By Tyler Durden
No matter how many times the big banks are caught red-handed manipulating precious metals, some failed former Deutsche Bank prop-trader (you know who you are) will take a vociferous stand based on ad hominemattacks and zero facts that no, what you see in front of you is not precious metal rigging at all but a one-off event that has nothing to do with a criminal banking syndicate hell bent on taking advantage of anyone who is naive and dumb enough to still believe in fair and efficient markets.
The last time this happened was in November when we learned that “UBS Settles Over Gold Rigging, Many More Banks To Follow“, and sure enough many more banks did follow, because in Europe, where the stench of gold market manipulation stretches far beyond merely commercial banks, and rises through the central banks, namely the BOE and ECB, culminating with the Head of Foreign Exchange & Gold at the BIS itself, all such allegations have to be promptly settled or else the discovery that the manipulation cartel in Europe involvesabsolutely everybody will shock and stun the world, which heretofore was led to believe that such things as gold market (not to be confused with Libor or FX) manipulation only exist in the paranoid delusions of a few tinfoil fringe-blogging lunatics.
However, as usually happens, someone always fails to read the memo that when it comes to gold-market manipulation one must i) find nothing at all incriminating if one is a paid spokesman for the entities doing the manipulation such as former CFTC-sellout Bart Chilton or ii) if one can’t cover it, then one must settle immediately or else the chain of revelations will implication everyone.
This time, that someone is the US Department of Justice, which as the WSJ just reported, is investigating at least 10 major banks for possible rigging of precious-metals markets. The DOJ is shockingly doing so “even though European regulators dropped a similar probe after finding no evidence of wrongdoing, according to people close to the inquiries.” Of course, the reason why said probe was dropped in Europe is because it would have implicated virtually the entire trading desk at the biggest and most important European bank: Deustche Bank, as well as the biggest bank in Switzerland, UBS and UK’s own Barclays, reveal a manipulation cartel rivaling even that of Libor. And once traders at the commercial banks turned sides and squealed for the prosection, well then it would be the central banks’ turn next. Which is why it was imperative to bring this investigation to a quiet end.
But not in the US.
According to the WSJ, “prosecutors in the Justice Department’s antitrust division are scrutinizing the price-setting process for gold, silver, platinum and palladium in London, while the Commodity Futures Trading Commission has opened a civil investigation, these people said. The agencies have made initial requests for information, including a subpoena from the CFTC to HSBC Holdings PLC related to precious-metals trading, the bank said in its annual report Monday.
HSBC also said the Justice Department sought documents related to the antitrust investigation in November. The two probes “are at an early stage,” the bank added, saying it is cooperating with U.S. regulators.
Who is involved in this latest gold-rigging scandal? Why everyone! … which makes it immediately obvious why the European regulator had to promptly cover up the whole affair. Under scrutiny are Bank of Nova Scotia , Barclays PLC, Credit Suisse Group AG , Deutsche Bank AG , Goldman Sachs Group Inc., J.P. Morgan Chase & Co., Société Générale SA, Standard Bank Group Ltd. and UBS AG , according to one of the people close to the investigation.
Robert Hockett, a law professor at Cornell University, said it is “not particularly surprising” that the Justice Department is plowing ahead despite the decision by European regulators. Recent scrutiny of big banks’ operations in the physical commodities markets and criticism of the Justice Department’s financial-crisis track record make it “quite understandable” that the agency would investigate allegations of precious metals price-rigging.
Last year, the FCA fined Barclays £26 million ($40.2 million) for lax controls after one of its traders allegedly manipulated the gold fix at the expense of a client.
Swiss regulator Finma settled last year allegations of foreign-currency manipulation with UBS. The regulator said it found “serious misconduct” among precious-metals traders at UBS, including “front running,” or trading ahead of, the silver-fix orders of one client. A spokeswoman for UBS, which said at the time that it “instituted significant cultural and compliance changes,” declined further comment.
You mean to say that the banks that were for decades rigging Libor… and FX… and bonds… and stocks… oh, and gold, were let go with a slap on the wrist and a promise to “change their ways” and not to do it again? Yup, that’s exactly right.
So what happens next? Well, we finally will find just how much of a banker-controlled muppet the so-called US attorney general truly is. Recall that a week ago he gave his subordinates 90 days to being cases against individuals for their role in the financial crisis.
Well here is the perfect opportunity. Should Holder let this latest mass criminal ring go without any incarecration, one can officially stick a fork in the US justice system, which is meant for everyone, but the rule-flouting bankers who can clearly get away with absolutely anything.
As for the rigging in the gold market, rigging which begins with the lowliest prop-traders at Deutsche Bank and involves every single central bank and High Frequency trading outfit and is now a proven fact, we have explained over the years and thousands of times just how to end it all, so instead of wasting readers’ time on this topic yet again, here are just two very simple solutions how to fix this one particular market:
- all trading in “paper” gold should cease immediately and all contracts be settled in physical for true price discovery
So simple, even the most corrupt US Attorney General caveman can do it.