The auto-selling scripts are intervening into the gold market by selling lots of paper gold above $1400 in order to stabilize the price.
This has been set up in advance, apparently, and I think it’s the last-ditch effort to control the hyperinflation. Also, Trump’s anti-crypto message might precede concrete actions to completely outlaw the crypto market in order to block the rats leaving the sinking USD ship. Both things seem to be related. When convertibility of crypto into USD is blocked, the value of crypto, for all intents and purposes, measurable in real world money, will be zero, because it will literally not be convertible into money.
When the water breaks through the dam, my guess is they will try to blame it on Russia and China doing some cyber attack or other fabricated bullshit, and then they’ll start a total war. It will be “use it or lose it” scenario, because when the dollar and Euro collapse, they will no longer be able to fund their military under a “business as usual” scenario. I simply can’t envision a scenario where America just lets that happen and peacefully endures their version of the collapse of the Soviet Union, especially since they’ve been deploying all kinds of preparations for exactly this scenario for quite some years.
Nobody has the power to block convertibility of crypto into USD – that’s like saying that some government can ban cannabis and therefore render it worthless. Even if you block centralized exchanges, people will still exchange and pay in crypto directly. Even if the US creates the great firewall of US that somehow manages to isolate Tor and crypto connections, people will still synchronize their wallets through satellite and mesh networks. They will do that, if nothing else, for it’s for some time now the only way to buy drugs online. 🙂
China repeatedly tried to suppress crypto for largely the same reason (to protect yuan) and it didn’t help a bit as crypto is a nice way for party comrades to move money out of country while PBOC devalues yuan. And they have much stronger grasp over their population than the US.
Even if the US somehow flexes its muscle and makes the whole world ban crypto, and if that works even for China (which I highly doubt)… I can pretty much guarantee that you’ll be able to sell bitcoin for USD in Venezuela. 😉
Trump’s tweets seem to be more about Libra than crypto though. Facebook managed to stir the hornet’s nest and is perceived as a larger threat to dollar than crypto; FED can’t allow corporations too much leeway with their own currencies.
As for gold – it is said that if you’re buying gold you’re trading against every single central bank there is. All central banks have strong incentive to manipulate gold price to fall, as gold is, in theory, the major benchmark against which value of state currencies is measured. Low gold price means they can print more currency and get away with it.
You can’t measure the real value of USD or EUR by comparing them to each other; every state currency is trying to achieve the “perfect” 2% yearly inflation which means that the real value of all of them is actually falling all the time. And then gold gets priced in state currency, instead of state currencies getting priced in gold, because Bretton Woods and stuff. That mechanism additionally drags the price of gold down, in the same way inflation drags wages down – you get paid the same amount as the last year, but everything costs more, unless your employer gives you an increase to match inflation, which they have an incentive to prolong or avoid. That’s why compared through the price of labor, in Roman times gold was worth about $5000 in modern dollars, instead of current $1415. Similarly, since gold is priced in state currency, traders would actually have to price gold slightly higher due to inflation of state currency, but that never happens. Price of gold reacts primarily to stock and bond market, which are much shorter term price drivers, and inflation simply never gets priced in.
When gold price is too high, states and banks will typically manipu.. sorry… trade gold futures and options to protect the value of their own currency. Which is easy as derivatives volume is much lower, and especially easy when you’re a central bank that can print money and then use it as collateral for shorting. US, Europe and China are united in this, and that’s in addition to banks such as Barclays in 2014 and JPMorgan last year admitting they’ve manipulated gold price for years.
That said, if I had a penny for each market manipulation story there is, I’d have more money than actually exists. Everybody manipulates every market they can all the time, but manipulating any freeish market is progressively harder the longer you do it as it makes you predictable which others can exploit. In the end, with or without manipulation, each market is just an average of sentiment of all market participants and can be traded as such.
You’re zooming in into gold chart to the point where there’s almost too much noise and scalping bots activity which is insignificant over larger periods. Selling gold above $1350-1400 range is a logical move for professional traders, as that level hasn’t been surpassed since 2013. That means anybody who bought since 2013 is now in green, so there’s an incentive for all of them to sell and realize profits and it’s easy for shorters to create a bit of panic. Also, there’s always a pullback after a big move, and day traders are counting on it – gold is up almost 13% since May, and it’s clearly consolidating for the past month or so, into what traders call a bullish pennant pattern. Trading patterns are charted psychology – in this case, you have a break upwards, then at some point people get nervous and sell, other people buy the dip, and this creates a zone where price ranges for a while until volatility is too low for day traders to make money and something or somebody pushes price past the stops which are usually placed above and below that ranging zone, which creates cascading buy or sell movement that powers the next leg up or down. Bullish pennant usually has a good chance to break upwards, by the looks of it, sometime during this month. Until then though, range trading (selling below previous high and buying above previous low) is a way traders earn money and that’s the activity you’re seeing.
Let’s wait and see how well your thoughts age.