"When Gold Goes Above 1430 We Whack It"

Tyler Durden's picture

Submitted by Allan Flynn via ComexWeHaveAProblem blog, 

As it goes in silver, so it goes in gold. In London at least. 

In a bid to have UBS reinstated as a defendant in a London Gold Fix antitrust lawsuit, plaintiffs documents submitted to a New York Court last week include explosive chat room transcripts of UBS and traders from different banks encouraging each other to “push,” “smack,” and “whack” gold prices.

The transcripts are equally as startling as those described of banks of the London Silver Fix and UBS given to the court the previous day and described last week in this article.

On December 6th attorneys for plaintiffs in a consolidated class action against banks of the London Gold Fix and UBS, asked the court for leave to amend with a Third Amended Complaint. The TAC includes additional facts based on a “limited set of cooperation materials” produced by former defendant Deutsche Bank, as part of a settlement agreement and further statistical analysis.

Supporting documents say the amended complaint addresses the Court’s October finding that the previous complaint failed to plausibly plead firstly that UBS was part of the antitrust conspiracy, and secondly that the conspiracy existed prior to 2006.

Also, for the first time a gold producer has been added to the class action of those claiming losses in gold trading due to the manipulation. Compania Minera Dayton, SCM the Chilean subsidiary of Australian resources company Lachlan Star is said to have “sold gold on many of the specific days on which Plaintiffs demonstrated manipulation of gold investments” totaling $287.4 million over the period 2004 to 2013.

In support of allegations that UBS shared customer order information and executed coordinated trades to manipulate gold markets, samples of “dozens” of chat room messages between UBS and Deutsche Bank are contained in the revised document indicating "many efforts to artificially suppress gold prices, and to manipulate gold prices at the time of the Fixing.”

Filings include the following script reminiscent of an 1980’s arcade game scene. Rather than competing for business in the marketplace, supposed competitors UBS and Deutsche Bank however are seen coordinating tactics as they anticipate the most illiquid of days to jointly execute their sell orders for greatest negative impact on the market.

Deutsche Bank: bro japan holiday today

 

Deutsche Bank: think it’ll be quiet

 

Deutsche Bank: well, illiquid, not quiet haha

 

Deutsche Bank: illiquid means wild wild west

 

UBS:okay when gold pops 1430

 

UBS: we whack it

 

UBS: u sell your 50k

 

UBS: i sell my 20k

 

UBS: then we double that up and produce our on liquidity too

 

UBS: that should be enough to cap it on a holiday

 

Deutsche Bank: haha yeah

 

Deutsche Bank: lol

One chat see's a Deutsche Bank trader confirming with a UBS trader his trading had indeed influenced the Gold Fix: “u just said u sold on fix.”  The UBS traded replied “yeah,” “we smashed it good.”

The secret associations between traders appear to be close knit, with the members willing to assist their opposite numbers at every chance: UBS “im feeling helpful to ubs today.”  The UBS trader then said “need to push this back wer,” to which the Deutsche Bank trader replied “ok,” and “lets do it.”

Counter-intuitively, the banks special penchant to suppress the price of gold is repeated throughout the examples. As the gold ticker rose on this occasion the indignant traders teamed up to push it back down, commending themselves sarcastically meanwhile.

Deutsche Bank: someone still trying to push our gold up

 

UBS: so u should pay the mkt right away

 

Deutsche Bank: nope

 

UBS: cause chances are someone else got hit and u f*ck them up

 

Deutsche Bank: no touchy

 

Deutsche Bank: im short 15k

 

Deutsche Bank: xau

 

Deutsche Bank: too much fire

 

UBS: im gonna sell more silver and gold

 

Deutsche Bank: k

 

Deutsche Bank: i really think we are on the right side today, being short

Not only are they pushing the market down but also there appears to be intent to harm client interests as the November 2014 FINMA investigation loosely reported.

Here a UBS trader gives information to a Deutsche Bank trader about a client’s order query on Nov 16th 2010, and strategizes to punish them by whacking the price lower if purchased from another party.

UBS: boc sniffing around in gold

 

Deutsche Bank: likewise

 

Deutsche Bank: passed my bid

 

Deutsche Bank: dude

 

Deutsche Bank: so their round

 

Deutsche Bank: is from u

 

Deutsche Bank: to me

 

Deutsche Bank: haha

 

UBS: not always

 

UBS: anyway good to give each other heads up

 

UBS: if we find out side, whack it

 

Deutsche Bank: yeah

Bank of China, one of the largest state-owned commercial banks in China, and which offers customers “a wide range of gold investments in gold bars and gold bullion coins” have yet to respond to this author’s query if the bank could be the buyer referred to as “BOC” in the above conversation.

