Monday, August 6, 2012

To Be Or Not To Be, Is The Silver Market Truly Free?

We now live in a nation where doctors destroy health, lawyers destroy justice, universities destroy knowledge, governments destroy freedom, the press destroys information, religion destroys morals and our banks destroy the economy  - Chris Hedges, "Days of Destruction, Days of Revolt"
Moment of silence for the end of the CFTC investigation into silver manipulation - or is it?  In the back of my mind when I read last night's Financial Times article, behind the immediate swell of anger and frustration, I was wondering if the article was a "plant" by someone motivated to force the demise of the investigation.  Apparently I'm not the only one who had that thought:  LINK  Certainly the big move higher in the silver market today indicates that the silver bulls aren't so sure about the validity of that news story either.

It doesn't take a high IQ to understand that the silver market (and the gold market) are heavily rigged by the big banks, likely fronting for a Government that is desperate to prevent a price run-up in precious metals from undermining the validity of its unbacked, paper fiat currency.  But I was reminded last night of President Lyndon Johnson's remark back in 1965 when he signed The Coinage Act of 1965, which de-monitized silver and nullified the original Coinage Act signed by George Washington in 1792:
“If anybody has any idea of hoarding our silver coins, let me say this,” drawled the Texan “Treasury has a lot of silver on hand, and it can be, and it will be used to keep the price of silver in line with its value in our present silver coin.”
Of course, the Treasury unloaded its silver in trying unsuccessfully trying to keep a lid on the price of silver, as it jumped from $1.29 to $49 within 15 years.  Here's a good article describing the Johnson tragedy: LINK

Fast-forward to 2012, with silver having hit $50 briefly in April 2011 and the CFTC on its third round of investigation into the silver market manipulation.  We've already had one insider come forward - Andrew Maguire - with proof that JP Morgan manipulates the silver market.  It's getting to the point at which the Government will lose all credibility in its role as a regulator of the commodities markets if it cavalierly brushes aside its investigation, in the face of many years of proof painstakingly compiled by GATA, in addition to the testimony and information revealed by Mr. Maguire back in the spring of 2010.

The interesting question is, however, to what extent does JP Morgan manipulate the silver market on behalf of the Treasury and the Fed?  Based on the degree to which JP Morgan is exposed to the silver market through its massive short position in silver on the Comex and its even more massive position in OTC gold/silver derivatives (per the quarterly BIS reports), JP Morgan is catastrophically exposed to one adverse move against its position in silver.  Anyone who has been in charge of large trading/risk positions on Wall Street (e.g. me) knows that no one would take the kind of capital positions assumed by JP Morgan in silver without some kind of backstop guarantee - either inside information or deep pockets that don't care about magnitude of losses (the same analysis applies to a magnitude of many multiples with JP Morgan's interest rate swap derivatives positions, which are likely used to cap interest rates on behalf of the Fed/Treasury).

Anyone who dismisses the idea that JP Morgan would be involved in silver market or interest rate manipulation must have missed the news surrounding the LIBOR manipulation, which now dates back to at least 1991.  It remains to be seen whether or not the CFTC will in fact do anything to prevent further blatant manipulation of the silver market.  Many of us have our doubts and would be pleasantly surprised if it does decide to take action.  At the end of the day, like all attempts to manipulate markets throughout history which fail miserably, the U.S. Government's endeavor in the silver market will ultimately end up with disastrous consequences for anyone short the silver market.


  1. does the government care about losing credibility? Rhetorical question I guess.

    The govt did put out Fridays Jobs report complete with the 195k jobs reduction in the household survey, right?

  2. Dave. The story is disinformation. Confirmed by Bart Chilton to the Silver Doctors this morning.

    1. yup. i saw an email he sent to someone who complained to him and he replied that he had informed the media that the story was erroneous

  3. (Quinn in Littleton)

    Dave: Silver is manipulated when dumb people like us start thinking it's money. The powers-that-be need the sheep to believe that silver is for circuit boards and electrical conduits. Heaven forbid we ever think it is precious and scarce! They need us to believe that silver is aluminum's big brother - not gold's little brother.

