GOLD AND SILVER PRICE MANIPULATION
by Louis Cammarosano, Smaulgld Are gold and silver price manipulation charges real? There is strong evidence to suggest that they are. Also See: Part 2 – Gold and Silver Manipulation – Actual Update November 9, 2014: UBS to Settle Precious Metals Misconduct Allegations Update January 27, 2015: German Regulator Finds no Sign of Gold Market Manipulation Update February 24, 2015 Swiss Watchdog Looking at Possible Gold Manipulation Update February 24, 2015: At Least Ten Banks Face U.S. Probe Over Gold and Silver Manipulation Part one of a two part series on suspected and actual gold and silver price manipulation.
Circumstantial Evidence of Gold and Silver Manipulation
Gold and silver investors constantly point to manipulation in the precious metals markets. They cite large amounts of seemingly senseless naked short selling that drives the price down. The Federal Reserve (the Fed) is the prime potential suspect of the manipulation because the Fed doesn’t like rising gold prices as they have a psychological impact that undermines the value of and confidence in the dollar. Sound like a gold bug conspiracy theory? Once you realize, however, that it is an accepted practice for the Fed to fix (manipulate) interest rates and the price of money by setting interest rates and actually printing dollars (counterfeiting) to participate in the bond markets in order to achieve artificially low interest rates, the idea that they might also manipulate the gold and silver markets makes eminent sense.
After all, why would the Fed go through all the trouble to print $4 trillion as part of its quantitative easing program (QE) only to see the gold and silver markets soar and the dollar plummet, thereby undermining their dollar printing scheme? For interest rate fixing to work, the precious metals markets need attending to as well.
Gold Price Manipulation
Gold Manipulation on Comex Doctor Paul Craig Roberts, former Secretary of the Treasury for Economic Policy under Ronald Reagan, suspects that the Fed once sold and or leased physical gold to drive the price down. Dr. PCR speculates that the Fed ran out of physical gold around 2011, and then turned to naked short selling of gold to suppress the gold price. Dr. PCR claims that the Fed sells massive amount of Comex gold futures, which are “dropped like bombs on the Comex floor” to drive down the price of gold. In “The Hows and Whys of Gold Price Manipulation“, Dr. PCR gives a recent example of massive naked short selling of gold contracts that occurred on January 6, 2014:
“After rallying over $15 in the Asian and European markets, the price of gold suddenly plunged $35 at 10:14 a.m. In a space of less than 60 seconds, more than 12,000 contracts traded – equal to more than 10% of the day’s entire volume during the 23 hour trading period in which gold futures trade. There was no apparent news or market event that would have triggered the sudden massive increase in Comex futures selling which caused the sudden steep drop in the price of gold. At the same time, no other securities market (other than silver) experienced any unusual price or volume movement. 12,000 contracts represents 1.2 million ounces of gold, an amount that exceeds by a factor of three the total amount of gold in Comex vaults that could be delivered to the buyers of these contracts.”
Dr. PCR notes that the manner in which massive amounts of futures contracts are dumped on the market defies common trading sense as anyone looking to unwind a large position would not sell such a large amount in such a short period of time. A trade of that nature will ensure the worst possible price and a loss. Only an entity that has an interest in a declining gold price, rather than its own trading profits would engage in such types of trades. Dr. PCR suspects that trading entity has been the Fed acting through one of the major gold futures trading banks like J.P. Morgan. Gold Manipulation on the London Bullion Marketing Association Market Dr. PCR also asserts that the Fed manipulates gold through the London Bullion Marketing Association (LBMA) physical gold market. The LBMA is comprised of several large bullion banks who make a market in physical gold. They include: Barclays, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, JPMorganChase, Merrill Lynch/Bank of America, Mitsui, Societe Generale, Bank of Nova Scotia and UBS. The LBMA is where the largest trades of physical gold take place. Doctor PCR surmises that the bullion banks acting on Fed orders sell large amounts of physical gold on the LBMA market. Purchasers of large amounts of physical gold may include, central banks, institutional clients or individual investors. On the LBMA, unlike most Comex trades, settlement takes place in physical bullion. Doctor PCR suspects that much of the delivery of physical gold is done via “borrowing” other clients’ gold held by the bullion banks and looting the gold trusts such as the ETF GLD for which JPMorganChase acts as custodian.
Through such leasing arrangements physical gold is made available for delivery in amounts that would not be otherwise available at the existing prices. Market purchases for large amounts of physical bullion would normally increase the price, but leasing allows the existing gold held by the bullion banks to be resold without having to purchase additional bullion to satisfy the delivery requirement. Thus, through leasing, gold can be sold to lower the price or used to satisfy large buy orders such that the price does not rise.