http://www.zerohedge.com/article/whistleblower-exposes-jp-morgans-silver-manipulation-scheme
There are more and more articles popping up out there about this story. I believe the NY Post and Huffington Post have been covering this as well. Should be very interesting to watch this one play out.
So the argument goes the JP morgan can influence the price of silver, since it holds so much silver already. So they short silver, and because of their cloute they can make the price go down temporarily and some investors get sucked in. But really this has nothing to do with the long term price of silver.
This can’t really be whats happening…
Or maybe as rothbard says, its okay because you’re transferring ownership of scarce resources from idiots (who lose money) to owners who know whats going on and can better allocate their resources.
Why not?
Cus the market’s not broken 
I don’t understand what you mean by that.
I guess the question is ‘what are they doing illegal?’ Even in terms of property, ie. theft, etc… What does the article mean by “manipulation”? I read the article but couldn’t find out what they meant by that in terms of justice or injustices.
My understanding is that they are essentially driving the value of silver whichever way they want in order to make a select few some money. I also understand that there are more paper claims to metals then there are of the physical commadity itself, which helps drive down the true value of the metals.
That is interesting, but I have always heard the real scheme is in gold leasing, and comex silver contracts that couldn’t be fulfilled if everyone took physical delivery.
This is what I understand as well. I referred to it in my 2nd reply to this thread. I think it ties into this issue with JP Morgan but I couldn’t really explain it. As I was reading into the JP Morgan issue I also came across the issues of metal contracts that don’t really have the physical metal to back them.
The only way JP Morgan is doing some act of aggression is in that it gets artificially low interest rates on money it borrows and turns around and purchases silver or anything else for that matter with it. What they do with the money is not an act of aggression. The fact that it is probably illegal only goes to show how stupid or outright corrupt the regulators happen to be. What is really funny in the article is this little gem:
“As always happens month after month, HSBC and JPM sell short in large quantities to overwhelm all bids and make unsuspecting option holders lose their money.”
There are lots of things wrong with this statement. The first is that it only says that HSBC and JPM sell short in large quantities. It gives no other details of the scheme. Maybe HSBC and JPM are simply betting that prices will fall, but that would not be a conspiracy worth whistle blowing about. Also note that HSBC and JPM could lose an INFINITE amount of money here. Again the real aggression is that the Fed will create money and give it to JPM to keep it solvent and has nothing to do with JPM selling something short.
I would point out that if I was a metals trader and I saw this then I would be buying into their short selling and stealing their money, I guess the person blowing the whistle is not that good of a metals trader after all.
The second thing that jumps out to me is that unsuspecting option holders lose their money. Hello to those ignorant of economics: An option is a zero sum game. There are two plus one sides in an options contract, the speculator and the supplier, and the broker. If the speculator loses money then the supplier gains and vice-versa, the broker makes money regardless of the outcome of the contract. And furthermore, options are incredibly risky instruments. If you are the speculator and unsuspecting then we call that being bankrupt.
Cornering or attempting to corner a market without state support is folly but not a crime. But JP Morgan, Goldman Sachs and the other Fed cronies are hardly a bunch of naive Hunt brothers. The monetary commodities are heavily manipulated - fiat currency can be thought of as one gigantic monetary commodities manipulation scheme.
Clayton -
JPM is way naked short. Gold too, along with HSBC. I wonder why. Oh yeah. Gresham’s law. Aka an artificial monopolist (like a sovereign issuing fiat currency) has an incentive to depress the value of competing currencies to make their fiat paper look better in reference. I wonder if gold and silver are competing currencies?
Yup, the TBTFs are Fed proxies (or is it the FED is run by the TBTFs).
Ron Paul has been discussing this ad nausem for years, how is that a LvMI forum is so off the mark?
http://libertymaven.com/2009/11/27/ron-paul-the-gold-price-is-rigged-by-central-banks/8160/
or
http://www.house.gov/paul/congrec/congrec2006/cr042506.htm
At other times they tried to prove that paper works better than gold by artificially propping up the dollar by suppressing market gold prices.
