Discussion with Mexico Mike Kachanovsky
Note: This commentary was originally published at Metal Augmentor on Friday, June 5, 2009 at 3:45PM EST.
Here is an email exchange I’ve just had with “Mexico” Mike Kachanovsky over the question of manipulation in the gold and silver market. The reason this discussion matters is because “busting” the manipulation is seen to be a major future price driver to many people in the gold and silver community. On the other hand, trading the moves in gold and silver is a profitable endeavor regardless of whether there is concerted price suppression or not. Yet it would appear to me that having somewhat of a handle on the dynamics of any manipulation or suppression scheme could make any trading even more profitable. This is not a debate ender but rather a starter and frankly I expect it to be a background discussion for as long as gold and silver are not the only money in circulation.
The contents of our exchange has been slightly edited to stay in focus on the debate itself.
We start out with Mike’s query:
We had a brief discussion during my conference in Reno last year, and I recall you did not think that manipulation was a factor in the metals trading. I wonder if you have changed your opinion. On a day like today, and on Wednesday, when we see such an obvious attempt to drive the metals lower, when there is a documented oncentrated short position held by just a few large banks, how more blatant can this be? Have you seen the light?
I would not argue the fact that the metals have had a very strong run and were due for a pullback. However, please explain for me why the intense selling presure commences at exactly 3am each time, if it is normal market forces at work. Can you point out any other market in which the same recurring selling activity occurs at the same times
month after month? There is no sophisticated trader on the planet that would choose to sell large blocks into a follow up like we had yesterday, unless their intention was not motivated by profit and instead their objective is to breakdown and crush a rally. How else do you define manipulation? I just cannot see how the market-apologists can continue to ignore the illegal trading and pretend this does not exist.You know that I refused to believe the market was fixed a few years ago too. The evidence has convinced me otherwise. During the month of March last year we witnessed a co-ordinated intervention on a massive scale to prop up the dollar and drive all commodities lower. Even people who refuse to acknowledge the intervention as a fact of life in our markets cannot ignore that particular example. This did a great deal of financial damage to many people for the sake of staging a pretend rally that ultimately failed. Market participants that are playing by the rules should not be sacraficed by illegal rigging in order to make a political statement.
My response was as follows:
I may sometimes state my position too strongly. I don’t believe that manipulation doesn’t exist at all. In fact, manipulation is a regular part of every market. Heck, the SEC even has the market maker rules that specifically call for the market to be manipulated! The job of the market maker is basically to buy securities when nobody else is willing to buy and sell securities (that the market maker doesn’t even own) when nobody else is willing to sell. So manipulation is real and it happens in every market, gold and silver included. I note that the bullion banks are essentially the market makers in gold and silver and they do in fact provide “liquidity” that at times results in a paper supply that supplements shriveling physical supply. We can rail about this as much as we want, but this is not unique to gold and silver, it happens in every market.
What I don’t believe is that there is a massive global conspiracy among bullion banks to suppress the price of gold and silver that has lasted many years. There are many reasons why such a conspiracy would not be possible but my favorite “practical” reason is simply that any one member of such cabal, being aware of the conspiracy, would have already at some point taken secret advantage of such knowledge to take the other side of the bet. “Naked” shorts are particularly vulnerable to trap strategies and due to the limited amount of physical gold and silver available for delivery the “rogue” cabal member(s) would have been able to force a short squeeze by now.
Especially in silver, a market that is measured in the low billions of dollars. Please realize there have been several concerted attempts to squeeze copper in the past two decades and copper is a much larger market than silver. These efforts all failed eventually but in silver such efforts would work simply because they have worked before (1979-80 Hunt Brothers episode). The key is simply to lock up as much physical silver as possible and that could be done for $10 billion or less, which is throwaway money for some global players.
