Trader blows whistle on gold & silver price manipulation
Metal$ are in the pits
There is no silver lining to the activities of JPMorgan Chase and HSBC in the precious-metals market here and in London, says a 40-year veteran of the metal pits.
The banks, which do the Federal Reserve’s bidding in the metals markets, have long been the government’s lead actors in keeping down the prices of gold and silver, according to a former Goldman Sachs trader working at the London Bullion Market Association.
Maguire was scheduled to testify last week before the Commodities Futures Trade Commission, which is looking into the activities of large banks in the metals market, but was knocked off the list at the last moment. So, he went public.
Maguire — in an exclusive interview with The Post — explained JPMorgan’s role in the metals pits in both London and here, and how they can generate a profit either way the market moves.
“JPMorgan acts as an agent for the Federal Reserve; they act to halt the rise of gold and silver against the US dollar. JPMorgan is insulated from potential losses [on their short positions] by the Fed and/or the US taxpayer,” Maguire said.
In the gold pits, Maguire sees HSBC betting against…….
…..read more HERE
It is inevitable that the big traders and hedge funds will push the naked shorts to the wall by asking for physical metal. We could therefore see more hedge funds switching out of GLD like Greenlight Capital did last summer, which leads to the second likely outcome. If we get a squeeze on the naked shorts, the sky is the limit for precious metal prices. – from the article below
A “New Dynamic” in the Gold Market”
by James Turk – Free Gold Money Report
April 1, 2010 – The shorts in gold – and particularly the shorts in silver – felt some pain today. Gold climbed $11.80 to close on the Comex at $1125.10, a 1.1% gain for the day. Silver did nearly twice as well, up 2.1% for the day and ending at $17.876, the highest in ten weeks. The gold/silver ratio fell to 62.9 from 63.6 the day before.
Now that the downward pressure put on gold and silver prices by the gold cartel for option expiry and quarter-end window dressing is behind us, it is no surprise that the precious metals have jumped higher. Physical demand – which is always the major driver of the gold price in the long-run – remains strong, as evidenced by high premiums pretty much everywhere.
The big news that has now begun influencing the market is the stunning revelation by GATA at a Commodity Futures Trading Commission (CFTC) hearing last week about the London whistle-blower who had explained to the CFTC how JP Morgan Chase has been manipulating/capping precious metal prices. In a shocking parallel to the inaction by the SEC after receiving warnings from Harry Markopolos about the Madoff ponzi, the CFTC has apparently been sitting on this information.
The whistle-blower, Andrew Maguire, is an experienced precious metal trader in London. In this riveting interview on King World News with GATA director, Adrian Douglas, Maguire describes a “new dynamic” impacting gold. Specifically, there is a huge short position in the market. But there is even more.
The CFTC hearing confirmed what GATA has been saying all along, that the gold market is being manipulated. To achieve this manipulation, the gold cartel has accumulated a huge short position. Importantly, the hearing confirmed that the gold cartel’s huge short positions are ‘naked’, meaning that these positions are not hedged. More to the point, the CFTC hearing revealed that there is 100-times more paper-gold outstanding than physical gold.
The market is now starting to absorb the significance of what GATA has uncovered over the years and summarized succinctly in its prophetic announcement in The Wall Street Journal more than two years ago, seven weeks before the collapse of Bear Stearns and the start of the present financial crisis: “The objective of this manipulation is to conceal the mismanagement of the U.S. dollar so that it might retain its function as the world’s reserve currency. But to suppress the price of gold is to disable the barometer of the international financial system so that all markets may be more easily manipulated. This manipulation has been a primary cause of the catastrophic excesses in the markets that now threaten the whole world.”
The revelations from the CFTC hearing are earth-shaking, and indeed a “new dynamic” has emerged. The gold cartel now has a big target painted on its forehead. One can never predict the future, but it seems to me that as this news about the gold cartel’s huge naked short position spreads, two things will happen.
It is inevitable that the big traders and hedge funds will push the naked shorts to the wall by asking for physical metal. We could therefore see more hedge funds switching out of GLD like Greenlight Capital did last summer, which leads to the second likely outcome. If we get a squeeze on the naked shorts, the sky is the limit for precious metal prices.
The gold cartel may not yet be finished, and won’t be until the unholy Wall Street-D.C. axis is dismantled. But the gold cartel is on its way out.
Over the past ten years, the gold cartel has staged a controlled retreat. It has been fighting the advancing gold price with propaganda, paper short sales and the occasional dishoarding of physical metal from central bank vaults and more recently, the IMF. This retreat is I suspect about to turn into a rout, which means the upside potential for the precious metals is huge.
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