Did Bankers Deliberately Crash MF Global to Crash Gold and Silver Prices?

smartknowledgeu's picture

Did bankers use the MF Global bankruptcy to suppress gold and silver prices and create the panicked appearance of collapsing precious metals to give themselves additional precious time to delay the crash of the Euro and the US Dollar? As crazy as this sounds, a closer investigation of some key data seems to imply this possibility. Though bankers claim that they created futures markets to provide a mechanism for commodity producers to hedge against volatile market prices, I have never bought the kool-aid the bankers were selling in this explanation for the rationale behind their creation of futures markets. Given that today, futures and spot prices for gold and silver in the short-term are entirely set by banker manipulation of the supply and demand for paper derivatives that often have no backing of any physical metal, I believe that bankers created futures markets for the explicit intent of allowing themselves to manipulate the prices of commodities and to enrich themselves, and themselves only, through the process of alternately and artificially inflating and deflating prices as would not be allowed in any type of free market. In other words, bankers invented futures markets to allow themselves to siphon off and steal money from other parties that wanted to invest in commodities with a mechanism, risk-free to them, that required deception and zero honest work and zero integrity.


The futures markets in commodities is such a deceptive market that it is hard to know even where to begin to unravel its many mechanisms of deceit in all their glory. Futures contracts traded on the world’s largest commodity markets such as the COMEX in New York and the LBM in London allow bankers to commit reverse alchemy, turning real physical gold and real physical silver into nothing but false paper contracts and air. Secondly, through futures contracts traded in New York and London, bankers routinely defy the economic principles of supply and demand, and set short-term prices for gold and silver that literally have zero to do with the supply and demand dynamics of the physical gold and physical silver market. In the world of physics, such an illogical, comparable feat of deception would be the indefinite suspension of the law of gravity. Bankers invented paper derivative gold and silver markets to allow themselves to literally defy and suspend every single sound economic principle that exists.


This is important to understand because not only does understanding this concept make the bulk of what you learn in business school a lie and entirely useless, but also because bullion banks such as Deutsche Bank, Citibank, JP Morgan, Goldman Sachs et al that serve as the puppet conduits for more powerful families that control Central Banks, routinely used to lease physical gold into the open market as their primary mechanism to suppress the price of gold and silver. However, as their mechanism of fractional reserve banking began to threaten the viability and utility of the most widely used fiat currencies in the world, the USD and the Euro, bankers understood that they needed to utilize and/or create another mechanism to suppress gold and silver prices that could replace selling physical PMs into the open market as they no longer wished to give up a solid asset with no third party counter-risk for what they knew they were turning into essentially worthless pieces of paper. Thus bankers increasingly turned to the paper futures markets to manipulate and control the price of gold and silver and also served up additional bogus derivative products to the public like the GLD and SLV ETFs. Bankers knew that there was no way they could possibly control the price of gold and silver if the supply and demand determinants of physical gold and physical silver had anything to do with the price, so they conspired to fool the world into believing that the fake paper price they set was set by the supply and demand of the physical markets.


Collapsing OI of Gold/Silver Futures Markets Directly Related to MF Global Collapse?



And here’s where MF Global enters the banking cartel gold and silver price suppression scheme. Today, short-term futures and spot prices of gold and silver have almost nothing to do with the physical supply and demand dynamics of gold and silver, as odd as that may sound. Bankers created the futures markets and paper derivatives in gold and silver to kill free markets and for the express purpose of suppressing gold and silver prices. Today we literally have no idea what the free market price of gold and silver should be or could be, besides the fact that both would be multiples higher than their current price, because of the fake paper market in gold and silver that the bankers created.


As well, bankers ensured that they armed a legion of worker bees in commercial investment firms all over the world that would represent these paper derivatives backed by very little physical gold and silver to their clients as the equivalent of investing in 99.999% pure physical gold and silver. In doing so, the worker bees thereby lured people all over the world into what will turn out to be the fatal mistake of not buying millions of troy ounces of physical gold and silver and instead buying their offering of fool’s gold and fool’s silver. When we receive a massive default of gold and silver futures contracts that stand for delivery on the COMEX or LBM, or if the SLV and GLD default, then, and only then, will the public start to see true price discovery of physical gold and physical silver in action. However, for clients of MF Global, unfortunately, they have already experienced the mistake of buying fool’s gold and fool’s silver from the bankers and have received air in exchange for gold and silver futures contracts they purchased that stood for delivery.