A central tenant of this lawsuit is that the banks have chosen one particular part of the trading day to act secretly. The strategy of banks that "colluded around the PM Fixing to ensure prices moved the direction they wanted, when they wanted," was enabled in this case by the same Deutsche Bank trader who appears in multiple chats over a period of years with various others sharing their presumably winning strategies around the afternoon benchmark.

2007

During a trading day which had been less successful the Deutsche Bank trader assured his opposite trader from Bank of Nova Scotia that “at least the fix will be fun . . . make it all back there!!!!!! : ?”
 

 

Another day the Deutsche Bank trader remarked to a different trader at Bank of Nova Scotia “hahahahaha, we were all short going into that fix.”

2008

The Deutsche Bank trader was informed by a HSBC trader: “i kick some out and take it back after the fix,” describing a tactic to sell gold high before the fix and buy it back after the fix at a lower price. Plaintiffs say the traders knew it would nearly always be cheaper after the fix. The Deutsche Bank trader replied ironically: “ yeah no one else is thinking that : - ?.”

2011

The Deutsche Bank trader this time to another HSBC trader: “everyone shrt into the fix i swear it’s the only time ppl trade,” to which the opposite party at HSBC replied “hahahhahahahahahahahha shocking absolutely shocking.”

2012

The Deutsche Bank trader said to his opposite number at Barclays, “im glad u are now interbank.” Barclays trader: "Why?" Deutsche Bank trader: “it’s a good alliance.”

That day the Deutsche Bank trader informed another trader at Barclays, “im a tiny buyer at the mom.”  Barclays trader: “think im buyer too,” Deutsche Bank trader: “means we fix lower.”

An example of further statistical analysis from plaintiff's Third Amended Complaint, TAC is a chart showing UBS spot gold price quotes over the period 2004-2012. The complaint says the bank "used its transactions and substantial presence in the gold market to drive prices downward, thus playing a key role in the conspiracy."

Deutsche Bank's proposed settlement of the London Gold Fix class action amounting to $60 million including the provision of cooperation materials was given the Court's preliminary approval on December 9th subject to a Fairness Hearing. This follows the non-UBS defendant banks of the London Gold Fix; Bank of Nova Scotia, Barclays, HSBC, and Société Générale being ordered in October to face charges in the lawsuit along with London Gold Market Fixing Limited, LGMF a private company owned by the five banks. Deutsche Bank's settlement offer of $38 million including cooperation materials in a similar antitrust lawsuit involving the banks of the London Silver Fix was given the court's preliminary approval earlier.

Opinion

The new chat evidence in silver and gold described in this and other articles provides the missing narrative to the volumes of statistical analysis incorporated in the original and amended complaints closely scrutinized by court and counsel at the April hearings. It lifts the curtain for once and all on the dirty role of bank suppression in gold and silver markets, and its not just the London Fix. The Court has already acknowledged plaintiffs evidence of symbiosis between the London Fixes and the pricing of other silver and gold products. The Court's preliminary approval of the Deutsche Bank settlements may provide for class claims in bullion, coins, options, futures, spot and other markets including exchange traded funds, ETF's within the US.

The collective evidence also neatly deals with the court's October supposition that further amending the complaint would be "futile."

Given the damming nature of material against UBS particularly, it remains all the more mystifying why the 2014 Swiss Supervisory Market Authority FINMA report into foreign exchange and precious metals trading at UBS said so little comparatively about UBS' precious metals trading misconduct, and specifically nothing about gold trading misconduct. As discussed in an earlier article, the word “gold” is conspicuously absent from the 2014 report.

Were it not for the early moral act of Deutsche Bank in providing the cooperation materials, which presumably gave them a settlement advantage, UBS directors might be sleeping much easier this week. If the remaining non-UBS defendants agree to settle, which is an increasing likelihood, there will be no need for the court discovery scheduled for 2017 and civil trial beyond. In the meantime we wait to see how long UBS hangs in there.

The appearance of a precious metals producer among the class of plaintiffs will also see shareholders and directors reaching for the calculator. SCM is but one of thousands of producers who have sold precious metal in the US throughout the period and like any other plaintiff if the case is successful could be entitled to treble damages with interest if granted standing.

Plaintiffs analysis indicates that manipulation of the London Gold Fix led to average losses of up to four basis points or four hundredths of a percentage point in the gold price on the days affected. Therefore, a small gold producer similiar to SCM with say $500 million of gold sales over 8 years could tally treble claims of $600,000 plus interest.

