Gold Price Manipulation (JP Morgan, Deutschebank, HSBC…)

faqs

Is the gold price actually manipulated?

Yes, multiple banks have admitted to manipulating the gold price, including DeutscheBank and Barclays. Extensive chat transcripts between institutional traders have shown gold price manipulation.

What is the gold price manipulation explained?

Manipulation of gold prices is a huge topic with deep implications crossing currency, economy, US dollar, and major banks. Click here to read a detailed article.

The world will soon wake up to the reality that everyone is broke and can collect nothing from the bankrupt, who are owed unlimited amounts by the insolvent, who are attempting to make late payments on a bank holiday in the wrong country, with an unacceptable currency, against defaulted collateral, of which nobody is sure who holds title – anonymous

Gold manipulation example

At opening bell of April 30, 2012, an anonymous player sold short $1.24 billion worth of gold. At ¾ of a million ounces, the sale slammed through over 1000 bids, up to 8400 ounces apiece in a fraction of a second. Even the Wall Street Journal ran an article on manipulation – the dump exceeded an entire average day’s trading. The perpetrator broke the law and took rapid losses of $75 million as the gold price reasserted itself in a few hours. The WSJ failed to note that these contracts were not longs liquidating, but naked shorts – a party selling gold they do not have. They do so without posting margin. The activity is blatantly illegal.

Gold Price Manipulation Bank for International Settlements

Sells of this type (though not this size) are fairly common. Many occur in a thinly traded period of the day – 3am, making it doubly stupid from a profit point of view. Without multiple buy orders to hold up the price, the seller gets less and less money with each bid filled. No trader would do this for profit – they would parcel it out over a period to avoid dropping the price.

The Fat Finger has been offered as an explanation. A trader could have keyed in an extra zero after the number of contracts. While this is possible, it’s highly unlikely that a sophisticated trader or trading system would have no safeguards against hundred million dollar losses because of a single accidental keystroke. The accident theory is implausible. The move more or less screams manipulation. Somebody controlling a lot of money wanted to slam the price of gold. But why?

One potential seller works at the Bank for International Settlements (BIS). Mikael Charozé’s bio at the Bank for International Settlements listed “interventions [and]…proprietary positions on all currencies including gold,” until the Zerohedge website posted it. A few days later, those parts of his job description had been removed from the BIS site. It cannot be proved, of course, because everything lies under layers of seemingly intentional confusion. And central banks have a wall of silence policy against any criticism, especially from the people they claim to serve. It’s all part of the gold wars.

Why Manipulate the Price of Gold?

The logic is simple enough from the bird’s eye view. A swiftly rising gold price reveals mismanagement of the currency. Therefore it is suppressed surreptitiously. Because paper currencies rely totally on faith, central bankers take it as part of their duty to manage that faith and maintain confidence in the currency. If gold shot up to $10,000, the world would become very, very concerned about their dollar holdings. Most other things are openly managed – food and oil prices (through subsidies and reserves), inflation, inflation perception, interest rates, money supply and financial risk.  Those who question the manipulation of gold should be asking the polar question – why wouldn’t it be manipulated? It’s the key metric of faith-based currencies. Managing the gold price is a central banker’s job.

The gold wars are the cornerstone of a much larger overall context – currency, trade and actual wars. As part of the gold wars presentation, it’s important to establish that the financial system is secretive, corrupt and highly beneficial to a few – it’s rigged. It’s also necessary to establish motive, means, and escape. The motive here is to preserve a failing system, the means is control of regulators, and escape is through control of public perception – the cover-up. People never know what really happened. The MF Global fiasco and other financial crimes we will explore are an easy way to prove corruption and elite benefit. The Petrodollar/ global reserve currency system and its stunning hegemony over world politics is the principal motive. The primary means is by control of the currency. Repeal of the Glass-Steagall Act, emplacement of corporate execs into regulatory bodies, too big to fail policies, and countless other methods are the secondary means. Loss of independent media, consolidation of media into a few companies, ignoring the public, foot-dragging investigations, obfuscation, ridicule of opposition, and secrecy by claiming national security interests are among the escape vehicles. These are some of the topics covered.

Zero Bound of Monetary Policy

The figure seen may be the scariest chart I know of. Around 1965, the debt to GDP ratio crossed 1:1. Before then a dollar of debt created at least a dollar of GDP increase. That’s sustainable. Since then, the long-term chart is vicious and steady down. In 2010, it crossed the zero bound – more debt created no GDP increase. It’s actually been pushed sooner because of the enormous monetary creation since 2008. The sharp jag below zero is clear and striking. Debt saturation is in full swing. Incomes have not kept pace – it can no longer service the debt. It’s tough to say what happens now, but probably (and strangely) new debt will contract GDP. As the zero bound is more clearly left behind, economic dislocations become more and more violent. Volatility goes haywire. The debt creation becomes a black hole. As this book shows, we’re already there.

