If
2013 was the year of the big crash for gold, then 2014 could become
the year of the truth for gold, evidenced by the attention that gold
manipulation is
getting in the mainstream media.
Case
in point: lawsuits against the Gold Fixing bullion banks started
yesterday in New York. The NY Times reportsthe
following:
At a 40-minute hearing, lawyers for more than
20 plaintiffs gathered in Federal District Court in Manhattan to
coordinate their linked lawsuits against the five banks that make up
what is known as the London gold fix. The suits, filed by hedge
funds, private citizens and public investors like the Alaska
Electrical Pension Fund, contend that the banks have used their
privileged positions as market makers to rig the price of gold to
their benefit.
As a reminder, five banks (i.e., Barclays,
Scotiabank, Deutsche Bank, HSBC and Société
Générale) are “agreeing” twice per day on a gold price, during
the London Gold Fix. The banks are in a priviliged position to
take advantage from the price they set (also via derivatives
trading). Since the LIBOR scandal, the accusations have become more
“accepted”, while it was “unconventional” in the past.
The NY Times continues:
The lawsuits — and there are still more being
filed — center on two main aspects of the gold fix: the fact that
it is unregulated and that member banks can trade gold, and gold
derivatives, during the call.
“The gold fix is by its very nature not
transparent and therefore vulnerable to conspiratorial and
manipulative behavior,” one of the suits maintains. The suit
claims: “The lack of prohibition against trading during the calls
allows defendants to gain an unfair trading advantage because pricing
information exchanged during the calls provides them with insight
into the immediate future direction of gold and gold derivative
prices.”
As a reminder, we have reported extensively
in the past, on a factual basis, that gold price manipulation was
visible in the charts. Based on his statistical research, Dimitri
Speck concluded that central banks started to influence
systematically the price of gold as of August 1993. His conclusion
comes in particular from his intraday statistics, where he observed
several anomalies. First, since 1993, the price has been falling
systematically during the trading session of COMEX in NY. Another
trading anomaly is that during the PM fix the price systematically
tends to drop significantly. The following chart is the result of
some 16 years of recording intraday data. The sudden price drops are
so sharp and systematic, that it can only point to intervention.
Besides,
it appears that manipulation
in the futures market (visible in the COT reports) comes on top of
the revelations on the intraday charts.
The point is that the interventionists increased significantly their
activities in the futures gold markets in May 2001, what is visible
in the COT report. Before that, the price was more suppressed through
selling and leasing of gold. As soon as the futures markets got into
play, an increasing number of price shocks have appeared with an
increasing intensity. Obviously those price changes were mostly drops
rather than increases. It becomes clear on the following chart. As of
May 2001, the “climate has changed” because of the futures
market, which is clearly an anomaly. The decline in the lower part of
the chart, that started at that given point in time, shows the net
positioning of commercials as a share of total positions. The line is
significantly lower, proving that commercials are more on the short
side.
So what’s visible on the charts is that,
since May 2001, the commercials have reinforced an ongoing trend that
started in 1993.
Our point is that the London Gold Fix is just
the tip of the iceberg. It is the most obvious way of manipulation,
but by digging a bit deeper, one can see, based on facts and figures,
how manipulation is much more evident.
Let’s hope that justice finally takes
place.
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