Supposing as statute 28 U.S.C. 1961 directs, the present Treasury constant maturities nominal- 1-year interest rate currently at 0.83% is applied to this figure over an average sale date midway through the class period of say December 2008, and an optimistic successful conclusion of the lawsuit comes a year from now. Interest then of $54,793.64 could bring a theoretical claim of $654,793.64 for just one class member like this. In this context Deutsche Bank's $60 million, plus the cooperation materials supplied, appear to be money well spent.

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undertow1141's picture

And this is why Gold Future PAPER should be illegal, it's just a price rigging tool. Nothing more.

Draybin Deffercon III's picture

Yeah and it's also why nobody here should have *ANY* positions in this "market" (long or short). You do not impress us with your knowledge or timing. We just know you are feeding a beast that deserves to be starved.

Theosebes Goodfellow's picture

Srew that "whack" shit. Who goes to jail? For how long? Oh yeah, it's class action civil. Whew! Thank god no laws were broken...

"Paging Loretta Lynch!'

"LORETTA LYNCH!!!"

[crickets...]

fockewulf190's picture

Bart Chilton and the CFTC: "no manipulation". Remember that farce of a conclusion? And now? Has there been even a fucking peep from those worthless clock punchers since DB spilled the beans?

UnpatrioticHoarder's picture

but where is JP Morgan in this? Absent, because they are smart enough to not use chat sessions but instead use the "silver signal" etc see lemetropolecafe.com for details. This is limited hang-out, the big stuff is Fed-sponsored.

J S Bach's picture

Patience, Grasshoppers.  I know we've been echoing this for some time, but this charade of paper manipulation is not sustainable.  It WILL collapse on a grand scale.  This is not stated in a gloating tone, but as mere fact.  When it finally happens - and reality sets in - tangible assets of ANY kind will win the day and remain true to their actual value.  Those foolish enough to put all of their faith in the "trust" of fiat currency will rue their arrogant aplomb of these heady days.

MalteseFalcon's picture

The dollar started to strengthen in 2011 and it continues today. 

Thus gold's slump.

These manipulations are for very short term gains.

Justin Case's picture

The spreads in the physical markets are an indicator that the fake paper market will become irrelevent as a price discovery mechanism.

Silver Savior's picture

All I do is just sit back of think about all the misguided people on CNBC who ridiculed me for wanting to buy silver and gold to hedge against the paper world. How will they live and what will they eat when my gold and silver will be the money. Been going hard getting the 10 ounce silver bars since Trump snuck in. 

Silver Savior's picture

All I do is just sit back of think about all the misguided people on CNBC who ridiculed me for wanting to buy silver and gold to hedge against the paper world. How will they live and what will they eat when my gold and silver will be the money. Been going hard getting the 10 ounce silver bars since Trump snuck in. 

asteroids's picture

No, the FED has the hammer. DB and UBS were selling what, maybe 30k contracts short? When gold gets smashed like a few days ago it was 75k contracts? Only the FED has that kind of juice.

Mustafa Kemal's picture

We use to have that problem, but now we require a safety check before we let the chimp have the rifle. Thanks i

OverTheHedge's picture

With all this "evidence" flying about, it is still considered a good idea to continue with something called a "fix".

Are they laughing at us? Are they?

They bloody well out to be - we are quite obviously imbiciles, to allow this insanity to continue.

I must write a stiff letter to The Times, that will sort this nonsense out once and for all. Anyone else care to join in? It's bound to work wonders.

 

 

 

FFS!

HungryPorkChop's picture

Will someone do some REAL INVESTIGATIVE REPORTING and get the peoples names, addresses and pictures who were sending these messages back and forth about rigging the market? 

There's nothing more I'd like to read on the front page of every alternative media is the title: Here are the pictures, addresses and names of the traders which were behind the gold manipulation!

Expose the cockroaches for who they are and lets see where this leads.

beemasters's picture

It would also be nice to know who has instructed them to smack gold/silver and why.
What would CFTC have to say in response to the revelation?

Chupacabra-322's picture

Lawlessness. Sickening, isnt it?

chubbar's picture

I want to see the names of the traders. I want to know who needs a fucking baseball bat across the face multiple times. These motherfuckers don't give a shit about the actual people they are hurting with their little fuck fuck games of controlling gold/silver. They desparately need to feel the wrath of the folks they have fucked in the ass. Let's get the names out there and hope that someone finds them walking home some night. Fucking assholes

FX223's picture

When you're done having fun with the baseball bat i'll enjoy sticking them with a pitch fork.

turnoffthewater's picture

The movie Shooter is pretty good

DjangoCat's picture

Enquiring minds want to know.

