The Real Bunker Hunt Story - What IF Today JP Morgan was Actually BUYING Physical Silver? *video*

We 1st pub. this in March of 2012

Now, what would happen today if the Hunt family were replaced by the banksters, namely JPM? The CFTC, SEC & COMEX were crooked in 1980, and aren't they even more so today?

Why couldn't the crooks actually be strategically on the long side for physical. They have the corrupted regulators in their pockets, so why not execute a similar strategy from the long side? Couldn't their large short positions be implemented to suppress the price for themselves, and acquiring it from miners directly or middle agents? Just another element that our silver gurus have been neglecting...in my view.

In fact, having driven the mining stocks down to absurd levels the conspirators could buy all the controlling equity in every gold/silver mine in the world for a few billion dollars of their taxpayer-supplied money!!

So, then, without the general public joining in the physical buying frenzy, why the repeated delivery delays of modest amounts. You might want to Google:  "physical silver bullion delivery delays"

In relation to this postulate, watch: Silver Fakewardation - *video*

Is JP Morgan Shorting Paper Metals While Acquiring Massive Physical Stockpiles?

*Updated

Manipulation explained, or pure disinformation orchestrated  to pre-emptively manage the fallout of the coming JP Morgan silver manipulation scandal?

DOJ, CFTC have Begun Investigation of 10 Major Banks for Rigging Metals Fixing

Need a job? Drop gold investigation

Posted on March 2, 2015 by Pat Heller

   

Late last week, The Wall Street Journal reported that the U.S. Department of Justice and the U.S. Commodity Futures Trading Commission (CFTC) had begun investigations of 10 major banks over the process of setting prices for gold, silver, platinum and palladium in the London market.

Look for the end result to pretty much
be a cover-up of the suppression of
gold and silver prices. – Pat Heller

The banks under scrutiny are Bank of Nova Scotia, Barclays PLC, Credit Suisse Group AG, Deutsche Bank AG, Goldman Sachs Group Inc., JPMorgan Chase & Co., Societe Generale SA, Standard Bank Group Ltd., and UBS AG. After this announcement, the Swiss competition commission, WEKO, said it was looking into possible manipulation by Swiss banks in the precious metals markets.

As reported in the Journal, the Department of Justice is looking into criminal activity, while the CFTC has opened a civil investigation.

Many researchers have written about the extensive history of central banks manipulating gold prices over the decades.  In the United States, for instance, declassified government documents released so far have all confirmed that the federal government has conspired with other governments and major banks to manipulate gold prices right from the 1930s up into the 1980s.

Historically, many government monetary systems were valued in relation to gold, so it should not surprise anyone that governments would try to influence the relative prices.  In the United States, for instance, the Treasury Department’s Exchange Stabilization Fund (ESF) was established as a provision of the January 31, 1934 Gold Reserve Act.  The ESF was explicitly authorized to use its funds to stabilize the exchange value of the dollar versus gold.  Changes over the years have never revoked the authority to manipulate gold prices.  In fact, a law enacted in 1970 directed the Secretary of the Treasury, with the approval of the President, to “deal in gold, foreign exchange, and other instruments of credit and securities.”

These new investigations follow similar reviews in Europe. Last year, the British government fined Barclays Bank more than $40 million for one incident of gold price manipulation.  Also, the Swiss regulator, FINMA, said it found “serious misconduct” among precious metals traders at UBS involving a silver-fix order of one client.

If you think that the researchers and writers claiming that central banks and major private banks were manipulating the precious metals markets by suppressing prices are finally going to be proven right, think again.

I am confident that the end result of the U.S. government investigations will be, after several years in the works, some fines collected from many of these banks for specific individual incidents. Further, there will be promises that whatever wrongdoing they had done will no longer occur.  And that will be all that happens.

Why do I think this is what will be the end result of such a bombshell development? The answer is simple. Ask yourself why the DOJ and CFTC are investigating trading in the London markets but not in the New York COMEX markets. While it is true that the London market handles more volume of precious metals trading than the COMEX, the U.S. markets are more relevant to Americans.

