Wednesday, June 4, 2008
Oil Market Manipulation
Thanks to www.beearly.com for this piece from Mexico Mike who makes a valid and critical point:
Investigating the oil market manipulators
by Mexico Mike
CNN ran a show last night on the story of high oil prices and a big part of the commentary focused on the reported investigation through the CFTC regarding alleged oil price manipulations. This was also discussed recently on CNBC during prime time.
I find it ironic that the Gold Anti-Trust Action Committee GATA has been pounding the table for an investigation into ongoing manipulation on the precious metals for years, and along the way has presented some pretty compellingevidence that at least warrants consideration, even for the most skeptical observers. Yet the response has been an abrupt dismissal of all that is brought to light. Even worse, we put up with the 'tinfoil hats' references and the entire story is a wall-to-wall joke from anyone that does care to mention it.
Okay, so there is no manipulation, and those that dare to suggest it are merely conspiracy nuts. So why is the investigation in the oil sector a hot news story with frequent discussion and analysis? The hypocrisy is astounding. Where are the tinfoil hats on the CNBC panel?
I was hoping for some kind of rebuttal regarding the whole concept of manipulation in oil, but instead we can sit back and listen to the crickets chirp. It all comes down to whose oxe is gored. The big money has been short gold all the way up, and there is cheerleading from the media at every downtick for gold. Conversely, the big money has been fading the oil move higher as an irrational move that is unsustainable.
Now that oil is making new highs on a daily basis, some of these parties are starting to squirm. Hence the investigation... And the unprecedented willingness of the CFTC to acknowledge the investigation before it had been concluded should indicate very clearly exactly which side of the debate they are leaning towards. The same agency put out a blatant whitewash on the issue of silver manipulation just a few weeks earlier, yet now they seem to be throwing their influence and moral authority on the line with very suggestive commentary that the allegations are legitimate.
I enjoyed a lively debate with a number of analysts during a recent property tour in Mexico, and most of them politely suggested I was out to lunch when I stated that the metals were heavily manipulated. The moderates would only acknowledge that all markets are manipulated and nothing special was out of line with gold and silver.
Most were unwilling to even consider in our markets that anything unsavory could be ongoing. Now that the genie is out of the bottle, maybe some more balanced consideration may be directed towards what GATA has been saying all along. I do not expect that the talking heads will ever give us the time of day, but I do think there have to be some neutral parties out there that will at least raise serious questions to review the body of evidence.
Even though I personally believe that there is no way that the oil markets can be rigged through manipulation to create such a move higher, this could generate just the kind of attention we need to shine the light on the precious metals, and I suspect there will be a flurry of cockroaches scrambling for cover if that were to happen.