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Lone Gunman Brought Down the Dollar


Conspiracy theories are sexy - and wrong.

In recent posts, I've taken a look at various conspiracy theories on the rise of the dollar, the shortage of silver and the manipulation of gold.

Here's a synopsis:

(Warning: Some of these are very lengthy.)

In The Great Gold, Silver Conspiracy Explained, I took a look at many manipulation claims in the gold and silver market, notably the COT report, large short activity, trader concentration and other so called "smoking guns."

In Jon Nadler, Senior Analyst Kitco, Chimes In On The Precious Metals Conspiracy, I noted that one conspiracy theory about gold lease rates that blew sky-high on the alleged manipulation was actually a bad data feed on lease rates.

Occam's Razor

I am a big fan of Occam's Razor, which states that the simplest solution is the best.

Competing Theories

Theory 1: The US government, foreign governments, central banks, various broker-dealers, and a consortium of 10 large US banks are all acting together in some massive conspiracy to suppress the price of precious metals for 15 years running - and not a single insider has stepped up to expose the fraud. Even though housing fraud stories from insiders are being disclosed at a rapid pace, and the government, CIA, and other intelligence leaks have been running rampant throughout that entire timeframe.

Theory 2: There was huge selling by over-leveraged hedge funds in response to fundamental changes in regards to the US dollar vs. the Euro.

You can compare these theories to the silver monthly chart here.

Simple logic would dictate that nothing ever goes straight up or straight down. There are always pullbacks in any bull market. Interestingly, one of the arguments for manipulation was based on how fast silver fell compared to the moving averages. On a monthly chart one can see that silver was miles above the monthly moving averages and did no more than fall back to it.

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