April 28, 2016
There has been considerable hoopla and
celebration, following Deutsche Bank’s
, in a U.S.-based litigation against this Big Bank regarding
precious metals manipulation. The enthusiasm surrounds Deutsche Bank’s pledge
to “cooperate” in providing evidence to be used against the other defendants in
that litigation: HSBC and the Bank of Nova Scotia (and possibly UBS, as well).
It is painful to be a naysayer here. The
manipulation and suppression of precious metals prices is one of the more
odious blotches on what we call “markets”. However, there is unfortunately no
basis for renewed optimism that this current litigation will have any
meaningful impact on precious metals manipulation – with respect to either
silver or gold.
There are several reasons for not
considering this to be the turning point in precious metals markets which
several commentators have suggested. The most important reason here is the subject
matter of the manipulation itself. The lawsuit which reaped this settlement is
based exclusively on manipulation of the silver fix (and gold fix).
As has been explained
, manipulation of the silver and gold “fix” is only the tip of
the iceberg regarding the manipulation of precious metals markets. Of far
greater significance are the following categories of fraud and manipulation:
- Naked shorting
- Bullion “leasing”
- Algorithm manipulation
Naked shorting is an endemic form of fraud
in our pseudo-markets, due to lack of regulation and enforcement of this crime.
We can only assume that this is particularly egregious in precious metals
trading, as the short positions in these metals is grossly disproportionate to
shorting activity anywhere else in the spectrum of commodities.
So-called bullion leasing is a form of
fraud and manipulation which has been discussed by many other commentators, as
well as in
. “Gold generates no income.” This tautology is true with
respect to any commodity.
The only way to produce revenues from any
commodity is to use it (i.e. consume it), or sell it. In either case, it requires
surrendering possession. Consequently, there can be no legitimate business
purpose in “leasing” any commodity, only nefarious ones. In the case of
(central bank) bullion leasing, the fraudulent modus operandi is well known.
…central banks stand ready to lease gold in increasing
quantities should the price rise.
Testimony of [Federal Reserve]
, July 24th, 1998
So what? Central banks “stand ready” to
temporarily transfer possession of their gold to some third party. In what way
does that counteract a rising gold price, the clear intent of Chairman
Greenspan’s testimony? There is no
way in which such a transaction could impact bullion markets.
The illegitimate way is well known. Western
central banks “lease” their gold to “traders” (i.e. the Big Banks). The bankers
then short the gold onto the market (manipulating the price lower), thus
requiring them to
of that gold, should the party on the other end of the
transaction take delivery of the metal being traded.
The gold is gone, forever, but it remains
on the books of the central banks: the phantom
of which Western governments continue to boast. Countless,
thousands of tonnes of gold have been leased onto the market during this era of
manipulation. We don’t know the precise level of fraud with respect to central
bank bullion “leasing”, because (of course) these institutes of
permit no full, public audits of their books, ever.
Algorithm manipulation is undoubtedly now
the most important category of precious metals manipulation, just as it is with
respect to price manipulation throughout our markets. This has been well
So-called “HFT trading” (i.e. computerized
algorithm trading) now dominates all trade activity, in all markets. The
evidence of manipulation, particularly in U.S. markets, has now been clearly
revealed and defined through
into this form of market crime. That research showed that:
75% of all U.S. equities were subjected
to significant levels of algorithm price manipulation.
This manipulation is not only
endemic, it is
algorithm manipulation was strongly “correlated”, meaning it was being
controlled by a single Invisible Hand – the Big Bank crime syndicate which
regular readers know as
Throughout the last, five years of
relentless price suppression, we have seen clear technical “break-outs” in the
price of gold and silver, only to see prices quickly reverse.
It is true that even legitimate markets
occasionally send false (technical) signals. However, both
have been priced at only small fractions of any minimum, rational price which
we could possibly assign. When strong, bullish technical indicators are
accompanied by strongly bullish fundamentals,
legitimate markets never reverse in such a manner.
This is why the mainstream media (a
tentacle of the One Bank) invests so much time and effort with their own,
of gold and silver, creating their own, bogus “fundamentals” which they then
hype as an “explanation” of the absurdly fraudulent prices of silver and gold.
