Whistleblower Exposes JP Morgan's Silver Manipulation Scheme

Tyler Durden's picture

Earlier today the CFTC held a sham hearing in which, among other things, the organization discussed position limits in PM speculation, because, you know, it's the mom and pop speculators that destroy the precious metal market (not JP Morgan or the New York Fed mind you). The hearing could not have come at a more opportune time. GATA has just broken a major story, in which a London metals trader-slash-whistleblower exposes JP Morgan's silver price suppression/manipulation scheme. At this point none of this should be at all shocking, and the only thing that matters is when CFTC's ex-Goldmanite Gary Gensler will be fired for allowing hundreds of billions of dollars to be sucked out of the PM market on behalf of such major market manipulating entities as JP Morgan and the New York Federal Reserve, for whom it transacts. Don't worry - the answer to that rhetorical question is "never", as it is the administration's goal to make all the millionaires among the bulge bracket firms billionaires, via legalized theft from honest investors. Furthermore, if indeed the CFTC is complicit in these manipulative events, as GATA suggest, we hope our objective mainstream media readers enjoin GATA in seeking justice for this criminal breach of proper regulatory enforcement.

From GATA:

Additional Statement by Bill Murphy, Chairman
Gold Anti-Trust Action Committee

to the U.S. Commodity Futures Trading Commission
Washington, D.C., March 25, 2010

On March 23, 2010, GATA Director Adrian Douglas was contacted by a
whistleblower by the name of Andrew Maguire. Maguire is a metals trader
in London. He has been told first-hand by traders working for
JPMorganChase that JPMorganChase manipulates the precious metals
markets, and they have bragged to how they make money doing so.

In November 2009 Maguire contacted the CFTC enforcement division to
report this criminal activity. He described in detail the way JPMorgan
Chase signals to the market its intention to take down the precious
metals. Traders recognize these signals and make money shorting the
metals alongside JPM. Maguire explained how there are routine market
manipulations at the time of option expiry, non-farm payroll data
releases, and COMEX contract rollover, as well as ad-hoc events.

On February 3 Maguire gave two days' warning by e-mail to Eliud
Ramirez, a senior investigator for the CFTC's Enforcement Division,
that the precious metals would be attacked upon the release of the
non-farm payroll data on February 5. On February 5, as market events
played out exactly as predicted, further e-mails were sent to Ramirez
while the manipulation was in progress.

It would not be possible to predict such a market move unless the market was manipulated.

In an e-mail on February 5 Maguire wrote: "It is common knowledge here
in London among the metals traders that it is JPM's intent to flush out
and cover as many shorts as possible prior to any discussion in March
about position limits. I feel sorry for all those not in this loop. A
serious amount of money was made and lost today and in my opinion as a
result of the CFTC's allowing by your own definition an illegal
concentrated and manipulative position to continue."

Expiry of the COMEX April call options is tomorrow, March 26.
There was large open interest in strikes from $1,100 to $1,150 in gold.
As always happens month after month, HSBC and JPM sell short in large
quantities to overwhelm all bids and make unsuspecting option holders
lose their money. As predicted by GATA, the manipulation started on
March 19, when gold was trading at $1,126. Last night it traded at
$1,085.

This is how much the gold cartel fears the CFTC's enforcement
division. They thumb their noses at you because in more than a decade
of complaints and 18 months of a silver market manipulation
investigation nothing has been done to stop them. And this is why JPM's
cocky and arrogant traders in London are able to brag that they
manipulate the market.

This is an outrage and we are making available to the press the e-mails from Maguire wherein he warns of a manipulative event.

Additionally Maguire informed us that he has tape recordings of his
telephone communications with the CFTC, which we are taking the
appropriate legal steps to acquire.

* * *

From: Andrew Maguire
Sent: Tuesday, January 26, 2010 12:51 PM
To: Ramirez, Eliud [CFTC]
Cc: Chilton, Bart [CFTC]
Subject: Silver today

Dear Mr. Ramirez:

I thought you might be interested in looking into the silver trading
today. It was a good example of how a single seller, when they hold
such a concentrated position in the very small silver market, can
instigate a selloff at will.

