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Senate report shows how easily banks can rig gold, copper, and other markets
Submitted by cpowell on Sun, 2014-11-23 15:25. Section: Daily Dispatches
10:30a ET Sunday, November 23, 2014
Dear Friend of GATA and Gold:
The heavy involvement of investment banks in commodity trading creates the potential for market manipulation and conflicts of interest in the gold market, and exchange-traded gold funds may be mechanisms of market manipulation contrary to the basics of supply and demand, according to the 396-page report published last week by the Permanent Subcommittee on Investigations of the U.S. Senate's Committee on Homeland Security and Governmental Affairs.
GATA's friend J.H. points out these findings on Page 38 of the report:
"Possible conflicts of interest permeate virtually every type of commodity activity. If the bank's affiliate leases an electrical power plant, the bank may attempt to use regional pricing conventions to boost its profits, even at the expense of clients that pay the higher electricity costs. If the bank's affiliate mines coal while the bank trades coal swaps, the bank may ask its affiliate to store the coal rather than sell it to help restrict supplies, and benefit from long swap positions, while causing its counterparties to incur losses. If the bank's affiliate operates a commodity-based exchange-traded fund backed by gold, the bank may ask the affiliate to release some of the gold into the marketplace and lower gold prices, so that the bank can profit from a short position in gold futures or swaps, even if some clients hold long positions.
"A fourth problem with mixing banking and commerce is that, in the context of physical commodities, it invites market manipulation and excessive speculation in commodity prices. If a bank's affiliate owns or controls a metals warehouse, oil pipeline, a coal-shipping operation, refinery, grain elevator, or exchange-traded fund backed by physical
commodities, the bank has the means to affect the marginal supply of a commodity and can use those means to benefit the bank's physical or financial commodities trading positions. If a bank's affiliate controls a power plant, the bank can 'manipulate the availability of energy for advantage' or to obtain higher profits."
commodities, the bank has the means to affect the marginal supply of a commodity and can use those means to benefit the bank's physical or financial commodities trading positions. If a bank's affiliate controls a power plant, the bank can 'manipulate the availability of energy for advantage' or to obtain higher profits."
And on Page 368: "At the same time, a commodity-backed ETF can have a significant impact on the price and volatility of the underlying commodity, even when a precious metal is involved. For example, gold-related ETFs first surfaced in 2004, with dozens of similar ETFs springing up over time. Today, it has become clear that significant movements in the gold-related ETFs have had direct impacts on the price of physical gold.
"As one analyst in the field noted: 'You watch the flow of money. ... No matter what the supply-and-demand fundamentals [for physical gold] may suggest, if that money’s flowing, those prices are going to move.'
"The Wall Street Journal cited as a possible explanation for the impact of gold ETFs on physical gold prices the relatively small size of the gold market, estimated at $236 billion in annual sales in 2012, and the ETFs' significant share of those sales."
Starting on Page 353, the report describes JPMorganChase's acquisition of the copper market, thanks in large part to an exemption from position limits granted by the Federal Reserve and Office of the Comptroller of the Currency to banks trading copper, an exemption previously granted only to banks trading gold and silver. The implication of the copper exemption is that the U.S. government decided that manipulating gold and silver prices was not enough if the major industrial metal was still able to trade freely and broadcast inflation signals as gold and silver also would do if they were traded freely.
Interesting as it is, the Senate report really has done little more than reiterate the old principle, the first premise of anti-trust law, that if a market participant is big enough, it can push any market around. Unfortunately that premise has been pretty much overlooked in the United States since Wall Street took over both major political parties.
Also unfortunately, if predictably, the Senate report does not touch on direct but surreptitious government intervention in the commodity markets, though sensational documentation of such recently became available, documentation that central banks and governments are receiviing volume discounts for surreptitiously trading all major commodity futures contracts in the United States:
Apparently the work of exposing that surreptitious intervention will continue to be left to outsiders like GATA.
The Senate report is posted at GATA's Internet site here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
Gold Anti-Trust Action Committee Inc.
Central banks getting nervous about gold vaulted elsewhere, Turk tells KWN
Submitted by cpowell on Sat, 2014-11-22 03:41. Section: Daily Dispatches
10:42p ET Friday, November 21, 2014
Dear Friend of GATA and Gold:
Concerns about the fractional-reserve gold banking system will increase because of the Netherlands central bank's repatriation of gold from the U.S. Federal Reserve, GoldMoney founder and GATA consultant James Turk tells King World News tonight. "People are getting nervous" about gold vaulted with others, Turk says, and central banks making contingency plans for their currencies need to ensure that they control their gold. An excerpt from the interview is posted at the KWN blog here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
Gold Anti-Trust Action Committee Inc.
Ronan Manly: Swiss gold vote likely tighter than polls suggest
Submitted by cpowell on Fri, 2014-11-21 21:39. Section: Daily Dispatches
4:37p ET Friday, November 21, 2014
Dear Friend of GATA and Gold:
GoldCore analyst and GATA consultant Ronan Manly today provides a detailed analysis of the opinion polls that seem to be moving against the Swiss Gold Initiative, and he raises a compelling question: While the Swiss National Bank complains that the initiative would severly limit its monetary policy options, the initiative gives the bank five years for compliance, so just how long does the bank intend to chain the Swiss franc to a depreciating euro?