Mike came back with:
Of course some degree of intervention is ongoing in every market, with the objective to allow for orderly trading activity. Where I feel it crosses the line into manipulation is the deliberate trading activity designed not to secure the best price for a trade, as one would expect from all market participants, but to destabilise a market, paint the tape, or otherwise undermine or overwhelm the other market participants. Since the objective is to suppress gold and silver, driving the market price lower, then I would not expect one of the ‘cabal’ to seize and advantage and try to generate a profit by trading against the scheme. I also believe that many other sectors will trade relative to gold or inverse to gold, and the easy money can be made by leverage to these other trades once the manipulation has smothered the metals trading. And keep in mind that the same participants are probably going short the mining stocks before they hit the metals so they gain profits indirectly without comprising the intervention on the metals trade. There are frequent documented examples of the HUI and XAU getting hit the day before a big takedown in the metals, often on days when the metals themselves are higher. This is front-running the intervention and surely is very profitable for the trade.
Perhaps this will evolve into an interesting open friendly debate with many people contributing. I think it also helps towards the objective of building a more aware community as we discussed in Reno. Thanks again for your response and I look forward to continuing the discussion.
I have posted our comments on a thread at my website: http://www.mexicomike.ca/php/phpBB2/viewtopic.php?p=102166#102166 .
So there you go. I haven’t dared look yet at the discussion at Mike’s website but I hope it will in fact be an interesting, open, friendly debate.
One big issue on the manipulation side is the selling during low volume hours which does not appear to have any puepose other than to suppress the price.
the other big one is concentration. Even if the 2-3 biggest shorts are hedged it’s still too much market power for them to yield. Why aren’t they held to some reasonable position limits if for no other reason than to allow other market participants into that market?
I think these bullion bnks operate as they’ve always done in that they hold large amounts of the metal and issue claims against them for more metal than they actually own on the basis that no one asks for it all at one time. Fractional gold bullion banks!! It appears that what we have gpoing on still today.
I think this metal is mostly held in the LBMA and is hedged/pledged more than once including perhaps to the etfs. Maybe that’s why Dubai is asking for their gold back.
Wasn’t JP Morgan convicted of a silver scam where they sold silver to unallocated accounts that they didn’t actually have?
@rob
Certainly there are issues with manipulation during low volume hours but that cuts both ways. If prices are pushed to artificial levels in either direction during low volume trading that should correct fairly quickly during the regular session.
Regarding concentration, the bullion banks have clients and their positions are reported along with the bullion banks’ own positions. Unlike the commodities, most gold and silver hedging involves protecting long physical positions against price drops. This is because gold and silver have a large stock-to-flows ratio meaning annual production is a fraction of total supply. Typically with commodities a substantial portion of hedging involves locking in prices by fabricators on raw inventories that have not yet been acquired (or even produced yet for that matter). This is a small stock-to-flows ratio and essentially means that most commodities will never have commercial short positions like there is in gold and silver.
JP Morgan wasn’t “convicted of a silver scam”, Morgan Stanley was sued by investors who alleged they were charged storage fees even though Morgan Stanley did not actually store any metal for them. The issue was actually more complicated than that — Morgan Stanley did open unallocated storage accounts for customers unless a customer specifically asked for allocated storage but MS allegedly did not properly disclose that such unallocated bullion was a claim and not outright bullion ownership. MS did basically what is standard practice which is to assume precious metal customers with a lot of money to buy gold and silver are sophisticated players. Many MS customers, however, were simpletons and MS essentially admitted it could have made better disclosures. The net result was no admission of guilt but a settlement for $1.5 million cash (mostly to pay attorney fees) plus reducing storage fees and making assurances about the precious metals amounting to an economic benefit for MS account holders of several million dollars. MS also agreed to modify its practices and focus on appropriate disclosure for all PM account customers.
Here is the link to the settlement document:
http://www.gardencitygroup.com/cases/pdf/SLB/SLBNotice.pdf
To add to the discussion. This is a Bill Murphy interview.
http://seekingalpha.com/article/141804-manipulation-of-the-gold-market
@silverax
JP Morgan, morgan stanley what’s the difference? they’re both descended from the same Pirate anyway right? Isn’t that how they got their gold and silver in the first place.
sorry couldn’t resist.
