Banks Are In The Clear If They Rig Markets As US Government's Agents

January 31, 2018

Metals market analyst Lawrie Williams, writing yesterday for London bullion dealer Sharps Pixley, notes that manipulation of the monetary metals markets by big banks is becoming more evident, what with the U.S. Commodity Futures Trading Commission imposing fines this week on three European banks and the U.S. Justice Department bringing criminal charges against eight traders at the banks.

Williams adds, "What is perhaps less certain is whether central banks are involved too in an attempt to protect the dollar," but he expresses suspicion because the U.S. government has taken no similar action against U.S.-based banks.

"Followers of the precious metals markets," Williams writes, "will be well aware that seemingly every time precious metals prices surge there seems to be contrary action in the futures markets that stops this activity in its tracks -- notably the apparent sales of large amounts of the metal aimed at bringing prices back down.

"It's bad enough if these are real transactions, but if they are being spoofed it means the traders involved carry no risk (apart from that of criminal prosecution which is, to say the least an uncommon experience.) It is perhaps notable that all three banks involved in the latest accusations are non-U.S. entities, yet suspicion is that the biggest banks thought to be participating in strange futures markets activities, seemingly designed to suppress prices, are U.S. concerns. This leads to suggestions that, if true, either the U.S. institutions are cleverer at concealing their (criminal) activities, or that the U.S. regulators are turning a blind eye to what seems to have become common practice among the domestic financial sector. Given that most of the regulators have come from the sector they are supposedly regulating, perhaps that is not too surprising."

But there is another possibility for the lack of action against U.S. banks in manipulation of the monetary metals markets -- that they are acting as agents of the U.S. government.

After all, the Gold Reserve Act of 1934, as amended in the 1970s, creating the U.S. Treasury Department's Exchange Stabilization Fund, authorizes the ESF to intervene secretly in any market in the world:

CME Group, operator of the major U.S. futures exchanges, has acknowledged on its internet site and in its filings with the CFTC and the Securities and Exchange Commission that its customers include governments and central banks and that it offers them trading discounts provided that they do their trading through intermediaries that are CME Group member firms:

And the biggest U.S. investment bank of all, JPMorganChase, renowned for its domination of the silver market, has said that it trades that market only for "clients," not for its own accounts:

Presumably any brokers trading manipulatively on the U.S. government's behalf would be exempt from any civil and criminal laws against such trading, as the Gold Reserve Act of 1934 would immunize them.

Governments long have anticipated impediments to their power and have enacted laws and regulations to remove them. As the former editor of The Washington Monthly, Charles Peters, often observed, the scandal is seldom what is illegal but what is perfectly legal.

Williams' commentary is headlined "Precious Metals Markets Manipulation -- 3 Major Banks Accused by CFTC" -- and they weren't just "accused" but they admitted the charges and paid fines -- and it's posted at Sharps Pixley here:

CHRIS POWELL, Secretary/Treasurer

Gold Anti-Trust Action Committee Inc.  

During 1500s the Spaniards had taken 16,000,000 kilograms of silver from Peru.

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