Remember way back when seemingly out from nowhere, the news wire came alive with the announcement that the U.S. Department of Justice was probing and scrutinizing major financial institutions with regard to their involvement in precious metals pricing — in London?
Once again, the public was getting a dose of conditioning.
The 'shock and horror' that precious metals prices are tampered with tends to soon be followed by official confirmation that nothing was found illegal. And the masses will forget all about it. Nothing to see here.
The news that the DOJ is pursuing institutions involved in precious metals fixing is almost comedy. In this case, They were investigating whether the fixing wad fixed!
Of course, in February 2016, the DOJ investigation was quietly converted from anti-trust to a fraud investigation.
All better, yes?
Fast forward to this year and we got the earth-shaking Deutsche Bank settlement with the agreement to help out in throwing it’s counterparts under the bus by turning over key communications…
“The German financial firm also agreed to help the plaintiffs pursue similar claims against other banks as part of the settlements, according to the letters. Vincent Briganti and Robert Eisler, attorneys for traders in the silver-fixing lawsuit, said Deutsche Bank will turn over instant messages and other communications to help further their case.”
Now we can rest easy!
“Can you imagine setting up an exclusive club of a few traders, allowing them to trade millions based on a price fix, and then putting them on a conference line to help set that fix ... and have them not move the price to their benefit? And yet we are supposed to be shocked (shocked!) that the price fix isn't completely objective?”
But don't worry. It's really all fixed now.
One detail from the silver fix fiasco the powers that be would like us to forget is the curious absence of the head honcho when it comes to control over silver and gold prices at the true center of price discovery, where JP Morgan maintains it’s blatantly concentrated selling position on the Chicago Mercantile Exchange’s COMEX.
So we should forget about Department of Justice inquiries into London trading. And forget about Bart Chilton (the fallen champion of the people who was able to leverage his tenure through the revolving door into the world of high paid law firms) and the CFTC. The visible crime is happening right underneath their noses. And now we are investigating an opaque boys’ club system in another country. This is pure and simple telegraphed distraction.
The former CFTC commissioner, now fully rotated into the comfortable life on the outskirts of government, Chilton recently was interviewed by the folks at Peak Prosperity.
He helpfully reminded us of the four magic pillars needed in order to prove manipulation.
According to Chilton, he has seen a little bit of all four, but never simultaneously.
“When asked directly if there's a manipulation problem in the precious metals market - silver, especially - he did not confirm or deny. Instead, he laid out the four pillars of evidence the CFTC looks for in determining whether manipulation can be proven: intent, size, trading action, and impact on price. From his experience during his tenure, it sounds like there were a lot of cases where many of the pillars were present, but few where all four were in enough abundance to overcome the "dueling economists" quagmire that ensued when bringing the case into a courtroom.”
This is what passes for modern day regulation. Fancy suits with no skin in the game calling shots in favor of the monied elite.
Few instances where all four were present? Let’s take a quick look at all four.
What more ‘intent’ do you need for a system in which profits are stolen on a daily basis? Okay, maybe it isn’t intuitive because ‘profiting’ on lower prices is a difficult concept. But of course, they profit in either direction any time. That it just so happens to fit the broader, more conspiratorial agenda of central banks protecting the dollar system comes later. First, there are profits.
Limitless positions given to the so-called market makers and resulting in obscene levels of concentration is how the big commercial shorts move the market in any direction they want.
By days of production held short; the net short position (and overall concentration) for 8 largest commercial banks is grotesque (more than 1/2 annual world production of silver) and truly an embarrassment to the legacy of commodity enforcement. How can the economy be expected to function for long when the pricing mechanism for basic necessities is completely detached from reality?
Blatant, sudden, and telegraphed drops in price around New York market openings induced by uneconomic position unloading and predictable price capping. In fact, if one had large enough pockets, the profitable arbitrage is possible by buying at the close and selling at the open.
Impact on Price?
Far detached from anything close to the reality of underlying supply and demand; anyone armed with even the most conservative estimates of real supply and demand would be shocked by how far price is disconnected from the equation— especially relative to any other commodity.
Chilton likely still champions himself as a man for the people – far short of self immolating - taking the blame and insisting that regulators need to listen to the average person more. It’s difficult to imagine more condescension.
The implication that it’s legal or profitable and that’s okay’ is a powerful deterrent that keeps the masses away and afraid or bruised and battered or tempted to chase all time highs and capitulate at the lows.
Price fixing distorts and moves investors to flounder like wounded seals - tying up capital in a system that is voracious and designed to hunt and devour constantly, like a great white shark that can never stop moving or it will die.
These stories of investigations are simply allowed in order to shape perception just enough.
As Lawrence Williams, pointed out at the time:
“…at least the possibility that the big money managers (the mega banks) might actually try to manipulate markets to their advantage has at last reached the attention of the mainstream media. It’s a start!”
In the meantime, everything really changes when COMEX ceases to be the center of price discovery...
Pricing moved away from futures between Aug 2010 and April 2011.
There are signs that we are entering a period like that again. Only this time - the head honcho - JPM has a giant physical long to offset its' obscene short.
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