Bank Cartel Silver Manipulators to Court

Topically after the “coincidental” COMEX lead price plunge yesterday, regular readers may recall our article back in April of this year where Deutsche Bank not only admitted to practices around price fixing precious metals markets brought by a class action, but in the settlement reached, agreed to name and shame other complicit banks.  Nearly 6 months later, yesterday the U.S. District Court governing this action dismissed UBS as a defendant but ruled Bank of Nova Scotia (often called ScotiaBank) and HSBC were answerable, and hence now open to silver manipulation price-fixing litigation where investors in the class action can prosecute antitrust and manipulation claims against the banks.  Specifically the claims they can now bring to the Federal Court are:

  • employment of a manipulative device claims
  • bid-rigging, and unjust enrichment.
  • price fixing and unlawful restraint
  • price manipulation claims
  • aiding and abetting and principal-agent claims.

At the moment this is all about silver as the parallel gold action is still being considered.

Whilst it may not see the end of the sort of blatant market fixing we’ve come to expect from these guys (because banks seem to be able to buy, oops, sorry, ‘settle’ their way out of everything) it gives credibility to the so called conspiracy theorists and is another very important step toward a natural market lead by supply and demand.  Importantly too, the discovery process (where documents and communications need to be made available to the plaintiffs’ lawyers) will maybe show the world what these guys get up to and help it being stamped out.

Cynics think that, just like the CFTC ruling a few years back, that whilst ever a low gold and silver price is convenient for the government (reinforcing the ‘everything’s awesome’ narrative) these actions will never have their in-principle support and ultimately fail.  The CFTC is not a court, and courts, particularly at a Federal level, have a record of ignoring government edict, proudly declaring rule of law is outside of politics.  So cynicism may well be proved wrong this time.

Topically Ed Steer, refers to this bullion banking cartel as ‘Da Boyz’ and yesterday outlined (with our square bracket explanations) how they go about allegedly orchestrating the sort of price falls we saw Tuesday night:

“The procedure, which Ted Butler has pointed out ad nauseam over the years, is always the same.  JPMorgan et al [commercial banks] spin their algos [algorithms that control the High Frequency Trading], throw in some spoofing — and sell just enough contracts as it takes to trigger Managed Money [speculative hedge funds etc] sell stops, then pull their bids — and you get the standard waterfall declines that you saw today.  The Managed Money traders are Pavlovian pooches, selling longs en masse on one hand — and going short on the other.  ‘Da boyz’ are standing right there to pick up the other side of these trades…purchasing all the longs the Managed Money traders are selling and covering their short positions with them.”

In our humble opinion, if this is correct, it is clearly criminal as it robs investors and miners alike.

As we said yesterday it will be very interesting see the next COT report to get some visibility in the shift from commercial to managed money.