Raffie's picture

The next $1mil dollar fine will teach them to steal billions.

phatfawzi's picture

I've been short all week, easiest trade ever. 

Tiwin's picture

Dear investment Abby: My stocks in XYZ corp declined from 11 5/8ths a share all the way down to 11 3/8ths this week!
Some seers claim its gonna crash down to 10 or even below 10!
What should I do?!?

Kirk2NCC1701's picture

And that is why you should avoid anything that's as grossly manipulated as PM is.

Stick to assets that are less manipulated as "Store of Value" or as a long-term investment.

Lore's picture

I knew those old comic books and toys would come in handy someday. 

Seriously, the full significance of this "settlement" travesty will be appreciated more fully in time.  That is one of the points that the author needs to emphasize: the story is FAR from over!  This and a few other revelations like it will be recognized in hindsight as first steps in a very exciting process of unfolding scandal, with exposure and disclosure, discrediting of naysayers and ostensible "regulators," and vindication for parties like GATA, which has been screaming from the rooftops for ages.  Basically, the cat's out of the bag, and it's just a matter of time before the whole thing blows open wikileaks-style. 

One thing we can count on is that psychopaths are very quick to turn on their lackeys and each other when a scam falls apart.  It'll be interesting to see who gets hung out to dry first.  Any guesses?  (Note to potential patsies: keep paper trails, and make copies -- lots of copies.)

Urban Redneck's picture

It's a market.  But markets can be manipulated.  If you are going to ban futures in gold, then you also need to ban futures in oil, wheat, steel, copper, et al.  And then the prices will RISE because actual market participants can't hedge, and everyone becomes poorer... everyone except the banksters who thrive off volatility, and make a killing when they BK actual gold producers like GS did to AngloGold in Ghana. 

There are more appropriate and effective solutions with fewer negative side effects- such as banning the Fix, demanding in kind settlement, higher margin and collateral requirements, greater transparency, and higher penalties for violation existing collusion and fiduciary laws. 

BigJim's picture

It makes sense to have futures markets for commodities, because their low stock:flow ratio means supply is subject to considerable volatility, and futures helps smooth that out.

Gold and silver? Not so much.

Urban Redneck's picture

So you're against gold being in any way considered "money"?  Even ignoring the industrial uses of gold and silver, without which an electronic economy is not even possible... put another way, if you want gold and silver to be important to society or to the economy, than they deserve futures markets, and better regulated futures markets, unless you would rather just rig things for your own  financial benefit, kind of like a bankster, I guess it really is good to be one...

ZH Snob's picture

someday soon, when the prices of PMs find true market value and the paper cheaters become irrelevant and passe, we can look back fondly on a time when we were savy enought to take advantage and buy the physical.  and when all our friends and family complain that they have none we can remind them over and over again how we tried to tell them and how they never wanted to hear it.

 

LawsofPhysics's picture

Paper markets and paper promises...

whatever, when fraud is the status quo, possession is the law! 

 

same as it ever was...

MFL5591's picture

How about when they take it down again we  go Pop!!

KnuckleDragger-X's picture

Big trial, send the underlings to Siberia, and ignore the people at the top. It's almost guillotine time.....

Latitude25's picture

Sell all your gold now at the yearly low.  The Chinese will happily buy it.

Silver Savior's picture

The Chinese know whats up. The PMs are moving east for a reason.

Silver Savior's picture

The Chinese know whats up. The PMs are moving east for a reason.

c2nnib2l's picture

shit... this is killing my hope on gold prices going up 

jomama's picture

Are you one of those people that voted for Rump - and then hoping the market would crash and gold would go up in Yellenbux?

beavertails's picture

These guys all part of PIZZAGATE supportors.  Hang 'em!

Lysander_Spooner's picture

James Alefantis 2310 California ST NW Washington, DC 20008-1637  is tied  to Julius Kaplan who is tied to Bruce Rappaport

 

all a big club of criminal degenerates !

 

#Pizzagate 

Yog Soggoth's picture

Good connection! BCCI was awful. What and where is the new form I wonder? Is the bank of NY still attached somehow?

UmbilicalMosqueSweeper's picture

Pervs Podesta, Clintons, Weiner, et al...NOT fake news!

ParkAveFlasher's picture

-hey bro

-sup

-chilln with chilton

-tell bart wassup?

-yo we hammerin today?

-hammerin like hank lol

-bart lulz 2

-he says we buy dinner

-lmao

-lmao

-bart lol u da mang