The Volcker Rule was supposed to be implemented and enforced by now. As part of Dodd-Frank, the rule set out to establish limitations on proprietary trading by financial institutions. But the “big banks” have successfully delayed its implementation. The “Too Big to Fail” industry is not only making money with their prop desks, but also helping to keep the illusion of a sound dollar. Using evidence provided by, of all places, the CME and its daily delivery reports, one particular firm is shown to be isolated in the efforts to keep precious metal prices contained.
Every trading day, the CME releases a report like this one, identifying the details behind all futures contracts being executed for physical delivery.
So who’s doing the selling and who’s doing the buying? Data from these reports show that since at least the beginning of 2013, JP Morgan has been on the opposite side of the trade against most of the other players in gold and silver.
These first pair of charts show the net daily change in physical deliveries by all futures traders who are either issuing (delivering) or stopping (receiving) metal, excluding JP Morgan’s client and proprietary trading desks. (Click on the charts to enlarge.)
If JP Morgan’s activities are ignored, on a net basis there’s more accumulation of physical gold rather than selling and that trend has consistently grown since the beginning of the year. For silver however, it’s the opposite – more selling of physical silver than buying.
Now let’s find out who everyone is buying gold from and to whom much of that silver is being delivered. The following pair of charts show the same data, limited only to JP Morgan’s client & proprietary trading desks.
These charts are perfect mirror opposites, which is expected since the issues and stops for every trading day should always be a zero-sum result. But what is alarming is the consistency of the trends and the magnitudes of the issues and stops. One entity has been steadily increasing its supply of gold to the market, which now stands at 2.2 million ounces. That’s over 70% of all the gold deliveries year-to-date (about 3 million ounces). And that same entity has taken a net delivery of 4 million ounces of silver from other traders, which is less intensive as it only represents 10% of the 35 million ounces delivered year-to-date by the entire market.
Let’s break it down further. JP Morgan’s prop desk has a net issuance of 1.5 million gold ounces since the beginning of the year. That represents 50% of the total gold deliveries year-to-date. And in silver, they had been buyers until April 29 when they issued 7 million ounces from their proprietary account. On April 29th, that 7 million ounces represented 25% of the 28 million total ounces of silver delivered by the market year-to-date. (It’s interesting to note that it was also 100% of all the deliveries made that day!)
JP Morgan’s client account has issued nearly 700K gold ounces so far this year. Their clients’ silver stash, however is still accumulating.
In their gold trading, it doesn’t look as if JP Morgan is trading against their own clients. On the contrary, they seem to be working in concert. But in silver, their prop desk hasn’t made a move since the first day of the May contract delivery, when they dropped those 7 million silver ounces. A large chunk of that went to their own clients, who’ve continued to accumulate in the first weeks of May.
So here we have physical evidence beyond that which has been continually displayed in the CFTC’s COT & BPR reports. The same conclusion can now be reached via the physical or paper market perspectives.
Just imagine if JP Morgan’s prop desk had been terminated as the Volcker Rule went into affect. Who would have supplied all that gold to the market? Without the prop desk, the futures contracts would have been distributed more evenly across the market. There’s no doubt that prices of precious metals would be a lot higher without JP Morgan’s concentration.
We invite readers to verify all this for themselves. Historical reports may be difficult to find, as the CME’s web site doesn’t appear to make them available, though they do provide high-level summaries by month and year-to-date. But here’s a zip file containing all their daily reports since the first of the year, which give all the juicy details.
Maybe it’s time we all wake up from our slumber. Maybe it’s time to understand the things that we’ve been too lazy to learn for ourselves instead of relying on someone else to tell us what to think! We have God-given rights as human beings, yes! But along with those rights, we have responsibilities we must accept – each and every one of us!
Here’s a start…. understand what money truely is!
