Monday, November 08, 2010

HSBC and JP Morgan accused of manipulating silver market ASM.v,, MGN, KTN.v, CUU.v, TNR.v,, NGQ.v,, KS.v, CZX.v, BVA.v, BVG.v,,, SGC.v, SSRI, SLW, SLV

Story about market manipulations in gold and silver, about which gold bugs have been talking for years, makes its way into the mass media in Europe as well now. JP Morgan is an interesting party of this game - there are some reports that is holds one of the largest derivative books and some have even suggested that the bank was engaged in gold market manipulations to artificially suppress the gold price. We do not expect  earth shattering revelations from this trial - the all FIAT monetary system is a ponzi scheme - but hot heads will be more careful in the future.

If these accusations will be confirmed, the mere fact of such manipulation can drive Gold and Silver prices much higher - buyers will demand the physical delivery of both metals. As Warren Buffett has put it - "When the tide will be gone - we can see who stays without the trunks". Silver market just can not provide delivery on all contracts including futures and ETF - it will be the Mother of Short Squeeze. Do not bet your farm on it, but we are moving into the right direction. We will address you to the Jim Puplava and his interviews with Erick Sprott and David Morgan.

Silver and Gold in the ground - Junior mining companies with solid projects will be the next game in town now. M&A activity will drive valuations in this sectors.

Today's call - from the World Bank "to debate the return of the Gold Standard" - we are finding just fascinating and it would be unbelievable just a few months ago. We can expect some tree shaking and corrections now in Gold and Silver markets, but they will only provide more buying opportunities to those who seeks ones.

"Gold will be go much higher from here, it will not be the straight line, but every set back will provide an investment opportunity in Gold and Silver space. We will share with our thoughts and companies we like and you will be cautioned to make your own DD as usual.

Next stage will be fight for the resources and M&A activity at all stages of investing in Gold mining cycle. With rising Gold price and inflated paper Majors will shop for juniors to buy time and gold in the ground. Jim Puplava will be a very good narrator to all our travel maps and reports about our journey. With rising gold, price price of physical gold will become even more prohibitive, we do agree with Jim that people will start to buy gold mining shares again with their easy to run discount brokerage accounts."

HSBC and JP Morgan accused of manipulating silver market

Have HSBC and JP Morgan been manipulating the silver market to keep the price artificially low?

This is the accusation levelled at the two global banking giants by investors in the US – with another lawsuit being filed last week.

On Tuesday, US law firm Kaplan Fox & Kilsheimer filed a class action complaint on behalf of an individual investor, Eric Nalven.

The suit named JP Morgan and HSBC in connection with an alleged conspiracy and manipulation of the market for silver futures and options contracts traded on the Comex exchange in New York.
The complaint alleges that around June 2008, when JP Morgan acquired Bear Stearns and its short positions in silver futures, JP Morgan and HSBC started a conspiracy to manipulate the market for silver futures and options contracts for their own benefit.
An informant, who is an ex-employee of Goldman Sachs in London, blew the whistle on the activity, claiming he had been told first-hand by traders at JP Morgan that the bank was manipulating the silver market.
Specifically, the complaint alleges that JP Morgan and HSBC acquired massive short positions on silver futures contracts in an effort to artificially depress the price of the silver futures market.
The lawsuit claims the defendants realised substantial illegal profits in connection with their scheme, while investors who had no knowledge of the scheme lost substantial amounts of money.
"The market for Comex silver futures and options contracts is highly concentrated, with very few large banks controlling a large number of futures and options contracts," the suit states. "As an example, in August 2008, defendants JP Morgan and HSBC controlled over 85pc of the commercial net short positions in Comex silver futures contracts and 25pc of all open interest short positions," it added.
The complaint alleges that the "illegal scheme" continued until around March this year, when a London-based ex-Goldman metals trader exposed the scheme. Silver prices have soared by about 80pc to a 30-year high since the low seen on February 8 this year.
The latest legal action comes after two similar suits were filed at the end of October.The plaintiffs in these suits – Brian Beatty and Peter Laskaris – each said they had traded Comex silver futures and options and contracts, and lost money because of the alleged manipulation.
In a speech on October 26, Bart Chilton, commissioner at the Commodity Futures Trading Commission, said the US regulatory body had been examining the issue for more than two years.
"I have been urging the agency to say something on the matter for months," Mr Chilton said. "The public deserves some answers to their concerns that silver markets are being, and have been, manipulated."
Mr Chilton was unequivocal about his belief that manipulation had occurred. "I believe that there have been repeated attempts to influence prices in the silver markets," he said. "There have been fraudulent efforts to persuade and deviously control that price."
However, manipulation is difficult to prove and Mr Chilton accepted this.
"The legal definition of manipulation under the law is a high bar to prove. It is a much different test than what the average person might consider as manipulation.
"Under existing law, to prove manipulation, the government is required to demonstrate not only specific intent, we also need to prove that as a result of the intent and market control, that activity caused an artificial price – a point which can certainly be debated by economists," Mr Chilton said.
A spokesman for JP Morgan declined to comment. A spokesman for HSBC said: "We aren't commenting on this case other than to say we will defend ourselves through proper legal channels."
In a submission to the CFTC in March, Jeremy A Charles, HSBC's global head of precious metals, argued that the precious metals market was broad and deep. He said that banks such as HSBC provided essential liquidity for the market.
"HSBC is an important source of market liquidity, and hedges its long cash positions when needed. Were it not for the active participation of commercial traders that take the other side of those trades, the spread between the price at which the current contract is liquidated and a new contract is entered into could widen dramatically, to the detriment of all participants," Mr Charles said.
Industry watchers believe the US derivatives regulator could make a statement soon. "I am hopeful that the agency will speak publicly about the investigation in the very near future," Mr Chilton said, "and when they do so that it will be in a more granular fashion than I am permitted from doing at this time." - Garry White"

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