These events trade to a regular pattern and we see orchestrated
selling occur 100% of the time at options expiry, contract rollover,
non-farm payrolls (no matter if the news is bullish or bearish), and in
a lesser way at the daily silver fix. I have attached a small
presentation to illustrate some of these events. I have included gold,
as the same traders to a lesser extent hold a controlling position
there too.

Please ignore the last few slides as they were part of a training session I was holding for new traders.

I brought to your attention during our meeting how we traders look
for the "signals" they (JPMorgan) send just prior to a big move. I saw
the first signals early in Asia in thin volume. As traders we profited
from this information but that is not the point as I do not like to
operate in a rigged market and what is in reality a crime in progress.

As an example, if you look at the trades just before the pit open
today you will see around 1,500 contracts sell all at once where the
bids were tiny by comparison in the fives and tens. This has the
immediate effect of gaining $2,500 per contract on the short positions
against the long holders, who lost that in moments and likely were
stopped out. Perhaps look for yourselves into who was behind the trades
at that time and note that within that 10-minute period 2,800 contracts
hit all the bids to overcome them. This is hardly how a normal trader
gets the best price when selling a commodity. Note silver instigated a
rapid move lower in both precious metals.

This kind of trading can occur only when a market is being controlled by a single trading entity.

I have a lot of captured data illustrating just about every price
takedown since JPMorgan took over the Bear Stearns short silver
position.

I am sure you are in a better position to look into the exact details.

It is my wish just to bring more information to your attention to assist you in putting a stop to this criminal activity.

Kind regards,
Andrew Maguire

* * *

From: Ramirez, Eliud [CFTC]
To: Andrew Maguire
Sent: Wednesday, January 27, 2010 4:04 PM
Subject: RE: Silver today

Mr. Maguire,

Thank you for this communication, and for taking the time to furnish the slides.

* * *

From: Andrew Maguire
To: Ramirez, Eliud [CFTC]
Cc: BChilton [CFTC]
Sent: Wednesday, February 03, 2010 3:18 PM
Subject: Re: Silver today

Dear Mr. Ramirez,

Thanks for your response.

Thought it may be helpful to your investigation if I gave you the
heads up for a manipulative event signaled for Friday, 5th Feb. The
non-farm payrolls number will be announced at 8.30 ET. There will be
one of two scenarios occurring, and both will result in silver (and
gold) being taken down with a wave of short selling designed to take
out obvious support levels and trip stops below. While I will no doubt
be able to profit from this upcoming trade, it is an example of just
how easy it is to manipulate a market if a concentrated position is
allowed by a very small group of traders.

I sent you a slide of a couple of past examples of just how this will play out.

Scenario 1. The news is bad (employment is worse). This will have a
bullish effect on gold and silver as the U.S. dollar weakens and the
precious metals draw bids, spiking them higher. This will be sold into
within a very short time (1-5 mins) with thousands of new short
contracts being added, overcoming any new bids and spiking the precious
metals down hard, targeting key technical support levels.

Scenario 2. The news is good (employment is better than expected).
This will result in a massive short position being instigated almost
immediately with no move up. This will not initially be liquidation of
long positions but will result in stops being triggered, again
targeting key support levels.

Both scenarios will spell an attempt by the two main short holders
to illegally drive the market down and reap very large profits. Locals
such as myself will be "invited" on board, which will further add
downward pressure.

The question I would expect you might ask is: Who is behind the
sudden selling and is it the entity/entities holding a concentrated
position? How is it possible for me to know what will occur days before
it will happen?

Only if a market is manipulated could this possibly occur.

I would ask you watch the "market depth" live as this event occurs
and tag who instigates the move. This would surly help you to pose
questions to the parties involved.

This kind of "not-for-profit selling" will end badly and risks the integrity of the COMEX and OTC markets.

I am aware that physical buyers in large size are awaiting this
event to scoop up as much "discounted" gold and silver as possible.
These are sophisticated entities, mainly foreign, who know how to play
the short sellers and turn this paper gold into real delivered physical.

Given that the OTC market (where a lot of the selling occurs) runs
on a fractional reserve basis and is not backed up by 1-1 physical
gold, this leveraged short selling, where ownership of each ounce of
gold has multi claims, poses a very large risk.

I leave this with you, but if you need anything from me that might help you in your investigation I would be pleased to help.

