WyckoffReading this morning’s missives from the punditocracy, I couldn’t resist pointing out a perfect example of what Gata’s Bill Murphy calls market action making market commentary.   As gold leaped higher Tuesday, we had Kitco’s Jim Wyckoff struggling for justifications, including this gem:

Silver Buffs Generic Add2

By Eric Dubin


“Gold prices were boosted overnight on news that China’s inflation rate heated up a bit. China’s June consumer price index was up 2.7% on an annualized basis, compared to a 2.1% rate in May and above the consensus forecast for a 2.5% rise. Gold and other hard assets have traditionally been used as a hedge against inflationary price pressures. The China inflation news coincides with the recent surprisingly sharp rise in U.S. bond yields and home mortgage rates. While still not perceived by the world market place to be problematic, inflation is a phenomenon that creeps up and is not recognized as a serious problem until it already has a strong grip around the throats of major economies. Many market watchers have never been convinced that the past few years of the major central banks of the world printing money that such would not come back to produce a strong inflationary bite.”

You can click here if you want to read the rest of his write-up.  Wyckoff bases much of his work on technical analysis.  But he’s not a one trick pony.  Generally speaking, he’s very smart.  He’s more than able to tread water in the global macro pool.  The trouble is, when one is in near total denial about the impact of the cartel’s periodic direct carpet bombing (e.g., even the April 12-15 bombing hasn’t turned around his worldview), making questionable global macro observations like this morning’s comment about China is nothing more than a silly attempt to match price movements with something — anything — off the newswires.

Chinese policy makers are downright paranoid about rising inflation and their overheated property market.  With thousands of protests each year, Chinese leaders take socio-economic stability seriously.  Their heads are on the line, quite literally.  We’ve seen them take extensive actions over the last year to manage liquidity.  Every so often they’ll come out and loosen credit to nurse economic growth — as they did surrounding the turn of this year.  But they have also shown an unusual quick propensity to step on the breaks and taper in a way that must make Fed Chair Ben The-Fed-Is-F*cked Bernanke jealous.

Tuesday’s uptick in inflation should be properly viewed as a motivator, at the margin, for Chinese officials to tapper liquidity or simply stand aside.  That analytical interpretation matches their policy framework and recent history.  Chinese citizens aggressively buying gold all these months are not going to be motivated one way or another by an uptick in inflation.  In fact, the explosion in their purchases since the April cartel carpet bombing coincided with continued lackluster reports about inflation globally.  Inflation will play a big part in the return to gold and silver later this year.  But Mr. Wyckoff’s comment Tuesday morning is a questionable global macro call, at best.  If gold had fallen Tuesday analysts like Mr. Wyckoff — and certainly, wire story reporters and the talking heads on financial television — would likely have been interpreting China’s higher inflation report as a justification for Chinese policy makers to tighten liquidity, which would “explain” gold’s negative reaction.  That’s how the “market action makes market commentary” game plays out.

Normally, I wouldn’t go out of my way to call out a pundit.  But given Kitco’s history of near total denial about the cartel’s documented history of gold market manipulation, the spotlight is well deserved.  I’ve written to Mr. Wyckoff a few times over the years, providing him with direct links to specific documents.  Others have done the same.   One of these days, he’ll come around and join the reality-based community.  He’s too smart to not eventually see the light.  In the meantime, we’ll just have to suffer through goofy “market action makes market commentary” rubbish.

Gold Maples As Low As $39.99 Over Spot at SDBullion!

  1. Doc has been posting so much good stuff that I had to wait in line with this so-so article :-)  I actually wrote it yesterday.  Just wanted to make that clear because the context might seem a little odd given that China’s news was yesterday.

    • Thanks Eric—
      Kitco is an enigma to me….I just don’t get where they are coming from; Never been a Jim Rogers fan either, but at least I can say he is on his own side…and sorta start my evaluating process with whatever he might be saying there….Kitco—sheesh….who knows?
      Is Kitco on our side??
      Sometimes it’s tough sorting through all the noise that available out there….but mostly it’s not that difficult. You and the Doc do a fine job, and are very tolerant of both the feelings and the mood swings of the many that read & post here—and I hit SD like ten times a day….

    • I’d agree with you MaryB, 9.9 times out of 10, but I think it’ll be different this time. Seems the Cartel has covered their shorts so they are ready for a move up. I’m probably wrong though…been stubborn wrong for a long time, but I care not. I know we’ll be right in the end.

    • should be a lot of technical resistance near these levels from the chart traders, in my opinion a move and close higher in the weekly charts would be a big reversal.

  2. Check the Silver Doctors Article of October 16 2012.  Kitco Bnakruptcy 4th extension.  There was also news some timeback about their tax fraud accusations. Maybe nothing  Maybe where there is smoke there is fire. just sayin’

  3. Eric, I happen to also follow Jim Wyckoff and think he too is a wonderful and insightful guy.  I take issue with your comment that he is searching for a reason PAPER GOLD is going up or down as you site the China reasoning because in today’s world of 100% manipulation and Government intervention in all markets, it is virtually impossible to come up with a reason for anything that happens.  Take the US equities at nosebleed prices with 50% of the population out of work.   Jim has pointed out that manipulation is prevalent in the Paper Markets and he is far more Gold and Silver minded that the rest of the journalists he works with so, I think some of your comments are unfair.  He could not possibly take the stand that there is total manipulation in Gold without proof of such action taking place.  If you have such proof, you should share it.
    Today is a perfect example to you and I that this corrupt cartel led by JP Morgan and Bernanke have tried to lessen the blow from the overnight vertical move in Gold. There is no question that manipulation is involved but, is it possible for anyone to say with complete certainty that the US Cartel has capped Gold today? No, you know it and I know it, may well be the case but no certainty so we all speculate to some degree.
    As for Nadler, I wrote to Kitco daily that they should stop selling Gold when they are bashing it on a daily basis, I don’t see anything suggesting Jim does this.  Thanks!!

    • “He could not possibly take the stand that there is total manipulation in Gold without proof of such action taking place.”

      That’s a straw man argument. I never said we live in a world of “total manipulation in Gold” and in fact, I regularly point out to those despondent in the face of current market conditions that the cartel doesn’t have total control.

      Bottom-line:  Mr. Wyckoff refuses to even deal with the fact that the April 12th through the 15th raid was an example of manipulation — although that event did sort of tweak his perspectives towards the direction of being at least more open minded about manipulation (but he still elects to not examine the full body of evidence).  You don’t need a smoking gun email (Earth to Bart Chilton, hello?) to prove that April instance was manipulation given the volumes of the sales involved and the way the sales were done on Sunday evening in particular, where it was quite literally a case of more gold being sold naked short than anyone in the entire world being able to back other than governments, and therefore, by definition, it was either a non-government party executing an illegal trade with the intent of manipulating prices lower, or a government (or the exchange stabilization fund, or what have you) executing the trade.  Either are examples of market management and manipulation.  There are no other explanations.  You may or may not have reconciled these facts, but Mr. Wyckoff hasn’t.

      And for the record, I made it perfectly clear that I like Mr. Wyckoff.  He’s a good guy – smart, insightful, etc.  But just as many can’t deal with facts like Oswald couldn’t possibly have acted alone (to draw an analogy regarding conspiracy in other arenas) given normalcy bias, overly propagandized minds and an unwillingness to actually study existing evidence, Mr. Wyckoff has a mental block regarding manipulation.  At the time of my multiple direct emails with him, he made it clear that he had not taken the time to actually look at the documented evidence GATA has amassed.

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