7 July 2005

A Fractal Comment on Market Manipulation and the Precious metals

For years and years there have been conspiracy theory advocates, indicating
manipulation of various markets. While on a daily fractal level, daily
caricatures of the ideal decay and growth fractals may raise some questions
about possible behind-the-scenes actions, the weekly, monthly and longer
term fractals provide the larger umbrella picture that manipulation by
select individuals, small groups, or possible covert small governmental
agencies, if real and present, is negligible. If manipulation does occur, it
affects only isolated stocks or individual commodities, and does not
significantly affect the bigger and longer term valuation fractal evolutions
of the large composite indices or major quasi-trillion dollar global
assets. Defying large scale saturation macroeconomics with the puny tools a
small group might have available is like a caveman trying to defy gravity by
jumping off a cliff with hand carved wooden wings and tail.

When sudden large and collective flows of investment money targets a
particular commodity or industry, exponential elevation of valuations
relating to that industry may indeed occur. The dotcom blow-off of 1998 to
2000 and the current US housing and oil commodity blow-offs are contemporary
examples of targeted asset collective money flow, while Radio and the
general equity market in the late twenties, 'certain advantageous trading
ventures and companies' in the British 1720 South Sea Bubble, and 'tulip
bulbs of extraordinary delightful color and possibility' of the 1637 Dutch
hegemony vintage - are examples of large collective investment money flows
representing earlier blow-off models.

When investor consumption of over valuated assets - relative to their real
economic utility and demand - become saturated, the electronic-
capacitor-like-decay of fractal collapse in valuations are both sure and
sudden, and akin to having the trapdoor fly open with free fall according to
the laws of gravity - which, while capable of being described in
mathematical and heuristic terms, shares its elusiveness of actual
underlying nature and cause with the near quantum-like nature and cause of
growth and decay valuation fractal patterns of saturation macroeconomics.


Wealthy small-group or individual manipulation of isolated stocks do occur,
the most recent preeminent example being Kirk Kirkorian's significant
accumulation of GM stock at its lows in April 2005. The comparison of GM
fractals to the daily fractals of Ford (F) and Chrysler (DCX), GM's sister
auto manufacturing equities, shows a disparity of fractal evolution with the
possibility that the billionaire's interest in and 'cornering' of GM stock
may have caused a minor aberration in the natural evolution of fractal
growth progression. Ultimately GM's utility and competitiveness with Asian
auto manufacturers and its nonviable debt load and sinking blue collar
obligations will relegate the company and its equity valuation to its real
and undesirable global position. Having said, the prior July 4th prediction
for the GM fractal evolution, is thus far...exactly... correct.

As well, the Hunt brothers cornering of the silver market in the late 1970's
with its scattergun effect on the gold market can be appropriately
classified as market manipulation. Had the Hunt brother's not decided,
after possibly a few good measures of select scotch, to buy the 'controlling
interest' in the silver market, it is very unlikely that its historically
more-noble sister yellow metal, would have climbed in 1980 to over 800
dollars an ounce. As overvaluation and saturation of band wagon manic
investors reached its peak, the actual utility verses supply of silver to
the world economy revealed itself, and the 'manipulated and money
concentrated focused valuation' collapsed. When looking at the monthly and
yearly fractals of precious metal valuation activity, it would be wise to
discount the silver and gold valuation peaks in 1980 as real fractal and
market aberrations due to the manipulated 'Hunt stunt'.

The precious metal markets and associated mining stocks are following a
very elegant, very definable, very predictable weekly and monthly fractal
pattern. In the next few months as debt is repudiated by the inability to
service it, the total 'operative' money supply - as determined by both real
circulating dollars and those theoretical dollars that should be returned to
the lender with interest based on the earnings of those who have obligated
themselves with equivalent future indentured servitude - will decrease.

With the collapsing money supply, how will the valuations of the precious
metals and mining stocks stand up in comparison to the falling bubble
prices of homes and oil which have real utility with respect to basic human
necessities? As the money supply contracts, the quantity of money
previously supporting ALL assets including precious metal and mining stock
valuations will be substantially diminished. Expect valuations in these non
necessity areas to be similarly affected during the time period of the
secondary decay curve of the Grand 147 Year US economic fractal cycle.

Historically after the nadir point in 70 year primary consumer saturation
cycles, precious metals have done very well relative to other investments.
Considering that China and India may represent the next economic hegemony
and having a grasp of the appreciation of these two cultures' traditional
reverence for precious metals, the precious metals should ultimately do well
after the bottom of the Secondary Grand Decay Fractal is completed.

G. lammert