With all due respect to those who doubt silver and gold prices are heavily manipulated, I recommend that you read the facts presented here. Because precious metals represent MONEY that can not be printed like fiat paper currencies, they serve as a threat to authoritarian governments and central banks who believe they can run a multi trillion dollar global economic system, better than free markets. History has proven that centrally managed, socialistic entities fail at such a complex task, but that does not stop the repeated attempts.
On November 6 2019 the U.S. Justice Department issued the following press release regarding explicit fraudulent trading of precious metals by a JP Morgan trader.
"A former precious metals trader at a United States bank (BANK) pleaded guilty in a proceeding unsealed yesterday to commodities fraud and a spoofing conspiracy in connection with his participation in fraudulent and deceptive trading activity in the precious metals futures contracts markets."
John Edmonds was the former JP Morgan metals trader who pleaded guilty to these charges and his sentencing has been delayed at the request of Federal Prosecutors. "Federal prosecutors, citing an ongoing criminal probe into manipulation of precious metals markets, on Friday were granted an additional five-month postponement of proceedings.."
Please read this part of the Justice Department release carefully as the large scope and depth of fraud is self evident.
Silver and Gold price manipulation 101
As part of his plea, Edmonds admitted that from approximately 2009 through 2015, he conspired with other precious metals traders at the Bank to manipulate the markets for gold, silver, platinum and palladium futures contracts traded on the New York Mercantile Exchange Inc. (NYMEX) and Commodity Exchange Inc. (COMEX), which are commodities exchanges operated by CME Group Inc. Edmonds and his fellow precious metals traders at the Bank routinely placed orders for precious metals futures contracts with the intent to cancel those orders before execution (the Spoof Orders), he admitted. This trading strategy was admittedly intended to inject materially false and misleading liquidity and price information into the precious metals futures contracts markets by placing the Spoof Orders in order to deceive other market participants about the existence of supply and demand. The Spoof Orders were designed to artificially move the price of precious metals futures contracts in a direction that was favorable to Edmonds and his co-conspirators at the Bank, to the detriment of other market participants. In pleading guilty, Edmonds admitted that he learned this deceptive trading strategy from more senior traders at the Bank, and he personally deployed this strategy hundreds of times with the knowledge and consent of his immediate supervisors.
Please note that Mr Edmonds was not operating as a lone wolf solely for his own gain and the endgame was to produce false and misleading liquidity and price signals to deceive other market participants about true precious metal demand and supply.
- Learned deception trading strategy from more senior traders at JP Morgan.
- Traded with consent of his immediate supervisors.
- Admitted intention to send out false pricing and liquidity signals
- Conspired with other Precious Metals traders at his bank-JP Morgan.
Four years ago, Attorney David Kovel sued JP Morgan on conspiracy charges of manipulation of silver futures market, that led to $30 million losses for his two precious metals trader clients. Kovel sees many similar parallels between the fraudulent trading of Edmonds, and allegations he brought against the same JP Morgan.
JP Morgan history of fines & settlements
April 1 2002-Fined $125 million to settle a case involving $2 billion relating to copper trades unauthorized by Sumitomo
July 28 2003-$135 million settlement concerning Enron-related allegations of misconduct.
March 16 2005-$2 Billion settlement with WorldCom investors who claimed that JP Morgan failed to fully investigate financial condition of WorldCom.
June 14 2005-$2.2 Billion paid to Enron investors who accused the bank of "participation in the accounting scandal" that led to Enron's collapse.
August 16 2005-$350 million to settle claims regarding role it played in the Enron fraud.
June 20 2011-$153.6 million settlement on misleading investors on a 2007 complex mortgage securities transaction, as the housing market bubble began to burst.
August 24 2011-$88.3 million settlement with Treasury Department over transactions with Iran, Cuba and Sudan.
September 27 2012-$600,000 penalty for violating Cotton futures position limits.
November 16 2012-$417 million settlement with the SEC on sale of troubled mortgage securities to investors.
March 20 2013-$546 million settlement in the MF Global dispute, where $1.6 billion was missing from MF Global accounts of investors. JP Morgan served as clearinghouse for MF Global.
July 30-2013-$410 million to settle U.S. Federal Energy Regulatory Commission allegations of manipulation of power markets.
October 26 2013-$13 Billion in settlement with Federal Housing Finance Agency claims, including misleading investors on bundling of subprime mortgages into Bonds before the financial crisis.
December 4 2013-$108 million fine for manipulating European and Japanese benchmark interest rates.
January 7 2014-$2.6 Billion settlement on failure to inform U.S. authorities of suspicious activities of Bernie Madoff.
May 5 2014-$280 million to resolve allegations that it mislead investors in billions worth of mortgage backed securities.
(source-"The Big Reset"-Willem Middelkoop-Appendix II pages 293-318)
I have left out many other JP Morgan fines and settlements detailed in this book, while trying to highlight only those most closely tied to fraud, manipulation, and misleading investors.
JP Morgan has reportedly accumulated a gigantic stock of physical silver in the range of 850 million ounces per Ted Butler (Avid silver analyst) while engaging in numerous "selling" (shorting) of silver futures. Butler closely follows the weekly COT-Commitment of Trader reports detailing the buying and selling of Silver futures. The Justice Department criminal investigation of JP Morgan is still open at this point. While the silver price suppression continues, we see that China has moved to secure a huge stock of silver on the Shanghai Futures Exchange.
Who else benefits from temporary suppression of silver and gold prices? JP Morgan for sure, but China and Russia are rapidly accumulating gold.
The U.S. would fare better by demanding that JP Morgan cease and desist, and allow the price to reach a level determined by a legitimate market of supply and demand. Why would we allow communist and socialist competitors (who suppress free speech and jail people who speak out against Government repression) to accumulate valid, fungible silver and gold on the cheap? China and Russia are economic rivals and their goals are not rooted in Democracy and capitalism.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.