ZeroHedge: Precious Metals Manipulation Worse Than Libor Scandal, German Regulator Says GLD, TNR.v, MUX, GDX

  

  Update Jan 17th, 2014:

Rats are running from the sinking ship! Now JPMorgan scale down and sale of its commodity trading businesses are getting the new meaning. Are we close to the final revelations with Record High Leverage at COMEX now!

Reuters:

Deutsche Bank to withdraw from gold fix amid probe

"Deutsche Bank is withdrawing its participation in the gold and silver benchmark setting process following the significant scaling back of our commodities business," the bank said in a statement on Friday.

"We remain fully committed to our precious metals business."

  ZeroHedge reports on latest news from Bloomberg about Gold manipulation investigation in Europe. No surprises for us here - it is worse than Libor scandal. Will this news propel Gold above $1270 now to confirm the Double Bottom Reversal in 2013?

Arthur Cutten: COMEX Gold Potential Claims Per Deliverable Ounce Rises to Historical High 112 to 1 GLD, TNR.v, MUX, GDX

 "After issuing his Buy Signal on Gold, Arthur reports the new historical all-time-high leverage at COMEX with 112 potential owners for each one ounce of Gold!"

Arthur Cutten: JPM Holds the Whip Hand on the Comex - Gold Buy Signal GLD, MUX, TNR.v, GDX

 "Arthur Cutten has issued his Buy Signal on Gold. He has a very conservative approach and his article speaks for itself."

GATA: China Gold Chief Confirms Gold Price Suppression by U.S. MUX, TNR.v, GLD, GDX, SLV

ZeroHedge:

Precious Metals Manipulation Worse Than Libor Scandal, German Regulator Says

Remember when banks were exposed manipulating virtually everything except precious metals, because obviously nobody ever manipulates the price of gold and silver? After all, the biggest "conspiracy theory" of all is that crazy gold bugs blame every move against them on some vile manipulator. It may be time to shift yet another conspiracy "theory" into the "fact" bin, thanks to Elke Koenig, the president of Germany's top financial regulator, Bafin, which apparently is not as corrupt, complicit and clueless as its US equivalent, and who said that in addition to currency rates,manipulation of precious metals "is worse than the Libor-rigging scandal." Hear that Bart Chilton and friends from the CFTC?

More on what Eike said from Bloomberg:

The allegations about the currency and precious metals markets are “particularly serious, because such reference values are based -- unlike Libor and Euribor -- typically on transactions in liquid markets and not on estimates of the banks,” Elke Koenig, the president of Bafin, said in a speech in Frankfurt today.

Actually, what makes the most serious, is that precisely because they are on liquid markets means they implicitly have the blessing of the biggest New Normal market maker of call - the central banks, and their own "regulator" - the Bank of International Settlements (hello Mikael Charoze).

“That the issue is causing such a public reaction is understandable,” Koenig said, according to a copy of the speech. “The financial sector is dependent on the common trust that it is efficient and at the same time, honest. The central benchmark rates seemed to be beyond any doubt, and now there is the allegation they may have been manipulated.”

Bafin has also interviewed employees of Deutsche Bank AG as part of a probe of potential manipulation of gold and silver prices, a person with knowledge of the matter has said.

We wonder how long until this particular investigation is stopped based on an "executive order" from above, because Bafin is now stepping into some very treacherous  waters with its ongoing inquiry of gold manipulation: what it reveals will certainly not be to the liking of the financial "powers that be."

Bloomberg: London Gold Vaults Are Virtually Empty GLD, MUX, TNR.v, GDX

  Bloomberg quite suddenly provides some really interesting information about the state of the gold market and ongoing manipulations around it these days. Could the reports about JPMorgan being Net Long Gold now be correct in the end?

Government Interventions In Gold Market: "The Double Face of Gold" GLD, MUX, TNR.v, GDX

 "We have the second part of the interview with Dmitri Speck revealing the ongoing Government interventions in the Gold market. This view from Europe on the Gold Cartel and Government Interventions in Gold market is particularly important now with the announced investigations in the Gold Market manipulation by German and UK financial regulators."

Bloomberg:

How to Keep Banks From Rigging Gold Prices:

By Rosa M. Abrantes-Metz

Authorities around the world are gradually piecing together a shocking picture of how banks have manipulated benchmarks that influence the price of everything from mortgage loans to foreign currencies.

Another area deserves their scrutiny: gold and silver.

In recent weeks, Bloomberg News and others have reported on concerns, among market participants and regulators, that the process for establishing the price of gold may lend itself to insider trading and other forms of unfair dealing. The available evidence strongly suggests manipulation and, given the structure of the market, possibly collusion.

The price-setting mechanism, known as the fixing, provides an easy vehicle for manipulation. Twice every business day in London, representatives of five banks and some select clients participate in a phone call in which offers to buy and sell gold are put forward. These calls determine the morning and afternoon gold fixings, which serve as the benchmark for trillions of dollars in transactions around the world. Silverfixings work similarly, with only three banks involved.

Such direct communication is conducive to collusive pricing, especially when the group of participating competitors is very small. We now know that collusion distorted both the Libor and Euribor interest-rate benchmarks, which involved many more participants. In those cases the coordination occurred through e-mails and instant messages. In the case of gold and silver, an organized live call allows for real-time signaling of the desired prices, obviating the need for additional contacts.

One needn’t look far for a motive. The participating banks all stand to gain both from using the privileged knowledge they glean during the fixing process and from influencing the fixing itself. Aside from trading in the spot markets for gold and silver, they may have significant derivatives positions tied to the benchmarks. The system isn’t set up to identify, let alone deter, such activity. It is the participating banks themselves that administer the gold and silver benchmarks.

So are prices being manipulated? Let’s take a look at the evidence. In his book “The Gold Cartel,” commodity analyst Dimitri Speck combines minute-by-minute data from most of 1993 through 2012 to show how gold prices move on an average day (see attached charts). He finds that the spot price of gold tends to drop sharply around the London evening fixing (10 a.m. New York time). A similar, if less pronounced, drop in price occurs around the London morning fixing. The same daily declines can be seen in silver prices from 1998 through 2012.

For both commodities there were, on average, no comparable price changes at any other time of the day. These patterns are consistent with manipulation in both markets.

It’s extremely odd that the prices of gold and silver are still based on such an archaic and exclusive system. Whether or not authorities seek and find conclusive evidence of manipulation, they should learn the lesson of the London interbank offered rate and reform the gold and silver markets in a way that will deter such behavior. Both metals are highly liquid commodities, so their benchmark prices could easily be set by observing actual trades. To ensure reliability, the process should be overseen by an independent institution with the appropriate governance structure and minimal conflicts of interest.

The best way to restore confidence in financial benchmarks is to remove the means, motive and opportunity for abuse.

(Rosa M. Abrantes-Metz is an adjunct associate professor at New York University’s Stern School of Business and a director in the antitrust, securities and financial regulation practices of Global Economics Group, a consulting company based in New York.)"