“If the American people ever allow private banks to control the issue of their money, first by inflation, and then by deflation, the banks and corporations that will grow up around them will deprive the people of their property – until their children wake up homeless on the continent their fathers conquered.” – Thomas Jefferson, 1802
“He who sacrifices freedom for security deserves neither.” – Ben Franklin
For more information on the Federal Reserve, the way it works and its history, see this article. And here’s an interesting look at the way the US fiat currency has been debased over the last 100 years.
JP Morgan’s electricity trading desk will essentially be sidelined for 6 months next year because of actions taken by the U.S. Federal Energy Regulatory Commission (FERC). According to the Los Angeles Times, the regulations authority accuses JP Morgan of misrepresenting facts and filing false information in its reporting and communications with the California Independent System Operator known as Caiso.
This all stems from August last year, when FERC started investigating JP Morgan Ventures Energy Corp. for alleged abusive bidding activities and potentially manipulative trading practices in the energy markets. Then, earlier this year in July, FERC sued JP Morgan because it had refused to turn over internal emails FERC had requested during its investigations.
Of course JP Morgan officials deny any wrong-doing, excusing any reporting deficiencies as inadvertent mistakes that were made in “good faith.” But in its decision, FERC states “no showing of the respondent’s intent or mindset is necessary in order to demonstrate that a violation” has occurred.
So here we have a regulatory agency that has the integrity and courage to stand up to the banking giants when they see clear violations and market manipulation. If only the CFTC would take notice. In their 4+ years of investigating the alleged silver market manipulation by JP Morgan, nothing has resulted.
In his letter to subscribers, Ted Butler included the following:
While we hear excuses from the CFTC about the need to prove intent before bringing charges of manipulation against JPMorgan in silver, FERC insisted that intent was a side issue. FERC’s got it exactly right, in my opinion. If someone is messing with the market, there is no need to pussy foot around intent; stop the messing around first and then sort out the details later. We can decide in time if JPMorgan is manipulating silver intentionally or by accident; the important point is to first stop the manipulation. Not every homicide is premeditated and to be prosecuted as murder one; some homicides are manslaughter and not premeditated. That doesn’t mean we tolerate people killing people if the intent isn’t clear. Likewise, JPMorgan is clearly manipulating the price of silver by virtue of their concentrated short position and status of being the dominant seller of new short contracts. First the CFTC should make them stop; then charges can be decided upon.
But then again, there aren’t any FERC members within the inner circle of elite central planning known as the Plunge Protection Team.
In this RT episode, Lauren Lyster interviews CFTC Commissioner Bart Chilton and they discuss:
The ongoing investigation of alleged silver market manipulation and Mr. Chilton specifically admits he’s seen one market participant have a controlling 30% concentrated position in that market. (It should be noted that this 30% position dominance is on the short side of the market. And the reader is urged to remember that in 1980, the Hunt Brothers were charged with having only a 20% dominance on the long side of the market.)
The difficulty in winning a legal action suit that alleges manipulation is in proving intent.
The increasing evidence of fraud in the market place, exemplified by such cases as MF Global and Peregrine. Mr. Chilton’s recommendations on protecting against future occurrences include the creation of an investor insurance program like that savers are provided with by the FDIC.
The delay in Dodd-Frank rules and the fact that “government is slow and reactive.”
As Lauren Lyster’s Capital Account segment at RT reports, these fraudulent activities affect legitimate businesses, such as Treasure Island Coins Inc. Bullion dealers typically buy physical bullion which they resell to customers. In order to protect themselves from severe price fluctuations in the gold and silver markets, these companies hedge their physical bullion with contracts in the futures markets. As things went sour at PFG, its clients saw their spot-metals futures positions fall into the control of PFG’s primary credit facility – guess who… JP Morgan. Those positions are presumably being liquidated causing further losses to PFG clients, but possibly benefiting JP Morgan, enabling them to profit from the lion’s share of suspected commercial short positions.
