News & Analysis
HSBC and J.P. Morgan Face Lawsuits for Precious Metals Manipulations
Could this be it? ... Two guys on our Christmas card list this year will be Ted Butler and Bill Murphy. Butler has been chasing the silver manipulation story since 1990; Murphy's Gold Anti-Trust Action Committee (GATA) has been chasing the gold side of the manipulation story for just about as long. It only took two decades, guys, but finally a regulator returned a phone call. Last week, CFTC Commissioner Bart Chilton described "repeated" and "fraudulent efforts to persuade and deviously control" silver prices, according to the Wall Street Journal. "I believe that there have been repeated attempts to influence prices in the silver markets," Chilton, a Bush appointee reappointed by Obama, said. – The Wallace Street Journal
Dominant Social Theme: Don't look at the man behind the drawn curtain. There. The one looking miserable. He's just been served ...
Free-Market Analysis: Hard-money writer David Bond has composed a short but cogent update (excerpted above) that spells out what could be going on with the gold and silver markets now and in the near future. It's his impression (and the impression of some Bell feedbackers, as we noticed yesterday) that the metals markets have arrived at an imminent turning point. The CFTC itself is beginning to acknowledge that there has been significant manipulations of the metals markets and several lawsuits have now been filed. Here's more from the article:
Two traders, in separate lawsuits, alleged that HSBC and J.P. Morgan-Chase were the culprits. According to Forbes, quoting Murphy, who was citing CFTC reports, the two banksters together controlled 43 percent of the net short commercial position in gold and a staggering 68 percent of the short interest in silver last November. It's difficult not to infer a conspiracy here.
One of the traders filing suit alleges that the banksters colluded on the silver futures market and let each other know about large trades, placing "spoof" trading orders in order to suppress the price. At this point these are allegations, but they should be taken seriously, considering their sources. Murphy and Butler were ridiculed for two decades for figuring out what, finally, regulators are waking up to: Something is rotten in Denmark.
More important even than the attention of regulators is that now the Wall Street media can no longer ignore the story. Quipped Murphy: "We've been quoted in Forbes. What's next? Field and Stream?" You won't hear about Chilton or the traders' lawsuits on CNBC or Bloomberg, just yet, but the fuse has been lit. This is a story that's just become too big to be busted ...
The last week of October, 2010, may well be the watershed event for precious metals, and for the U.S. Federal Reserve Dollar. Should the short-side manipulation of silver and gold ever become understood by Joe Sixpack, the Fednote is toast and there will be no upside limit to genuine, precious metal money.
Bond is too careful a journalist to draw definitive conclusions, though, at the same time, he is pointing out a potential market event. He is correct to do so, though Bond knows – as do we all – that timing a market is good bit more difficult than predicting a trend. Here at the Bell, we have never much doubted a massive conspiracy to keep down the price of gold and silver. Central bankers in testimony have regulated admitted as much when it comes to gold, though the suppression has always been cast in the language of monetary adjustment, which makes it sound like policy rather than crookery. But lately the entire scheme has been unraveling. We carried a recent article about it, which you can read here: Retiring CFTC Judge: We Covered Up Market Manipulation.
As the gold and silver manipulations unwind – and sooner or later they probably will as legal pressure is brought on the actors – then it will be interesting to see what happens next. This is because the manipulations have gone on for decades, probably with increasing urgency since the 1970s anyway. That means that anyone who has ever purchased gold and silver in the past 40-50 years has essentially been defrauded. That's a lot of people and a lot of precious metals.
We have pointed this out before in several articles. If the conspiracy is actually exposed, even if only partially, the potential for litigation is substantial. Of course we are sure there would be efforts to create a class-action lawsuit to settle damages and to make them tolerable for the system as a whole. But gold and silver bugs are a stubborn lot. Even a large, corporate law firm from, say, New York, might have trouble generating a class-action law suit. If the exposure and resultant litigation cannot be controlled, the entire mess that is the West's current and rapidly eroding fiat-money system might simply collapse. We're not making a prediction, merely pointing out a possibility.
On the other hand, we have noticed when it comes to power elite promotions that investigations tend to move slowly and all but the most serious fiat-money catastrophes tend to be in some sense averted. What does happen over time is that the system erodes as people simply lose faith in it and logic divorces from emotion. But because the elite essentially CONTROLS the system – all parts of it from the judiciary to the legislative and even the executive, both in the US and Europe, the ability to challenge elite sociopolitical and economics structures is always constrained.
