by
GoldCore
Today’s AM fix was USD 1,332.50, EUR 987.92
and GBP 830.22 per ounce.
Yesterday’s AM fix was USD 1,320.25, EUR 977.67 and GBP 825.36 per ounce
Yesterday’s AM fix was USD 1,320.25, EUR 977.67 and GBP 825.36 per ounce
Gold rose $10.60 or 0.8% yesterday, closing at
$1,333.10/oz. Silver gained $0.11 or 0.51%, closing at $21.76.
Platinum rose $4.19 or 0.3% to $1,422.49/oz, while palladium climbed
$3.22 or 0.4% to $720.22/oz.
Gold and silver have consolidated on
yesterday’s gains and silver is up nearly 1% to $22/oz. Both rose
yesterday for the first time in four sessions on fears that U.S.
budget negotiations have stalled, increasing the risk of a U.S.
government shutdown.
While a shutdown is unlikely, the politicians
are likely to again raise the U.S. debt ceiling to close to $18
trillion, storing up much greater problems for the U.S. and global
economy in the long term.
Silver’s support is at $20/oz and a fall
below that level could see silver test the next level of support at
$18.40/oz mark. Resistance is at $25/oz and a breach above resistance
should see silver quickly test the next level of resistance at $35/oz
(see chart above).
Expectedly, the Commodity Futures Trading
Commission (CFTC) has closed the investigation that was publicly
confirmed five years ago, in September 2008, concerning silver
manipulation by Wall Street banks.
The Division of Enforcement is not recommending
charges to the CFTC in the silver investigation. Despite the five
year investigation, no report of the investigation or its findings is
being released to the public.
The CFTC statement said that “based upon the
law and evidence as they exist at this time, there is not a viable
basis to bring an enforcement action with respect to any firm or its
employees related to our investigation of silver markets”.
In September 2008, the CFTC confirmed that it
was investigating complaints of misconduct in the silver market. At
that time the Commission had received complaints regarding silver
prices. These complaints were focused on whether the silver futures
contracts traded on the COMEX were being manipulated.
By reference to publicly available information
concerning large traders with short open positions in the silver
futures contracts, the complaints alleged that the concentrated large
shorts in the silver market were responsible for manipulating silver
futures prices.
The decision may highlight the great difficulty
that U.S. regulators face in proving a case of market manipulation,
even after the CFTC was given greater powers to crack down on trading
malfeasance after the 2010 Dodd-Frank financial reforms.
Incredibly, only once in its 36 year history
has it successfully concluded a manipulation prosecution. This was a
1998 case concerning electricity futures prices. Occasionally, the
CFTC has levied heavy fines for trading rule violations.
The closing of the probe was a rare bright spot
for Wall Street commodities players and banks during a year in which
the U.S. power market regulator has leveled record fines against two
big banks, and the Federal Reserve is considering whether to rein in
Wall Street’s ability to operate in physical metal and wider
commodity markets.
Democrat commissioner Bart Chilton, who had
championed the silver inquiry, said he was disappointed.
“For me, there’s not been a more
frustrating nor disappointing non-policy-related matter at the CFTC,”
he said in a statement after the agency’s announcement.
The Gold Anti-Trust Action Committee, an
advocacy group that believes the Federal Reserve and banks are
colluding to keep gold and silver prices artificially low, said it
was not surprised by the CFTC decision.
“We believe that the U.S. government is part
of the trading operation. In essence, you are not going to have the
CFTC turn against its own government,” GATA Chairman Bill Murphy
said.
“We are not even slightly surprised and had
expected this.”
A JP Morgan spokesperson declined to comment.
The CFTC findings that there has been no
manipulation of the silver market came a day after the Federal
Reserve itself had expressed concerns about ‘suspicious’ trading
in the gold market and a day after there were further revelations and
developments regarding LIBOR interest rate market manipulation and
rigging.
The world’s largest interdealer broker, ICAP,
has been fined $87 million (€64.4m) by U.S. and UK regulators over
its role in the Libor rate rigging scandal. The CFTC and UK Financial
Conduct Authority (FCA) ordered ICAP to pay $65m and £14m
respectively to settle allegations of wrongdoing.
The scandal, which has laid bare market
manipulation and the failings of regulators and bank bosses, has
already seen three banks fined $2.6 billion, four individuals
charged, scores of institutions and traders grilled and a spate of
lawsuits launched.
Banks and brokers have faced allegations that
their employees actively colluded with traders seeking to fix rates
for personal gain – and were handsomely rewarded.
Silver’s
fundamentals remain very sound, with a very small finite supply of
above ground, investment grade silver coins and bars and robust and
increasing industrial and store of value demand – particularly in
Asia.
We
continue to believe silver will rise to its real record high or
inflation adjusted high of $140/oz in the coming years.
It
remains an important diversification for all looking to protect their
wealth from “bail-ins” or deposit confiscation and currency
devaluations.
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