Here’s Jim Rickards explaining the Fed’s intentions behind Operation Twist, expectations on future gold prices, and the logistics behind the Currency Wars of the economic world today. Also, with Jamie Dimon & JPMorgan filling the latest headlines, Rickards gives his take on the parasitic institution of Rent Seeking, which has invaded both parties – Republicans and Democrats. Rent Seekers have taken the form of:
On the Democratic side, Public Sector Unions, who are inflating their latter years’ pay in order to retire earlier with better benefits than those in the private sector.
On the Republican side, Wall Street Bankers like JPMorgan and Goldman Sachs have been profiting from their proprietary trading and derivative schemes, while at the same time ensuring losses are covered by the taxpayers.
On both sides of the isle, though Rickards doesn’t specifically mention them, there are the Crony Capitalists. Solyndra, Enron, Halliburton to name but a few examples. As we slip into the future, the Rent Seekers are even able to manipulate the legal system, making it tougher to actually prosecute the cronies that are caught in the act (see MF Global).
Things are getting bad out there, folks. If you’ve worked hard all your life and have accumulated wealth, please see our Protect Your Assets series to learn how you can protect your wealth from being destroyed by this rigged economic casino.
Specifically, the President’s Working Group on Financial Markets was created in 1988 by the Reagan administration in order to prevent another market crash like that seen in October of 1987. This Working Group, sometimes referred to as the “Plunge Protection Team” consists of four members (today’s members pictured above): The Chairman of the Federal Reserve; The Chairman of the Securities Exchange Commission (SEC); The Chairman of the Commodities Futures Trading Commission (CFTC); The Treasury Secretary.
Their mission is to intervene in the markets whenever they feel it is in the best interests of the banking powers. Strong precious metals prices mean a weakened U.S. dollar. The paper futures markets are used to suppress the prices of gold and silver in order to maintain the illusion of a stronger dollar. As Chris Powell of GATA always says, “There are no markets anymore…only interventions.”
Butler noted that even though Chairman Gensler of the CFTC likely understands that citizens are “being screwed” by the manipulation, he’s unable to do his duties and enforce existing commodity laws against JP Morgan because this powerful Working Group has alternate goals.
Find more information about precious metals price suppression here.
In fact, many of the questions seemed to set Mr. Dimon up perfectly to expound on the banking institution’s view on the Dodd-Frank legislation. God forbid that position limits and the definition of proper ‘hedging’ should ever interfere with the bank’s ability to gamble with the people’s money, assured that losses are covered by the taxpayers, while gains are reaped only by banking insiders. Lauren Lyster of RT’s Capital Account gives a good behind-the-scenes account of today’s Senate Banking Committee interaction with the JP Morgan chief.
This is only today’s example of Crony Capitalism at work and it seems like every day it’s even more in-your-face than it was the day before. To see just how corrupt JP Morgan is thought to be, the RT Keiser Report is given below for review. As we get closer to the end game, when investors lose their wealth through less-than-honest financial firms, time is running out. Please see our Protect Your Assets series to learn how you can protect your hard-earned wealth.
Update May 16, 2012: In contrast with Jim Willie’s speculation below, a much more renowned Jim Rickards has a much more probable thesis on the JP Morgan loss. The trade was actually a bet on the spread between the bond index and the bonds themselves. Time ran out, resulting in the loss. Read about it at USNews.
Here’s an interview with Jim Willie (TheGoldenJackass) discussing his speculation on what’s really going on regarding JP Morgan’s $2 billion dollar ‘whale trader’ loss. Jim speculates that JPM’s declaration that it involved European bond investments that have gone bad doesn’t make sense because in the last 6 weeks those bonds haven’t changed so much to warrant such huge losses. More likely, according to Jim, is that these losses are much larger and they reflect losses in the credit derivatives markets. Furthermore, eastern nations like China are likely causing the rout in precious metals because they’re forcing the western commercial banks to sell to cover these losses in the derivatives markets.
JP Morgan has taken delivery of almost 10 million ounces of silver over the last month bringing its current holdings to just under 14 million. As the chart shows, something has changed and JPM is adjusting its strategy in the silver market.