    I sent you a chart via email that illustrates my thinking. Quinn

  4. I think Hal is right. At this stage of the game I'm not sure that governments even care anymore. Things that governments are doing are so far out there, they can just brush off people who call them out as crazy conspiracy nuts. And just keep on doing it till they can't. They are playing for keeps, all the marbles, going for broke. Then, after it does break, they will simply try to change the "rules" of the game to their advantage once again. If anyone still trust any government oversight department, well, your still living in fantasy land and haven't woken up yet.

  5. BBC: Banking With Hitler

    interesting....especially the BIS and gold movements

  6. In my last years in the corp world, I learned the most important stuff. The new execs--only cared about how much money they would get out of company. The "group" met to strategize who would control and "manage" the top execs. They met to make sure their stories to top execs were consistent. Cost savings ideas were real tough operational issues-like cutting benefits and just cutting headcount-nothing to do with improving operations.

    Commonality-they did not care about company-literally and fully only how much could they drain out of company before anybody found out.

    The govt now reminds me of that experience.

  7. When I first started in the City I was taken out to lunch by my head hunter. In those days you had to be checked out to see if you could use a knife and fork and eat properly. As well as visit a topless bar without gawking which of course I was tempted to do.

    My head hunter was an old guy from one of the very old established businesses and he told me a story over lunch in the topless bar about his first appointment. He had just joined the firm and the Bank of England had appointed them to draw up the short list for a senior appointment and he was told to interview Max Warburg. Now Max Warburg couldn't speak English but he had been head of the Reichsbank throughout the war. In fact before the war he had owned the Reichbank and as you will recall had sold the bank to Reich for the gold the Nazis took from Poland.

    Now this Polish gold was held in London and England was at war with Germany. The British Parliament didn't recognise the German occupation authorities but only recognised the Free Polish Government in exile. Consequently the Bank of England did not recognise the transfer of gold from the Reich to Max Warburg's account in Switzerland. Max involved the BIS and during the height of the blitz a plane left England carrying the Polish gold to Switzerland to settle the deal.

    Now Max moved from owner to manager of the Reichbank throughout the war. After the war he was briefly arrested and cleared by the allies of all collaboration with the Reich. Max went to London and landed a job at the Bank of England becoming head of the Open Market Committee setting interest rates in the UK throughout the fifties even though he could not speak English.

    It was only much later that I realised what my head hunter was telling me about the people in the market and how it was run.

  8. We know from history that PM's have never been free and consistently Governments/Elites have meddled here - with price, with laws etc. For instance what is demonetization all about, as you write.

    Anyway - as with price controls - the consequence is increased scarcity. So this price correction is showing its consequence now. For example: Rick Rule's piece today on Kingworldnews - many explorers will be unable to finance themselves. Secondly here a piece by the CEO of Goldfields -

    The message is that miners are changing and focusing on free cash rather than growing ounces. During a demand cycle for PM's the supply is getting even tighter - a positive feedback loop.

    Lets see how it all shakes out.

  9. What I wanted to still add is that eventually the rise in energy costs will have very big other consequences which we have seen before. It will accelerate the economic decay, which will increase the demand for Gold even more. Interesting times - and what will break this enforcing spiral.

  10. Dave,

    Seriously? If the Fed/Treasury/Gov't is behind the manipulation via JP Morgan, do you really think the CFTC can say boo? They'll probably be waterboarded if they come up with anything revealing.

    Jon in The D

    1. Someone blew the whistle on LIBOR manipulation, which was being done on behalf of both the Fed and the BOE...

    2. Bloomberg blew the whistle on LIBOR. Note also that bloomberg together with Quatar is setting up QIBOR, press release from may 2012;

      ''QIBOR will enhance transparency and promote liquidity

      ''NEW YORK, DOHA — Qatar Central Bank (QCB) and Bloomberg LP are partnering to launch the first ever Qatar Interbank Offer Rate (QIBOR) fixings in a move aimed at encouraging a more active interbank market in Qatar, executives announced today. Interbank rate fixings are used around the world to provide a daily reference point for banks borrowing unsecured funds from other banks in the local wholesale banking market and this announcement brings Qatar into that market for the first time.''

