A New Gold War? - Addendum

March 20, 2000

NY MANIPULATION of the spot POG

It has been one week since the GOLD-EAGLE published my analysis of the conflict between the gold market's overseas trading and its NY activity. If a pattern is more than a chance relationship among elements then it should prove predictive of subsequent events. If this was my major concern then I should have withheld the analysis and waited a week or two to gather the subsequent data that would have tested the strength of this relationship. The reason for waiting, of course, is that any relationship discovered in a set of data based upon human behavior can be altered when the humans become aware of that relationship. In this case, upon realizing that they were discovered, all the NY players had to do was ship some buying offshore and the pattern would be broken. Due either to information dissemination lag time, or just sheer arrogance, this did not happen. The pattern emerged again this week as strong as ever.

I will describe the new total data set and some new ways to interpret the data in a moment. First I would like to answer a question that was posed in many e-mail's received concerning this article. "When will the pattern be broken." The simple answer is that I do not know. When it is broken however, it will be because of one of three reasons.

  1. The stock market bubble breaks and the U.S. dollar weakens. Then the NY crowd will not be able to hold back the tide as U.S. buyers join the overseas buyers to swamp them.
     
  2. The continued major pressure from NY wears down and/or frightens overseas buyers into capitulation. Then the market will fall like a rock.
     
  3. NY buying is surreptitiously shifted to overseas outlets. In this case the pattern is broken but the market remains in its medium-sized trading range. You would no longer so clearly see the buying coming from overseas and the selling coming from NY.

Now let's look at the new data additions. This week's data strongly support the previously identified trend. For 4 out of 5 trading days the overseas trading resulted in an increase in price at the London AM fix. And just as convincingly, for 4 out of 5 trading days, the Kitco-reported NY spot closed below the London AM fix.

You can see in Table 1 that the sum of all the gains and losses from the London AM fix to the NY close results in a total loss of $43.75. The NY close to the next mornings London AM fix results in a total gain of $45.85. Over the total number of trading days the NY-London AM losses about cancel out the London AM- Previous NY close gains. The mean gain overseas is $1.31 per day while the mean loss in NY is $1.25 per day. This means that on a typical trading day the NY selling will reduce the average daily overseas gain of $1.31 to only $.06. Testing these differences with the Fisher's t test indicates that the probability that these differences are nothing more than random fluctuations is less than .01.

So, there we have it. An identified pattern, which strongly suggested NY MANIPULATION of the spot POG, has predicted activity during the week following its discovery.

Look for a future article where I will tackle the societal structures that make such an event possible, hard to detect and extremely difficult to shut down.

Table 2
---------------------------   Spot Gold Prices   1/25/99 - 3/17/2000   -----------------------
  London AM London PM NY Close NY Close
- London AM
London AM
- Previous NY
London PM
- London AM
17-Mar $285.50 $283.90 $283.85 $1.65 $0.30 $1.60
16-Mar $288.40 $287.35 $285.80 $2.60 $0.10 $1.05
15-Mar $288.70 $289.15 $288.30 $0.40 $0.40 $0.45
14-Mar $290.30 $288.75 $288.30 $2.00 $0.40 $1.55
13-Mar $289.65 $290.65 $289.90 $0.25 $1.05 $1.00
10-Mar $292.10 $290.25 $288.60 $3.50 $1.40 $1.85
9-Mar $289.00 $290.50 $290.70 $1.70 $0.75 $1.50
8-Mar $292.75 $291.20 $288.25 $4.50 $1.25 $1.55
7-Mar $288.35 $289.75 $291.50 $3.15 $0.95 $1.40
6-Mar $289.25 $288.80 $287.40 $1.85 $0.95 $0.45
3-Mar $289.30 $288.50 $288.30 $1.00 $2.15 $0.80
2-Mar $289.00 $289.90 $287.15 $1.85 $1.65 $0.90
1-Mar $293.75 $292.90 $290.65 $3.10 $2.45 $0.85
29-Feb $294.00 $293.65 $291.30 $2.70 $2.30 $0.35
28-Feb $292.75 $292.50 $291.70 $1.05 $0.55 $0.25
25-Feb $297.15 $294.00 $292.20 $4.95 $0.95 $3.15
24-Feb $299.90 $298.75 $298.10 $1.80 $0.60 $1.15
23-Feb $305.25 $302.00 $299.30 $5.95 $0.45 $3.25
22-Feb $305.40 $302.25 $304.80 $0.60   $3.15
21-Feb $305.75 $305.25     $3.05 $0.50
18-Feb $302.25 $303.55 $308.80 $6.55 $2.00 $1.30
17-Feb $304.25 $306.25 $300.25 $4.00 $2.85 $2.00
16-Feb $300.50 $302.50 $301.40 $0.90 $1.00 $2.00
15-Feb $307.00 $304.25 $301.50 $5.50 $1.50 $2.75
14-Feb $308.75 $308.35 $308.50 $0.25 $1.45 $0.40
11-Feb $316.50 $311.50 $310.20 $6.30 $1.30 $5.00
10-Feb $311.25 $309.00 $315.20 $3.95 $6.15 $2.25
9-Feb $306.00 $308.60 $305.10 $0.90 $7.90 $2.60
8-Feb $303.15 $296.25 $298.10 $5.05 $0.15 $6.90
7-Feb $316.60 $312.70 $303.00 $13.60 $14.30 $3.90
4-Feb $287.50 $293.65 $302.30 $14.80 $0.90 $6.15
3-Feb $285.25 $285.05 $286.60 $1.35 $0.75 $0.20
2-Feb $283.10 $285.60 $284.50 $1.40 $0.70 $2.50
1-Feb $283.65 $283.00 $282.40 $1.25 $0.55 $0.65
28-Jan $286.15 $286.75 $283.10 $3.05 $0.65 $0.60
27-Jan $286.50 $285.55 $286.80 $0.30 $0.90 $0.95
26-Jan $284.90 $285.90 $285.60 $0.70 $0.85 $1.00
25-Jan $288.70 $288.00 $285.75 $2.95   $0.70
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