My point really is that I don’t think these guys play by the rules and they operate like fractional reserve bullion banks. we can’t really know for sure until we see what’s behind the curtain.
“Certainly there are issues with manipulation during low volume hours but that cuts both ways. If prices are pushed to artificial levels in either direction during low volume trading that should correct fairly quickly during the regular session.”
It does when sentiment is strongly in the opposite direction as we saw with the failed attemprts when PM were taking off a few weeks back. But when sentiment is marginal they push it down, hit the stops and change the technical picture which changes the sentiment and voila we have lower prices. Keep pounding enough and it sticks. Look what they did to you. You’ve got that yellow flag flying perpetually and it’s from conditioned fear of intervention, whethewr you see it that way or not. This is a market that should be breaking out to new highs and when the technicals and fundamentals strongly support that why would anyone sell relentlessly into that in a low volume setting. Also isn’t it true that PM don’t trade upside breakouts like other securities? Isn’t that more evidence of ongoing manipulation.
So no I don’t buy that the price will revert to what it should be and the manipulation will necessarily fail.
Also you didn’t address the concentration issue. I agree with what you say about their hedging. My point is that they have too much control of the market, legitimately hedged or not and anyone with that much power will use it to manipulate the market. Isn’t that why we used to have anti trust laws? So my argument is if they can manipulate it they will.
Tom I don’t understand your comfort with the concentration issue. Assuming all this is REAL commercial hedging, is it CREDIBLE that this amount of hedging by many many parties would be managed with accounts with only a couple bullion banks?
If these bullion banks do dominate the commercial hedging market to such a degree is that healthy? Given what we’ve seen in the US financial sector are you saying these boys will restrain themselves?
Silverax:…”but in silver such efforts would work simply because they have worked before (1979-80 Hunt Brothers episode). The key is simply to lock up as much physical silver as possible and that could be done for $10 billion or less, which is throwaway money for some global players.”
As I recall the Hunt “episode”, Hunt and other investors effectively
cornered the silver market. They bought up thousands of contracts
and did the unthinkable…they demanded delivery. Some large
banks had been shorting heavily as the price blew through $20 to
25, to 30 and up up to 50+. Then, it looked like some
big banks were in big big trouble because of their short selling.
An “emergency” late nite meeting was called involving those
banks, futures market officials, and Federal regulators.
They “solved” the problem by changing market rules (ex post facto)
which had the effect of pulling the rug from under the Hunts
and their collaborators making their positions untennable…in
effect, no they could not have the silver they had bought.
The media of the day was flooded with stories of how the
heroic Federal regulators had stopped the greedy Hunts
and had saved the banking system and the whole U.S. economy.
Little or no mention was made of the fact that the shirts of
those fine, upstanding, God fearing, bankers had been saved
from the consequences of their (naked?) short selling.
So, it seems that it is possible that “manipulation”
occurs. It has only been only consequential or worthy
of regulatory attention when that manupulation is driving
prices up. Or, perhaps manipulation just never, ever occurs
to drive prices down.
Guys,
Manipulation or no manipulation, I took my profits at $16 and $985, and have reentered at $945 and $14.75, because the charts were screaming so. I guess I am also a manipulator, since I sold my metals at higher price to be able to buy back at lower prices. I don’t care, as long as I make money.
The overriding issue seems to have become the strength or weakness of the USD, and the bullion banks are struggling with it. At the moment, according to 24hgold.com, US$ gold is up 9.07 and CA$ gold is down 5.88. In 1979, this did not happen.
