Gold News

"Repeated Fraud" in Silver Prices

What do CFTC commissioner Chilton's accusations suggest for the broader markets...?

LAST WEEK we received reports from US regulator Bart Chilton that he believes market players have made "repeated" and "fraudulent efforts to persuade and deviously control" Silver Prices, writes Julian Phillips at the

Now we hear that HSBC Holdings Plc and J.P.Morgan Chase & Co. are facing an investor's lawsuit of placing "spoof" trading orders to manipulate silver futures and options prices in violation of US antitrust law.

The investor, Peter Laskaris, alleges that starting in March 2008, the banks colluded to suppress silver futures so that call options, or the right to buy, would decline, and put options for the right to sell would increase, according to the complaint filed last week in federal court in Manhattan. The collusion was also intended, he alleges, to maintain prices at levels at which some options would expire as worthless.

Is this happening in the Gold Market? It is logical that the Commodity Futures Trading Commission – for which Bart Chilton is a commissioner – will ask the same question of other markets and uncover similar practices in those markets. We hope that the banking morality that condoned these practices is at least sound enough to stop such practices when they are seen in their systems. If so, we should expect month-end options and futures markets as well as the physical markets to become buoyant at month-end and not flat as 'spoofing' kicks in. A look at Friday the 29th October's rise in silver and Gold Prices could prove a revelation.

The same traders, speculators and bankers accused of manipulating Silver Prices are deeply involved in the gold market too. One has to commend commentators like GATA and Ted Butler and others who have been shouting that this is common practice for a very long time, only to be treated with disdain by so many. We hope they keep up their vigilance and keep the CFTC in the picture and doing their job. Such results will certainly help to secure your Gold Investing profits in these markets.

Bad banking practices have been going on for a long time, perhaps millennia, but never has there been a time when so many have been exposed to the public eye. We have long considered politicians somewhat less than honest, but they continue at the helm of society. Again, never have so many dishonest politicians or their practices been so exposed!

We do live in an age of consequences, and we do expect it to continue. What are the results of this in the financial world? Distrust, doubt, increasing regulation but worst of all declining confidence is spreading across the developed world's attitudes and practices. If these revelations keep on coming, then the phrase "moral turpitude" would well describe the ways of the West. Hopefully alarm bells are ringing in the right quarters, and action is being taken, or is it?

What is a very visible consequence is the rising trust in gold as a wealth protector and counter to the depredation of the developed world. The advantage that the emerging world has is that they never trusted their investments to 'the system' before and are now seeing why they are right not to do so. One of gold and silver, for that matter, is that they are outside the system of obligations by government (such as currencies are bound by). Once in your hand, you alone control it. That is, of course unless the financial situation governments find themselves in becomes dire, then they are inclined towards following President Roosevelt in 1933 and confiscate their citizens gold. Many ridicule that possibility.

Another sobering example of just how government, the banking system and citizens can end up against each other over gold came last week, when we saw that Vietnam's central bank has stopped banks selling gold deposited by customers and using the funds for loans or for converting into foreign currencies. Yes, the central bank was partly looking to help take downward pressure off the Dong. But it is also concerned that, if the value of gold continues to soar, banks could suffer heavy losses when they have to Buy Gold back to repay depositors.

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JULIAN PHILLIPS – one half of the highly respected team at – began his career in the financial markets back in 1970, when he left the British Army after serving as an Officer in the Light Infantry in Malaya, Mauritius, and Belfast.

First he worked in Timber Management and then joined the London Stock Exchange, qualifying as a member and specializing from the beginning in currencies, gold and the "Dollar Premium". On moving to South Africa, Julian was appointed a macro-economist for the Electricity Supply Commission – guiding currency decisions on the multi-billion foreign Loan Portfolio – before joining Chase Manhattan and the UK Merchant Bank, Hill Samuel, in Johannesburg.

There he specialized in gold, before moving to Capetown, where he established the Fund Management department of the Board of Executors. Julian returned to the "Gold World" over two years ago, contributing his exceptional experience and insights to Global Watch: The Gold Forecaster.

Legal Notice/Disclaimer: This document is not and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment. Gold Forecaster/Julian D.W. Phillips have based this document on information obtained from sources they believe to be reliable but which it has not independently verified; they make no guarantee, representation or warranty and accepts no responsibility or liability as to its accuracy or completeness. Expressions of opinion are those of Gold Forecaster/Julian D.W. Phillips only and are subject to change without notice. They assume no warranty, liability or guarantee for the current relevance, correctness or completeness of any information provided within this report and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission. Furthermore, they assume no liability for any direct or indirect loss or damage or, in particular, for lost profit, which you may incur as a result of the use and existence of the information, provided within this report.

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