Even The CME Is Getting Tired Of Silver Manipulation

Tyler Durden's picture

Everyone has seen them: those "inexplicable" bouts of furious selling in gold and silver, coming out of nowhere with no news or catalyst, which serve no rational price discovery purposes (because no normal seller takes out the bid stack, telegraphs a massive sell order and executes at the worst possible price) but merely are there to reprice the market higher or, as happens in 90% of the cases, lower.

In fact, look no further than what happened first thing this morning, when an unknown seller, smashed all stops in one big sale, and took silver to its lowest price for 2014.

There was no news, so one can't even blame a rogue algo overreacting to some headline and taking momentum ignition strategies a little far.

In short: this was a premeditated and deliberate selling of silver with one simple purpose: push and reprice silver lower.

But this is nothing new: precious metal traders, especially those who are on the other side of the table of the BIS' Mikael Charoze or Benoit Gilson, and countless other commercial banks, are all too aware of this behavior and they take it for granted.

No, the real surprise is that suddenly none other than the CME is getting worred that manipulation this blatant is finally chasing regular retail traders away who are tired of being fleeced on a daily basis, leaving central banks and a few "fixing" banks to trade only with each other, which is not acceptable - after all it is the muppets' money that is fair game, not that of other cartel members.

According to Reuters, the CME, which at present has price fluctuation limits for futures contracts in some energy, agricultural commodities and financial products, but not for its precious and base metals products, is considering introducing daily limits on gold and silver futures.

"We don't have price limits in gold and silver. That's something that we are looking into," Miguel Vias, CME Group's director of metal products, said in a panel discussion at an industry event, in response to a question about how the exchange protects investors from excessive volatility.

The biggest concern for the exchange is the array of sophisticated trading programs that are capable of significantly pushing the market higher or lower, Vias said.

Oh, so it is the programs? And who programs these... programs? Could it be people? And perhaps one should look into whether actual people are ordering the programs to "significantly push the market higher or lower."

It gets better. While the clueless hacks which appear on TV speculate about plunging trading volumes, anyone with half a brain knows why most have shunned capital markets - people know the market is one rigged, manipulated casino, and never more so than now. But while until now this mostly impacted the stock and bond market, it is now moving over to gold and silver.

"Unusually big moves and the fears of price "slippage" - the difference between the price at which a market player wants to execute an order and the price at which they are able to do so - have turned some gold and silver futures investors away, he said.  In the first four months of the year, COMEX gold futures volume dropped 10 percent from a year ago..."

But the best part is this:

The possible move reflects growing concern at the largest U.S. exchange of futures and options about big bouts of buying or selling that have caused huge fluctuations in prices without any apparent fundamental reason.

Funny, one could almost call huge fluctuations in price without a reason... manipulation. But better not, because what little confidence in a rigged system exists, may promptly dissolve even further.

Still, while this is merely the latest alleged case when the CME promises to clean up its act, we can be confident nothing will happen: "support for setting limits on price moves does not appear to be universal. "I think the breaks in trading are good, but I wouldn't support fixing price moves," said one U.S. trader."

Could said trader be manning the NY Fed trading desk at Liberty 33?

Ironically, there may be some hope, though not out of the CME. It appears the cannibalization in the PM manipulation industry is so bad, there may no longer be any silver "fixers" left. Also from Reuters, we learn that Deutsche Bank's exit from the London precious metal fixes will leave just two banks running a century-old system that sets the global silver price, likely stirring the debate about regulation of one of the most volatile commodity markets.

The bank's decision on Tuesday to resign its seat ends an unsuccessful four-month search for a buyer, as U.S. lawsuits alleging gold price-rigging by the five banks that set the benchmark turned potential suitors cold, sources said.

"You can't have a silver fixing with just two people, that's a bit of a nonsense really," a London-based precious metals trader said, adding just two participants would restrict liquidity and competition.


"It would just be two people talking to each other. I think the regulator should be stepping up a little bit here."

It should, but like the CME, it most likely won't:

Shortly before news of Deutsche's withdrawal on Tuesday, Britain's financial watchdog, the Financial Conduct Authority (FCA), said it could intervene if there were too few participants in commodity benchmarks such as gold and silver.


"If there is a risk of dislocation because people are withdrawing and we think that breaches or is a risk to our objectives, then we would set that as one of our activities but it is not entirely straightforward," head of enforcement and financial crime Tracey McDermott said on Tuesday.