I’ve read some lengthy articles about Hunt and his silver deals. He started out small and bought the actual metal and stored it. Later he got greedy and bought futures and more futures. For weeks he had a broker buy silver every morning. Obviously the price rose. Once he got over-leveraged, his opponents had him. He didn’t have the money to take the silver and he didn’t have the money to close his futures positions. $50/oz was a ridiculous price at the time. In 1964 it was $1.60/oz. Inflation wasn’t that bad (it was bad) and interest rates were rising and squeezing levered metal holders.
In the end, Hunt was a **** dummy!!!
He should have just kept his physical silver and sat on it. The future silver players are more cautious and have learned from Hunt. Accumulation is the method. Not a big vacuum cleaner that takes it all up at once.
His sister asked him when it was all over … Why did you do all this and risk the entire family business?
his reply “I just wanted to make a little money”.
by the way, Hunt is still alive and own racehorses now.
It isn’t just a couple of bullion banks although in the U.S. the true “banks” involved as bullion swap dealers are JPMorgan Chase and HSBC and then to a lesser extent Citi and BofA. That said, there are a few other firms that manage hedging for clients via COMEX as an offset. We can judge the relative sizes of the players by looking at the 4 largest and 8 largest concentrations over time. If we do that, we can tell that firms #5-8 by position are significantly smaller but still significant. Also, just about every conversation about concentration excludes the fact that each dealer has its own specialty. As I mentioned above, JP and HSBC are primarily swap dealers. In gold and silver, swap dealers take the long side of a swap trade most of the time, the reason being as I discussed already that gold and silver have large stocks-to-flow. Meanwhile, other bullion dealers specialize in providing long exposure for clients which can involve complicated strategies with floors, collars, etc. These dealers tend to be net short against their clients and thus they are long the COMEX.
Here is another thing. Bullion, despite our focus here, is really a very specialty business in the wider world of fiat-driven financial markets, and that is why there are just a few dozen players with a handful dominating the action. This is not a recent phenomenon, it has been that way for a very long time and part of the reason is that the LBMA is selective about the banks that get to be in the upper eschelon as price “fixers” (in terms of the daily gold and silver fixings).
The premise that concentration alone will result in manipulation has been twisted around quite a bit in this debate, mostly by Ted Butler who I don’t believe is any sort of expert in antitrust issues judging by the amateurish nature of his anti-concentration arguments. Are any of you experts in that subject? Didn’t think so. I’m not either, and so I can’t say exactly what level of concentration creates heightened risk of market abuse. What I can say is that I know enough about the banking industry, I know enough about the regulatory industry, and I know enough about the bullion business to make a fairly certain determination that given the circumstances it is highly unlikely that there is a long-term collusion/conspiracy/cabal between bullion banks, regulators and the government to actively suppress the price of gold and silver.
Tom,
You said if such a Cabal did exist one member may take advantage and use inside info to take the opposite trade. I do not believe this is the case because for one thing Gold/Silver markets are small compared to many other markets.
The very biggest reason to control Gold is what I would term the pro-fiat game. This is the game where untold trillions are made. Gold is the only threat to their paper monopoly and any losses that are incurred by controlling Gold are miniscule compared to their lock on the great fiat casino. Therein lies the banksters control of the world by their control of paper money.
Remember their big lie, Gold is a barbarous relic.
@JohnST
The Hunts made a cardinal mistake in thinking they can try to create a market default. The reason they went to the COMEX is because they wanted leverage and could not buy enough silver on the physical market. They weren’t dumb, they sensed there was limited time to complete the corner once Volcker raised interest rates, and they made a bad decision. Moreover, the idea that they were going to take physical delivery is ridiculous — they didn’t have the funds. What I said is “the key is simply to lock up as much physical silver as possible”. PHYSICAL silver. Not COMEX silver.
As far as manipulations to drive down prices, those are pretty rare and when they do occur it is short-term in nature, primarily because once somebody figures it out, they tend to take the other side against the manipulator knowing that the odds are greatly with them. You see a manipulation ALWAYS runs up against dwindling supply. In a short manipulation, that dwindling supply works against the manipulator and is thus self-extinguishing. In a long manipulation the dwindling supply works in favor of the manipulator and is self-reinforcing.
