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Frank Holmes: Dumb Trader Caused Gold Price Drop

March 7, 2012


My friend Daniela Cambone from Kitco was able to track down Frank Holmes, CEO of US Funds, at this week’s Toronto PDAC conference (PDAC is the largest mining convention in the world, with over 30,000 delegates.).

In a quick interview, she got him talking about gold’s sudden price drop that concurred with Fed Chairman Ben Bernanke’s speech last Wednesday.

Evidence of the carnage is below. Read it and weep.

KitcoMar12012 Frank Holmes: Dumb Trader Caused Gold Price Drop
(Photo: Kitco)

Always the statesman, Mr. Holmes, one of the top gold-focused fund managers in the US, restrained from siding with gold conspiracy theorists like

Mr. Holmes, an expert on market gyrations, didn’t go there. Instead, while, hinting that something suspicious was going on in the market, he attributed it to “grossly negligent” trading.

Mr. Holmes also pointed out that there were “no hard-core” government policies that indicated interest rates would rise, which would account for such sudden price drops.

I take these careful thoughts to mean that maybe it was a stupid trader that caused the plunge.

Mr. Holmes’ takeaway message from the PDAC was simply that he’s optimistic about growth in the years ahead.

“It’s important to be a positive skeptic, but to recognize you are in a super-cycle in commodities… The need for commodities… And that everyone, all of these emerging countries, they want the American dream trade. They all want to have a beautiful home, a car. They want all these parts, and governments are doing everything to build them out. Thirty, forty years ago they couldn’t really truly appreciate or see what we have. This is a big sea change now with the Internet. So I think it’s a super cycle. Historically, the shortest cycle for copper was 17 years. That means we have at least another 10 years.”

Still, Mr. Holmes’ restraint from pointing the finger had some wondering: Did the “secret gold cartel” get to him?

Nah. That’s nonsense… Right?

Discover Frank Holmes’ company, US Global Investors Inc., at

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Name Last Change
DOW 24024.10 1.77%
S&P 500 2634.56 1.36%
NASDAQ 7007.35 1.73%
TSX 15477.00 0.48%
TSX-V 789.24 0.00%

Resource Commodities

Name Last Change
Gold 1328.33 0.16%
Silver 16.71 0.12%
Copper 3.14 0.97%
Platinum 928.25 0.03%
Oil 67.70 1.39%
Natural Gas 2.78 1.47%
Uranium 24.25 N/A
Zinc 1.46 0.00%


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