Source – bullionstar.com
– “…There is also ample evidence about central bank manipulation documented in various places including on the GATA website. The motivations for such central bank interventions include protecting the existing financial system, engineering low real long term interest rates, and preventing gold acting as a barometer of inflation”
Gold & Silver Price Manipulation: The Greatest Trick Ever Pulled – By Ronan Manly
There is probably no other topic in the gold and silver markets which incites heated debate more than the subject of precious metals price manipulation.
That prices in the precious metals markets are manipulated is not speculation, it is fact, a fact made clear again recently by the Commodity Futures and Trading Commission´s (CFTC) ruling against investment bank Merrill Lynch Commodities Inc (MLCI) for spoofing pricing of gold and silver futures contracts on the COMEX exchange.
The number of investigations, legal cases, class actions and financial headlines involving precious metals manipulation are now so pervasive that it’s hard to keep track of which cases are in motion and which investment banks are under scrutiny at any given time.
But beyond the profit and greed driven bullion bank manipulations gold and silver prices, there is also the issue of central bank policy interventions to suppress the gold price by outright gold sales or using the opaque and secretive gold leasing and lending market. This is a less talked about manipulation given the secrecy of everything to do with central banks and gold, as well as a reluctance of the financial media to broach the subject and a reluctance of regulators to ´go there´ by even looking at central bank gold market activities.
That central bank operations in the gold market have existed is also fact, with such operations covering price smoothing and price stabilization, price pegging, and coordinated gold pools. See BullionStar articles “New Gold Pool at the BIS Basle, Switzerland: Part 1” and “New Gold Pool at the BIS Basle: Part 2 – Pool vs Gold for Oil” and “The Bank of England and the London Gold Fixings in the 1980s” for more background. There is also ample evidence about central bank manipulation documented in various places including on the GATA website. The motivations for such central bank interventions include protecting the existing financial system, engineering low real long term interest rates, and preventing gold acting as a barometer of inflation.
But beyond even commercial bank manipulation of gold and silver metals prices and central bank policy manipulation of gold, there is arguably another form of manipulation in the precious metals markets which is far more influential in subduing price discovery and which takes the form of the very structure of how these markets trade vast quantities of futures contracts and synthetic and paper gold and silver positions that are completely unconnected with any underlying physical metal. The home of this trading is of course on the US COMEX exchange and the unallocated gold and silver markets in London. Both venues of which are ruled by the LBMA bullion banks
The Usual Suspects – UBS, HSBC and Deutsche
But the recent case against Merrill is not an isolated event. It follows similar moves by the CFTC in early 2018 where the CFTC charged investment banks UBS, Deutsche Bank and HSBC and a number of their traders for spoofing precious metals futures from as early as 2008, while fining the banks a combined $46.6 million (of which $30 million was levied against Deutsche, and $15 million against HSBC). In those cases, the CFTC worked with the US Department of Justice and the FBI to bring the charges.
Moving forward to this year, in February 2019, the U.S. District Court for the District of Connecticut fined ex UBS precious metals trader Andre Flotron $100,000 for price spoofing and price manipulation in violation of the Commodity Exchange Act (CEA) and CFTC Regulations. In that action, the CFTC found that Flotron had spoofed large orders in the precious metals markets between “at least August 2008 through at least November 2013, while employed at UBS”. This followed the CFTC reopening the case against Flotron in December 2018.
For excellent insights into how these UBS and other investment bank traders operated their spoofing, see the articles by Allan Flynn from April 2018 titled “US Gold and Silver Futures Markets – ‘Easy Targets’” and “UBS and Deutsche Bank gold and silver traders, April 2018”. For example, in evidence at the Flotron trial, Mike Chan, a UBS junior trader to Flotron while they worked in Singapore stated to the court that “during training, I’d seen him spoof and – enough that I replicated it immediately to do the same thing. And as my career progressed at UBS, the more traders I interact with, the more people I’ve seen spoof.”