Good point, but the question of manipulation still matters because at some point the gold and silver bull markets will top and the manipulation/conspiracy crowd will not know to get off since they will still be waiting for that short squeeze moon shot that never arrives.
That may be so, but the mistake you make is thinking the banks have each others’ best interest in mind. If so, why is Citigroup suing Wells Fargo for $60 billion: http://www.reuters.com/article/ousiv/idUSTRE52N2YF20090324 ? My point is any particular bank would love to cut the throat of any other bank if it means gaining something. That argument still works even if we assume the ultimate goal of the “banksters” is to rule the world.
@eddysharpe
Exactly.
TAKE A GOOD LOOK AT THE 2 YEAR TREASURY…..that will bring a SMILE to the GOLD and SILVER BUGS.
2 YEAR TREASURY
http://stockcharts.com/h-sc/ui?s=$UST2Y&p=D&yr=0&mn=4&dy=0&id=p09273087630
Not much time left to get on the PRECIOUS METALS TRAIN. People who want to TIME TRADING CASH to PRECIOUS METALS might be holding FUNNY PAPER as the GRAND TREASURY MARKET gets FLUSHED down the toilet.
People can ARGUE all day long about “TO BE OR NOT TO BE MANIPULATION.” The IRONIC thing will be, as they ARGUE and BICKER about MANIPULATION, they WHOLE US DOLLAR-TREASURY FACADE will IMPLODE right before their EYES.
Take a FEAST on this article:
BRIC countries (Brazil, Russia, India and China): A new global order emerging!
On June 16, at Brazil’s urging, BRIC leaders will meet in Russia to discuss an ambitious agenda: overhauling the international financial system, enlarging the United Nations Security Council and dumping the dollar as the world’s reserve currency.
http://ceoworld.biz/ceo/2009/06/08/bric-countries-brazil-russia-india-and-china-a-new-global-order-emerging/
@SRSrocco
Thanks for the link. Even a couple of years ago, outright discussions about dumping the dollar as the world’s reserve currency would have been unimaginable.
I find it funny to listen to the pundits who claim that the dollar will remain the reserve currency because the rest of the world is in worst shape, or the world needs the US consumer, or there is no viable alternative, etc etc. Our collective hubris is incredible. While we blow smoke up our own *sses about how important we are, our creditor are clearly moving away from the dollar. I don’t think it can be reversed at this point. For God’s sake, a group of Chinese students actually laughed in the face of our pathetic treasury secretary. Anyone with a decent grasp of elementary math can see that the only way we can pay off our debt is by monetizing it.
I’d give the US dollar 5 more years, max, as the world’s reserve currency. With the speed at which things are unravelling though, it could happen much quicker.
@SRSrocco
It is a mistake to take such events in isolation. We all make this mistake. If falling Treasuries foretold an imminent collapse, there would be other indicators including a breakdown of the dollar and weakness at some point in stocks.
As far as the BRIC, good luck to them. I doubt they could agree what color socks to wear for the “team photo” much less on important topics such as “new world order”.
@Jeff S.
If the “reflation” doesn’t work, you will be right. However, if by some miracle there is even a hobbled recovery, the U.S. would be able to use a number of levers to maintain global hegemony for the dollar.
On a related topic, did anybody see this:
http://online.wsj.com/article/BT-CO-20090609-713994.html
The $68 billion of TARP repayment is less than 10% but needs to be seen as part of the big picture. Another part of the big picture is that U.S. Treasury spreads to corporate bonds have shrunk by leaps and bounds in the past several weeks. That means something has got to give. It also might mean that somebody placed a large singular bet against Treasuries and not the rest of the U.S. bond market, which to me is foolish since I would expect Treasuries to be the last man standing after all corporate bonds are dead and gone. In other words, I’m looking for a sharp reversal in Treasuries and not a breakdown, unless of course we see corporate bonds start to deteriorate sooner than later.