Also ask yourself why the investigations involve eight foreign owned banks and only two U.S. companies. The foreign banks would only be within the purview of American regulators if their actions in the London markets were perpetrated from the U.S.-based offices. Why aren’t other U.S. banks being investigated?

The reason these investigations will be pretty much whitewashed is that the Department of Justice is unwilling to go after Wall Street. New York Federal Reserve Bank president William C. Dudley (who worked at Goldman Sachs 1986-2007 as the chief U.S. economist, a partner, and as a managing director) confirmed not that long ago that the DOJ has no ongoing investigations of Wall Street firms. The DOJ is not conducting such investigations despite former Federal Reserve chair Alan Greenspan’s public claim that there were massive illegal and criminal frauds committed by Wall Street firms.

The DOJ consistently stated that it will not prosecute these large institutions because the risk of damage to the economy, as they were told by outside experts.  However, could this DOJ policy could have more to do with the revolving doors where the DOJ and CFTC investigators largely have worked for the above named banks or hope to do so when the leave government employment?

After all, U.S. Attorney General Eric Holder announced two years ago that no investigation of UBS’s fixing of LIBOR interest rates would be done. Holder claimed in a news conference that the lack of prosecution was based on a decision of how such an investigation would impact global financial markets. But, was the real reason that UBS was a client of the law firm where Holder worked before his current job?

Want to add some luck to your 
collection or your pocket?

In a previous decision not to investigate HSBC, a Congressional panel asked for the identity of outside parties who advised the DOJ to drop the investigation for global financial stability reasons.  Eventually, Justice officials had to admit that they did not consult any outside parties before canceling the HSBC review.

In sum, I expect the public to be lulled into thinking that the U.S. government is really finding and reporting the truth about the manipulation of precious metals prices. However, once you realize that the DOJ and CFTC are investigating the wrong market (London instead of the New York COMEX), not all of the appropriate American-based banks that should be investigated are being pursued because the government agencies have a “policy” to avoid investigations of firms where they used to work or hope to later be employed. Don’t expect any definitive revelations about the depth and breadth of the manipulation of precious metals trading in America.

Instead, look for the end result to pretty much be a cover-up of the suppression of gold and silver prices.

via numismaticnews

Rothschild may have already become the Custodian for China's Gold

We 1st published this post about a year ago, again more recently 05.11.14 - but still no mainstream financial "journalists" have dared touch it. No surprise here. Had you forgotten Hank Paulson's more 70+ trips to China when he was with Goldman Sachs setting himself to be the US Treasury Secretary?

Read December 2014 post:
ICBC: A New Global Currency & Gold Setup Is Being Conceived

Perhaps we were too quick to pass over the world gold fixing stories and manipulations recently.  Reading this banking article from the 1990s is a good lead-in for our strong suspicions that manipulations will go on as usual business in China. Then, at the appropriate time we the serfs will come to realize that Rothschild's syndicated ICBC bank is the controlling factor (custodian, central bank?) for Red China's gold.

The Lawless Manipulation of Bullion Markets by Public Authorities

December 23, 2014

Editorial By Paul Craig Roberts

Note: In this article the times given are Eastern Standard Time. The software that generated?the graph uses Mountain Standard Time. Therefore, read the x-axis two hours later than the axis indicates.

The Federal Reserve and its bullion bank agents are actively using uncovered futures contracts to illegally manipulate the prices of precious metals in order to keep interest rates below the market rate. The purpose of manipulation is to support the U.S. dollar's reserve status at a time when the dollar should be in decline from the over-supply created by QE and from trade and budget deficits.

Historically, the role of gold and silver has been to function as a means of exchange and a store of wealth during periods of economic and political turmoil. Since the bullion bull market began in late 2000, it rose almost non-stop until March 2008, ahead of the Great Financial Crisis, which started with the collapse of Bear Stearns. When Bear Stearns collapsed, gold was taken down over the course of the next 7 months from $1035 to $680, or 34%; silver from $21 to $8, or 62%. 

The most violent takedown occurred as Lehman collapsed and Goldman Sachs was about to collapse. This takedown occurred during a period of time when gold should have been going parabolic in price. The price of gold finally took off in late October 2008 from $680 to $1900 while the Government and the Fed were busy printing money to bail out the banks. While the price of gold rose nearly 300% from late 2008 to September 2011, the U.S. dollar lost over 17% of its value, falling from 89 on the dollar index to 73.50.

The current takedown of gold from $1900 to $1200 has occurred during a period of time when financial and political fraud and corruption becomes worse and more blatant by the day. Along with this, the intensity and openness with which the metals are systematically beat down seems to grow by the day.

Comex futures trade 23 hours a day via a global computerized trading system known as Globex. The heaviest period of trading occurs when the actual Comex floor operations are open, which is 8:20 a.m. to 1:30 p.m. EST. All other times Comex futures trade electronically via Globex. Gold and silver are smashed primarily during the Globex-only trading periods, when volume is often light to non-existent.

This graph of Comex futures trading on December 16th shows the sudden plunge in the price of silver.

The second stage of the sharp price drop begins at 1:30 pm eastern time (11:30 mountain time), after the Comex floor trading operation was closed for the day. This is typically one of the lowest volume trading periods, during which orders to buy or sell can cause significant price disruption to the market. There were no news or events that would have triggered the sudden selling of bullion futures, and none of the other markets experienced unusual movements while gold and silver were quickly plunging in price.

To put in perspective the 9,767 silver contracts sold in 15 minutes, the total trading volume in Comex silver for the 23-hour global trading period for Comex contracts ending at 5:00 p.m. on December 15th was 149,964 contracts, or an average of 6,520 contracts per hour. The only type of market participant that would dump almost 10,000 contracts in a 15-minute period is a seller whose only motivation is to push the price of silver as low as possible. One entity that can afford to use capital like this is the Federal Reserve, because the Fed can create its own capital for free using the printing press.

In the background, the financial markets are becoming increasingly pressured by declines in emerging market currencies, insolvent sovereign governments–including here in the US–and perhaps a renewed derivatives crisis triggered by the collapse in the price of oil. The oil price decline could result in derivative problems larger than the subprime mortgage derivatives of the 2008 crisis.

The downward manipulation of the prices of precious metals prevents the "crisis warning transmission system" from properly functioning. More important, the decline in the price of gold/silver vs. the U.S. dollar conveys the illusion that the dollar is strong at a time when, in fact, the dollar should be under pressure from the over-issuance of dollars and dollar-denominated debt.

What we have been experiencing since the 2008 crisis is not only the subordination of US economic policy to the needs of banks "too big to fail," but also the subordination of law and the financial regulatory agencies to the interests of a few private banks. The manipulation of the bullion markets is illegal whether done by private parties or on public authority, and so we have the spectacle of the US government supporting a handful of banks via illegal means. Not only has economic accountability been set aside, but also legal accountability.

Just as Washington places itself above laws prohibiting torture and naked aggression in order to conduct its self-declared "war on terror" and above the Constitution in order to construct a domestic police state, Washington places itself above the laws prohibiting market manipulation.

Obviously, the government's claim to represent the rule of law is as false as all its other claims. The foul stench of corruption and hypocrisy that emanates from Washington is the smell of a dying country.

This article, by Paul Craig Roberts and Dave Kranzler, was contributed courtesy of PaulCraigRoberts.com.

Source thedailybell

Silver Price Ready to Reverse its Tumble? - - a Coin Dealer's Perspective

physical silver perspective from a leading coin dealer...

Silver fall ready to reverse?

Posted on September 8, 2014 by Pat Heller

From July 29 to Sept. 2, managed money traders (which include large hedge funds, commodity pool operators, commodity trading advisors and similar companies) decreased their net long position in COMEX silver contracts from 14,063 to 6,542. Since each contract represents 5,000 ounces of silver, that means they decreased their net long position by about 37.6 million ounces in just five weeks. 

This change was accomplished by increasing their gross short positions by over 135 million ounces while the increase in gross long contracts by less than 98 million ounces.

This shift represents roughly 4 percent of global worldwide silver mining production. Had this shift occurred among "strong hands" traders, the decline in the price of silver would almost certainly have been greater than the $1.42 (6.9 percent) drop from $20.57 on July 29 to $19.15 on Sept. 2.

However, traders in this category are traditionally "weak hands." They typically buy and sell positions for short-term results. The offset to their reduction in their net position (remember that there is always a short and a long position for each COMEX contract) has been bought largely by "strong hands" investors, those who will hold on to their position for much longer than the managed money traders.

Indeed, from July 29 to Sept.  2, the net COMEX silver long position held by companies listed in the "Other Reportables" category increased from 8,461 to 12,034 contracts (just under 18 million ounces).  This category includes very large traders who are trading for their own accounts rather than executing orders for clients.

It seems obvious to me that if short- term traders have been decreasing their net long position, they have a high likelihood of soon turning around to aggressively add to their net holdings. This also seems to be the expectation of large traders placing trades on their own behalf.

Do these two trends indicate that silver prices will end September higher than at the beginning? We will find out in three weeks.

In the meantime, recent lower silver prices have brought a minor flurry of buying of bullion-priced physical silver coins and bars. The U.S. Mint reported higher sales of silver Eagles in August than in July.  While there are no shortages of physical silver on the market yet, those purchasing large quantities will probably have to wait a few more days for delivery than they did in late July.

S​ource ​

Numismatic News​

How The Coming Silver Price Bubble Will Develop - Ted Butler

On the other hand, with or absent manipulation, silver will always be money. It has been a millennial refuge for those seeking a safe harbor for their dying fiat currencies. A panic along that plain, IMO, would ignite silver's price and reach a magnitude far greater than just a "shortage."

We reported this yesterday, but didn't see any mention by Mr. Butler: Gold and Silver Futures Margins Lowered by CME
In the "past" the lowering of margin requirements has given an immediate bullish blip to prices, but not yet it seems.

---

Commodities / Gold and Silver 2014 Aug 26, 2014 - 06:07 PM GMT

By: GoldSilverWorlds

Ted Butler writes: What is an asset bubble? An asset bubble occurs when a large number of buyers, normally not usually prone to speculate in an asset, bid the price of that asset much higher than underlying valuations would support, most often fueled by leverage or borrowed money. 

Typically, towards the terminal phase of the bubble the most compelling reason for continuing to buy the asset is due to the rising price itself, as all caution is thrown to the wind amid the collective belief that prices can only move higher still. Then, when the last possible speculator has purchased the asset, the inevitable occurs and the price of the asset collapses as previous buyers turn into sellers and attempt to get out. Since the formation of the bubble and its inevitable collapse are driven by the collective emotions of greed and fear, it is generally impossible to predict how long an asset bubble will persist and how high the price can climb, as well as the timing and extent of the subsequent collapse.


How do asset bubbles develop? Most often, an asset bubble develops when an undervalued asset which has a compelling investment story and there exists an overall financial environment of sufficient buying power, catches the collective interest of the crowd. For example, by the mid-2000's and after years of steady appreciation, residential real estate developed into an asset bubble amid the self-fulfilling cycle of continued gains and the availability of easy credit.

As far as great stories go, silver has the best potential story to develop into a bubble. First, there is little argument that it is among the most, if not the most undervalued asset of all by objective relative historical price comparison. In addition, it is at or below its primary cost of production, as evidenced in recent quarterly earnings reports. Remember, most bubbles start out with an asset that is undervalued – on this score silver more than qualifies as being undervalued.

Aside from extreme undervaluation, the silver story is multi-faceted. Silver is both an industrial metal and a primary investment asset, the net effect being that very little newly-produced silver is available for investment, perhaps only 10% of the one billion oz produced yearly (mine plus recycling), or 100 million oz annually. In dollar terms, at current prices that comes to less than $2 billion per year. There are two ways to look at that; the observation that there are countless individuals and investment funds capable of ponying up that entire amount on their own and the fact that $2 billion amounts to less than 30 cents on a per capita basis for the world's 7 billion inhabitants. Simply put, there is no other asset class which would require less buying to develop into a bubble than silver.

Apart from newly-produced silver available for investment, the amount of previously produced metal available for investment, or world inventories, is also shockingly low. As a result of a 65 year deficit consumption pattern that ended in 2005, world silver inventories have been depleted by 90% from the levels existing at the start of World War II. Today, only a little over one billion oz of metal in accepted bullion industrial form exists with perhaps another billion oz existing in coins and bars. In dollar terms, that comes to $20 to $40 billion, where most other asset classes (stocks, bonds, real estate and even gold) are measured in the many trillions of dollars. And please, never confuse what exists with what's available for purchase – only the owners of the small amount of silver that exists will determine at what price it is available.

The conclusion is simple – the asset requiring the least amount of buying to create a bubble is, automatically, the best candidate for developing into the biggest bubble. The fuel for any bubble is total (world) buying power versus the actual amount of an asset available for purchase. Previous, as well as prospective, bubbles in stocks, bonds and real estate grew to many trillions of dollars of total valuation. At $200 an ounce, all the silver in the world (bullion plus coins) would "only" amount to $400 billion, not even a rounding error to the total valuation of stocks, bonds, real estate and, even, gold. In other words, due to silver's current undervaluation and its shockingly small amount in existence, it has more room to the upside than any other asset class.

But I'm not done. Silver's unique dual role as a vital industrial material and primary investment asset creates a setup for something happening that has never occurred in any previous bubble. As and when sufficient physical investment buying develops in silver to drive prices significantly higher, the industrial consumers of silver, in everything from electrical and solar applications to medical and chemical applications, will likely be subject to delays in the customary delivery timelines of the metal. As is almost always the case, whenever industrial consumers of a commodity are deprived of timely deliveries, they resort to stockpiling that commodity as a remedy, further exacerbating delivery delays to other users.

Thus, the stage is set for something the world has never experienced previously – an asset bubble accompanied with an industrial shortage. The two greatest upward price forces known to man, an asset bubble and a genuine commodity shortage, appear set to combine in silver. Either one, alone, would have a profound impact on the price, but the combination seems both inevitable and almost impossible to contemplate in terms of how high the price of silver could be driven. And it's hard to see how intense investment buying wouldn't trip off industrial user attempted inventory stockpiling or vice versa; it doesn't matter which comes first.

Tying everything together, there is one and only one explanation for why silver is so undervalued and the asset bubble/industrial shortage hasn't occurred yet – the ongoing price manipulation on the COMEX. Massive amounts of paper contracts traded between two groups of large speculators (technical funds and commercials), measuring in the hundreds of millions of ounces and completely unrelated to the supply/demand fundamentals have set the price of silver. This COMEX price control is both the curse and the promise in that it not only explains the undervaluation, it will explain why it seems inevitable for an asset bubble/user shortage to develop.

Think of it this way – the asset with the greatest potential for becoming the biggest bubble ever had better have the greatest story ever as well.  And that is what the COMEX silver manipulation is – the key ingredient in the greatest investment potential score ever.  If silver wasn't manipulated how good would the story be? Absent manipulation, I wouldn't buy or hold silver because that would mean that free market forces were setting the price all along. In other words, if silver wasn't manipulated there would be scant reason to buy it in my eyes. If I wasn't convinced silver was manipulated, I can't see how I would have ever written this or anything about it in the past or could have become interested in it in the first place.

As painful as recent prices have been to existing holders because of the manipulation, without it there would be little chance for a price explosion at some point. The easiest major potential change in the silver price equation is for the manipulation to end, one way or another. And if history and logic win out, the silver manipulation must end, not the least because of the coming clash between paper and physical silver. Some call it the disconnect between paper derivatives contract on the COMEX and actual physical silver, but in reality the story is that COMEX futures contracts are very much connected to each other via the delivery mechanism.

The connection between paper and physical has been forged because the main COMEX futures speculators are only interested in trading paper futures contracts and not in trading physical metal. Technical funds have no desire to buy and sell real metal for full cash payment when they can deal in paper contracts for only 10% cash down because they are trading, not investing. The problem is that the trading between the technical funds and the commercials has become so large that it dwarfs real world silver supply/demand fundamentals and ends up setting the price of silver in violation of commodity law. I know that this perversion of the price-discovery process has existed for a long time, but it would be wrong to confuse longevity with permanence.

The fact is that while the COMEX paper market dominance has lorded over the real supply and demand fundamentals, the stage has been set for a physical asset bubble/industrial user panic event. I've become convinced that any prospective bubble in silver won't be driven by the aggressive buying of COMEX futures contracts, but only by physical buying. For one thing, the crooked CME and CFTC would never allow any group of traders to drive silver prices sharply higher by buying unlimited amounts of COMEX futures contracts. If the technical funds do buy big amounts of COMEX silver futures contracts (as was the case from June to mid-July), you can almost be certain that the CME and CFTC knew that those funds would be soon forced to sell on lower prices.

As a result, any bubble in silver must and will develop from physical investment buying. Surely, any industrial user inventory buying panic must involve immediate physical delivery and not a paper futures contract in a time of delivery delays and uncertainty. In fact, it is hard to imagine, as a silver bubble begins to develop, a greater urgency for holding only physical metal to intensify, due to a growing recognition that the COMEX manipulation was responsible for the former low price.

Since I am speaking in terms of a potential historic asset bubble in silver, I am implying that the price of silver will far exceed its true value at some point before correcting sharply. It is before that collapse point, that God-willing, I intend to sell. I am not deluding myself that I will come close except hoping not to be terribly early or late. While I respect anyone's reasons for buying and holding silver, my mission has always been to help end the manipulation and be done with silver after that was accomplished and reflected in the price.

This article is based on a commentary of Ted Butler's premium service at www.butlerresearch.com which contains the highest quality of gold and silver market analysis. Ted Butler is specialized in precious metals market analysis for over four decades.

Source - http://goldsilverworlds.com/physical-market/how-the-coming-silver-bubble-will-develop/

© 2014 Copyright goldsilverworlds - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

​via marketoracle​

Gold and Silver Futures Margins Lowered by CME

Monday, August 25, 2014, 8:44 clock | Posted by Gold Reporter

Gold and silver futures speculators must deposit less money

The speculation in gold and silver for re-appointment cheaper for traders.

 
The CME Group has reduced the margin requirements when trading gold and silver futures for the fourth time this year.

The operator of the US-commodity futures exchange Comex, the CME Group, has lowered the gold margins by the start of trading on Monday again by almost 15 percent. However, this applies only to the trade group of speculators.

When trading statements must now per 100-ounce contract only $ 5,060 deposited in the account of the respective distributors be (formerly $ 5,940). The Maintenance Margin (if a contract is held longer than one day) is reduced to $ 4,600 (formerly $ 5,400). The amounts secured for hedgers / members remain unchanged, so that the maintenance margin is now equal in both groups of traders.

The Silver margins for the 5,000-ounce contract fall by around 13 percent. Again, only speculators affected by the reduction and also the Maintenance Margins are now both dealer groups with $ 6,500 at the same height. As initial margin $ 7,150 (speculators) or $ 6,500 (Hedger / members) are now required.

The margins for smaller contract sizes have been adjusted downward. It is the fourth margin reduction this year in gold and silver.
Gold Reporter

Rothschild ICBC Bank Now Controls Asian Gold Exchanges

For more on the Rothschild ICBC see links below interviews.

---

Interview with BullionStar's CEO on the development of the Asian gold market

Mr. Persson touches specifically on the development of the Chinese and Singaporean gold markets

Published: 30-07-2014 02:25

BullionStar's CEO, Mr. Torgny Persson, was recently interviewed by Mr. Sunny Pannu of Minaurum.com on his views of the Asian gold market.

In the interview, Mr. Persson talks about the Chinese and Singaporean gold markets and how the respective Chinese and Singaporean governments are worldwide unique in facilitating for flourishing gold markets.

How come the Asians understand the concept of gold whereas the Westerners are struggling under an ever increasing mountain of debt?  

There's two parts of the interview.

Part 1 of the interview:

 
Part 2 of the interview:

1. ICBC: A New Global Currency & Gold ... Jul 16, 2014 
2. Rothschild may have already become the ... May 11, 2014
3. Renewed Estimates of Chinese Gold ... Apr 05, 2014
4. The Gold Rush Spreads From China And ... Dec 24, 2013

source bullionstar

Silver bullion banks accused of manipulation in U.S. lawsuit

Absolutely no effective congressional oversight worthy of the name has been standing guard on these crooks. We learned years ago the banksters are in bed with the regulators and they're all raking in the booty. Common investors can take a hike. We expect nothing significant judicially to develop from this. You certainly don't require  five years to "probe the allegations." We just pass it along for your info.

https://comparesilverprices.com/

We would suggest you follow the coin dealer premiums on the 1 oz. eagles to get a general idea on the availability of silver. We are of the understanding that only 5% or so of the 5,000 oz. contracts actually receive silver as settlement. Banksters are settling for the US$ price paid in paper fiat, not bullion. A beginning start for tracking might be here.

---

​N​EW YORK Fri Jul 25, 2014 6:41pm EDT

A closed branch of Deutsche Bank is pictured in a parking a parking garage in Bochum May 17, 2013.Credit: Reuters/Ina Fassbender

(Reuters) - Silver bullion banks Deutsche Bank, Bank of Nova Scotia and HSBC have been accused of manipulating prices in the multi-billion dollar market in a lawsuit filed on Friday.

The lawsuit was filed in a New York district court by J. Scott Nicholson, a resident of Washington DC and alleges that the banks, which oversee the century-old silver fix, manipulated the physical and COMEX futures market since January 2007.

Nicholson is seeking class-action status for the lawsuit, which was registered in the Southern District of New York.

Deutsche Bank and HSBC declined to comment. Nova Scotia was not immediately available for comment.

The lawsuit comes after a series of separate lawsuits were filed since March, accusing gold bullion banks of rigging the daily gold price.

The five banks in those lawsuits have denied the allegations.

This is the first case to target the silver fix, although the silver market, whose prices have gyrated wildly in recent year, is no stranger to regulatory and legal scrutiny.

In a five-year probe, the U.S. Commodity Futures Trading Commission investigated allegations that some of the world's biggest bullion banks distorted silver futures prices.

The U.S. commodity regulator found no evidence of wrongdoing and dropped the probe last September. A long-running class-action antitrust lawsuit including similar accusations was dismissed at the end of last month by a federal appeals court.

The lawsuit also comes at a critical time for precious metals markets, as regulators investigate trading around the setting of London's daily gold and silver price benchmarks and the industry tries to find alternative ways to price their dealing.

​Source Reuters​

Could this be the Big KA-BOOM? Up To $80 Billion Gold-Backed Loans Are Falsified, Chinese Auditor Warns

Submitted by Tyler Durden on 06/26/2014 10:32 -0400

As the probe into alleged fraud at Qingdao continues to escalate (with liquidity needs growing more and more evident as Chinese money-market rates surge), Bloomberg reports that China’s chief auditor discovered 94.4 billion yuan ($15.2 billion) of loans backed by falsified gold transactions, in "the first official confirmation of what many people have suspected for a long time - that gold is widely used in Chinese commodity financing deals." As much as 1,000 tons of gold may have been used in lending and leasing deals in China and Goldman reports that up to $80 billion false-loans may involve gold. As one analyst noted, this was unlikely to have a significant impact on the underlying demand for gold in China and as we have pointed out before, any unwind of the Gold CFDs would lead to buying back of 'paper' gold hedges and implicitly a rise in prices.

As Bloomberg reports,

China’s chief auditor discovered 94.4 billion yuan ($15.2 billion) of loans backed by falsified gold transactions, adding to signs of possible fraud in commodities financing deals.

As much as 1,000 tons of gold may have been used in lending and leasing deals in China, where commodities including metals and agricultural products are used to get credit amid lending restrictions, according to World Gold Council estimates.

Of the as much as $160 billion in transactions projected by Goldman, $80 billion may involve gold, $46 billion copper, $13.8 billion iron ore and $10.3 billion soybeans, according to a March 18 report.

Steps by the Chinese government to rein in credit by raising borrowing costs in recent years created a surge in commodities financing deals that Goldman Sachs Group Inc. estimates to be worth as much as $160 billion.

The Chinese agency that stockpiles strategic commodities is checking to ensure its copper purchases are free of collateral risks while the customs authorities issued new rules to help prevent goods being pledged multiple times as collateral, people with direct knowledge of these matters said previously.

How the deals worked...

In some commodities financing transactions, owners of raw materials sitting in ports use receipts from warehousing companies to get credit from banks, which they put to work in high-yielding investments before repaying the debt.

Other deals involve a Chinese buyer placing orders for commodities with overseas companies and then applying for a letter of credit from a lender, which they use to import the materials. The buyer can then sell the consignment in the domestic market and use the money onshore at a higher interest rate before repaying the original loan.

But the flow is expected to continue...

“This is the first official confirmation of what many people have suspected for a long time -- that gold is widely used in Chinese commodity financing deals,” said Liu Xu, a senior analyst at Capital Futures Co. in Beijing.

...

Mark To, head of research at Wing Fung Financial Group in Hong Kong, said the audit office’s report was unlikely to have a significant impact on the underlying demand for gold in China. 

...

The global flow of bullion from west to east that’s helped to make China the world’s largest user will probably last for as long as two decades as rising incomes spur demand, according to the China Gold Association.

*  *  *

As we commented previously:

When we previously contemplated what the end of funding deals (which the PBOC and the China Politburo seems rather set on) may mean for the price of other commodities, we agreed with Goldman that it would be certainly negative. And yet in the case of gold, it just may be that even if China were to dump its physical to some willing 3rd party buyer, its inevitable cover of futures "hedges", i.e. buying gold in the paper market, may not only offset the physical selling, but send the price of gold back to levels seen at the end of 2012 when gold CCFDs really took off in earnest.

In other words, from a purely mechanistical standpoint, the unwind of China's shadow banking system, while negative for all non-precious metals-based commodities, may be just the gift that all those patient gold (and silver) investors have been waiting for.  This of course, excludes the impact of what the bursting of the Chinese credit bubble would do to faith in the globalized, debt-driven status quo. Add that into the picture, and into the future demand for gold, and suddenly things get really exciting.

Here's our previous explanation of gold's move... if we are right that somehow China managed to push gold lower via gold CFDs, then the unwind pushes gold higher:

Here's how that might work:

In the gold markets, the paper or synthetic 'demand/supply' dominates pricing as opposed to the non-precious metals which have at least a grain of fundamental sense to them still

Throughout 2012/2013 - as the gold CFDs were booming, Chinese demand for physical gold was soaring as the price plunged (due to the forward hedging required in the CFD transactions which pressured gold swaps/futures lower and thus dominated pricing)

As CFD unwinds hit en masse, these flows must unwind (cover hedges and ensure the underlying physical is there... and if not buy it)

This will pressure gold futures prices higher and because unlike in non-precious commodities where spot markets wag the tail of the futures markets - spot gold will likely be dragged higher also (as we know the demand for the physical has been high).

So unlike in the industrial commodities - where the CCFD unwind drives prices down as the image above shows, thanks to synthetic manipulation and domination of the paper gold (and silver) market, the opposite occurs in PMs.

via ZH