Bankers invented fake paper gold and silver contracts, because they knew that if they could not fulfill contractual obligations to deliver physical gold and physical silver because the contracts were a binding lie to begin with), that they could always renege on these contractual obligations and give the people the nothingness they truly owned in return. And thus, we have the story of MF Global.


Ratings agencies downgraded MF Global on Oct 25 and MF Global declared bankruptcy on Oct 31. If one scours the data that the Chicago Mercantile Exchange (CME) releases via its aggregated Commitment of Trader (COT) reports during this time period, one may not notice any data that immediately stands. However, investigation of the disaggregated reports reveals far more interesting patterns that almost undoubtedly can be traced back to the collapse of MF Global. In a period just preceding the MF Global collapse, from late August to mid October, the open interest (OI) in longs in gold and silver futures within the Managed Money category collapsed by 33.75% in gold (202,430 to 136,103) and 44.74% in silver (29,849 to 16,494). During this exact same time period, shorts in the gold and silver futures in the Managed Money category increased by 19.3% and 83.82% respectively (see the chart below). Within the Managed Money category, between Sept 13th and 27th, in just a two-week period, the drop in OI in the longs in gold and silver futures was even more pronounced, with a 25.41% plunge and 34.3% plunge in silver. I imagine if someone could trace the connection of this plunge in OI in the Managed Money category in the gold and silver futures markets, one would discover that a good deal of the plunge was somehow directly tied to the impending MF Global bankruptcy and its freezing and/or liquidation of gold and silver futures accounts in its possession.



After Phase I of the collapse in OI in the gold and silver futures markets, Phase II followed. When the story about MF Global’s legalized client theft hit the presses, an enormous public distrust of the entire futures markets started to build. If clients lost millions of dollars in gold and silver futures accounts due to forced liquidation or freezing of contracts that they were holding for delivery, anyone that had considered using the futures markets to take delivery of real gold and real silver following the MF Global debacle obviously reconsidered their options. Thus, due to the massive fraud of the futures markets that was revealed by the MF Global collapse, another huge drop in the OI of gold and silver longs in the Managed Money category occurred during Phase II (as labeled in the above chart) that respectively amounted to an additional respective 11.79% and 7.48% plunge. In essence, it appears that the MF Global collapse served up the exact same price suppression effect as a CME issued initial or maintenance margin hike in gold and silver futures, which forces a tidal wave of unwanted and involuntary liquidation of gold and silver longs that consequently violate technical support lines and trigger technical sells.


Of course, we also have to factor in the temporary OI-increasing effect of the risk-on CME event when they lowered initial margins to a 1:1 ratio with maintenance margins at the onset of November. Still, given the figures presented in the chart above, it seems that bankers used the MF Global collapse to force liquidation of gold and silver longs in the futures market quite rapidly and drastically. Why is this important? This is important because typically strong hands ride out any temporary banker manipulations of gold and silver prices downward. In this case, strong hands, if they existed at MF Global, were not given this opportunity and were forced to liquidate or had their accounts frozen whether or not they desired such an outcome. Furthermore, if primarily strong hands were forced out of the futures market, this would leave the majority of volume in the gold and silver futures markets primarily in the hands of the criminal banking cartel. We’ve seen repeatedly, this past year in the US S&P 500 index, when low trading volume primarily controlled by the banking cartel has translated into curious and inexplicable market bounces of 2% in a single day. In other words, low trading volume allows bankers excessive and easy manipulation over markets. If this was indeed the scenario bankers deliberately created with the MF Global collapse, then the MF Global collapse and simultaneous collapse of open interest in gold and silvers futures certainly would have paved the way for the banking cartel to easily manipulate gold and silver prices.