Wells Fargo does not belong to the “elite” banks (meaning, stockholders of the Federal Reserve) - it is “outsider” and, as such, can be hunted (suied, etc.). I don’t think that Citi would ever risk to challenge JPM, for example (by the way, it is not quite clear to me why Lehman was allowed to fail, and who inherited their shares of NY FRB).
However, I would agree that some European banks (first of all, Germans) can risk a bidding against FRS and JPM.
@silverax
I don’t really understand how you come to the conclusion that we can maintain dollar hegemony by “reflating”. Surely you don’t think the fed can “reflate” the stock market and housing bubble without severe price inflation (and loss of confidence in the dollar). In my opinion, the Fed attempting to reflate (how is this different than inflating?) is the main reason why other countries will try to dump the dollar.
As for your assertion that the BRIC countries are too incompetent to conduct trade without the dollar, I would say that attitude is actually a big reason they would like to screw us. I lived in Brazil for a while and I can guarantee they don’t appreciate patronizing Americans. I doubt the BRIC nations will try to form some “new world order” alliance, but they certainly don’t need the dollar to survive.
@Serge
Nonsense. Read here: http://www.geocities.com/CapitolHill/Senate/3616/flaherty5.html .
@Jeff S.
Yes, the Fed can “reflate” without severe price inflation and “loss of confidence” in the dollar, though it would be difficult and take a number of attempts. The way it works is that the U.S. economy stabilizes while much of the world remains a mess. The hope then is that the U.S. will pull everyone else out of the hole, yet how can that happen when the dollar has “loss of confidence”?
Regarding the BRIC countries, I didn’t (necessarily) say they were incompetent to trade without the dollar, I said they have competing interests and aren’t about to form any type of trade alliance. Do you really think the Brazilians want to deal in Remnimbi, Ruble or Rupee? Speaking of which, I didn’t realize until now that the BRIC currencies all start with “R”. So perhaps it does make since they form a trade alliance, perhaps join currencies and call it the “RRRR”. We can then nickname it the “roar”.
Nobody needs “the dollar to survive” and certainly if they can come up with something for their own trading that works better, more power to them. The dollar works primarily because the U.S. has been around in essentially the same form for more than 200 years with the most recent political upheaval about 150 years ago. Whether an empire or not and despite the public protests of dickwads like Alex Jones and Rush Limbaugh, the U.S. will be around in essentially the same form for a very long time.
Well, I have to agree with your statement that the key is in the
physical markets, i.e. locking up as much physical as possible.
The seepage of inventory into small investor hoards may be the
way that “lock up” is done in the long run. The big players,
it seems, have many smoke and mirror techniques to ofuscate
what the true silver supply situation is.
As the old saying goes: “Where’s the Beef?” will apply to
silver at a time when actual users of silver find themselves
desperately asking “Where’s the Silver?”. At that point,
silver in the hundreds of millions of ounces, may be scattered
across many thousands of small physical holders. The collective
will of these “small” investors will then trump Comex quotes and
they will determine market price.
@silverax
I disagree that the fed will be able to channel newly created money into their preferred asset classes (ie stocks and real estate). Even after falling substantially, valuations on stocks and real estate are still well above their historical averages. I don’t know of one historical example where an asset bubble was reflated immediately after bursting. There are, however, many examples of countries that destroyed their currency by reckless spending and debt monetization.
As for countries trying to move away from the dollar, I don’t think using local currencies will be a good solution. I think there may be several unsuccessful attempts to replace the dollar with other irredeemable currencies, before the world comes to the realization that only gold is suitable as both a unit of account and a stable store of value. After all, gold never really stopped working, it merely got in the way of politicians who wanted to spend more money than they had.
COMEX Gold Settlement 9 June ‘09
June 09 $954.00
July 09 $953.90?