Kind regards,
Andrew T. Maguire

* * *

From: Andrew Maguire
To: Ramirez, Eliud [CFTC]
Sent: Friday, February 05, 2010 2:11 PM
Subject: Fw: Silver today

If you get this in a timely manner, with silver at 15.330 post data,
I would suggest you look at who is adding short contracts in the silver
contract while gold still rises after NFP data. It is undoubtedly the
concentrated short who has "walked silver down" since Wednesday,
putting large blocks in the way of bids. This is clear manipulation as
the long holders who have been liquidated are matched by new short
selling as open interest is rising during the decline.

There should be no reason for this to be occurring other than
controlling silver's rise. There is an intent to drive silver through
the 15 level stops before buying them back after flushing out the long
holders.

Regards,
Andrew

* * *

From: Andrew Maguire
To: Ramirez, Eliud [CFTC]
Cc: BChilton [CFTC]; GGensler [CFTC]
Sent: Friday, February 05, 2010 3:37 PM
Subject: Fw: Silver today

A final e-mail to confirm that the silver manipulation was a great
success and played out EXACTLY to plan as predicted yesterday. How
would this be possible if the silver market was not in the full control
of the parties we discussed in our phone interview? I have honored my
commitment not to publicize our discussions.

I hope you took note of how and who added the short sales (I
certainly have a copy) and I am certain you will find it is the same
concentrated shorts who have been in full control since JPM took over
the Bear Stearns position.

It is common knowledge here in London among the metals traders that
it is JPM's intent to flush out and cover as many shorts as possible
prior to any discussion in March about position limits. I feel sorry
for all those not in this loop. A serious amount of money was made and
lost today and in my opinion as a result of the CFTC's allowing by your
own definition an illegal concentrated and manipulative position to
continue.

Bart, you made reference to it at the energy meeting. Even if the
level is in dispute, what is not disputed is that it exists. Surely
some discussions should have taken place between the parties by now.
Obviously they feel they can act with impunity.

If I can compile the data, then the CFTC should be able to too.

I would think this is an embarrassment to you as regulators.

Hoping to get your acknowledgement.

Kind regards,
Andrew T. Maguire

* * *

From: Andrew Maguire
To: Ramirez, Eliud [CFTC]
Sent: Friday, February 05, 2010 7:47 PM
Subject: Fw: Silver today

Just logging off here in London. Final note.

Now that gold is undergoing short covering, please look at market
depth right now in silver and evidence the large selling blocks in a
thin market being put in the way of silver regaining the technical 15
level, which would cause a short covering rally and new longs being
instigated. This is resulting in the gold-silver ratio being stretched
to ridiculous levels.

I hope this day has given you an example of how silver is "managed" and gives you something more to work with.

If this was long manipulation in, say, the energy market, the shoe would be on the other foot, I suspect.

Have a good weekend.

Andrew

* * *

From: Andrew Maguire
Sent: Tuesday, February 09, 2010 8:24 AM
To: Ramirez, Eliud [CFTC]
Cc: Gensler, Gary; Chilton, Bart [CFTC]
Subject: Fw: Silver today

Dear Mr. Ramirez,

I hadn't received any acknowledgement from you regarding the series
of e-mails sent by me last week warning you of the planned market
manipulation that would occur in silver and gold a full two days prior
to the non-farm payrolls data release.

My objective was to give you something in advance to watch, log, and follow up in your market manipulation investigation.

You will note that the huge footprints left by the two concentrated
large shorts were obvious and easily identifiable. You have the data.

The signals I identified ahead of the intended short selling event were clear.

The "live" action I sent you 41 minutes after the trigger event
predicting the next imminent move also played out within minutes and
exactly as I outlined.

Surely you must at least be somewhat mystified that a market move could be forecast with such accuracy if it was free trading.

All you have to do is identify the large seller and if it is the
concentrated short shown in the bank participation report, bring them
to task for market manipulation.

I have honored my commitment to assist you and keep any information
we discuss private,however if you are going to ignore my information I
will deem that commitment to have expired.

All I ask is that you acknowledge receipt of my information. The rest I leave in your good hands.

Respectfully yours,

Andrew T. Maguire

* * *

From: Ramirez, Eliud
To: Andrew Maguire
Sent: Tuesday, February 09, 2010 1:29 PM
Subject: RE: Silver today

Good afternoon, Mr. Maguire,

I have received and reviewed your email communications. Thank you so very much for your observations.