According to analysis by Ted Butler, JPM has had an abnormally large short position of paper silver in the futures markets ever since they acquired Bear Stearns in 2008. He estimates JPM’s current short position to be 18,000 contracts, which represents 90 million ounces of silver.
The new strategy being employed by JPM is likely to be one of the following:
Acquire as much physical silver as possible to dump on the market, forcing silver prices to fall and enable JPM to unload its short position in the futures market. JPM takes a small loss on the physical silver and a huge profit on their paper futures contracts.
Acquire as much physical silver as possible prior to covering their futures positions. Depending on how quickly JPM covers, the loss on the paper contracts could be limited, while the long-term growth potential of the physical silver remains.
Acquire as much physical silver as necessary to enable delivery to those parties taking the opposite side of JPM’s short issues.
Perhaps some combination of all of the above.
Judging from past behavior of these Wall Street giants, one would suspect that JP Morgan is likely to chase after whatever gives them the most profits in the shortest time (option 1). However, Mr. Butler has noted that over the past year of frantic turnover in COMEX silver inventories (in and out movement) there has been some big underlying demand that has not been so obvious to the main stream. Whether JPM plans to dump their accumulated physical silver at some point is unknown, but generally folks buy when they expect something to go up.
Every day, more investors are becoming aware of the suppression of precious metals prices in the futures and options markets. It’s a serious issue and needs careful consideration. The following updates to this issue are posted in an effort to keep a historical record and to allow the reader an intial place to start in his/her own research.
September 24, 2014
Jim Rickards, author of the book, The Death of Money, gives a terrific overview of all the tools available to those who manipulate the gold market. He also reviews the strategy of the central banks and why the Fed ultimately wants a weaker dollar and why China would prefer, at least for the time being, lower gold prices. This is a MUST LISTEN interview with Anglo Far-East and the audio file can be found here.
More evidence from the past that those in high places wish to control the price of gold comes from a staff meeting of the former Secretary of State, Henry Kissinger in 1974. The discussion centers on how to go about the demonetization of gold in order to prevent Europeans, especially Western Europe, which has a higher concentration of gold holdings than the US, from using their gold to settle accounts and generate reserves, thereby undermining the dominant position of the US dollar. Read more at LibertyBlitzkrieg.com.
A careful and thorough reading of the CFTC’s announcement will reveal that nowhere is it stated that they did not find evidence of manipulation. The announcement only describes their exhaustive investigation, with over 7,000 staff hours spent on the case. The fact that their conclusion doesn’t state any specific finding, but rather only declares that no “enforcement action” will be executed “based upon the law and evidence as they exist at this time” is very revealing. As Chris Powell of GATA explains in this KWN interview, the US government under the Exchange Stabilization Fund Statute, the Gold Reserve Act of 1934, has legal authority to interfere in the precious metals or any other markets. So if manipulation was found to be occurring because of government intervention, the CFTC would be unable to bring any charges against the US government or any of the parties the government was using to carry out such activities.
September 24, 2013
Max Keiser interviews Andrew Maguire, who has gone public with information indicating that the CFTC was given more evidence of gold and silver market manipulation in June of 2012 from two more whistle blowers. And allegedly, these whistle blowers were blowing from the depths of the beast – they were both JP Morgan employees. (Maguire’s interview starts at the 12:30 mark.)
March 14, 2013
Chris Powell of GATA on CNBC Asia continues to explain GATA’s allegations of western central bank suppression of gold prices via leasing and swap arrangments.
December 18, 2012
Serving as a brief review of many of the issues already documented on this page, Lauren Lyster interviews GATA’s Bill Murphy & Chris Powell.
November 14, 2012
Bart Chilton is interviewed on RT, where he admits to seeing one participant in the silver market hold a 30% concentrated position. Of course, although he doesn’t explicitly state the nature of this position, it should be noted that it is a short position that trader held. When the Hunt Brothers were charged with a manipulative position of the silver market in 1980, it was only a 20% position, but it was on the long side.