“I’d give the US dollar 5 more years, max, as the world’s reserve currency. With the speed at which things are unravelling though, it could happen much quicker.”
Actually, rhe great unravelling will be visible to all within 5 months.
Heh, one of few things I was surprised at when moved to US is how many people here tend to believe the government… :))
@Serge
Skepticism can certainly have its utility but sometimes things really are as they seem.
I’m posting this commentary on behalf of “Galearis”:
http://www.gold-eagle.com:80/editorials_02/speck062802.html
One of the early articles showing gold (and silver) manipulation was a most interesting and useful one….The smoking gun argument could even apply…but heck, I loved it because it was so useful…I used to time my metal buys from the bullion banks based on these take-downs (use the 200 dma) and their COMEX morning efforts at around 10:30 edt, - or, the “paint the tape” effort at the old COMEX close of around 1:20 PM. There were other articles – one that did a statistical study to prove manipulation – and showed that 90% of the time the collusive elements of selling took down the COMEX markets on almost a daily basis…These behaviors of these short attacks of these cabal banks (and the manipulation community is why it is called a “cabal”) is an inferred smoking gun in itself, IMO. That these communities in the east (Tokyo et al) would seem to be less effective (NY Access Market) in this would seem to be a factor of distance and of fairer markets - and sometimes successful antics of such questionable miscreants as Goldman Sachs – the latter having removed itself from the game recently has expressed itself with these paper markets performing a little better in recent months.
As to the argument that Tom uses against cooperation, it speaks to an omission, I think, about ties to government of these bullion banks…And dare I say it that Ted Butler’s “raptors” might just be out of this particular loop…and STILL fair well by observing that it is profitable to ride on the coat tails of the bigger players on the short side?…Ok, (and I am trying to keep this on a most general, almost philosophical level of discussion) these smaller players may have noted (as has Rob Kirby and others) that entities like JPM’s huge otc short position IS the insolvency trait I refer to and increasing it to be as large as necessary to control price to the downside is believable policy of these banks if 1) one is already insolvent and held artificially afloat by the US government/Federal Reserve and 2) it does not matter HOW short one goes if one is already insolvent with no hope of survival (or depending on infinite bail-out confidence under a TARP umbrella – couldn’t resist the pun). And 3) the third point is also inferred by what happened to the Hunt Bros when they took on the infant cabal of commercial interests and the COMEX management in the ‘70s. Could there be a falling out of a bullion bank to take on JPM and its huge short interest? IF the cabal has the “official” (if secret) support of the US government (and I think this is true), what bullion bank would turn-coat with that backing? We should recall that Bear Stearnes reportedly (Kirby) ran afoul in some measure within this bank pecking order and we have seen the discipline handed out…What other support do they have? Well, the COMEX management who can change the rules when necessary and with total draconian extremes, its bureaucracy of entrenched harassers of the would be metal delivery takers, the SEC (intimidation), the IRS (intimidation) – direct from the government - and of course the CFTC (and all of the above) who never saw a lower price it didn’t like. A CFTC official has even public ally stated this position on rising prices of silver…
I do not maintain that I have proven the case with all of this, but if the essay has any veracity that is good…FWIW, I doubt anyone could prove absolutely that the market is rigged to the extent that is implied by most of the GATA camp…But it sure is safe to say that it is manipulated WAY MORE than most.
And for the record (one last thought): I think manipulations DO matter in markets. The one in silver (ironically and coincidently) has been going on for 5 generations to the very point of extirpation of bullion supplies and to the point that the end of mineable primary ore reserves are in sight…In my opinion it is a myth that manipulations don’t matter in the long term….In the case of silver and its usefulness to industry (alone) the consequences of the price controlling practices over 60 years are even predictable. I would like to go on record that ephemeral entities like JPMorgan and other members of the cabal may have insulted the very fabric of civilization and theirs and similar shenanigans (the take down of commodities last fall - again Rob Kirby) will kill millions of people in the end.