The scatter plot below reveals one aspect of this control. This scat plot illustrates two-dimensional map between connected money flows and price changes in the paper market. The distribution with the scatter plot should be largely random (no discernible pattern) in a free (uncontrolled) market. The negative sloping least squares linear model clearly illustrates a nonrandom relationship exists in the paper gold market. In other words, a definable linear pattern when none is expected reflects a managed market.
Scatter Plot: Net Long As % of Open Interest (NL%OI) for Commercial Traders vs. 6-Week Natural Logarithmic Change in POG Since 2002
Managed, however, is a relative term. Today’s paper shuffling on the leveraged exchanges no longer generates as strong of a price response as it did in the past. This deterioration in paper control is suggested changing slope of the model since 2006-2007. While the price of gold is still controlled today, the grip of ‘paper shuffling’ over it has loosened.
This trend is significant. The trading sharks, known for sensing blood in the water from a wounded animal, always press vulnerability for profit. Right now, it's only a matter of early recognition.
"In all my years of investing, I have never seen an asset hit record highs, as gold has done recently, with less fanfare. There were no front page stories in the Wall Street Journal or Financial Times, heralding the new milestones." Fred Hickey, editor of the High-Tech Strategist and a member of Barron's Roundtable.
Source: dowtheoryletters.com
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