Coming To The Defense Of Martin Armstrong Regarding Gold

Those that are in my Trading Room at Elliottwavetrader.net know that I am not a huge fan of Mr. Martin Armstrong. Yet, I believe his perspective about the “manipulation” of gold is absolutely correct, and, unfortunately, he has been wrongfully maligned lately.

I have noted many times that Mr. Armstrong’s writings are often so ambiguous that one can interpret them to mean exactly opposite perspectives.  In fact, I have seen people noting Mr. Armstrong to support the exact opposite perspectives, but each using the same quotes from his writings. 

Furthermore, there is no question about his checkered past, and entanglements with our legal system.  And, no, I don’t believe it is because he “knew too much.”

But, I believe the attacks of him we have seen of late are completely unwarranted.  In fact, it is those who have been wrong for the last 4 years that have been spewing venom his way of late, possibly to take the spotlight off the fact of how wrong they really have been.  

In two recent articles I have read, Mr. Armstrong was taken to task for daring to claim that the gold market was not manipulated to drop from $1,900 to $1,100.  One of the articles posits that “it is well documented that markets are in fact manipulated and done so in the directions central banks and sovereign treasuries wish.  This is now FACT by admission of various central bankers, various sovereign treasury officials ...and various admissions of guilt from financial firms who were doing the dirty work!”

But, Mr. Armstrong correctly claims that the long term trend cannot be subverted to the extent that it is meaningfully altered.  While Mr. Armstrong has recognized that there certainly can be smaller degrees of manipulation at times, the longer term trend is unalterable.  It is with this proposition that the recent authors have taken him to task.

However, Mr. Armstrong is 100% correct. 

In fact, Ralph Nelson Elliott noted this decades ago:

“The causes of these cyclical changes seem clearly to have their origin in the immutable natural law that governs all things, including the various moods of human behavior. Causes, therefore, tend to become relatively unimportant in the long term progress of the cycle.  This fundamental law cannot be subverted or set aside by statutes or restrictions.  Current news and political developments are of only incidental important, soon forgotten; their presumed influence on market trends is not as weighty as is commonly believed.” 

You see, in order to buy into the manipulation theory, one has to believe a two-step argument being proffered by Mr. Armstrong’s antagonists.  First, one has to believe that the Fed is manipulating the market.  And, second, one has to believe that this manipulation has been so overpowering and significant that it has taken gold down 40% and silver down 75%.

Let’s forget that these same antagonists were hailing the imminent parabolic rise in gold due to QE3 back in 2012. At the time, they were uber-bullish of gold because of QE3.  But, were they claiming that the Fed’s engaging in QE3 was going to manipulate the market to go up?  I don’t remember any of these antagonists making that claim in 2012.  Now, after gold did exactly the opposite of what they expected after QE3, they are trying to claim that QE and the Fed’s actions were really gold’s undoing, and caused it to go down.  Huh?  Yes, this is the first problem with their intellectually dishonest argument.

Let’s move onto the underlying perspective which has driven the manipulation theory to popularity.  We need to understand that each of the supporters of the manipulation theory have been wrong about the direction of the metals for the last 4 years.  Not only did they not see the top coming in 2011, but they were all acting like giddy, euphoric school children, waiting impatiently for the market to eclipse the $2,000 level.  There was no doubt in their minds this would occur, and they were suggesting – even at the highs – that investors continue to buy metals with both fists.  Their linear perspective led them and their followers down the primrose path of the recent “Tulipomania.”  And, sadly, very few emerged unscathed. 

But, rather than admit they were wrong, they needed a scapegoat.   So, they pointed to an invisible hand manipulating the market to the downside. But, surely, if there was an all-powerful hand that controlled the market, then it was also manipulating it to go up too . . . right?  Yet, for some reason, I have never heard this perspective before!? 

In fact, I have written about this on KITCO before:

But, the market came to a point of recognition after silver had lost 50% of its value from its 2011 highs as the "fundamentalists" secretly realized that they were foolishly holding on to something that was clearly not working. They needed to come up with something to save face, without admitting their analysis was wrong. They needed to provide "comfort" to those that followed them. They needed to show that, while they were right, something else was causing their losses. Ultimately, they needed something more than "the market is just not trading based upon fundamentals at this time." And, thus was born the "manipulation" theory.

But, for now, let’s simply ignore the intellectual dishonesty of that perspective too.

Next, these manipulation theorists want us to assume that the Fed orchestrated an insidious plot to crash the metals market by 40-75%.  To this end, they often quote snippets from various Congressional hearings to support their claims.  The problem is that just about every quote I have seen presented by these “theorists” has been proffered completely out of context. 

Unfortunately, such cursory analysis misleads most that read their perspective into believing that the large 4 year drop is due to manipulation.  And, statements that are not presented in a misleading manner only relate to the minor type of manipulation that may occur in the market for relatively small spikes.  Remember, just because their “may” be some manipulation that can move the market a fraction of a percent, it surely does not support the perspective that the market can be manipulated down by 40% and 75%, respectively.  Any “manipulation” to which these antagonists believe is “FACT” only relates to the former type and not the latter. 

So, rather than re-create the wheel here, I will simply direct you to the articles in which I discussed a few of these “quotes” in greater detail within their correct context:

https://www.gold-eagle.com/article/smoking-gun-gold-manipulation-fed

http://www.kitco.com/commentaries/2015-08-21/Confessions-of-A-Gold-Analyst-Debunking-The-Manipulation-Theory.html

Lastly, even if you chose to ignore all my arguments above, are you really willing to believe that the metals are the only financial market in the world which is supposed to be one-directional in nature and a correction should never occur?   If so, then I am sure Mr. Armstrong’s antagonists would be willing to sell you a bridge.  Actually, since most of them are sellers of metals, they probably have something else in mind to sell you.  Have you ever considered that? 

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Avi Gilburt is a widely followed Elliott Wave technical analyst and author of ElliottWaveTrader.net (www.elliottwavetrader.net), a live Trading Room featuring his intraday market analysis (including emini S&P 500, metals, oil, USD & VXX), interactive member-analyst forum, and detailed library of Elliott Wave education.