And who can possibly forget the CFTC's own "quest" (or Bart "rotating door" Chilton's haircut for that matter) to root out evil silver manipulators (most of which just happen to be its superiors), which found nothing wrong.

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


After 7,000 staff hours of investigation, the U.S. commodity regulator found no evidence of wrongdoing and dropped the probe last September.


The banks faced similar accusations in a long-running class action antitrust lawsuit that was dismissed at the end of last month by a federal appeals court.

No, investors - at least those who are not close to the reserve money system - are on their own.

Whatever the outcome of the latest scrutiny, some users, including mining companies, which hedge production against the benchmark, may have little choice for now but to rely on it even with just two members.


"Whether it is good or bad or if it is down to two members, we have to use it," said Ounesh Reebye, vice president of metal sales at mining company Silver Wheaton, which is expected to produce 36 million ounces of silver this year.

Perhaps it would be best to just have one gold and silver "price fixer" left, the Federal Reserve. That way at least some integrity to an otherwise broken and manipulated market will be restored. Until then, watch as trading volumes slowly but surely trickle down to zero as everyone finally realizes what we have been saying since 2009 - in a market so manipulated, so rigged, so artificial, a far better and enjoyable option for investors around the world is just to take their money to Las Vegas.

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Infinite QE's picture

Like they don't have trading records for who placed the paper trade? Give it to Anonymous and have them flush out the truth. Post names, addresses, children's photos, et al. Roust the Bolsheviks before they destroy us all.

Chuck Norris's picture

I'm not complaining.  I just buy more of the physical stuff when it tanks.  Thank you manipulators.

Xibalba's picture

An online dealer flashed an alert for 100oz of shot at $1700.  When you click to buy it..wholla $1950.   But glad to know bloomberg news is focused on the real financial news out there: http://www.bloomberg.com/news/2014-04-30/brits-throw-down-with-starbucks...

john39's picture

what a welcome relief to see that the appropriate authorities are finally on it.    (can't even type that without laughing). 

Keyser's picture

The fact that Reuters published the article had me chuckling... 


strannick's picture

Bart Shill-ton said it best. ''we are looking into it''.

The goal of CFTC or CME investigations is to defer attention for the moment of increased scrutiny, to then announce down the road when the pressure has been released and attention has been diverted, that there is nothing here to see, move along.

There is too much at stake. Nothing will be done, and so we stack until the silver supernova.

BartShilltonisashithead.com. I wonder if that is still available?

bigkahuna's picture

These guys are nervous because the intended effect of their manipulation is to un-nerve people into selling physical- and it is having the opposite effect. At some point, physical silver will not be easily available out there. Then I wonder how they plan to control the market. 

Againstthelie's picture

I do not agree. They are getting nervous, because people are leaving the US futures market. Since China is making big progress in offering the Asian markets useful futures markets, I think that is a big problem for the Money Masters. They must decide: either allow to continue to rig the market, with all it's benefits for them, or to restrict rigging somehwat, to win back confidence.

hobopants's picture

Shit take the price down to a buck for all I care, the cheaper it gets the more I buy.

ForTheWorld's picture

It only costs 50c per ounce to get it out of the ground, right?

hobopants's picture

Someone was saying that the actual dedicated silver miners are running at cost right now, but because silver is also mined as a by product in other mining operations they can push it even lower than that. I don't know though, I think if it goes too much lower the miners shutdown and the drop in supply relative to demand forces the price back up again.

Can you imagine it hitting even 15 an ounce though? I would go nuts and wipe out the LCS.

N2OJoe's picture

CME Translation:

"We're worried the manipulators will soon lose control, resulting in massive  upside volatility. We're looking into placing upside limits on price moves for your protection."

Bindar Dundat's picture

Will someone please just blame it on the group with a motive  to keep gold and silver lower : Hint it's not the Government or the FED.

Maybe  the Chinese and the Russians?   They want a strong dollar and weak commodity pricing. Follow the money my fellow ZH zealots!

cpnscarlet's picture

Some of us having been BTFD for a long time, Chuck...and now we're "broke".

Poor Grogman's picture

Then you are fulfilling the Cartels desires, and will soon be voluntarily relieved of your metal.

The term "weak hands" springs to mind.

