SHARKS CAN FAIL IN PRICE MANIPULATION TOO!
When you participate in the financial market, we certainly cannot overlook the existence of large organizations, investment funds, banks, and even the government, which are partially involved, and we often refer to them as shark groups, whales... manipulating and creating directions in financial markets. But do you know that sharks can also fail in their price manipulation plans? Let Alden share a story with you!
In the first half of the last century, the U.S. dollar was still pegged to gold, or what is known as the gold standard. This means that when the Federal Reserve Bank of the U.S. (FED) issued a dollar, it would correspond to a value equivalent to a certain amount of gold stored in the FED's vaults, and when individuals or organizations wanted to exchange dollars for gold, it was completely simple. Therefore, the amount of gold stored in the FED's vaults was extremely large to ensure liquidity and the balance of payments between gold and dollars.
But problems began to arise when the demand for dollars needed for U.S. expenditure was increasingly high, one of the biggest reasons being that the war in Vietnam was escalating in the 1960s. The U.S. needed money to continue the war, so there was no other way but to print more dollars to serve the war. The amount of gold remained the same, but as the amount of dollars increased, the dollar naturally depreciated. And the countries holding dollars were not happy about this. The wave of exchanging dollars to withdraw gold was increasingly high. The U.S. lost a significant amount of gold in its reserves, and the market no longer trusted the dollar.
At this time, the U.S. government, led by President Johnson, rushed to implement a plan to manipulate the gold market to restore confidence in the U.S. dollar. Specifically, the U.S. government and the Bank of England would collaborate to urgently sell off a significant amount of gold, causing a sudden increase in gold supply in the market, driving gold prices to plummet, with the hope of instilling a sense of crisis and panic selling among speculators across the market, creating a large-scale sell-off of gold, further pushing prices down. At that point, the U.S. government and the Bank of England would quietly buy back at extremely low prices :))) (the government still has to play tricks, right?), to replenish the gold reserves for the U.S. and prevent the speculative gold hoarding wave.
The plan was implemented in 1968, but what President Johnson and the U.S. government did not expect was that the entire amount of gold sold by the U.S. was fully absorbed by the market and could not create the sell-off wave as desired. The U.S. government's price manipulation plan completely failed, the Federal Reserve Bank of the U.S. lost over 9,000 tons of gold in its reserves, exacerbating the crisis situation in the U.S. This was also one of the reasons why the U.S. lost much of its motivation to continue the war in Vietnam. Later, the U.S. had to consider ending the gold standard, inciting the Middle East war to tie the value of the dollar to oil.
So Alden shares the above story with you to have some bullet points:
1. Market trends are always influenced by the group of creators; it is not entirely so, but largely it is!
2. The price manipulation plans of sharks are not always 100% successful, as they depend on the general market psychology or other sharks. So sharks also cannot predict the market direction 100%, so why should small traders want to predict the market direction!
3. Forecasting market directions is not the decisive factor in a trader's success. On the contrary, predicting the market can sometimes be a barrier to trading psychology. What is important is how we observe and record the market to act according to the general trend, combined with risk management so that when we are right, we gain more than when we are wrong.
ALDEN!