Failure of Debt based monetary policy

The central economic problem in the world is debt saturation. This is a direct offshoot of the current monetary system – fractional reserve banking. The public has almost no knowledge of how money is created and that’s extremely unfortunate. “It is well enough that people of the nation do not understand our banking and money system,” Henry Ford said. “For if they did, I believe there would be a revolution before tomorrow morning.” Money, in today’s world, is made of debt.  All money comes when a bank loans it into existence. It is extinguished when the loan is paid off, but the interest (bank profit) is not created. Consequently, there is always much more debt than money to pay it – scarcity is built-in to the system. Numerous problems result, some obvious, some not. We will explore this strange system in much greater detail, but one salient fact is disturbing. It requires perpetual growth at an increasing rate to sustain the system without implosion because of the inbuilt shortages of money. It inevitably leads to a debt crisis, as Ludwig von Mises postulated six decades ago. He called it a systemic crack-up – a global reset. Leaders have greatly increased sovereign debt in response, but the solution to debt is not more debt. It is default. What cannot go on forever will end.

Gold Backed Money

In the past, money was directly issued and backed by precious metals. Or it was coinage. This required no debt and no perpetual growth. It was stable. Gold systems are not perfect – no system is. However, they have proven far more durable and self-sustaining than debt based money. True gold standard economies do not need to be centrally planned – they have built in self-corrections to prevent modern excesses. Central bankers express great disdain for such systems publicly. Gold is the mortal enemy of modern money.

Without the gold anchor, the world economy has become seriously unbalanced. Greek one-year debt hit a high of 140% interest in 2011. Under Generally Accepted Accounting Principles, the 2011 US deficit exceeds $5 trillion – far more than the government accounted $1.5 trillion. The entire US obligations would be $60 to $200 trillion, depending on who did the estimating. The total of accounted for derivatives is $600 trillion by BIS measures and undisclosed bets might easily double that total to over a quadrillion – twenty times the world’s economy. Central bank balance sheets are bleeding red from buying worthless paper to prop up failing banks. Financial giants are leveraged at many times their reserve assets, making them insolvent in even a slight downdraft. The Federal Reserve issued $23 trillion in zero interest loans since 2008. Something is seriously wrong. The global economic system is dying and the illness is being hidden from view.

Trust is one of the great missing quantities in today’s system. That lack is a primary reason that precious metals will continue to steepen in demand – they alone require no trust. There are many components of trust necessary for a strongly functioning economic system. Virtually all of these components are now AWOL. A citizenry must believe that its leadership has their best interests at heart, even if the actions taken are less than perfect. If the leaders are seen not as flawed, but as corrupt, deeply self-interested, or worst tyrannical, then many decades of trust will evaporate in a few years. We are close to that point.

Likewise, the citizens must believe the banks are functional utilities, serving a basic societal need, rather than profit-driven entities focused on investment and returns. Most people think that banks are wildly speculative enterprises, risking the nation’s very health. The truth is less important than the perception. Some make the case that leadership and finance have been utterly self-interested for a very long time and managed to disguise that fact from the public through skillful P.R. Because the strains make it impossible to paper over, the truth is emerging. The evidence of long-scale deception is an interesting topic we will address in other posts.

Ignorance about Money

One very strange lacuna in our civilization is the lack of monetary knowledge. In a well-educated system which prides itself on fundamental capitalist values, a knowledge of money seems de rigeur. America lives and breathes money – it “makes the world go ’round.” Yet mysteriously, almost no one understands this most basic and essential fact of our life. What is money? Where does it come from? The old saw that money does not grow on trees is no longer true – money is paper – gold has been demonitized. It is less than paper in the case of electronic money – it is just a number in a computer.

Why the ignorance? It seems fair to blame the educational system. According to John Taylor Gatto, the missing substance is deliberate. Gatto, named Teacher of the Year – the highest honor in education – condemned the system in his speech. He roundly criticized the system for deliberate mal-education of the entire population. The Department of Education was more or less designed by large private endowments. Big capital, Gatto claimed, wants a society of citizens poorly informed about many things, especially money and its link to freedom. The citizens are more compliant by ignorance and far more willing to follow the system of big capital. They are a society of workers, not entrepreneurs. We have a system of unbridled paper money creation, a citizenry totally ignorant of the mechanics and a deliberate veiling of the powers that control it. If money is power, then the government-given authority to create it is the exponential manifestation of that power. Keeping citizens uninformed safeguards the power from revolution. Cattle are easy to control.