The fact that not only precious metals markets, but most all markets are potentially rigged – and legally, due to the Gold Reserve Act providing the Exchange Stabilization Fund, managed by the US Treasury, with the ability to secretly intervene in any financial market, while being exempt from congressional oversight and questioning.
The debasement of US coinage in 1965 and President Johnson’s warning to potential hoarders of silver.
The selling and leasing practices of western central banks.
German government concern regarding its own central bank’s gold transactions as well as its practice of storing the national gold reserves abroad at the Bank of England, Bank of New York and Bank of France, where its likely that the gold has been used in swap and/or leasing schemes to help keep the price controlled.
GATA’s never-ending battle to obtain information (using FOIA) regarding gold transactions by the Fed and US Treasury.
The article has many valuable and interesting links, supporting central banking intervention in the precious metals markets.
October 13, 2012
In the following video, Lars Schall interviews Dimitri Speck, author of the German-language book “Geheime Goldpolitik” (“Secret Gold Policy”). Dimitri summarizes the history of the price capping schemes the central banks have undertaken in the gold and silver markets since 1993.
September 24, 2012
Here’s an article over at the International Man site by Jeff Thomas. The article gives a somewhat simplified overview of how banks control the price of gold as well as a likely scenario of what will happen when more people start seeking physical bullion and avoid its paper derivatives (i.e. ETFs & pooled accounts) as they realize there isn’t enough physical to go around. This, combined with the comments section, provides for an interesting read.
September 6, 2012
Bill Murphy (GATA) and Lauren Lyster (RT) review recent developments in the ongoing precious metals price suppression activities and the investigation by the CFTC. See this page for more information.
Dimitri Speck has done some investigative research into the $22 gold price plunge on June 7, 2012 using the COMEX’s own trading records. He published his findings over at Safehaven.com, which reveal that the price was smashed in less than a second at 9:21 PM at the 20-second mark. Only High Frequency Trading (HFT) algorithms could accomplish such a feat. The price was thereafter suppressed for a couple hours, allowing the financial institution(s)’ employing the HFT technology to reap quick profits. “This was a well-defined incident in thin trading, limited to a short time period and to a single market. These conditions make it ideal for a successful investigation by the regulatory authorities.“
August 7, 2012
Lauren Lyster of RT interviews Chris Powell of GATA regarding the Fed’s surreptitious suppression of the gold (and silver) price. The discussion yields a good understanding of the situation. Powell reminds the audience that in 1965, President Johnson, as he signed the Coinage Act of 1965, warned silver investors not to invest in silver – not to drive the price up – because the US government would dis-hoard from its strategic silver stockpile to rig the silver price. (See actual remarks of silver hoarding by President Johnson here.) So, since 1965, the US government has pledged to rig the silver market. Another astonishing fact conveyed during the interview is the establishment and use of the ESF (Exchange Stabilization Fund) in order to trade (intervene) in any market the Treasury chooses. Only the President and the Treasury Secretary have the legal authority to control and have knowledge of the activities of the ESF and it is exempt from any inquiries including immunity from any efforts based on the Freedom of Information Act.
July 30, 2012
Back in September of 2009, Zero Hedge claimed that this conspiracy revolving around gold price suppression was “no longer a theory, … merely sad.“ The evidence Zero Hedge uncovered, the smoking gun, was a memo written in 1975 by then Chairman of the Fed, Arthur Burns. The memo was addressed to President Ford and outlined a disagreement between Fed policy and U.S. Treasury Policy on the issue of whether or not central banks of the world should be free to buy gold from one another at market prices. Even back then, in 1975, the official price of gold was $42.22/ounce, but market prices had been trading between $160 and $175. The Treasury was apparently open to such free market activity, but the Fed was opposed. The Fed’s position was further clarified: Every country should have limits (ceilings) on their individual gold holdings. The reasoning the Fed gave for their position was four-fold:
There was no urgency to allow free market activity on the gold price to support central bank balance sheets because countries had relatively easy access to “borrowing facilities” or could even sell their gold or use it as collateral for loans.
