Holmes spoke to Kitco News at Palisade Global’s Hard Asset Conference on Friday. The three-day conference was held on Jekyll Island, Georgia.
The market manipulation, or spoofing, occurs during Chinese holidays when trading is thin, according to Holmes. He explained a large number of contracts will be “flashed” on the markets with the intent to sell.
“Immediately the market becomes fearful there is a big seller,” said Holmes.
“[Traders] start hitting all their bids, and the price of gold cascades down. It’s fraud. It’s mis-communication,” he said.
Holmes explained that gold is being suppressed because officials want to keep gold at a price that is low in relation to the country’s currency.
He added that the Chinese market is especially important to observe for traders and investors now that the global hub of gold trading has shifted from London to China.
“We’ve seen now that China has sort of become the epicenter of gold trading. It moved from the London Fix to China, so now we have to be cognizant of those holidays,” Holmes said.
China is not the only sour point in the price manipulation of gold, Holmes said, as the Bank of International Settlements (BIS) has also suppressed the yellow metal with its policies, this according to his findings.
“The big bully of this whole thing is the Bank of International Settlements. They are very, very smart in how they deal with it and how they suppress the price of gold – you see money moving in and out of the GLD, you can see the futures markets, how the flows turn around at certain times,” he said.
According to Holmes, the BIS has 60 central banks in the world clearing through them, and it is in their interest to not have competition from alternative currencies like gold and bitcoin.
On the topic of bitcoin, Holmes said that major financial institutions have been taking a stance against the cyrptocurrencies and their public “bashing” of the coins may have contributed to their suppressed price levels.
“[There has been] an unprecedented attack on bitcoin as another alternative asset class. It’s speculative, but it’s another asset class. And it was just relentless because they do not want bitcoin to look like gold and they definitely don’t want to be backed by dollars until J.P. Morgan came out with their coin,” he said. “[When J.P. Morgan] came out with their own crypto coin, the bashing stopped and we saw this year bitcoin rally from that bottom.”
Since its highs in December 2017, Bitcoin prices have tumbled, reaching a low of $3,200 a coin in December 2018. The largest cryptocurrency has since rallied almost 150%, last trading at $7,930 on Tuesday.
The SPDR Gold Shares (GLD) was trading at $120.18 per share on Tuesday afternoon, down $0.46 (-0.38%). Year-to-date, GLD has declined -2.81%, versus a 7.82% rise in the benchmark S&P 500 index during the same period.
This article is brought to you courtesy of Kitco.