably be about $10 higher around 2-3 PM and that silver was also going to be significantly higher.

On the basis of this information, this customer chose not to sell the silver and buy the gold simultaneously.  Instead, we bought the gold for him right away and sold the silver in the afternoon.  When we sold the silver, gold had risen to about $1,105, and silver was up to $16.10.  By purchasing the gold at a spot of $1,094 and selling silver at $16.10, we narrowed the customer’s gold/silver ratio to 67.95.  The customer was able to get a gift of almost 2% more gold by being able to count on the predictable times when precious metals prices are either suppressed or are not manipulated.

I don’t ordinarily recommend trying to time markets in the very short term.  There are enough exceptions to the observed patterns of manipulation that you cannot count on it moving so precisely.  But, if they can live with the risk that once in a while things will not work out in their favor, the smaller investors can often get a 1-3% edge on trades by studying the patterns of gold and silver price suppression.

Special announcement:  Bill Murphy, the chairman of the Gold Anti-Trust Action Committee, Inc. (GATA) will make a presentation at the upcoming American Numismatic Association’s National Money Show in Fort Worth, Texas.  His speech is titled “Why Gold is Going to $3,000-$5,000 per Ounce.”  The event will be held in Room 103A at the Fort Worth Convention Center, 1201 Houston Street on Saturday, March 27, 2010 at 1:00 PM.  For those coming only for this presentation, there is no admission charge (those wishing to enter the bourse floor to visit hundreds of coin dealers will be charged $6.00 for that purpose).

For more than 10 years, GATA has actively accumulated evidence of the US government’s efforts to suppress the price of gold.  Attendees will have the opportunity at the end to ask questions of one of the most knowledgeable people on the subject.  For more information on this event, visit the GATA website at http://gata.org.

Patrick A. Heller owns Liberty Coin Service in Lansing, Michigan and writes "Liberty's Outlook," a monthly newsletter covering rare coins and precious metals. Past issues can be found online at http://www.libertycoinservice.com/ Pat Heller is also the gold market commentator for Numismatic News. Past columns online at http://numismaster.com/