Don't worry though, all the silver you sell will not be discarded on the land-fill.

I'm sure it will come in quite useful as canoe ballast.

Matt_Master's picture

I just say thank you idiot bankers for the discount on my massive stack of silver...pitty I lost it all in the boat accident

Cacete de Ouro's picture

Here's some names: The silver foxes.....sorry, I mean fixers

David Rose - HSBC
Simon Weeks - Scotia Mocatta
Matthew Keen - Deutsche Bank

And their sidekicks

Peter Drabwell - HSBC
David Wilkinson - Scotia Mocatta
James Vorley - Deutsche Bank

Al Huxley's picture

Where do they live?  E-mail addresses?  Facebook pages?  Cell phone numbers?

Cacete de Ouro's picture

Simon Weeks,
Polo Barn,
Nairdwood Lane,
Great Missenden,
Bucks HP16 0QH

James Vorley,
Flat 4, 32 Shootershill Road,
London SE3 7DB

David Wilkinson,
1 Greenway
West Sussex RH12 2JT

Matt Keen is in Dubai

Peter Dennis Drabwell, his birthday is today, 49 today. Happy Birthday!

Peter Benjamin Rose, he seems to live at HSBC, his 50th birthday is on June 16th. Can we come to the party?

Larry Dallas's picture

I want the Instagram handles of their kids, Facebook accounts of their wives (and girlfriends).

This will make Donald Sterling look like a St.

Bankstein Swissgoldberg's picture

Their kids did not manipulate the market.

Joenobody12's picture

To Peter Dennis Drabwell

Happy birthday to you, 

Happy birthday to you,

People dying and starving,

Happy birthday to you !

ultimate warrior's picture

This is my analogy of what is going on.


The CME is like the big brother to a sister who knows is being raped by their step dad but is too afraid to say anything. It's too shameful and embarrassing to say anything or do anything so the travesty continues on. Fuck you CME....Fuck you up your stupid ass.


Al Huxley's picture

You give them too much credit.  They're more like a pimp than a big brother.

Canadian Dirtlump's picture

I figured the communist mongoloid exchange is just cutting them metals off at the pass to manage an imminent rise ( along with margin raises ). They don't do anything for reasons of nobility - especially when the manipulation is engineered by the fed.

SAT 800's picture

Try really hard to understand this; you're engaged in making up stories and drama about nothing. Nothing happened. the market price is the market price; it's getting ready to feed into Hong Kong now at the same price it left Hong Kong this morning. Try really hard to understand; NOTHING HAPPENED. there's no drama.

john39's picture

true, but unless something happens, PM's are stuck in the mud and never leaving...  fine, unless you need to sell to eat.

SAT 800's picture

$19.015; same as it was at 4 O'clock this morning; soon to be bid up again by Hong Kong. You're discussing a non-event.

Canadian Dirtlump's picture

which is why I think it is being done in advance to help cap daily rises. IT is becoming more of a non-event because they've blown their load and it isn't working anymore after the hundreds of hulk smashes in the last year.

the manipulation is as plains as day as it ever has been and the news doesn't report it and the regulators don't regulate it.

MillionDollarBoner_'s picture

Totally agree.

CME have stood by and done nothing whilst the blatant smashdowns have taken place.

That they now propose daily limits means we are near to the end of the downward manipulation and they are preparing for the explosion upwards. They will use these new limits and the usual trick of margin hikes to attempt to dam the flood.

They will fail...

rosiescenario's picture

Could be, unless the same TBTF banks (who were short silver during the down manipulation) have now gotten long, in which case there will be no daily limits set.

Al Huxley's picture

Agree.  They've been aiding and abetting forever, this is not a sudden change of heart.  The constraint will be on the rise of the paper silver price, which will probably just ramp the priice for the real stuff even faster once people start to get worried.

DanDaley's picture

CME have stood by and done nothing whilst the blatant smashdowns have taken place.


Maybe somebody doesn't want to take flying lessons?

fattail's picture

That was the first thing I thought of.  Price declines of one or two percent are not a big deal, just when there is no reason for it do people get pissed.  Now that they want to implement a daily limit, the pressure to keep the price down must be getting fierce.