As a result, we are not sure of how fast the unraveling happens. We believe it could take another five years to complete this cycle, although we also believe 2011 will be a particularly "shaky year." Of course we have been careful to point out that five-year timeline could be short-circuited by the elite itself deciding to move to some other sort of monetary system (presumably metals based). There are all sorts of considerations: Metals confiscation is a possibility; but so is the possibility that the elite will simply lose control of the monetary economy, which will then erode into some sort of private gold and silver standard along with, hopefully, free banking. We have no doubt the sovereign money crowd will have their say as well.
The elite's promotional campaigns have been less and less viable of late – surprisingly and even shockingly so. On the other hand, the stubbornness of the Anglo-American elite and its determination to move forward with all sorts of plans for global consolidation has surprised us as well. We believed that once the promotional elements of the elite's strategy were exposed, the thrust toward global governance would likewise begin to erode. That doesn't seem to have happened yet.
Presumably this is because the one thing the elite continues to control whether or not its promotions are working, is government itself and the levers of power on all levels in both the US and Europe. As we pointed out in the other staff report in today's issue, what the powers-that-be are doing currently does not make much sense. They seem convinced, this intergenerational, familial elite, that if they can only put the correct legislative instruments into place that this will give them the authority to govern globally – which is apparently their goal.
Conclusion: From our point of view this does not make much sense. The economic crisis and the truth-telling of the Internet has seemingly shattered their franchise, which depended on secrecy. Insanity, in our view, is doing the same thing over and over when it is obviously not working – especially when the curtain has been lifted! From our point of view, there will likely be massive changes in Western societies over the next decade, but it may well not be those that the elite planned. The question – and it is important one for investors and citizens of the West alike – is not so much at this point whether big changes will occur but when. And how high will money metals go in the meantime. Our bet is a lot.
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Posted by 4irw4y on 11/04/10 02:13 PM
I'm worrying for the Continental Europe.
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Posted by 4irw4y on 11/04/10 12:44 PM
I'm just back from taiga. No global predictions for today.
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Posted by Lupus Yonderboy on 11/03/10 05:02 PM
@AmanFromMars
"Now why would you try to misdirect everyone here?"
Oh! You scoundrel! I have made no such attempt to misdirect and speak only from personal experience. The story I tell of the wandering cash is true and no more than a few weeks old. It is no longer possible for a small businessman to conduct legitimate trade with cash, nor can one protect himself from the ravages of a declining dollar by denominating his assets in another currency without paying the troll under the bridge to oversee the transaction.
I bow to your right to act as you see fit. Take your US Dollars from the bank and trade for the venerable Swiss Franc. Place those bonds in a drawer and watch as the US dollar becomes toilet paper, then try to use those bearer bonds you have secreted in the drawer to conduct business.
Report back on your experience, or seek out a self-styled master to hit you with a stick; I only charge 2% to hit you with the stick :)
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Posted by 4irw4y on 11/03/10 01:36 PM
Till things go 0,5% worse than supposed, there's a story to paint the fence of waiting in a Tom Sawyer's manner.
A bloke walks down the alley. Suddenly an Inner Voice speaks to him:
IV – Look right.
He looks right and sees a case standing there.
IV – Open it.
He opens it -- Boom! a Million dollars.
IV -- Let's gamble!
CASINO.
IV -- All for 00!
Zero, indeed.
IV -- Now, all for Red.
Black.
IV -- OOPS!
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Posted by 41rw4y on 11/02/10 11:11 PM
An interesting admission, DB, which would be productive to ponder at, as I'm a zen-addict to some extent. Constant Messaging welcomes you.
Also snowy outside? US has shower rains. November green, pink and yellow colours. And, aren't friends welcome even when they drag you out ou a cosy place for an immediate urgent walk?
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Posted by 41rw4y on 11/02/10 10:42 PM
status: Not denominated
Reply from The Daily Bell
Ha, why don't you just reappear? You are like an animated crossword puzzle and your cover has been blown! You have Internet friends who miss you. (God knows why.)
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Posted by 41rw4y on 11/02/10 10:12 PM
@ prev DB re "Another paper..."
In terms of the law ... don't know. Please don't bother yourself.
I have a screenplay for St.Barbie in economics. The most indebted companies will probably be intended to buying metals and puting the balls in one pocket.
Can you imagine Armani suits racing through the vault's mainline on carts with bullions? Kicking Ladies! Streetracing! Steamroller! (As you can see, I always try to use possibly less exclamations).
Go Juli-Anne.
"Korean sector is closer to you than mine, gimme the fore"!
