Market-Manipulation Mutterings Growing

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Peter Brimelow

May 5, 2011, 5:48 a.m. EDT

By Peter Brimelow, MarketWatch

NEW YORK (MarketWatch) "” Manipulation mutterings are spreading, and that's ominous.

Recently, I noted that longtime gold bug Richard Russell of Dow Theory Letters finally converted to the thesis that gold's price is subject to manipulation by a Wall Street-Washington alliance. See April 25 column on Russell and the gold-manipulation thesis.

Chinese social-media site Renren soared on its first day of trade in U.S. markets Wednesday, but Cody Willard cautions why these high-flying IPOs are not meant for individual investors.

Russell seems to be brooding about this insight. In reply to a correspondent who asked about the possibility of an FDR-type confiscation of gold he said the following:

"I've thought about this at length, and I've arrived at what I believe to be the correct answer. The answer is "” No, the government will definitely not call in the gold. The simple reason is that a tremendous amount of gold is held in very powerful hands. [The] SPDR Gold Trust ETF /quotes/comstock/13*!gld/quotes/nls/gld GLD -2.57%  and gold bullion [are] held by pension funds, university endowment funds, large powerful hedge funds, corporate reserves and state treasuries."

This strikes me as an odd answer. Were the people who owned gold in 1933 really less so much powerful? But it's indicative of Russell's current thinking.

This idea of manipulation seems to be spreading beyond the lunatic fringe where many investment letters dwell (often profitably). Thus the respected institutional service The Gartman Letter wrote early Wednesday morning:

"Here in the U.S., we have seen example of "?tape painting' before where the market's important indexes have hardly moved but where the broader markets have weakened materially, but yesterday's action was the "?painty-iest' [sic] of all. The Dow finished the day essentially unchanged, but the advance-decline line was horrid. The Nasdaq /quotes/comstock/10y!i:comp COMP +0.40%  was weak; the S&P /quotes/comstock/21z!i1:in\x SPX -0.20%  finished five points lower. The public heard the national news last night, which tends to report the Dow, and [concluded] things were steady. They were not. [They] were weak, and they are weakening again this morning."

(In fact, the Dow Jones Industrial Average /quotes/comstock/10w!i:dji/delayed DJIA -0.41% finished Wednesday down 84 points amid general dismay.)

Dennis Slothower of Stealth Stocks Daily Alert has always been shockingly explicit about manipulation in the markets. See Nov. 1, 2010, column that mentions Dennis Slothower.

/quotes/comstock/13*!slv/quotes/nls/slv SLV 34.86, -3.41, -8.91% The iShares Silver Trust ETF

On Wednesday night Slothower wrote: "The iShares Silver Trust ETF /quotes/comstock/13*!slv/quotes/nls/slv SLV -8.91%  fell another $2.31 today. I can't stress enough how investors were set up here ... Remember what the media present as the most obvious thing to do is really what J.P. Morgan Chase & Co. /quotes/comstock/13*!jpm/quotes/nls/jpm JPM -0.04%  and Goldman Sachs Group Inc. /quotes/comstock/13*!gs/quotes/nls/gs GS -0.68%  want you, the public, to do. And last month, crushing the dollar and forcing investors to buy gold and silver at the top of the market gave the primary dealers plenty of liquidity to sell their gold and silver positions into the top of the cycle."

Slothower's cynicism extends to commodities:

"Crude oil is starting to look very toppy. The economy is beginning to break here and crude oil is beginning to look ready to roll over as energy speculators will dump this bubble and hunt for another one.

"The Fed has played out its hand with this quantitative-easing program and is about to bring the economy to ruin again. We have a government that believes it is their right to pillage and plunder us. The name of the game is delusion (false economy), diversion (OBL) and the division (or plunder) of your wealth.

"If you are holding gold, or any investment for that matter, you now need to have an exit strategy, should that day come. I will repeat that: YOU NEED TO HAVE AN EXIT STRATEGY!

"I think investors need to be prepared that the next couple of quarters are going to see a repeat of what happened in 2008, which will cause huge asset-allocation shifts.

"Frankly, I don't think this bull market has much longer to live."

That's really alarming. Slothower has been arguably too cautious recently, but he was one of the handful of advisers who dodged the Crash of 2008.

Slothower's bottom line:

"We are 10% invested (short position in InterOil Corporation /quotes/comstock/13*!ioc/quotes/nls/ioc IOC -0.91% ) and 90% cash/money markets."