SAT 800's picture

this particular TYPE of manipulation; short term, for a day, for instance; particularly on a partial holiday, has been a fact of life for thrity years on the Comex; but it has no effect on the fact that the price of Silver is around $20 and not around $4; for instance. It's a completely international market and you can watch the various markets open and close as the world turns; no one controls anything. It's amarket and the market activity sets the price. Period. The tremendous mis-understanding is the internet wisdom that pretends that silver is not $30 or $45; or some other figure because of some kind of GLOBAL MANIPULATION. This is nonsense. It's complete crap.

ultimate warrior's picture

or the manipulation has more of an impact on days like today, See May 1 2011.

Silver Pullet's picture

Your "market activity" setting the price is a bunch of people who pretend that they will buy from a couple of banks who pretend that they have something to sell. You're right, it is nonsense, complete crap.

SAT 800's picture

To witness live market activity for yourself; real people buying and selling real silver; go to bullionvault.com and click up the market chart; it's a real time market between the customers or clients of bullionvault and you can watch people post offers and other people hitting the bids and so forth. This type of market, for real metal, completely dominates the paper market, and not the other way around.

Canadian Dirtlump's picture

sure dude. the thing is, someone dumping contracts at illiquid times doesn't make sense for any other reaosn than to drive price down. the idea that such moves are organic is retarded.


not to mention that is scares people out of the game.

SAT 800's picture

Yes; the floor traders dumped contracts on the market, ran a lot of stops and drove the price down; yes; that's what happened. Not a Bank, Not an evil empire, just some employees at the Comex; and it has no effect whatsoever on the International Market in Silver Bullion. No one but you are so ignorant as to think it means anythng. Wake up, please.

SAT 800's picture

It 's not a game; and if you're scared you don't belong there. Try to figure out how you're going to convince the Chinese not to buy Silver tomorrow, or the Swiss acting for their customers; that's what it will take to affect the price of silver. when you figure it out let me know.

Ness.'s picture

You're fucking retarded if you think the pit traders and locals at the Comex have the capital to or the desire to dump $300M in paper silver into a thin market without regard to price.  Some very powerful hands are doing evil things because they know there'll be no consequences for their actions.  My thinking is that the CB's are using their puppet banks to break the backs of the little guys, drive down the price, bankrupt the junior miners, merge the remaining companies and eventually nationalize them. There is a reason the world's most important countries are either demanding repatriation of their gold or amassing it at historic rates.  

crazybob369's picture

Just look at a silver chart from this morning:

5AM: 40+ cent price drop from $18.09 to $17.68

5:30AM: Price spike to $19.20

So, let's recap: JPM et al shorts 5,000 contracts at 4:59AM, gradually buys them back until around 5:29 and then dumps them at 5:30.  $10,000,000 in a half hour.  Not bad!



SAT 800's picture

You're not paying attention; a non-event is a non-event. It doesn't benefit anyone except a few floor traders who bought the bottom they created. There's no interaction or reaction in the greater world at all. None. It's not "done' to cap anything; it's done for the profit of a few floor traders on the Comex. and as of right now; the price is back to what was set by the free and un-fettered international market. The problem you have is you've been listening to crap for so long you started believing it. it's crap. It's a market the price is what people bid for it every day. Period. there's not drama available; sorry about that. Try Soap Operas.

Rock On Roger's picture

It's a futures market, thus crap, the future is not today.

Why not set price with a live public auction of the real metal?

That seems like a fair and unfettered market.

The price would be truly determined by supply and demand.

Theta_Burn's picture

Or we can just say thank you, and buy more at firesale prices..


SAT 800's picture

What firesale price is that? The price now is the same as it was this morning at 4am. It'll probably get bid up a little later in the afternoon. The only way you can make use of these one day wonders is to have a price order in beforehand on the Comex; or some other market. The wonderful manipulation you're so entralled by is over before you can even react to it.

Osmium's picture

"After 7,000 staff hours of investigation, the U.S. commodity regulator found no evidence of wrongdoing and dropped the probe last September."

Ya, 7000 hours of watching porn maybe.

MillionDollarBoner_'s picture

7,000 hours is 1,000 days if you work on 7 hours per day.

Four years - the time it took Fart Childporn to conduct his investigations into the rigging of silver markets - comprises 960 working days, assuming 5 days a week and 4 weeks vacation.

So, one person - the office janitor? - spent their time "investigating" the rigging of markets in a strategically vital commodity?

Some workrate, huh? Waaayyy to gooo, CFTC!