 

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swamp's picture

There's millions of little buyers like me, in the USA and in other countries. A ZH poster last week said the Bangkok gold markets were smokin'. Jim Sinclair just wrote yesterday that Dubai gold market was busy.

Problem Is's picture

"Good thing JPM is to big to fail.  So when this finally blows up in their face we can bail them out again."

Jamie Dimon for Secretary of the US Treasury

As Jamie likes to say:

"Silver, peasants!"

perchprism's picture

 

I have a good bundle of silver and probably enough gold (not certain, but I'm not too worried).  Let the price drop and I'll max out my credit cards if I have to.  I don't care.  Silver and gold will eventually regain their luster in this world, when folks realize that fiat debt-based paper has gone the way of the hand-shake.

DoChenRollingBearing's picture

You got it buddy.  I bought 7 toz of gold Eagles the day I got back here to the USSA from my trip.

"They" take the prices down more?  I'll join you in line there at the coin shop with FRNs to spend on gold (although the local shop I go to said he will let me have his platinum 3 pieces of 1 toz Eagles at a mere $35 over spot, YOW!, that's a deal, and I have more $ value in Pt than in silver).  Guess I know where I'm going Saturday!

Hulk's picture

I bought 7 toz of gold Eagles.

Is toz supposed to be tonz DoChenRollingBearing?

Great over spot price, best I have ever seen...

DoChenRollingBearing's picture

toz = troy oz.  Yeah I wish I had tonz...  Of course 1/3 of any tonz would be on its way OUT of America.

Yeah, if I understand him correctly, paying a mere $35 over spot for Pt Eagles is almost incredible.  That is even less than the premium for gold Eagles (typically $70 for me).

Mr Lennon Hendrix's picture

I will be loading up tomorrow, as I did today.

Nihilarian's picture

Damn straight, Mr Hendrix, damn straight.

DoChenRollingBearing's picture

Mr Lennon H. and Nihilarian are thinking like I do!  I will do my part to strip the S. FL bullion dealers of Au, Pt and Ag on Saturday!

I also have an old small physical position in palladium (Canadian) that I will hang onto, for old times sake.  Hey, Pd stores 900 x its weight in hydrogen gas, the top of the class in that regard.  And if the Asians or the Europeans find a way to use Pd (cheaper) than Pt for DIESEL engines (catalytic converters), then any pikers with palladium are going to do great!

I have repeated, perhaps 'ad nauseum' the below website that has really helped me open my eyes to the REAL value of gold:

fofoa.blogspot.com

bigkahuna's picture

Good article. I am in no way surprised that the PM market is under manipulation. It is also no surprise that our federal government is allowing it to happen. If history will be written truly-the last few years and the next one or two are going to be without parallel unless you go back to the thievery of declining ancient Rome.

Rick64's picture

This should be spread around the internet and every news agency. This is concrete evidence of manipulation and CFTC corruptness. He should of went straight to the media outlets that care and won't bury it bypass all government organizations. Like Ellsberg.

Bob's picture

Perhaps, but he did keep good records and got it to the media in the end. 

Great idea about pushing it out, though--I only had 10-12 media outlets in my contact list, but I gave it my fair share of push. 

swamp's picture

Murphy has been blasting away for years but who carries him but ZH? GATA paid $379,000 for a full page ad in WSJ. Did any reporter from WSJ ever follow up? Nah.

tip e. canoe's picture

i actually think that those email exchanges with the CFTC are priceless.  i love the one where McGuire refers to the fact that they asked him not to tell anybody else.

"We're from the government.  You can trust us.  Now keep your mouth shut like a good American."

mouser98's picture

yes, in other words:  "join me in a criminal conspiracy to cover this up, thereby becoming an accomplice to it"

Bob's picture

I'm predicting some real fallout on this one.  Hope it ain't just the hope left in me.  This looks like a major break--whistleblowers are long overdue and it's their time to emerge in numbers.

This nation has alot more conscience than we've seen. 

Frank Owen's picture

+1, Bob. But the irony of your name and the character in Fight Club is somewhat disturbing.

Bob's picture

Go ahead . . . Cornelius, you can cry.  

Now please get back to work and spread the word about this stuff!

