Three JP Morgan metals traders have been charged with precious metals market manipulation.
“US prosecutors have charged three JPMorgan metal traders with a “massive, multiyear scheme” to manipulate markets and warned they were continuing to probe higher echelons at the largest US bank.
“Michael Nowak, head of precious metals trading, was charged on Monday along with two colleagues, Gregg Smith and Christopher Jordan, on federal racketeering charges normally used to take down organised crime syndicates.
The indictment alleged that the three traders engaged in “widespread spoofing, market manipulation and fraud” while working at JPMorgan, which along with HSBC dominates global flows of gold and silver trading.
They placed orders they intended to cancel before execution in an effort to “create liquidity and drive prices toward orders they wanted to execute on the opposite side of the market”, it said.
The case will increase scrutiny over global precious metals markets and the dominance of large banks such as JPMorgan, with prosecutors indicating more senior executives and other banks are under investigation.”Source.
These charges are merely the latest in a long line of gold and silver manipulations now being made public.
Back in November 2018, a former JP Morgan trader plead guilty to a charge of manipulation of precious metals markets over a period of 7 years.
“John Edmonds, 36, pleaded guilty to one count of commodities fraud and one count of conspiracy to commit wire fraud, price manipulation and spoofing. Edmonds, a 13-year J.P. Morgan veteran, said that he learned how to manipulate prices from more senior traders and that his supervisors at the firm knew of his actions.” Source.
Much like the current case, Edmonds also used the method of “spoofing” where trades are placed via high speed computer and then quickly cancelled. This is done solely with a view of affecting the price of a metal. So as to make a gain on the traders own position.
The current charges and the now public guilty plea by Edmonds, may assist an ongoing civil case also against JP Morgan for silver futures manipulation:
“[Lawyer, David Kove is sueing JP Morgan] on behalf of a colorful hedge fund operator and big-stakes poker player, Daniel Shak, and two metals traders, Mark Grumet and Thomas Wacker. The civil lawsuit accused J. P. Morgan of manipulating the silver futures market from 2010 through 2011, costing Kovel’s clients $30 million in losses.
Edmonds isn’t named in the Kovel case, or mentioned in its allegations. But he was questioned under oath by lawyers for the traders. And Edmonds worked at J. P. Morgan in the same group of traders who are identified as participants in the scheme alleged in the civil case.
“The conduct that Mr. Edmonds admits to is highly consistent with the conduct that my clients allege harmed them and it’s not surprising because he was working with the same people at J. P. Morgan trading in the silver markets at that time,” Kovel told CNBC.
“We are currently exploring how this could impact the evidence we will put forward in the case,” Kovel said.
Separately, last Wednesday, another group of lawyers filed suit in Manhattan federal court against Edmonds, J. P. Morgan and unnamed precious metals traders. The suit, which is seeking class action status, claims the parties engaged in manipulative precious metals futures trading.”Source.
These latest reports come after a deluge of information on manipulation in the silver and gold markets has been released in recent years.
In January 2018, the US CFTC ordered UBS, Deutsche Bank and HSBC to pay millions in a spoofing settlement. The number of enforcement actions by the CFTC increased sharply in 2018:
So just as we’ve been saying for the past couple of years, this isn’t likely to be the last we’ll hear of manipulation in the precious metals markets. And JP Morgan may not be the only one to have a civil case taken against them.
A Visual Representation of Manipulation in Precious Metals Markets
If you’ve been involved in the world of precious metals for any length of time it’s highly likely you’ve come across some charts from Nick Laird’s excellent website www.goldchartsrus.com.
In December 2016 screeds of documents were released (350,000 pages!), as part of a settlement by Deutsche Bank in a lawsuit for manipulation in the silver market (i.e. paying a smaller amount to avoid going to trial and paying a much bigger one). Nick Laird did a fantastic job of creating a timeline chart. This timeline shows the price action in silver, highlighting specific acts of collusion by a cabal of banks including Deutsche Bank as outlined in the released documents.
Here is the link to timeline:
This timeline takes a bit of reading as there are plenty of links to click on. However Mike Maloney did a good job of summarising some parts of it in the video below.
He walks you through the historical silver charts and pinpoints the exact moments bank traders colluded together to rig the markets. The evidence leaves little to doubt. But as you’ll learn, there’s an upside to this manipulation for silver investors who accumulate physical metals.
There can be little doubt now that the likes of the Gold Anti Trust Action Committee (GATA) have been right all along. This latest prosecution is a further vindication for GATA’s tireless (and much maligned) work in proving there is manipulation in gold and silver.
For more of the evidence GATA have gathered over the years, see the speech that Chris Powell gave a few years ago here in Auckland. He clearly outlines many of the documents that show banks and central banks plainly intervene in the precious metals markets.
Or for GATA’s latest summary of manipulation see: Update on Gold Market Manipulation
Are the Regulators Serious about Ending Gold and Silver Manipulation?
Could the most recent charges show that the authorities may finally be waking up to how deep seated this manipulation has been?
Are the regulators serious about cleaning up the markets? Or is this just a case of appearing to do the right thing?
It’s hard to say. We’ll reserve judgement until we see if anyone further up the food chain at JPMorgan gets indicted. Such as CEO Jamie Dimon or former head of Global Commodities, Blythe Masters.
Not All Silver Price Rigging is Illegal
But it’s also important to note, as Bix Weir does, that not all price rigging in silver is illegal:
“Although the price rigging of silver is MOSTLY illegal, it is not ALL illegal. It is illegal for the bullion banks to rig the silver market without approval from the US Treasury but it is NOT illegal to rig the silver market when you are instructed to by the US Government.
The US Treasury has the right and the DUTY to rig the silver market under the power of the Gold Reserve Act of 1934 which legalized the Exchange Stabilization Fund which is used to “influence markets.” This fund is controlled by the President’s Working Group on Financial Markets which answers directly to the President. The Working Group consists of the Head of the Treasury, the Head of the Fed, the Head of the SEC and the Head of the CFTC…oops.
So don’t ask WHY the CFTC is not opening up a new silver market rigging investigation after seeing all this proof of the rigging. They have already closed 3 separate silver inquiries and found NOTHING.
Of course they found nothing…they are part of the rigging mechanism!
Yes, it’s all a CON but it is also ENDING as the Bad Guys are being removed from power.
If the current price of silver has got you frustrated and you KNOW that they have been suppressing the price for decades if not centuries… ask yourself what the price of silver will have to do to become “freely traded” once again?
If you are thinking $1,000’s of dollar per ounce you are most likely correct…at least while as the price unwinds decades of manipulation.
So take heart all you frustrated Silver Bugs…our day in the sun will come very soon.”
Yes indeed silver holders have been frustrated in recent years. But as was shown by the London Gold Pool in the 1960’s manipulation cannot last forever. When it finally ends silver and gold are likely to be priced much higher than they are currently. The recent months gains in silver might be just a small indication of what is to come.
But even if silver doesn’t reach the lofty heights Bix Weir mentions above, there is certainly plenty of upside ahead. See what silver products are available: Buy Silver.
Editors Note: This post was originally published 15 December 2016. Last update 17 September 2019 with latest charges to JP Morgan traders.