What Goes Up Must Not Come Down?

It never gets old.  Week after week, the lower the price of gold drops, the more articles I see saying the exact same thing:  Gold is being manipulated to go down.  So, I feel it is only fair for someone to present some reality to the market on an equally consistent basis.

Do you want to call it a conspiracy theory or the mechanics of manipulation?  To me, it matters not.  But, anyone who believes that gold has been manipulated to the degree that price has dropped 50% from its high (75% for silver) believes that gold is the only market in the world that is supposed to move in one direction all the time.  Is that reasonable?

If you read all the “proof” presented by the manipulation theorists, and really think about what it means, you would recognize that they have either presented statements being taken out of context (which I have shown in some of my prior published articles), or they have shown that there may be  small movements in metals that may have been manipulated. 

But, there is no way that anyone can prove that gold has been manipulated down by 50% if one is reading their “proof” from an intellectually honest perspective.  You see, at best, they have evidence of what is akin to a paper cut in the market.  Yet, they are trying to claim that their proof of a paper cut is what caused the market to bleed to death. 

There is not a single market in the world that does not move in two directions over the short and intermediate term. However, overall, markets generally trend upwards over the very long term.  And, the reason financial markets trend upwards over the very long term is that society is generally progressing over the very long term.  However, can we say that society only progresses and never experiences periods of regression?  Have all the “manipulation theorists” lost their perspective on history?

Have you ever heard the saying “three steps forward, two steps back?”  Have you ever thought about what that really means in life?  You see, man is generally progressing over the very long term period.  This is why we have been able to transform from cavemen into the society we currently enjoy.  But, even so, throughout our history, have we not had some periods of regression?  In fact, we have seen some seriously difficult periods of regression. 

Over time, our financial markets experienced the exact same phenomena.  And, gold is absolutely no different.  This is what Ralph Nelson Elliott came to realize 70 years ago:

“Civilization rests upon change.   This change is cyclical in origin and characteristics.  A rhythmic series of extreme changes constitutes a cycle.  When a cycle has been completed, another cycle is started.  The rhythm of the new cycle will be the same as that of the previous cycle, although the extent and duration may vary.  The cycle progresses in accordance with the natural law of movement.”

Even Alan Greenspan has recognized this about our financial markets:

“The cause of economic despair, however, is human nature’s propensity to sway from fear to euphoria and back, a condition that no economic paradigm has proved capable of suppressing without severe hardship.  Regulation, the alleged effective solution to today’s crisis, has never been able to eliminate history’s crises.”  Financial Times, 2008

So, is it reasonable to say that a paper cut caused this market to bleed to death?  Or, is it more reasonable to say that markets have periods of progression and regression, and gold is simply going through one of its periods of regression? 

You see, if one understands that markets do not move in only one direction over the intermediate and shorter term, then one would have been able to recognize that the market was topping back in 2011.  So, the next time you consider giving any credence to the manipulation theorists, look to see if there was even one manipulation theorist that recognized the market was topping back in 2011, or if they were wildly – and wrongly – bullish at the time? I think we all know the answer to that question.  So, could it be that their “theory” is attempting to mask their abject failure between 2011-2015?

One really has to begin to question the motivation behind these manipulation theorists.  What prompted them to head down this path?  Well, let’s be honest and recognize that not a single one of them recognized the top in 2011, as they were each wildly bullish at the market highs of 2011.  They did not recognize the impending sentiment change in the market.  They had no clue that the market was about to reverse.  All they saw was a one direction market, and they looked quite foolish still looking for the market to “certainly” exceed $2,000, while the market was setting up to target $1,000.  Do you think it would be good for business or their reputations if they were caught being so dreadfully wrong about market direction?  They had no choice but to come up with something to save face.  They needed a scapegoat.

Don’t ever forget that it is human nature which causes markets to progress and regress.  And, that same human nature may also be the impetus to misdirect the public into believing the market has been manipulated so that no one focuses on their massive failure for the last 4 years. 

Even if you do not buy into the fact that markets progress and regress, for the sake of your investment account, you should at least consider what the last 4 years in the market has meant to your investment account, and what conclusions one must draw therefrom. 

We can all agree that the ultimate goal for every single investor is to develop the appropriate tools to align their investment account with price.  Anything else is a side show or misdirection.  So, if there is someone who is providing you with an excuse as to why they have been on the wrong side of price during a 50%+ draw down, for the benefit of your investment account, their perspective must be discounted, especially if they are trying to blame someone else for their failure.  Is there any other market in the world where you would adopt or accept such excuses for being so wrong? 

Just something to think about.

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