…
The Fed tries to keep the consumer spending spree going, not through hard work and savings, but by creating artificial wealth in stock markets bubbles and housing bubbles. When these distortions run their course and are discovered, the corrections will be quite painful.
or
http://www.thestreet.com/story/10397859/ron-paul-get-back-to-gold.html
or
Yet while politicians favor central bank control of money, history and the laws of economics are on the side of gold. So even though central banks try to mask their inflationary policies and suppress the price of gold by surreptitiously selling it, the gold markets always cut through the smokescreen eventually. Rising gold prices like we see today historically signify trouble for paper currencies, and the dollar is no exception. Should the dollar continue to decline in value, America will find itself struggling to service our already massive debt load even as our foreign creditors become less interested in our dollars.
true. in terms of gov’t involvement: criminality undoubtedly will be found in the collaboration.
But in terms of this single instance I wonder what the crime is. Are we saying the silver certificates are gov’t issued and JP is using those specifically to manipulate the market? If so, then I see possible fraud.
In case people didn’t understand the reference: http://fskrealityguide.blogspot.com/2008/02/hunt-brothers-silver-corner.html
I was thinking, isn’t this a form of fractional reserve banking?
If so, then if the market is accepting these certificates as if they are silver how can this be considered fraud? Obviously the market acts in a way that these certificates are silver. Silver devalues but then the argument that ones real silver, as opposed to the certificate, devaluing isn’t a case of fraud. How could one make the case that silver has to have a fixed artificial price? If the certificates are accepted as silver and silver devalues then that’s the natural price. One possibly argues that they are not entering in a silver market and accepting that the certificates are real silver, but since another part of the silver market is accepting them as silver what really could be done?
Same would go for fractional reserve banking with dollars. People accept the dollars even though they are fractional by the act of consent, never mind if people know or not, cause that doesn’t matter. Their act of accepting the dollar is what matters. Their actual possession and exchange is what matters in economic terms.
This is the first time I’ve personally taken fraud this far off the table as to what’s going on not only in fractional reserve banking, but I don’t see it in this case either. The market may accept a different way if it wasn’t being extorted into legal tender, but either way the market is consenting to this by the act of individuals. Of course if there are individual(s) who no longer use dollars or silver and this is probably happening in the gold market too, then these people are not consenting.
edit: I guess I haven’t really made up my mind completely on this because being a silver market then all that should be traded is silver so this is fraud, maybe? Yet the dollar market is only about dollars so that’s still different and not fraud, maybe?
Not exactly, a FRN is not redeemable in anything. A silver contract is in actual fact redeemable in silver. Or maybe more accurately it could be considered a form of fractional reserve banking, but not the type we have in place.
ok. that’s what I was thinking after I typed all of that and so made that little edit. thanks.
Why wold JPMorgan want to do this by itself? Isn’t it far more likely that its merely doing the wishes (with the possibility of a kickback) of their master? (Ie: the Federal Reserve System).
The Fed itself would definitely have a vested interest in manipulating gold and/or silver, for sure.
Indeed. And it is well known and out in the open that the SEC doesn’t watch over any firms but rather helps them pervert laws at times. How the fed. or other political bodies wouldn’t even know this is going on, but isn’t it considered by the gov’t legal anyways? But for sure this sustains the gov’t interventions to not appear as bad in the short run with all the gold and silver floating around diluting the market. You know they see all these green shoots anyways and there’s such a thing as a jobless recovery, etc…
J.R. you are right: far too many persons still see banks as independent entities.
It has been known that commodities prices have been manipulated for years for political ends with accomplices (large commercial banks etc) making a nice profit in the meantime as their share of the booty. Gold and oil have been the traditional targets but in recent years steel, silver and to a lesser extent copper, platinum and palladium have all been subjected to price manipulation. Call it an unholy allegiance of banks looking for easy profits and governments interfering in the market process.
Also I don’t get why people here seem to have a soft spot for speculators. Modern speculators are not the hoarders of old: back then hoarders used their own money to stock up on goods to sell when prices were high. If they didn’t get it right they went bust. Modern speculators are creatures of the fiat money/fractional reserve/bloated financial market. Even the last broker trading a few hundreds thousands dollars worth is merely a pawn of the system.