I wonder if they have a yellow roadmarking on the mainline ...
Reply from The Daily Bell
Does the name "Weeble" ring a bell?
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Posted by 41rw4y on 11/02/10 09:55 PM
Another paper shower friday in federal press-release. I imagine the cart race down there.
Reply from The Daily Bell
More lawsuits?
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Posted by Clark on 11/02/10 12:24 PM
I've heard of people using gold for doing things such as paying a dentist. At a gun show I went to, two tables had signs saying they accept cash, silver or gold.
I guess networking is going to be very important in the beginning. In America, everyone is a de-facto criminal. The prosecutors mantra, "Show me the crime and I'll find you the man."
For every instance I face today I find myself asking, "Self, if this were 1930's Germany, what would you do?" It seems like you could be doing nothing and still they would find something wrong.
Click to view link
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Posted by AmanfromMars on 11/02/10 12:17 PM
"A bank run sounds like a wonderful, peaceful form of grass roots protest, but it would be practically impossible." .... Posted by Lupus Yonderboy on 11/2/2010 8:09:28 AM
Of course it is practically possible, Lupus Yonderboy. Now why would you try to misdirect everyone here? And who and/or what would be the beneficiary of such disinformation and status quo non-action?
"Curiouser and curiouser, cried Alice" saith we on discovery of a mole in a hole.
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Posted by Lupus Yonderboy on 11/02/10 08:09 AM
@Hognutz
"Why put it back? Buy tangible assets."
Yes, you're right of course but there is a valid reasons our culture invented banks; namely physical asset protection. In our current polite society it is illegal to prepare an effective physical defense of tangible assets and anyone who chooses to follow that path as an individual does so as either an outlaw or a victim. I think it is not practical to withdraw a significant fraction of your accumulated wealth from our banking system without having made prior arrangements with a private bank to provide security and liquidity, however today there are no private banks.
Have you personally attempted to use either cash or gold in any real business transaction? It doesn't work. The so called anti-money laundering and terrorist funding regulations introduced over the past decade have made anyone who tries to use cash or cash equivalents in a transaction involving more than a few hundred dollars a de-facto criminal. It cannot be done even in backwater countries like Dominica and Nevis. I expect you might still be able to purchase illegal drugs with physical currencies and precious metals, but you will not be able to legally purchase a car or a house, nor will you be able to pay your taxes.
A bank run sounds like a wonderful, peaceful form of grass roots protest, but it would be practically impossible.
Reply from The Daily Bell
"The so called anti-money laundering and terrorist funding regulations introduced over the past decade have made anyone who tries to use cash or cash equivalents in a transaction involving more than a few hundred dollars a de-facto criminal."
Great observation. Again, we see the "war on terror" is a way to introduce financial controls - aimed of course at the free use of gold and silver.
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Posted by Jeanna on 11/02/10 07:07 AM
And, I am wondering, since the PE habitually replay their scenarios, if they're about to replay the Currency Act of 1764? Why are they printing and storing huge quantities of new "gold" shaded $100 FRNs? If these were just new art work for the $100 note, why aren't they printing up the other denominations? Is the $1 note going to be replaced by $100 note due to the amount of FRN's soon to be in circulation?
Reply from The Daily Bell
We have long predicted the return of a gold standard of some sort or even a gold and silver standard arising spontaneously.
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Posted by Hognutz on 11/02/10 02:49 AM
@Lupus,
Why put it back? Buy tangible assets.
The whole purpose of the bank run would be to stop the banks from being our "master", and taming the savage beast. By doing so we would become the master of them.........
Granted I am looking at it from a "dollar" point of view.
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Posted by Lupus Yonderboy on 11/02/10 12:55 AM
@ Hognutz
I'm game, but has anyone really considered the personal consequences of such a "run" on the banks? I recently discovered that after removing CHF 20,000 from a bank in 2008, I will need to buy dollars with it in order to get it "back into the banking system". This is not an isolated policy of a single bank or country. I have found no one who will take these notes; not in 5 different countries. I must either buy dollars at an absurd loss or find someone other than a bank that will accept them in exchange for goods and services.
If you take your "currency" out of the system you may well find that it costs you to put it back. Wouldn't it be a hoot if everyone took their funds in cash only to discover that the Bank was going to charge a 4% handling fee to put it back? How badly do you want to sleep on your money?
Reply from The Daily Bell
Thanks! We looked and could not find this article on Google. Strange, eh?