There was also further circumstantial evidence that bankers used the MF Global collapse to collapse gold and silver futures markets at the end of 2011. For example, in an article posted on the SilverDoctors blog by Jim Willie in which he gathered data regarding the amount of physical gold and silver ounces represented by the longs at MF Global that were standing for delivery in the futures markets before these contracts imploded, he stated: “JP Morgan increased the amount of registered silver and gold by precisely the amount that was suppose to be delivered [by MF Global]…JP Morgan effectively averted both a Comex default and a European Sovereign Debt implosion.”


Silver Lining in the MF Global Debacle?


Can there be a silver lining in the MF Global debacle? I believe that in the long-term, this extremely unethical, negative event could transform into a positive game-changer in the way people buy large amounts of gold and silver. Obviously, the futures market is not a safe market for anyone seeking to take delivery of millions of dollars of physical gold and silver as many MF Global clients learned. The GLD and SLV ETFs, of course, are no safer than any gold or silver futures contract for the same reasons. So in the future, and I mean the immediate future starting now, I believe that large buyers of physical gold and silver will now opt to bypass the bullion bank’s middle men in the futures market and go directly to the gold and silver mining companies to buy large quantities of bullion. This should eventually help usher in the death of futures markets as a mechanism for buying physical gold and physical silver and be a step towards establishing a free market for gold and silver prices for the first time in our lives. Mark Cutifani, CEO of AngloGold Ashanti, recently echoed the same: "Major [asset management fund] buyers are finding it is hard to get physical gold. People are coming directly to us [for large gold purchases,] people who want tonnes of physical gold, people with serious financial muscle, because they are finding it is very difficult to secure the volume of gold they want. That is something we have noticed over the last 18 months, and it has been increasing in the last six months. People are finding it’s hard to get physical gold."


People that want to own physical gold and physical silver never should have been buying the GLD, SLV, or gold and silver futures. Now, in light of the MF Global debacle, scores of people will stay away from these fraudulent vehicles for good.



About the author: JS Kim is the Chief Investment Strategist and founder of SmartKnowledgeU, a fiercely independent investment research and consulting firm with a mission to help re-establish the monetary freedom that bankers have stolen from us. Despite believing that gold and silver will remain highly volatile in 2012, JS believes that long-term holders of physical gold and silver will be richly rewarded as bogus paper gold and silver derivatives start collapsing and reach their intrinsic value in coming years. Follow JS on Twitter and Facebook.

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Bicycle Repairman's picture

"I believe that bankers created futures markets for the explicit intent of allowing themselves to manipulate the prices of commodities and to enrich themselves, and themselves only, through the process of alternately and artificially inflating and deflating prices as would not be allowed in any type of free market."

There are no free markets, except for labor.

Alpine's picture

JP Morgan Shorts

An important consequence of the Gold/Silver effective confiscation of outright Gold/Silver ownership positions with vault receipts, is that the longs will no longer be willing to have large positions on the COMEX, leaving the Fed executioner (JP Morgan) with their disproportionate short positions to continue to manipulate the price of Silver & Gold for some time to come.

Alpine's picture

JP Morgan Shorts

An important consequence of the Gold/Silver effective confiscation of outright Gold/Silver ownership positions with vault receipts, is that the longs will no longer be willing to have large positions on the COMEX, leaving the Fed executioner (JP Morgan) with their disproportionate short positions to continue to manipulate the price of Silver & Gold for some time to come.

Quinvarius's picture

The problem with the COMEX/MF Global/Bankers trying this game is that they are wired into a global futures system.  The book just gets passed to an honest exchange.  They cannot stop the rise in paper prices anymore than they could stop the depletion in physical.  Infact, as they lose customers and OI, they lose the ability to influence global prices.  Everything the cabal does to stop the price from rising has a short term effect that works for them, but beyond a couple weeks it works against them 100 fold.  The CME was stupid not to make the MF Global customers 100% as their agreements say they will--Incredibly stupid. It is like when they kicked US citizens out of the gold and silver FOREX markets thinking that would stop demand.  Everyone just went to futures and physical.  Now they are messing with the futures market.  Everyone will just go to physical.  Every cabal action has a hidden backfire/blowback effect.   

twotraps's picture

great point and I'd like to think that the same applies to all mkt intervention....I keep waiting for a 10X reaction in another part of the mkt system to compensate for all the bullshit over the past several years.  