Note additionally the pattern of silver
trading over the past 5 years. Silver is both a much smaller market than the
gold market, with much more volatile demand. For both of those reasons, the
price of silver
must be more volatile
than the price of gold, yet over the past five years we see precisely the
We see a pseudo-market which is being
ruthlessly suppressed. Further indication of this comes by looking at the
technical break-outs in the price of silver versus break-outs in the gold
pseudo-market. Silver break-outs are instantly attacked, and the price is
hammered lower, while gold break-outs occasionally are allowed to gather a
little momentum, before then being illegally reversed. Indeed, it is precisely
this previously demonstrated omnipotence which prompted the
that the current “rally” in gold and silver is a fake-rally.
The fact that silver is held in a much
tighter choke-hold reflects the differences in the fundamentals of these
metals. Physical inventories and stockpiles of silver are undoubtedly much
smaller than those of gold, in relative terms. The price of silver has been
suppressed to a much more extreme degree. This means that the upward
price-pressure on silver is much greater than with gold, and the capacity of
the “market” to withstand any stampede of bullish demand is much more limited.
The Big Bank crime syndicate is much more afraid of silver than gold, and we see
this clearly reflected in the pattern of price manipulation. The price of
silver is never allowed to gain momentum, for fear that once “lift off” was
achieved with silver that there would be no way to reverse either a price
spiral, nor prevent some final, catastrophic implosion of inventories.
This brings us to the silver fix, and the
Deutsche Bank settlement. The silver fix and gold fix were never anything more
than minor tools of manipulation. At two moments each day; the banking crime
syndicate “fixes” gold and silver prices. This is useful for defrauding
contracts based upon the prevailing “fix” in gold or silver, but it has no
significant impact on overall price manipulation.
Exposing such manipulation will do nothing
toward preventing the continued, systemic manipulation of gold and silver
prices, via the much more potent weapons of naked shorting, bullion leasing,
and algorithm manipulation. Deutsche Bank was never accused of crimes of this
nature in this lawsuit, thus its “cooperation” does not extend to providing
information about such manipulation. However, by settling its own suit, acknowledging
liability, and “confessing” the
manipulation of the gold-fix and silver-fix by other Tentacles, the One Bank
pretend that “manipulation” has
now been eradicated from these markets.
This brings us to the final reason why the
Deutsche Bank legal settlement is (unfortunately) much ado about nothing. It is
the settlement of a lawsuit, not a conviction for the
crime of illegally manipulating the gold and silver pseudo-markets.
Deutsche Bank acknowledged civil liability for its actions,
not criminal guilt.
These fix-manipulation lawsuits were
launched in both the United States and Canada. Do we see the pseudo-regulators
or pseudo-justice officials in either Canada or the U.S. announcing (criminal) investigations
of the obvious crime for which Deutsche Bank has acknowledged its culpability?
Any real “investigation” might stumble upon
the more potent forms of price manipulation discussed previously, and have some
real, lasting impact on the serial manipulation of the prices of these metals.
Civil lawsuits, no matter what their outcome, have no lasting impact on such
systemic criminal activity. All that the victims of manipulation can do is
launch additional suits in the future, since “justice” is a commodity which no
longer exists in markets – the playground of the Big Bank crime syndicate.
As regular readers are already aware, the
One Bank is now able to
its bogus “Monopoly money” in literally infinite amounts. No matter how much of
its worthless confetti it is forced to shower upon litigants (now or in the
future), such lawsuits could never have any deterrent effect on these financial
Even more appalling, when the Big Banks are actually caught-and-convicted
perpetrating one of their serial
, such convictions never provide any actual law enforcement. A token
“fine” is paid, and then the Big Banks go right back to committing the
. Indeed, the U.S. Department of (pseudo) Justice has now formally
that it will never punish
for their corporate crimes.
In the face of such systemic, unobstructed
criminality, the token “victory” in an aspect of precious metals
price-manipulation which has little overall relevance is trivial. Real
victories will only come with real justice. The latter no longer exists in our
corrupt nations, thus we should not be holding our breath for the former.
Jeff Nielson is co-founder and managing partner of Bullion Bulls Canada; a website which provides precious metals commentary, economic analysis, and mining information to readers and investors. Jeff originally came to the precious metals sector as an investor around the middle of last decade, but with a background in economics and law, he soon decided this was where he wanted to make the focus of his career. His website is www.bullionbullscanada.com.
The views and opinions expressed in this material are those of the author as of the publication date, are subject to change and may not necessarily reflect the opinions of Sprott Money Ltd. Sprott Money does not guarantee the accuracy, completeness, timeliness and reliability of the information or any results from its use.