Hulk's picture

Sorry to say nothing will ever come of this.

System is too corrupt Bob.

Whistleblowing just isn't functioning in the current fraudulent environment

Bob's picture

I think it's like anything else--when enough people start singing their own tunes, the puppet masters are gonna have major problems. 

Every potential whistlblower knows the ache of conscience that dogs their days and torments their nights. 

There are literally a million potential whistlblowers.  If only ten percent of them act to salvage their honor and dignity, the game changes.

Whistleblower advice: See a lawyer specializing in this area ASAP, take your notes with you. 

web dizajn's picture

I agree completely. Neither whistleblowers nor the general public have any kind or real power to change anything. web dizajn

lsbumblebee's picture

This also will be ignored by the politicians. Because there are no laws for the power elite it doesn't matter what Mr. Maquire has to say. The only chance for the average investor to realize its true value is to take physical possession of his or her gold and silver and force an actual physical shortage of precious metals for investment and industrial use. Only then will we see what the market is really willing to pay.

Shameful's picture

Doing this will actually be what exposes this corruption to the public.  The only chance this comes to the fore is if they are no longer able to deliver physical.  Until then, be happy the price is manipulated, because it gives us guys who are showing up late tot he game a chance to buy.  If they are this short and they get called on it they will need to cover, and they will have all the backing of the UST and Fed Reserve to make sure hey are liquid enough to cover it.  To big to fail.

TheGoodDoctor's picture

Amen brother. It's all about the supply.

Hulk's picture

Exactly right Isbumblebee

And you had better be able to back the physical possession up with lethal force. Massive lethal force. Join together in order to protect your family, wealth and rights.

Lionhead's picture

Thank you Mr. Maguire for stepping up & exposing this fraud once & for all. You sir, have courage & conviction to do this. You have my deepest respect. Stay safe.

Hulk's picture

It actually doesn't boil down to a safety issue Lionhead, because everyone in the game knows its rigged and nothing will become of it. Just have to go through the SLOW motions,which is great because this places one that much closer to federal retirement....really

Segestan's picture

When honesty is on the outside looking in don't expect justice.Just another voice in the wind.

SWRichmond's picture

Looks to me like TA figures prominently in this scheme, where "support" levels are targeted.  So who is responsible for foisting TA upon the masses?  TA always seemed like an insider scheme to me; if I have the power to push markets, I have the power to steal your position from you, especially if I know where your stops are likely to be.

i.knoknot's picture

likely?

these guys are market-makers and know exactly where the stops are...

gnarly.

Harbourcity's picture

hhahaha I love being a Canadian.  Wasn't that interviewer hilarious.

Pegasus Muse's picture

Once the government proves itself corrupt and complicit in Gangster Bankster fraud and market manipulation the game is over.

I suspect the people, upon hearing the truth, will conclude not only the banksters are criminals, but so are the do-nothing regulators and the enabling crony politicians.

History is replete with stories of what happens to governments and so called "power elites" when citizens conclude they have been deceived and defrauded by their own leaders. 

Evil must be removed.

So, Mr Gensler, will history repeat itself?  The tricoteuse are beginning to knit faster ( http://en.wikipedia.org/wiki/Guillotine ).

Mad Max's picture

The "people" are not going to rise up because of this or any other enormous crime against honesty and the concepts of true capitalism.

The people may rise up when their cable tv stops working and they can't get beer at the 7-11 any more.  When they do rise up, think Watts Riots, not anything resembling the American Revolution.  They will probably lynch people, all right - most likely the honest and innocent people who are victims, not creators, of our current ponzi nation.

Figure out your own way of dealing with the decline of this empire.  And hurry.

perchprism's picture

Ultimately what we need is for a country, any country, to decide to back its currency with gold.  Then, and only then, with its daily screams of outrage at the gold bourse manipulation, will anything be done. 

Israel could do it, for example.  Assuming it has enough gold.  Silver could be added, if necessary.   

Shameful's picture

You would think a Muslim nation would do it...you know with their holy book demanding that money be gold and silver...guess we can see how fundamentalist they really are... (Note this is not a slam at Muslims only to point out that they are not blindly follwong their holy book, so maybe not as fundamentalists as some pundits claim)

Also at the risk of an argument, if you want hard money it needs to be gold or silver, or really anything.  Bi-metalism is an invitation for trouble.  The only way to have gold and silver as money is to have them completely separate and distinct and let them trade against each other.  Setting an artificial exchange rate will cause one or the other to be under valued and taken off the market.

perchprism's picture

 

A Moslem country, or an Asian country like Thailand, for example.