Manly's commentary is headlined "Swiss Gold Vote Likely Tighter than Polls Suggest" and it's posted at GoldCore here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
Gold Anti-Trust Action Committee Inc.
Dutch leaving plenty of gold abroad and it's probably gone, von Greyerz says
Submitted by cpowell on Fri, 2014-11-21 21:23. Section: Daily Dispatches
4:23p ET Friday, November 21, 2014
Dear Friend of GATA and Gold:
King World News notes today that Swiss gold fund manager Egon von Greyerz, a leader of the Swiss Gold Initiative, remarked to KWN a month ago that another European central bank was repatriating gold from the United States. The Netherlands central bank made such an announcement today.
But von Greyerz scoffs at the bank's assertion that the repatriation will build public confidence, since 69 percent of the Netherlands gold reserve will remain vaulted abroad and probably is not really vaulted with its nominal custodians but more likely has been whisked off to Asia through gold lending.
An excerpt from von Greyerz's interview is posted at the KWN blog here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
Gold Anti-Trust Action Committee Inc.
Dave Kranzler: Was GLD gold moved to the Dutch central bank?
Submitted by cpowell on Fri, 2014-11-21 20:22. Section: Daily Dispatches
3:22p ET Friday, November 21, 2014
Dear Friend of GATA and Gold:
Sharp-eyed Dave Kranzler of Investment Research Dynamics notes that the gold announced today to have been repatriated by the Netherlands central bank nearly matches the recent decline in tonnage held by the gold exchange-traded fund GLD. Kranzler's commentary is headlined "Was GLD Gold Moved to the Dutch Central Bank?" and it's posted at Investment Research Dynamics here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
Gold Anti-Trust Action Committee Inc.
Russia, China will accuse U.S. of gold scam, bullion dealer tells KWN
Submitted by cpowell on Fri, 2014-11-21 16:00. Section: Daily Dispatches
11a ET Friday, November 21, 2014
Dear Friend of GATA and Gold:
Montana coin and bullion dealer Steve Quayle, whose motto is "If You Can't Touch It, You Don't Own It," tells King World News today that Russia and China soon will tell the world that the United States doesn't have the gold it claims to have. An excerpt from the interview is posted at the KWN blog here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
Gold Anti-Trust Action Committee Inc.
Netherlands starts repatriating gold
Submitted by cpowell on Fri, 2014-11-21 13:48. Section: Daily Dispatches
8:45a ET Friday, November 21, 2014
Dear Friend of GATA and Gold:
The central bank of the Netherlands announced today that it is repatriating much of its gold from abroad.
Bullion Star market analyst and GATA consultant Koos Jansen covers the announcement here:
MarketWatch reports about it here:
A Dutch newspaper, De Volkskrant, offers this, which, if opened in Google Chrome, can be automatically translated to English:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
Gold Anti-Trust Action Committee Inc.
John Butler: Will Putin play his gold card?
Submitted by cpowell on Thu, 2014-11-20 13:32. Section: Daily Dispatches
8:33a ET Thursday, November 20, 2014
Dear Friend of GATA and Gold:
Fund manager and author John Butler of Atom Capital in London, editor of the Amphora Report, wonders this week whether Russian President Vladmir Putin will play his "gold card" and notes that strengthening Russia's economy and international position by remonetizing gold is actually an old idea. Butler's commentary is headlined "As the 'Sanctions War' Heats Up, Will Putin Play His Gold Card?' and it's posted in PDF format at Atom Capital's Internet site here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
Gold Anti-Trust Action Committee Inc.
Unusual gold moves in Asian hours puzzle jittery traders
Submitted by cpowell on Thu, 2014-11-20 13:13. Section: Daily Dispatches
They must not yet have heard about the Bank for International Settlements and the Exchange Stabilization Fund.
* * *
By A. Ananthalakshmi
Reuters
Thursday, November 20, 2014
Reuters
Thursday, November 20, 2014
SINGAPORE -- Some of the biggest price moves in gold since late October have, unusually, occurred in Asian hours and traders more accustomed to following the lead of their Western counterparts suspect a big increase in algorithmic trading may be to blame. ...
Liquidity in Asia tends to be thin until Europe wakes up but recent weeks have been different: COMEX gold futures, the busiest gold contract in the world, have suffered sharp sell-offs in Asia, sometimes sparked by the news flow or currency moves but often for no identifiable reason.
"It is unusual for Asia to be seeing these busy trading sessions," said David Govett, head of precious metals at broker Marex Spectron in London. "I have spoken to a lot of people about it and the general consensus seems to be that there is a big increase in algorithmic and high-frequency trading in this time zone nowadays as it can be quite easy to push about," he said. ...
... For the remainder of the report:
Jesse's Cafe Americain....
China SGE Gold Withdrawals For Week 52 Tonnes
The Shanghai Gold Exchange withdrawals were 52.26 tonnes for the week ending 14 November.
To put this into perspective, there are a total of 27 tonnes of gold bullion in the registered 'deliverable' at these prices category in all the Comex warehouses now.
That's only a few days supply work in Shanghai.
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According to the last SRG poll on the Swiss referendum, 44% supported "Save our Gold", 39% were opposed http://www.kitco.com/news/2014-10-27/Swiss-Gold-Initiative-Faces-Tough-Hurdles-Despite-Positive-Early-Polls.html …
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