strannick's picture

Before anyone goes guffhawing at the title of this article, realize too, that regarding the silver position limits the CFTC said they would enact, were first put off until January, and now have been put off until May. This issue is a leviathan seething beneth the surface, and corrupt and appeasing regulators at the CFTC (Jill Sommers, Scott OMalia, Bart Chilton, Gary Gensler, and the new chick, I forget her name), are doing anything in their power to buy time for the bullion banks, at the expense of precious metals investors. Dont forget they have had an open investigation for silver manipulation for over 3 years. One of the Commisioners, Jill Sommers, voted against even having a public hearing on precious metals position limits.

The Beam's picture

When I saw MF Global file for bankruptcy, I was reading the story about how they were going to be overseen by JP Morgan. Knowing that they were a big player in commodities (see their stake in the LME), I INSTANTLY remembered the lawsuits against JP Morgan and HSBC for market manipulation (specifically in the silver market). I knew something was there and to follow the money.

Sure enough, JP Morgan has their hands in every part of MF Global.

I see the occasional story about "this" and "that", but nothing has pieced all the parts together. I emailed people the connections. Most didn't seem to think it was a good enough story.

With JP Morgan's positions, and the worrying emails that caused the investigation against them for market manipulation (paper shorting), it is interesting when their physical silver reserves TRIPLED OVERNIGHT (I did see Tyler Durden comment on it)

JailBank's picture

I have already been going past themiddlemen and buying silver directly from First Majestic.

San Diego Gold Bug's picture

First M's prices are Ok but you will get much better pricing on your silver from the biggest dealers.  Check prices at comparesilverprices.com and you will see three dealers that beat FM's prices by a lot.

lakecity55's picture

Thanks, and a hat tip. Had not found a centralized PM link until your post. I just picked up some Maple Leafs and AU US half dollars.


If anyone is interested in another valuable metal (Full Metal Jacket), here's a good link with lowest prices:



Happy New Year, bitchez!

Pemaquid's picture

Year end will find PM manipulated so that MSM can pronounce them a looser. Back up the truck Jack!

XtraBullish's picture

Gold and Silver are shorts until mid-January - buy the ES for a move to record highs...

Benjamin Glutton's picture

Did Kyle Bass force JPM/COMEX to take out MFGlobal by taking delivery of 1 Billion in Gold a couple of weeks before MFG downgrade?


2 minute video of Mr. Bass explaining how he took COMEX Gold from 35:1 OI to 80:1 OI overnite!




Gimme the gold.lol

slackrabbit's picture

This is what Kyle Bass and GATA have been complaining about for years...after no one listening, I guess he made the point pretty clearly....'if the system screws you, then you screw the system'

Theres always an appropriate youtube ... http://www.youtube.com/watch?v=EmDQiL3UNj4


"it's not enough, but its close" ;-)

orca's picture

Not to say "I told you so", but I told you so. Electronic gold will go to zero, while physical will spike, or rather fiatponzi will crater (since 1 gram of gold stays 1 gram of gold). Before that we will have force majeure, ie the "temporary" suspending (temporary as in for the next 30 years) of physical delivery, due to "unprecendented dislocation" or something similarly bullshitty.
Your mantra while accumulating physical should be "rather expensive than not at all".
The only good thing is that you can hedge physical with futures,just don't forget to bail out of your electronic shorts before all play is suspended.

vegas's picture

While you bring up some good points, the main disagreement I have is that banksters act as one. In any conspiracy, everybody has to act together or it doesn't work. I just don't see every bank playing along with this.



Smiddywesson's picture

You don't see every bank playing along with this?  Cooperation and secrecy is at the heart of banking.  Some examples:  

  • Central banks are buying gold, all over the world, all at the same time, and yet, gold prices are falling
  • coordinated margin hikes in the US, London, and China
  • Coordinated interest rate policies
  • The central banks are owned by the same shareholders
  • The Fed bailed out foreign banks for a reason
  • How about this?  It is in the interest of a ruined economy to devalue their currency first, and yet, the only printing being done is just enough to stall and continue to buy up gold.