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Posted by Bionic Mosquito on 11/02/10 12:03 AM
@Lupus Yonderboy
Forgive me. I think paraphrase was the wrong word on my part. I meant to offer a counter example to illustrate a point. Perhaps it was the wrong approach on my part.
In any case, if I understand your further comments, yes we appear to hold a somewhat similar view.
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Posted by Lupus Yonderboy on 11/01/10 11:24 PM
@Bionic Mosquito
" May I paraphrase your question: by what means does a warring man contest this control? "
No, I think you may not paraphrase it that way. I am well aware of the difference between the words "peaceful" and "warring". Had I chosen to use the word "warring" in the sentence I would assuredly done so myself.
I do have an answer in mind and yours is not so far off. I think the key lies in the word "organized" when I said:
"When an entity controls all of these things it has absolute control of any organized society."
We offer ourselves in bondage to these "elite". We pay for the opportunity to enter the bazar with our servitude. The high ground that is being protected is not one of produce, it is market share.
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Posted by Breck on 11/01/10 11:11 PM
I forgot to mention that the manipulation was via shorts. With the inexorable rise in price, uncontrollable, they were getting squeezed, squeezed, squeezed!
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Posted by Breck on 11/01/10 11:10 PM
Posted by Dan on 11/1/2010 8:07:56 AM
In the US, we may get a sound money advocate overseeing the financial subcommittee in the House of Representative if the republicans win tomorrow. I am speaking of Ron Paul. If this happens, I hope he can implement currency competition, allowing Gold and Silver to freely compete with Federal Reserve Notes. I my opinion that would be a game changer.
Frankly my dear :-) I'd settle for auditing the FED. If he can do that he'll have done plenty. I don't hold out much hope for the good Doctor being able to institute real money just yet!
This discussion (intermittantly) of the recent announcement, by Mr. Chilton of the CFTC, re: silver manipulation, is actually something I know a bit about! In the sense that I began reading and corresponding with Ted Butler some several years ago.
My thoughts are that there were too many people who had become aware of the fraud in silver markets. It was just becoming too difficult to continue to stonewall it.
And I don't think that it is entirely impossible that the CFTC finally, somehow, got an honest man in charge. Stranger things have happened.
And lastly, yes Dear Bell, the market! There are a helluva lot of folks out here in the hinterlands who are and have been buying silver with every little bit of disposable FRNs we have. That's a strong market force. I remember quite well 2 years ago I'd go down to my friendly, local coin dealer/business, to buy some silver and the clerk would shake his head and say he didn't have ANY silver to sell!!! DIDN'T HAVE ANY TO SELL? And the spot price of silver at that time was like cheap. We both agreed that it was very, very, very strange in the extreme, that the spot price of silver could be so low when it was obviously in short supply. Like, duh!
Now this was a simple, common sense, perception down at the proverbial grass roots level. So, why not give the Devil his due? Maybe, just maybe, there was a little bit of sunshine piercing the gloom and doom.
(And if you knew me like my wife does :-) you'd raise your eyebrows at my uncharacteristic optimism!).
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Posted by AmanfromMars on 11/01/10 11:09 PM
Will Daily Bell ringers please note that whenever one sees on a post .... Click to View Link / ..... one needs to delete the / from the returned hyperlink in the address bar of your browser to access the page provided.
It does happen occasionally DB that such a glitch, which prevents full and accurate rendering of a web page, escapes your attention, and its simple, self help solution, as shared here, allows your fans to see what is being thought by others.
"So, I leave you with a question; by what means does a peaceful man contest this control?" ..... Posted by Lupus Yonderboy on 11/1/2010 9:31:37 PM
Oh, that is both extremely simple and so beautifully complex as to be something which corruptible and perverted elites can never hope to achieve and have use of against animal kingdoms and humanity and those who would be so gifted .... he plants new thoughts and abilities in your head with the sharing of novel ideas easily demonstrated with a most sophisticated of MkUltra Sensitive Neuro-Linguistic ProgramMING Projects ...... and thus can/is Reality on Earth led by AI and ITs Civilised CyberSpace Promotions.
And please, let no one here waste any of anyone's time in a barren negative effort which would seek to dispute the premise and share one's own doubts and reveal one's own lack of necessary ability in the field, and raise an unwarranted and ignorant opposition which would posit against that fact, whenever it is so boldly and transparently stated as being virtually available and really true.
What you can be sure of in those cases, is that you will arguing alone and against yourself, for the Program is Up and Running and Irreversible and Unstoppable.
And welcomes All SMART Input to Output in Novel Content to Webs and Spiders and Joint Magical Mystery Turing AIdDVenture Partners.
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