Courtesy of Mish.
Business Insider says “Traders Are Talking About A Gold Conspiracy Theory And There’s Evidence To Back It Up”
No discussion about gold is complete without a good conspiracy theory. While most theories are easily dismissed, some stay around for a while due to a confluence of circumstantial evidence surrounding it. Wall Street veteran Art Cashin addresses one such theory in this morning’s Cashin’s Comments.
From Cashin:
All That Glitters Is Not Arbitrage – Monday, spot gold spiked up $45 and the media pundits pointed to things from China to the FOMC. While all the cited may have been factors, veteran traders saw the bulk of the move resting in a conspiracy story.
In my mid-day email to friends I had noted this:
Gold soars as NYT story on metal warehouses fans flames of conspiracy theorists that gold warehouse stores have been “lent” out. That theory also aided by backwardation (spot price far above near future)…..Unfortunately, we are not sophisticated enough to answer these questions. But email us at moneygame@businessinsider.com if you can.
Email is on the Way
Consider what follows as my email to Business Insider and Cashen.
People like conspiracy theories for two reasons:
- Conspiracy theories are sexy and fun to discuss
- Traders want to blame someone else for their poor trades.
Simply put, if gold goes up, it’s because it should (and the traders are brilliant for understanding that). If gold gold down, it must be a conspiracy (because the traders cannot possibly be wrong).
Investigating Backwardation
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