      Now who controls Bloomberg? I bet you know that they have strong links with Rockefeller.

      I do assume the FED and BOE were informed that it would happen, but if this leak was fully on behalf of them.... Somehow I have some reservations about that. I think this runs deeper.

  11. Is Peter Thiel Assisting the Government in the Creation of an Authoritarian State?

    Posted on August 7, 2012 by Michael Krieger Peter Thiel, co-founder of Paypal and early investor in Facebook, markets himself as a libertarian and Ron Paul supporter; however, do his actions back up such claims? I I read a very disturbing article last evening about Palantir, a company less people in America and the world would have heard about, but which was founded by Thiel in 2004. Of note, the CIA’s investment arm, In-Q-Tel, was an early investor in the company.

    So what is Palantir up to these days? We get a little sense from a Business Insider article from a few days ago. Here are some quotes:

    Palantir is a company founded by Peter Thiel — of Paypal and Facebookrenown — that has software which absolutely changes the game with intelligence.

    It’s one of the best programs at coordinating the vast databases accumulated by the U.S. intelligence apparatus. It’s already in use in federal domestic security.

    Palantir is one of the first Silicon Valley companies to view the government as a customer rather than an annoyance and — after stepping into a game dominated by top contractors like Lockheed Martin, IBM, and Raytheon — it’s proven controversial in both what it does and if it should be used.

    What it does is assemble comprehensive dossiers on objects of interest, collated from the sprawling databases of intelligence agencies.

    Oh, and Thiel is a member of the secretive Bilderberg group.

  12. people may dislike Chris Hedges but his quote is spot on....

    Pfizer pays $60M to settle bribery charges
    Pfizer pays $60M to settle government allegations of bribing doctors overseas

    WASHINGTON (AP) -- Pfizer has agreed to pay the federal government $60 million to settle allegations that its employees bribed doctors and other foreign officials in Europe and Asia to win business and boost sales.
    The Securities and Exchange Commission said Tuesday that Pfizer's overseas subsidiaries made illegal payments to health care officials in China, Italy, Russia, Croatia and other Eastern European countries. As early as 2001, Pfizer sales representatives tried to conceal the bribes by recording them as legitimate business expenses for travel, entertainment and marketing purposes, the agency said.

    "Pfizer subsidiaries in several countries had bribery so entwined in their sales culture that they offered points and bonus programs to improperly reward foreign officials who proved to be their best customers," said Kara Brockmeyer, chief of SEC's foreign enforcement division.

    ....they feel the % of gdp dedicated to healthcare is too low in other countries....oh and the fine, what a deterrent...???

  13. Wasn't it obvious that things would turn out this way regarding the CFTC ?
    It has become clear that the US government is in on manipulating practices regarding gold and silver , JPM , Bear Sterns , and so on is an example of that.

    So why with the CFTC being a branch of the same government should that be so hard to figure out ?

    Until the physical metals secede from the make believe paper ponzi scheme things won't change.

    The thing that confuses me is that the physical precious metal world has the power to be the ones calling the shots by mere possession alone yet by and large they succumb to those who prefer paper dollars over physical metals....?!
    Might that have something to do with the character the lion on the Wizard of Oz and how he didn't have the courage ?

    It is amazing how history keeps repeating itself.

    ~ We're off to see JPM , the wonderful JPM of Oz ! ~

    1. Are Handcuffs Needed for the Libor Scandal to Register With Bank Perps?

      While many citizens favor criminal prosecutions of bankers (I recently had a BSchool classmate of Jamie Dimon ask me when he was going to jail), it’s been remarkable how little mention of it there has been in the mainstream media in connection with the Libor scandal (yes, sports fans, price fixing is criminal per the Sherman Anti-Trust Act). This interview of Dennis Kelleher and Felix Salmon by Eliot Spitzer provides a badly-needed counterpoint.