The gold issue should not be discussed separately. The “desired shape of the future world monetary system” may be “prejudged” if the policy on gold were decided in the absence of a consensus of that system.
It was believed that France and other countries were striving for a higher gold price in order to increase the “relative importance of gold in the monetary system.”
Higher gold prices would allow countries to revalue their gold holdings, as France had already done at the time. This would result in massive “liquidity creation” and frustrate efforts to keep inflation under control.
Posted over at GATA.org, the latest edition of Things that make you go Hmmm… by Grant Williams explains how gold and silver market manipulation is no longer the realm of conspiracy theorists. The LIBOR manipulation scandal has proven that the financial elite are capable of exercising long-lasting, inconspicuous maneuvers to prolong the illusion of fiscal integrity. Even the main-stream media is picking up on this as seen in this CNBC interview with Cheviot Asset Management Investment Director Ned Naylor-Leyland:
CNBC Asia interviewed GATA’s Chris Powell regarding central bank intervention in the gold markets and their motives behind their actions. They’re able to suppress the price using paper instruments that are supposed to have physical gold backing, but do not. He estimates that 70-80% of all the gold people think they own doesn’t really exist! See the CNBC interview here.
June 13, 2012
In his letter to subscribers today, Ted Butler has finally come to the conclusion that the U.S. government is not only aware of JP Morgan’s manipulative short positions in the silver commodity futures market, but also intent on allowing them to continue to suppress the price of silver using those paper derivative positions. Read more about it here.
April 30, 2012
Today, when the gold and silver prices were slammed at the New York NYMEX open, the gold price was instantly down about $15/ounce (1%). For those precious metals investors who see this occur so frequently, they’re used to seeing the prices manipulated in such a manner. But the main-stream media outlets still refuse to report the issue objectively. The Wall Street Journal reports the incident as the result of a “fat finger” trading entry – a simple human error of sorts.
On the other hand, Russia Today’s Lauren Lyster interviews Bill Murphy of GATA on gold price manipulation and specifically mention JP Morgan as the institution behind the futures market rigging.
April 21, 2012
In this interview, Jim Rickards, author of Currency Wars, gives some insight on the intentions behind central banks’ desire to see gold’s price rise, but in an “orderly way.” That is, the central banks manage the price so it doesn’t explode to the upside violently. Overall, however, a slow and steady rise in the gold price achieves their objective of debasing the paper currency, thus enabling debt to be paid off easier and also allowing exports to increase GDP.
In the April issue of The Casey Report (subscriber protected), Casey wrote an article comparing the current gold bull market with that of the 1970’s. He also took up the issue of precious metals market manipulation. While he doesn’t dismiss the idea outright, he does ask some important questions, which he believes need answering.
In response, here is an article from James Turk entitled, Some Answers to Doug Casey’s Questions, which discusses in some detail, the motives and methods behind the precious metals manipulation scheme.
And, weighing in with their grand arsenal of proof, GATA responds too.
April 7, 2012
Here’s Mike Maloney interviewed on Russia Today where the gold and silver price suppression schemes are discussed. Gold leasing by central banks and Futures paper contract selling are among the concepts reviewed.
April 6, 2012
CNBC has interviewed Blythe Masters, Head of Global Commodities at JP Morgan, and discusses the speculation of precious metals manipulation.
Masters indicated that JP Morgan doesn’t hold the positions for itself, rather they are client positions. In this GATA dispatch, Chris Powell takes up the charge that this is indeed the truth and that the client JP Morgan is working for is actually the Federal Reserve.
The beneficiary of such manipulation is any entity which owns assets based on fiat currencies. It should be understood that a rising price of gold in terms of US dollars is indicative of a weakening dollar. So, that’s one of the primary motives for these institutions to suppress precious metal prices – to keep up the appearance of a strong dollar, which maintains their dollar-based wealth.
In addition to the video and audio links below, there have been some excellent articles written and for those that prefer to read about the manipulation, here are a couple suggestions: