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Now That the CFTC’s Chilton Has Confirmed Fraud in the Silver COMEX Markets, Let’s Get the CFTC to Confirm Fraud in the Gold COMEX Market Too!
On October 26, 2010, as everyone that follows PM markets knows by
now, CFTC Commissioner Bart Chilton released the following statement
(see Mr. Chilton’s full statement here):
“I take this opportunity to comment on the precious metals
markets and in particular the silver markets. More than two years ago
the agency began an investigation into silver markets. I have been
urging the agency to say something on the matter for months. The public
deserves some answers to their concerns that silver markets are being,
and have been, manipulated.”
“The legal definition of manipulation under the law is a high bar
to prove. It is a much different test than what the average person
might consider as manipulation. Under existing law, to prove
manipulation, the government is required to demonstrate not only
specific intent; we also need to prove that as a result of the intent
and market control, that activity caused an artificial price — a point
that can certainly be debated by economists. Attempted manipulation is
less difficult to prove — requiring an intent to manipulate and some
overt act in furtherance of that intent. There are also other violations
of law that could contort markets and distort prices.”
“I believe that there have been repeated attempts to influence
prices in the silver markets. There have been fraudulent efforts to
persuade and deviously control that price. Based on what I have been
told by members of the public and reviewed in publicly available
documents, I believe violations to the Commodity Exchange Act have taken
place in silver markets and that any such violation of the law in this
regard should be prosecuted.”
First and foremost, I encourage everyone that reads this article to please take 5 minutes out of your day and send a
thank you note to Mr. Chilton for having the courage to speak out in a
regulatory environment that is rife with corruption.
I believe Mr. Chilton needs to hear from all of us to know that his
efforts in breaking the corrupt strangle hold of banks over gold and
silver prices are very much appreciated. Hopefully, our support will encourage him to
continue fighting against the bankers on behalf of the interests of the public.
Over two years ago, in October, 2008, I corresponded with Mr. Chilton
over what I felt was blatant fraud and manipulation in the Gold COMEX
market at the time, though Mr. Chilton respectfully disagreed with me
back then. Below is our correspondence from two years ago.
My Letter to CFTC Commissioner Bart Chilton Regarding
Potential Fraud in the Gold Futures Market in October 2008 and Mr.
Chilton’s Response
On October 1, 2008, I sent the bulk of this information (click here to see the information I sent)
to Mr. Bart Chilton, Commissioner of the Commodities Futures Trading
Commission (CFTC) located in Washington DC, requesting answers to some
of my questions above. In response, Mr. Chilton replied to me with the
following (the below message has not been altered in any way):
“Your point is that there are at times price differences between
gold in Hong Kong and gold elsewhere, including New York. I know that
when our folks looked at this in the past, they found that there are
restrictions placed on gold flows into China which likely accounts for
the differences (in other words, the Chinese gold market is not a free
market).”
“To date, the market surveillance folks are not aware of any
manipulative activity in the COMEX gold futures market. However, I think
what has been going on certainly deserves closer attention. The simple
existence of price differences between different markets isn’t
‘incontrovertible’ evidence of manipulation. Price differences usually
reflect differences in supply and demand at the different locations or
the effects of impediments to the free flow of the commodity at one
point but not at another (such as governmental restrictions). While
price differences may suggest improper activity, it would be much more
likely that the untoward activity occurred on the smaller and less
liquid market (ie, the Hong Kong Market).”
“I am not convinced that what I have said is what is going on —
just what I have been told in the past. I will try to get some more
information for you.”
In response to Mr. Chilton’s message back then I responded:
“I am aware that Chinese markets are very highly regulated but
that does not necessarily mean because the market is smaller and less
liquid, that this market is the one being manipulated to a greater
extent than the one in New York. To address this issue, I only have two
further points (albeit long ones):”
“(1) According to Zhang Bingnan, the Beijing Gold Economy Center
President, “Gold prices in China should be 1 yuan a gram, or more than
$4 an ounce, higher than the overseas market on average. The premium is a
result of the spread between bids and offers in different bullion
markets and the exchange rate.” Is this a reasonable statement to you,
or are there perhaps other reasons that explain why the premiums are so
vastly greater in Asia’s futures markets for gold than the $4 an ounce
premium that Zhang Bingnan stated should be the reasonable expectation?
The spreads for the past 10-12 weeks have consistently been $30, $40,
$60 and even as much as $100 an ounce between the highs in Asia’s
futures markets for gold and the lows in the New York futures market for
gold [on the same day].”
“As I inquired in my previous message, can you let me know if
American banks or investment firms are using these huge arbitrage
opportunities to enter and exit short futures contracts the same day or
within a 48-72 hour period over and over again? If I am not mistaken,
the CFTC should have access to this information. If this has indeed
been occurring, would it be possible to let us know who these firms are,
and if not, is there any reason why this information needs to stay
secret? If this has occurred, while not evidence of manipulation, would
this not be evidence that arbitrage opportunities are being leveraged to
earn enormous profits in a manner inconsistent with the reasons why
future markets were established? And would this not be grounds for
further investigation?”
“(2) Secondly, Mr. Chilton, you stated to me that manipulation is
most likely occurring in the Asian gold futures market and not in the
New York futures market. If this is the case, then why are the spot
prices established in Asia much closer to the prices of gold established
in physical markets than the spot prices established in New York? Right
now, there seems to be four different markets for gold. The spot price
in Asia, the spot price in New York later that SAME DAY, the price of
bullion (which is often selling at significant premiums over spot) and
the price of gold coins (selling for even a more significant premium
over the spot price).”
“While I do understand that soaring demand for physical gold,
both bullion and coins, are setting higher prices for purchase of
physical (real) gold than the prices in paper markets, I still believe
that this begs the question of “what is wrong with the price of gold in
the paper COMEX markets?” Perhaps I’m unaware of previous occurrences
of enormous price spreads of this nature between physical markets and
paper futures markets and this has happened before with some reasonable
explanation. If you may be able to provide an example to me of previous
times in history when spreads of 15% to 40% existed in physical market
prices over the prices established in futures markets for the same
commodity or asset, then perhaps it will help me understand what is
going on with the prices of gold in the COMEX markets. My quest really
is to understand the anomalies that seem to still be occurring between
the price of gold in the physical markets and the price established in
the COMEX paper futures market.”
According to Mr. Chilton’s statement regarding manipulation in the silver markets released this past week, “Under
existing law, to prove manipulation, the government is required to
demonstrate not only specific intent; we also need to prove that as a
result of the intent and market control, that activity caused an
artificial price.”
I believe that the huge pricing anamolies in gold markets that
existed on a regular basis during July, August, September of 2008 and
that still occur today between the futures markets in Asia and those in
London/New York intraday, as well as the significant anomalies between
gold pricing in the futures markets and gold pricing in the physical
markets is proof that the bankers’ price suppression schemes against
gold create an artificial price. Many times, I watch the gold markets in Asia as they remain stable or climb higher all day, only to witness the gold markets crater once the New York COMEX opens later the same day. Basically, all manipulation schemes
that Mr. Chilton asserts bankers employ against silver that is proof of
manipulation, bankers employ against gold as well. The next logical step
is to encourage Mr. Chilton to publicly acknowledge the gold price
suppression schemes so I encourage anyone that is reading this article
to please write him to encourage a public announcement denouncing banker
price suppression schemes against gold as well. Please send any
personal proof that you have compiled regarding these schemes to
encourage such an announcement. Mr. Chilton is known to read all emails
he receives. We can defeat the banksters one small step at a time.
Here is Mr. Chilton’s information below, but before requesting the
same tenacity from Mr. Chilton in the gold futures markets as he has
demonstrated in the silver futures markets, please do not forget to thank him for his recent efforts. I already have sent him a brief thank you note and so should you. I’m sure Mr. Chilton will appreciate hearing from you.
Bart Chilton, Commissioner
Commodity Futures Trading Commission
Three Lafayette Center 1155 21st Street, NW
Washington DC 20581
Telephone: (202) 418-5060
Fax: (202) 418-5620
About the author: JS Kim is the Managing Director and Founder of SmartKnowledgeU,
a fiercely independent investment consulting and research firm that
devises investment strategies to protect Main Street from the fraud of
Wall Street.
»
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People manipulating markets for profit? Geezus. What kind of a ridiculous notion is that? Next thing you know you'll be telling us about conspiracy theories.
Personally I think they've been manipulating gun markets. Ammo prices through the roof. Who needs gold and silver when you got lead? Alchemy.
interesting from barclay's re gold:
Gold prices have been propelled higher as a raft of factors has merged to create, not
only a gold-favourable macro environment, but also supportive structural changes in
the market itself. One of the key pillars of support, in our view, has been the demise of
the global gold hedge book. The additional demand created through hedge book
buybacks have in some instances provided the impetus to push gold out of rangebound
trading and compounded positive sentiment. At the start of the last decade, the
global hedge booked peaked over 3000 tonnes, falling to 230 tonnes as at the end of
Q2 10 according to VM Group. At the start of 2007 the largest hedge books were held by
some of the world’s largest gold producers, including AngloGold Ashanti (~360 tonnes),
Barrick Gold (~335 tonnes), Newcrest Mining (~140 tonnes), Newmont Mining (~60 tonnes)
and Buenaventura (~60 tonnes). However, now all five companies have closed out of those
positions. Last year, as well as the central bank buying that emerged in H2 09, Barrick
announced in September that it intended to close out all of its fixed-price and some
floating contracts and confirmed it had eliminated all of the hedges less than three
months later. This September, alongside market anticipation over QE2 and further
central bank buying, AngloGold Ashanti had announced it was closing out its hedge
book, and confirmed less than a month later it had completed the elimination of its gold
positions. Following this closure, we estimate the global hedgebook is now closer to
just over 100 tonnes, thus in turn, opportunities for further demand to be created from
premature closures have been substantially reduced. But even though this source of
demand is nearing its end, on a positive note, despite record prices, we have not seen a
surge in fresh hedging, and the hedging that has materialised has primarily been on the back
of new project financing. Of course, many producers are keen to maintain an exposure to
spot prices as they believe prices will continue to gain. Although the lack of buybacks has
created a gap on the demand side, for now this shortfall has been more than adequately
filled by robust investment demand. Perhaps more importantly, prices retain their strength
without this pillar, and for now, we believe, the strength of investor interest can still drive
prices to new highs.
The CB's are the major league for gold manipulation. They prefer using leases and the LBMA. COMEX is a side show.
I don't see the problem here. Their manipulation is the only way many of us have been able to accumulate physical at such a deep discount to its true value.
As long as people will accept dollars in exchange for gold, then the game won't change.
.
The miners knew they were getting in bed with the devil when they hedged out future production. However, it is sometimes the only way they can get finance. The smart ones are unwinding these positions and my understanding is most have. Companies like CDE really shot themselves in the foot by borrowging money to be paid back in shares. So what's a banker to do but short the shares every time a payment is due in order to receive more shares for less money. Tony Soprano would be impressed.
The good news is JPM etc have been losing money on these short positions.
Keep taking delivery.
+1
I don't know much about anything, but do the producers/miners that sell their silver have any recourse against the alleged manipulators, should they be found guilty?
Artificially lowering a price of a product another company produces would cause economic harm, no?
When the government does it, it's not illegal.