Gold and Silver, historic market manipulation or capitalism at its finest?

[Visum]

Here is some recent information that gold and silver investors may be interested in knowing.


TED BUTLER COMMENTARY
March 30, 2009
The Sting (To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.)


"Stunning new evidence of manipulation in silver and gold has just been published by the Office of the Comptroller of the Currency (OCC) (To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.), a bureau of the U.S. Treasury Department. The OCC, first established in 1863, charters, regulates and supervises all national banks. Their new data proves the manipulation in unambiguous terms. The report also confirms how the U.S. Government, in partnership with JPMorgan Chase, intentionally cheated silver investors worldwide of many billions of dollars during the fourth quarter of 2008, and longer. This was all outside the futures market I normally write about. It was a scam of historic proportions."

Here is a copy of the referenced data, 4th quarter, 2008 (To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.):

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For those of you that read charts, here is an account of Gold. Notice the significant price drop during the 4th quarter of 2008 and into the beginning of the 1st quarter of 2009. Gold had been in a steady climb from mid 2007 until March 2008. It had some trouble and then began to resume its climb until around July 6th, 2008. US fiscal 4th quarter (To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts._States) begins July 1st, where I have the first vertical dotted red line. If you believe this was manipulation, it affected gold prices on a global scale.

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[Bobert]

Don't gold prices usually climb during recessions?

[Visum]

Silver was also included in JP Morgan Chase's holdings. The price drop is much more substantial and corresponds almost perfectly with the 4th quarter. The drop is about a 50% reduction.

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Visum added to this post, 18 minutes and 3 seconds later...

Don't gold prices usually climb during recessions?

Historically gold and now silver have/are considered safe haven investments. When global markets run from risk they tend to turn to the safe havens. So, yes, usually these metals will increase in value. Now, silver is both a precious metal and used in industry, specifically electronics, so we can logically conclude that a drop in global industry could/should have an effect on its price. One significant note, so as not to paint a one sided picture, these investments are priced in dollars. When the dollar gains value the general trend is that these investments drop in price due to the dollar's purchasing power. Here is the dollar index (To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.), which is a value priced in relation to the values of a basket of currencies, not commodities. However, this does not negate that manipulation could have occurred.

Note the 50% of OTC silver holdings and the 50% price drop...not sure that is a coincidence?


Butler:
"In the case of silver, more than 50% of all the OTC silver derivatives held by U.S. banks were liquidated in the fourth quarter. I doubt we will see such a large liquidation ever again.In terms of ounces, this forced liquidation was the equivalent of 25 million ounces of gold and as much as 960 million ounces of silver, at the prices that prevailed during the quarter. These amounts are equal to 250,000 COMEX gold contracts and 192,000 COMEX silver contracts. Remarkably, in the case of silver, this is double the entire current total current open interest in COMEX silver futures, the largest listed and regulated silver market in the world."

"Since the price of gold was slightly higher on December 31st than it was on September 30th, the reduction is marginally understated. Since the average price of gold during the fourth quarter was around $800, the $20.3 billion reduction in derivatives amounted to 25.38 million ounces ($20.3 billion divided by $800). JPMorgan accounted for more than 85% of the reduction in gold derivatives during the fourth quarter."

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[Bobert]

HOLY CRAP! 50%!?

[Visum]

HOLY CRAP! 50%!?

Yes, and gold was about a 25% reduction in value.

EDIT: To be more correct, a 25% price drop denominated in dollars.

[deinotes]

Here is some recent information that gold and silver investors may be interested in knowing.


TED BUTLER COMMENTARY
March 30, 2009
The Sting (To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.)


"Stunning new evidence of manipulation in silver and gold has just been published by the Office of the Comptroller of the Currency (OCC) (To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.), a bureau of the U.S. Treasury Department. The OCC, first established in 1863, charters, regulates and supervises all national banks. Their new data proves the manipulation in unambiguous terms. The report also confirms how the U.S. Government, in partnership with JPMorgan Chase, intentionally cheated silver investors worldwide of many billions of dollars during the fourth quarter of 2008, and longer. This was all outside the futures market I normally write about. It was a scam of historic proportions."

Here is a copy of the referenced data, 4th quarter, 2008 (To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.):

To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.

For those of you that read charts, here is an account of Gold. Notice the significant price drop during the 4th quarter of 2008 and into the beginning of the 1st quarter of 2009. Gold had been in a steady climb from mid 2007 until March 2008. It had some trouble and then began to resume its climb until around July 6th, 2008. US fiscal 4th quarter (To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts._States) begins July 1st, where I have the first vertical dotted red line. If you believe this was manipulation, it affected gold prices on a global scale.