/quotes/comstock/13*!gld/quotes/nls/gld Add GLD to portfolio GLD SPDR Gold Trust ETF $ 143.93 -3.80 -2.57% Volume: 35.93M May 5, 2011 2:30p var embeddedchart1488405933Chart = new EmbeddedChart('#embeddedchart1488405933', NormalChartStyleNoDecimals, 240, 80, '1dy', '5mi', null, null, null, 'US:GLD'); jQuery.data($('#embeddedchart1488405933').get(0), 'embeddedchart', embeddedchart1488405933Chart); /quotes/comstock/10y!i:comp Add COMP to portfolio COMP Nasdaq Composite Index 2,839.43 +11.20 +0.40% Volume: 380.80M May 5, 2011 2:29p var embeddedchart1186512883Chart = new EmbeddedChart('#embeddedchart1186512883', NormalChartStyleNoDecimals, 240, 80, '1dy', '5mi', null, null, null, 'US:COMP'); jQuery.data($('#embeddedchart1186512883').get(0), 'embeddedchart', embeddedchart1186512883Chart); /quotes/comstock/21z!i1:in\x Add SPX to portfolio SPX S&P 500 Index 1,344.68 -2.64 -0.20% Volume: 0.00 May 5, 2011 2:29p var embeddedchart124732823Chart = new EmbeddedChart('#embeddedchart124732823', NormalChartStyleNoDecimals, 240, 80, '1dy', '5mi', null, null, null, 'US:SPX'); jQuery.data($('#embeddedchart124732823').get(0), 'embeddedchart', embeddedchart124732823Chart); /quotes/comstock/10w!i:dji/delayed Add DJIA to portfolio DJIA Dow Jones Industrial Average 12,674.38 -52.64 -0.41% Volume: 97.45M May 5, 2011 2:29p var embeddedchart70394702Chart = new EmbeddedChart('#embeddedchart70394702', NormalChartStyleNoDecimals, 240, 80, '1dy', '5mi', null, null, null, 'US:DJIA'); jQuery.data($('#embeddedchart70394702').get(0), 'embeddedchart', embeddedchart70394702Chart); /quotes/comstock/13*!slv/quotes/nls/slv Add SLV to portfolio SLV iShares Silver Trust ETF $ 34.86 -3.41 -8.91% Volume: 226.29M May 5, 2011 2:30p var embeddedchart1488405299Chart = new EmbeddedChart('#embeddedchart1488405299', NormalChartStyleNoDecimals, 240, 80, '1dy', '5mi', null, null, null, 'US:SLV'); jQuery.data($('#embeddedchart1488405299').get(0), 'embeddedchart', embeddedchart1488405299Chart); /quotes/comstock/13*!jpm/quotes/nls/jpm Add JPM to portfolio JPM JPMorgan Chase & Co $ 45.48 -0.02 -0.04% Volume: 15.83M May 5, 2011 2:30p var embeddedchart124732459Chart = new EmbeddedChart('#embeddedchart124732459', NormalChartStyleNoDecimals, 240, 80, '1dy', '5mi', null, null, null, 'US:JPM'); jQuery.data($('#embeddedchart124732459').get(0), 'embeddedchart', embeddedchart124732459Chart); /quotes/comstock/13*!gs/quotes/nls/gs Add GS to portfolio GS Goldman Sachs Group Inc $ 150.49 -1.03 -0.68% Volume: 2.44M May 5, 2011 2:30p var embeddedchart1685131760Chart = new EmbeddedChart('#embeddedchart1685131760', NormalChartStyleNoDecimals, 240, 80, '1dy', '5mi', null, null, null, 'US:GS'); jQuery.data($('#embeddedchart1685131760').get(0), 'embeddedchart', embeddedchart1685131760Chart); /quotes/comstock/13*!ioc/quotes/nls/ioc Add IOC to portfolio IOC InterOil Corporation $ 56.59 -0.52 -0.91% Volume: 492,658 May 5, 2011 2:29p var embeddedchart77678209Chart = new EmbeddedChart('#embeddedchart77678209', NormalChartStyleNoDecimals, 240, 80, '1dy', '5mi', null, null, null, 'US:IOC'); jQuery.data($('#embeddedchart77678209').get(0), 'embeddedchart', embeddedchart77678209Chart); //$(document).ready(function() { var storywidth = $('#mainstory').width(); var maxwidth = storywidth; $('#maincontent pre').each(function (index, value) { var thiswidth = $(value).width(); if (thiswidth > maxwidth) maxwidth = thiswidth; }); var offset = maxwidth - storywidth; if (offset > 0) { var margin = 13; var blanketwidth = $('#blanket').width(); var contentwidth = $('#maincontent').width(); $('#blanket').width(blanketwidth + offset + margin); $('#maincontent').width(contentwidth + offset + margin); $('#mainstory').width(storywidth + offset + margin); } //});

Add Comment › · Recommend (7) · Post: Alert Email Print var OB_permalink= 'http://www.marketwatch.com/story/market-manipulation-mutterings-intensify-2011-05-05'; var OB_Template="marketwatch"; var OB_widgetId= 'AR_1'; var OB_langJS ='http://widgets.outbrain.com/lang_en.js'; if ( typeof(OB_Script)!='undefined' ) OutbrainStart(); else { var OB_Script = true; var str = ""; document.write(str); } Comments Screener Breaking Insight Are bonds the next bubble? Gold timers in denial Double-dip recession is now undeniable Youth served in Canadian elections Why I shorted gold and silver earlier this week Most Popular Most read Most commented 9 stocks up over 900% since Sept. 11, 2001 Silver pullback is a buying opportunity U.S. stock futures fall more after jobless data Market-manipulation mutterings intensify U.S. stocks hit by surprise rise in jobless claims Fed and bombshells: You make the call Gold moves pit Soros against Paulson U.S. stock futures fall more after jobless data Is gold about to go vertical? Silver pullback is a buying opportunity Find a Broker Partner Center » MKTWBrimelow's Latest Tweets

"Peter Brimelow: Market-manipulation mutterings intensify http://on.mktw.net/m2R3jb" 4:55 a.m. EDT, May 5, 2011 from MKTWBrimelow

"Peter Brimelow: Is this the Bernanke gold market? http://on.mktw.net/l6kf4X" 2:52 a.m. EDT, May 2, 2011 from MKTWBrimelow

"Peter Brimelow: Sound Advice worries about gold http://on.mktw.net/mFa8Ck" 2:13 a.m. EDT, April 28, 2011 from MKTWBrimelow

"Peter Brimelow: Russell endorses gold manipulation thesis http://on.mktw.net/fgwQBs" 2:36 a.m. EDT, April 25, 2011 from MKTWBrimelow

"Peter Brimelow: Newsletter goes nuclear http://on.mktw.net/fr40X3" 11:23 p.m. EDT, April 17, 2011 from MKTWBrimelow

About Peter Brimelow

Peter Brimelow has been an editor at Barron's, Fortune and Forbes and is the author of "The Wall Street Gurus: How You Can Profit From Investment Newsletters."

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