I completely agree that the paper gold market (futures) is rigged in the sense that the big banks, COMEX and government (through lack of CFTC regulation and oversight) all conspire together and have a vested interest in keeping the gold price surpressed. There is stacks of evidence to support this. They all benefit from the Federal Reserve monetary system and a significantly higher gold price signals that the dollar is on its death bed causing a rush out of the bond market.
Consider how it works...
There is an idea where you go to the casino and play roulette. Each time you lose you just double down your bet (assuming you have virtually unlimited funds) so that when you finally have a win you make enough profit to cover all previous losses and then some. You then start over again employing the same tactics. This would work fine so why don't more people go and do it? The answer is that the casino spoils the party by imposing maximum bets (position limits).
This is exactly what some of the bigger players like JPM have done (eg. with their massive silver short position) only the CFTC has not imposed position limits. Most people realize that bull markets have to have corrections (there is no conspiracy there) but the manipulation comes when the bull gets ahead of itself and loses entropy and there are less new players willing to buy in. By selling huge amounts of paper contracts (going short) and allowing the price to rise in a controlled manner more buyers are drawn in to the market now so that future demand is brought forward. Eventually at an agreed upon time (usually when the market is trading thinly) there is a coordinated effort to smash the price down through a series of margin calls even as the price falls. The buyers that would normally come in to support the price are simply not their so the price falls much further to such a point that the shorts can cover their positions and take profit. The timing of this is counter intuitive to maintaining a stable market and reducing the risk of a COMEX default as margin calls should come when the price is rising at an increased rate and the amount of leverage has increased to dangerous levels. Notice how they never reduce margin requirements after a correction or when prices are falling?
It is the lack of willingness to impose position limits and the mechanism described above that has the paper gold market rigged. It will continue until people refuse to play ball and avoid the COMEX all together. MF Global has shown just how fraudulent the COMEX and the CFTC are. It's not just the bankruptcy of a broker/clearing house, the market mechanism is broken.