The deeper implications of these facts are frightening when fully understood, and history bears this concern out many times over. Governments with too much centralized power – whether from misguided public trust or harsh repression – inevitably abuse the privilege of unbacked currencies. The warfare/welfare state is as old as repressive government. Rome called it ‘bread and circuses.’ Politicians buy loyalty or enforce obedience. Both are extraordinarily expensive, far too much for a sound currency to support. Reserves would be gone in a few years of the types of excesses which are common now – China could cash in its Treasury debt for 275 times the amount of US gold at Treasury prices. (Market prices are 40 times higher – a twisted tale for later). Paper (or digital) currencies allow for terrible abuses, unrestrained war, and tyranny – there is no check on spending. The current system has gone out of all control. Black Swan events are causing bouts of alternating debt deflation and the policy response of firehose monetary inflation. The real economy is being destroyed by the far larger speculative economy. Short term solutions only make the long-term problems worse.

Serious debt issues

There is now a tremendous amount of confusion, complexity, and uncertainty. It might even be described as chaos. Terms like debt holocaust, uncharted territory, never before seen conditions, Europocalypse, and financial Armageddon seem to be popping up all over the net and even in the mainstream. No one fully comprehends the depth and breadth of the issues – it’s too vast. Therefore no one can create a real solution to save the mechanism. Indeed, no solution may be possible. The reset button has been hit before – four times in the twentieth century. This time the problems are much larger and aggravated by real resource constraints. The planet is tapped out. Growth is at its maximum. The wall is right in front of us and we are flying at full speed towards it. The system may somehow muddle through, but fools ignore these problems at their peril. In such situations, vast wealth has a historical tendency to disappear. That’s because wealth is largely illusory. 

update: This content was written a few years back, when the 2008 crisis still had some memory. The economy somehow muddled through, and perhaps the Fed was responsible. This time, however, with the Covid 19 money printing orgies, the situation differs. We are looking at radical inflationary outcomes as very likely.

Some illusions, like derivatives, are far more insubstantial than others, like the value of precious metals. Derivatives require trust in the system and the organization holding the other end of the contract. The system must hold value in the currency, the other party must honor the letter and intent of a complex contract, a regulatory agency might need to enforce it, that agency must not be compromised, and the other institution must have both the solvency and liquidity to back it up. That’s actually a lot of trust. It’s been taken for granted – up to now. We will examine recent events that have shaken the system upside down. Hordes of honest investors and deep pockets are jumping out of major markets. They cite manipulation, lack of confidence, and even outright theft.

Gold as Money

Precious metals, held in one’s own possession, require very little trust. Gold is corruption insurance. It has no counterparty obligation. There is no other entity required to uphold the value of PM’s – society as a whole is the guarantor of value. One concern is market manipulation. Metals, however, have retained value for thousands of years – manipulation is only a short-term effect. Unlike paper, gold never goes to zero. Other than that, the only risk is theft – a relatively low risk, especially if holdings are kept quiet and well-secured. In times of massive distrust, fear, and economic corruption, gold and silver become highly valued for many reasons. Systems which seek power and control hate gold. The gold wars are not new. In ancient China, people were put to death for refusing the paper currency and demanding gold. Likewise in 18th Century France. Examples are plentiful and we will cover some very instructive ones.

Conclusion

Nowadays, serious problems, even crises, are popping up more and more. Trust is vanishing. Fear and suspicion reign. Class war is raising its head. According to Warren Buffet, class war is ongoing and his class, the wealthy, is winning.

That’s because only the wealthy understand the need to pay attention to economics. This failure in the middle class will destroy it. People have lost their life savings in a puff of rehypothecated smoke. Financial markets are little more than casinos.

The long cold trade war between the uneasy great power allies – China and the US – is growing hot. It is becoming a currency war. Bank runs are happening silently in southern Europe. The Greek government almost failed. Portugal, Spain, and even Italy teetered on the cliff of default for years. The derivatives on those bonds number in the hundreds of trillions of dollars – quicksand under the global banking system. Sovereign debt is going parabolic.

With Covid 19, realistic unemployment numbers are approaching Great Depression levels. Tent cities are appearing nationwide. Municipalities are going bankrupt. Bizarre crime is escalating. Riots are popping up over police impropriety. States are beginning to rise against the Federal government. Some even declare a right and intent to arrest federal agents enforcing unconstitutional laws.

Ron Paul made a serious run by bucking the establishment. He fathered a groundswell of public outcry to audit the Federal Reserve, even shut it down. Occupy Wall Street became a global movement against the bankers.

Goldman Sachs has or had former executives as head of the European Central Bank, the Federal Reserve, Bank of Canada, NY Fed, the US Treasury, in line for the Bank of England, as unelected prime ministers of Greece and Italy, and as creators of the Euro currency. GSax has a less flattering moniker – the great vampire squid with its tentacles sucking blood from the world economy.

The policy of too big to fail has created moral hazard on a scale that threatens the world’s financial system. The drums of war beat louder every day against the oil-rich Middle East and especially Iran. Meanwhile, the executive branch conducts wars without Congressional approval, burdening the nation with out of control debt. The world grows increasingly skeptical of US good intentions and increasingly hostile towards the United States. No one trusts anyone anymore. Amidst these situations, the idea of the world economy erupting in flames appears not only more and more possible. To those paying attention, it’s happening.