  14. This Is Why The NAR Will Never Be Prosecuted For Facilitating Money Laundering

    "A Florida home that originally listed for $60 million has sold for $47 million, a record for a single-family house in Miami-Dade County. The home, in Indian Creek Village, had been on the market since early 2011, when construction was still being completed. The asking price was reduced to $52 million this year." And the punchline: "The identity of the buyer, a foreigner who purchased the home in the name of a U.S.-based limited-liability company, couldn't be learned." In other words a foreigner who may or may not have engaged in massive criminal activity and/or dealt with Iran, Afghanistan, or any other bogeyman du jour at some point in their past, and is using US real estate merely as a money-laundering front perhaps?

  15. The so-called LIBOR scandal has been going on for ever. I have a theory about the what the Bank of England call the owners. The families that own the BIS, the Fed and the rest of the Central Banks set up after the establishement of the Bank of England and the fiat currency systems. The owners do not care whose currency they trade as long as they own the market.

    Some time ago we had the Osborne and the heads of the London banks visit Bejing asking for London to be the first center to set up Renmimbi trading. We never heard back from this delegation at all. I have spoken to Chinese investigating the Western commodity markets and I think they told them their markets are all rigged. Consequently we have had a series of rumblings of very old scandals begining to come to the surface. The owners need the renmimbi for London and their whole system to survive. They have made some fundamental errors going about it and these are begining to show bigtime.

    1. China has responded to the London visit by increasing it's direct currency swaps with Australia, Russia, India and Brazil among others. This allows trading outside the BIS net and the Swift system setting the a new basis outside of London particularly oil and Iranian oil at that.

    2. New York has dragged Standard and Chartered one of the heads of the Bejing delegation into court in New York over Iran, the other head HSBC has been dragged into court over money laundering.

    3. Using Lloyds against Iranian and Russian shipping is as significant as using the Swift system, this has put the position of the London insurance markets into doubt worldwide. Japan, China and India are all replying with their own insurance underwriting comapnies and markets with the same result as the renmimbi currency swaps allowing trade in oil out of Iran.

    These are just the obvious points we see daily in the news cycle yet alone what we are looking at in the geopolitical news cycle with the operations in Syria and Iran. I was reading the account of a British photo journalist who was captured by the so called Syrian Free Army and he said he didn't any arabic speakers and most people had london accents. In his opinion Syrian free Army meant British mercenary.

    If China and the owners don't come to an agreeement soon we are going to see this ending up in a major war. Simply put the trading system in London can't survive this assault. Take shipping for instance as soon as the insurance is in yen or renmimbi and the tankers manufactured in China or Japan replacement costs are in yen and renmimbi who is going to take insurance in US dollars it doesn't make sense. The whole dollar based London market is at risk.

    If they do come to an agreement these disclosurers about the rigging of the Western markets are going to come thick and fast. Precious metals, LIBOR, all commodities, the bond markets, the stock markets, the insurance markets, the settlement systems, the shipping markets are all going to go through a LIBOR experience because the Chinese won't integrate until the game is cleared up and frankly they are all rigged and the Chinese know it.

  16. Paul Volcker Confronted on Bilderberg
    Paul Volcker, former Chairman of The Federal Reserve under United States Presidents Jimmy Carter and Ronald Reagan, gets confronted by Luke Rudkowski of WeAreChange about his attendance of past Bilderberg meetings.

  17. Spain is Reaching the Boiling Point: Activists Steal in Bulk from
    Supermarket and Bring to Food Kitchen

    Unemployed fieldworkers and other members of the union went to two
    supermarkets, one in Ecija (Sevilla) and one in Arcos de la Frontera
    (Cadiz) and loaded up trolleys with basic necessities. They said that
    the people were being expropriated and they planned to “expropriate
    the expropriators”.

    The foodstuffs, including milk, sugar, chickpeas, pasta and rice, have
    been given to charities to distribute, who say they are unable to cope
    with all the requests for help they receive. Unemployment in the
    Sierra de Cadiz is now 40%.

    In a related story:

    The Spanish city of Girona has decided to lock supermarket rubbish bins to stop people scavenging for food.

    Products past their sell by date are thrown away at the end of the day and then taken and eaten by hungry people.

    The move is not as mean as it first appears, officials said that there are health risks involved for those who eat from the bins and the practice causes social alarm.

    Spain is going from bad to worse.

  18. Great interview with GATA co-founder Chris Powell on Capital Account regarding gold and silver manipulation