 

In 1994 I live for a while in Saudi Arabia, working for Riyadh Telephone Cables.  I accumulated some gold while there, all 21 or 24K.  ElMirey Street contains their gold souk.  Later, Stateside, I bought a lot of gold/gems/jewelry from Thaigems.com. They were great at first, but became somewhat lame with the advent of eBAY.  My best jewelry pieces are from Thaigems.  18 and 21k gold set with beautiful diamonds and gemstones such as sapphires, rubies, and D-Block tanzanite.  They let you design your own jewelry in the early days.  I have 10's of thousands of dollars in 24-K gold with D-flawless diamonds.  Only recently have I placed any attention toward coins.  I fear the tradeability of gemstone-encrusted jewelry won't be as fluid as a Golden Eagle. 

Chickens is where it's at, anyway, and arable land.  I'll have both soon enough, although my current garden is rather large.  Five acres across the road is what I have my eyes on now.  Nice plowable farmland.  I don't plan to scrape by on the skin of my teeth to survive--I plan to prosper, with 100+ chickens, and plenty of potatoes, corn, beans, etc.  People will have to deal with me in either silver, gold, or bartable goods.

 

 

Shameful's picture

Like I said I'm all for a country to go gold.  I would dance a jig if a Muslim country did it.  Hell I might have to learn a new language if say Saudi Arabia did it, or the rumor (wishful thinking?) about a gold backed currency for the sale of Middle East oil.

That sounds awesome!  Sounds like an amazing stash, and jewelry will always be worth something

I agree that agg will be great.  But personally I think there will be a lot of turmoil out there. I would rather be fluid and mobile.  But then again my net worth is not overly impressive, I could not buy a good plot or the gear to work or, and I don't have those skills anyway.  Though much to my surprise my dad is talking about buying a section of land.  Will be a damn sight better then living in a city even if he isn't going to farm it.  Admirable you are planning on thriving, I'm grateful I got a chance to plan.  I'd just like to be able to ride this storm out.

SWRichmond's picture

http://gulfnews.com/business/economy/launch-timetable-for-gcc-single-cur...

If the Saudis can get a better defense deal, or if (when) USD goes kaboom like a glock firing out of battery, they will do it.

http://www.youtube.com/watch?v=Vceh44UK-8I

delacroix's picture

you may be able to farm land, without buying it, just do it. the banks won't be keeping close tabs on a bare lot.  junk silver is IMO the superior barter medium, get yourself in the mindset to kill the chickens you want to cook, and stock up on surplus feed. the chickenshit is excellent garden fertilizer. expect to give away a sizeable portion of what you grow, maybe barter for labor, and security. make it in your groups best interest, to protect your spread

jeff montanye's picture

the banks aren't keeping close tabs on built-on lots either.

velobabe's picture

haven't you been reading about what the drug cartels? are doing in california with the vast marijuana groves, same colorado, on government national forests or BLM land. i see this on the same level your talking about. sophisicated farming, using lots of water though.

my friends started a chicken and turkey farm for resale they are dead broke.

big food corporations occupy this space, i think. can't compete even if raised free range.

SWRichmond's picture

You'd have a real tough time enforcing a claim to the produce from the land, though, if questions ever arose.  What would you do if you found yourself getting lots of unsolicited "help" at harvest time?

tip e. canoe's picture

SWR,
(a) all the more reason to keep it discreet.
(b) build a fire, bring out the moonshine & have a feast?

Hulk's picture

Check out horse and plow perchprism, before you buy a tractor

Have someone come out and give you a demo, let you take a test

drive,, in case you haven't tried that before..

We are also doing forest raised pigs now.

Chipotle restaurants will be buying all our forest raised pigs,

the owner is really into properly raised food

THE DORK OF CORK's picture

They might have to change their international reserve accounts first , as at the moment they have zero gold in their vaults

www.imf.org/external/np/sta/ir/isr/eng/curisr.htm - refer to contents - official reserve assets and other foreign currency assets