To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.
There is also the coincidence that right before something economically bad happens gold takes a beating a day or few hours in advance.

[Visum]

Bringing it around:
The bottom line is that if you owned gold or silver during the 4th quarter of 2008 and sold for a loss, a single entity, JP Morgan, could be who took the majority of the value of your position, i.e. your money. Legally or illegally is the question.

Due to the sheer magnitude of this sale, its affects are still reverberating around the world. This "artificial" price depression has other ramifications such as the loss of jobs and bankruptcies in the mining industry.

What is Shorting? (To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.(finance)) Wiki

[Tough Love]

Notice the significant price drop during the 4th quarter of 2008 and into the beginning of the 1st quarter of 2009. Gold had been in a steady climb from mid 2007 until March 2008. It had some trouble and then began to resume its climb until around July 6th, 2008. US fiscal 4th quarter (To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts._States) begins July 1st, where I have the first vertical dotted red line. If you believe this was manipulation, it affected gold prices on a global scale.



I work in gold, this is very true. Please can you dumb down the rest for me a bit because im finding this interesting. I was not aware of any manipulation as such. But i would like to understand why you say there was?

[Visum]

TL,
Think about it this way. Let’s say you make your living by making apple sauce and selling it to local stores. You buy the apples from local fruit farmers, crush them, and then bottle the sauce. You create your selling price by what is fair and by the going rate for apple sauce. This price includes all of your labor, packaging costs, and the cost of the apples. You make future plans, take out expansion loans, hire new workers, etc., based on your projections for growth.

Now, along comes an investor. Call him JP Apple, and he talks to the local apple broker, the guy who buys all of the apples at wholesale from the fruit farmers. JP Apple talks the broker into lending him a bunch of apples for a few months, (in the case of JP Morgan it could be about 86% of all the available apples). JP Apple has collateral, his financial backing, and the broker agrees. Then JP Apple goes to the market and immediately sells all of his apples at the current market price. The price of apples now falls because there is this new and huge inventory available to the market and it "dries" up all of the apple buyers as they now have their apples. Now, only a handful of other apple vendors, 100%-86% = 24%, are selling apples, but there are no buyers at the current price. They must drop prices to sell their apples, and this is where JP Apple comes along and buys back all of these apples at a lower price. JP Apple goes back to the broker and returns all of the borrowed apples. From this action, JP Apple sold 86% of the apple market at the current rate, and then bought 86% back at a lower rate. JP Apple forced the price down because of his large market share and created an almost "sure deal" for profit.

Who gets hurt or takes a loss?

1. Those other apple vendors looking for profit, may have purchased their apples at a higher price then where JP Apple forced it to. They take a loss because they must sell their apples.

2. You, as the apple sauce maker had made agreements to your apple vendors to buy apples at the going rate. When you go to buy them, the apples are actually selling much less then where they were before, but you must buy at the previous price due to your contract. Now, other apple sauce vendors, who had not made similar arrangements went to market and bought apples at a lower price. With this price savings, they are able to sell their sauce cheaper and thus run you out of business.





Visum added to this post, 6 minutes and 16 seconds later...

I know the math does not work out perfectly, but it is the best I can do at the moment. Short selling is legal in most markets, but at this scale it can be considered market manipulation.

What makes it so outrageous, is that JP Apple could even buy more apples than he borrowed, at the new low price and do the opposite. All of this buying, now more than 86% of the market, quickly forces the apple price back or even exceeds what it originally was.

[Visum]

This may be mumbo jumbo to some, but for those of you that want to follow the CFTC investigation.

All Talk, No Action (To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.)

By: Theodore Butler

"Finally, I hope everyone notices that the argument that the big shorts have physical silver behind them has been jettisoned. Where the CFTC used to imply that the big shorts possessed physical silver, now it’s completely non-transparent swaps, forwards and lease positions. The same paper garbage derivatives that have just about ruined our financial system."

Commissioner Chilton’s Response to Reader Emails (To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.)

By: Bart Chilton

"Thank you for your e-mail regarding silver. As many know, I called for an open hearing, and then for the investigation, which was announced last September. This is the first such investigation in many years. It is detailed and deep, looking at many aspects of the markets. The Commission has been briefed periodically on the investigation and I have had many additional meetings on the matter. We are making progress and I am pleased that the investigation is ongoing. That said, some believe that this is an open-and-shut matter, which can be resolved in days. They are incorrect."