The Fed and the ECB are the big fish.  They ensure the cooperation of the little fish through force.  They are cooperating.  It is their nature.

onebir's picture

Mark Cutifani, CEO of AngloGold Ashanti, recently echoed the same: "Major [asset management fund] buyers are finding it is hard to get physical gold. People are coming directly to us [for large gold purchases,] people who want tonnes of physical gold, people with serious financial muscle, because they are finding it is very difficult to secure the volume of gold they want. That is something we have noticed over the last 18 months, and it has been increasing in the last six months. People are finding it’s hard to get physical gold."

I think this is a direct quote from Kingworldnews (& worth attributing).

Zola's picture

the big problem is the miners using the COMEX price to make deals...as long as they base their sales on that fraudlent paper price, nothing will change

GoldBricker's picture

There is talk by Jim Willie (I've read him for years; he's overwrought but generally correct) to the effect that big investors are buying directly from miners & fabricators since exchanges can't deliver large orders quickly and are not to be trusted with cash balances.


toadold's picture

The commodities futures market didn't deal in gold/silver when it first started. It was agricultural products. Which is one of the reasons that  in the US it got big in Chicago.  When it first started the people using it were producers and processors.  As it grew and added more non ag commodities, metals and such, it aquired more crooks and manipulators.  Now days the biggest crooks are in bed with the government and thats what has made it so nasty. You can't trust the stats put out from government sources, and one big baking company that  I know of has it's own in house metorlogist now.  This corruption of the market is cracking a lot of peoples rice bowls and I suspect that the blow back is going to be spectacular.  

twotraps's picture

exactly, futures were not invented for gold manipulation.

unirealist's picture

And what happened with the 400 tons of gold owned by Libya?

Where is that now?  I suspect that a LOT of it has been sold into the market to suppress the price of gold.

I also suspect the author is right that the collapse of MF Global is connected to the dire dearth of eligible metals on the Comex.  I don't think we will ever know exactly how and why.

The system is turning to more and more desperate measures to stave off the inexorable forces of reality.

When the crash comes, all anybody is going to know is that the rich fucked us, and the consequences are going to be extreme.

Google "Reign of Terror."


GoldBricker's picture

See my post above. For what it's worth, Willie mentions the use of Greece's 114 tons as well as Libya's 144 tons (where he gets his numbers, I don't know) to engineer a short-term drop.

nathan1234's picture

I dont think there are many real PM buyers left in COMEX. It's just the Crooks buying and selling amongst themselves to fool the public.

And God help anyone who sells their real physical stuff in Comex.

They may never get their money

The CME is a cesspool of criminals

HurricaneSeason's picture

What about Bear Stearns silver shorts picked up by the taxpayer? It's a small market when there are trillions in taxpayer funds floating around.

eri's picture

Wow, what a stupid article.

MF Global is the reason why gold price is falling?!?!

What a crap.

The real dissapointment is to read this kind of crap on Zero Hedge.

Tyler, you are losing it, man

russki standart's picture

Ad hominems and personal attacks are not arguments.  No one forces you to read this.

scatterbrains's picture

I could just as easily think the opposite.  Corzine was hating on Goldman after the way he was dumped out. If he knew about a suppression scheme he may have took the other side of the trade knowing that it will eventually blow up on GS/JPM. Once mob banker's saw what he was doing they took silver down hard and a few weeks later MF was bust. Perhaps he's still a free man because the banksters know they can never admit what really happened and Corzine knows this.  The only reason I doubt this line of thinking is because if true Corzine would have been murdered by now.  Unless he hedged his life by threatening to reveal hard evidence in the event of his death or something.

jumblies's picture

So state your case, show some data to back it up and explain why you disagree with his premise.

Benjamin Glutton's picture

This reminds me of going to Solid Gold with some buddies who blew past the doormen sticking me with the cover charge for the group which no sooner had I paid I look up and two of them are being escorted out for unauthorized touching of the "Gold".



Look but don't touch Bitchez!

Heyoka Bianco's picture

These "banker conspiracy" posts always make me laugh. They all assume a level of evil intelligence and control that is just not humanly possible (please to be noting that even when they completely game the system, it still ends up in the shitter), and that egotistical, self- absorbed, self-approving pricks can some how come together to work for their common good (or evil, depending on your point of view). Even a cursory examination of any professional sports team will tell you this just don't happen.  Even the best teams can sink quickly under the slightest shift in conditions.


The "evidence" cited above can be interpreted in a myriad of ways, but the most obviously likely is simply that most of the 'commercials' knew well in advance that MF was going to live up to its initials, and they knew to dump the longs and jump on the short side when the feces impacted the swirling blades. The power of these yahoos to influence events is far less than is commonly believed, but the general consensus on their frontrunning abilities is probably spot on.

russki standart's picture

Just because you do not find it humanly possible does not make it so.  My suggestion is to start researching central banks and foundations and learn what are the mechanisms of control, that most of our history is not random but directed. 

Money 4 Nothing's picture

Yes, I said that from day 1, Jon was sent there to gut the firm and my reply was glossed over.



PsychicWebbah's picture

So the moral of the story is if you plan to to take physical delivery make sure JPM or GS is your broker as they will never fail. Then we can see the real hurt when they can't come up with the metals we are after.

SilverTech's picture

Don't think that being a JPM or GS customer will protect you in any way. Just makes you an easier target.

non_anon's picture

ding, ding, ding, ding

AUD's picture

Though bankers claim that they created futures markets to provide a mechanism for commodity producers to hedge against volatile market prices

I suggest to you that in fact futures markets were 'created', more likely evolved, to allow producers to sell forward their produce, that is to monetise it before it is even produced. It is easy to see how this would benefit the producer, it is a form of credit for the producer.



twotraps's picture

thanks for that...its not why they were 'created', kinda of a drag on credibility but I don't doubt that its manipulated, its about gaming the system these days, trading is secondary.

Advoc8tr's picture

Entirely plausible IMO.  If futures were in fact for the stated purpose of hedging then you would have to own the undelying commodity to short it, there would be no leverage allowed and the vast majority of contracts would be 'delivered' on expiration.  It is clearly just a casino at this point and the house takes a cut no matter what happens.  It is reminiscient of that 1 guy in a billion that hits the super jackpot at the casino only to be thrown out and told it was a computer error .....  the prize never existed in the first place just like the corresponding amounts of physical commodity do not exist in the futures market.

GoldBricker's picture

I recall reading, around 2005, Ted Butler claiming that the total short/long open interest in silver was greater than all the above-ground metal in the world. (I suppose we have the same thing in the 'notional' hundreds of trillions in non-commodity derivatives.) It's the fractional-reserve idea at work.

So what you say is true; these are just bets on a future event, like a sports bet. And like sports bets, there is always the potential for the betting to leak through and, Heisenberg-like, affect the event itself.

t0mmyBerg's picture

this post reminds me of the point in Finding Nemo when Marlin and Bluie are supposed to jump out of the EAC at Sydney and one of the little turtles says something like "then you rip it roll it and jump it".  Marlin looks at him and says something like "I know he is trying to say something to me, I just don't know what it is".  Although that may be giving too much credit in this case.  Low signal-to-noise ratio.  I guess in this slow holiday season, in the deep breath before the coming storm, some filler was needed.

Bendromeda Strain's picture

And you thought that point was so clever you couldn't be bothered to google the character's actual name?

Freddie's picture

The silver linking in the MF Wordlwide debacle would be seeing Jon Corzine swing from the end of a rope.

The Peak Oil Poet's picture



yet anoher shill post by ZH


watching the ZH headlines amidst the headlines of my now something like consolidated 300 news feeds puts things into perspective.


ZH i loved you when i met you like you were a virgin beauty.


Now i see you as just another avaricious slut





Smiddywesson's picture

"300 consolidated news feeds."

 LOL, garbage x 300 is still garbage.  It's the quality of what you put in your mind that counts.  This isn't a hot dog eating contest for the mentally obsese.

My suggestion is to cut it down to 299.

mrgneiss's picture

Awesome response, garbage times 300 is still garbage!

malek's picture

>yet anoher shill post by ZH

Says a peak oiler - LOL!