Is it truly the beginning of the end of precious metals manipulation or has the London silver fix been mostly symbolic for years? Although it is tough to know from the vantage view many of us find ourselves, there have been a lot of helpful hints along the way…
As humanity awakens to the power structure, markets have been scrutinized like never before. The precious metals market has been among the most scrutinized, if not least publicized. Most people who suspect precious metals of being manipulated believe that ALL MARKETS are manipulated, to be sure, meaning the entire economy is nothing but an illusion based on fiat – the belief of the dominant group.
But somethings have historical precedent. The precious metals’ sectors long and storied history put it at the center of the global economy. Most people, sadly, don’t know this.
EUROPEAN SUSPICIONS LEAD TO QUICK EXIT FOR SILVER FIXERS
European regulators have looked into the fact that the precious metals market is manipulated. Germany’s BaFin said that precious metals manipulation is worse than the Libor scandal. This led to Deutsche Bank’s resignation from the London gold and silver fix. The London Silver Market Fixing company changed the most, with just two members left – HSBC and Bank of Nova Scotia.
This week, however, things became more dramatic: The London Silver Fix announced that after August 14, 2014, it would no longer operate. The turmoil in the institutional silver market over the past year has been palpable, with JP Morgan, steward of COMEX, the inventory for the ETF market, bowing out of the silver market. Citi stepped in.
Some questions immediately came up. One of them was, “Why a three month notice period?” The silver fix answered:
Although members of the Company may resign on seven clear days’ notice, the members have confirmed that they stand ready to continue the Company’s operations until (and including) 14 August 2014.
Perhaps it would have been a tad-bit suspicious if all members jumped ship in a short period, thus sending panic into the “poor man’s gold” market. This would disrupt currency markets.
The fix began in the late 19th century when a handful of London bullion dealers began meeting daily under a cloud of cigar smoke to set the price for what is called the “devil’s metal.” 117 years of operation was all the fix had in it. As FT reports, “the global benchmark for the metal – is on its deathbed.”
This, having come-to-pass, puts those in the gold fix under intense scrutiny.
Maybe the banks are realizing that if they stick around too long, they could be facing serious fines. They’ve watched their partners go down in scandal after scandal, with the biggest one being LIBOR.
US DOLLAR SYSTEM UNDER STRAIN
It seems like the US dollar system is unraveling. And since the US went “full fiat” in 1971, the management of precious metals market has been key to US dollar strength. Why? Because a strong gold price, namely and generally speaking, implied a weak dollar price. It remains this way. The US operates from a frozen perspective: that the US dollar reigns supreme and everything must be made to fit this perceived reality.
This is a phenomenon that the Soviet Union experienced. Living in the Soviet Union was like being on a train with the curtains closed. No matter what changed on the outside. During the late eighties, when culture opened up per perestroika and glasnost, society was much like a train stopped on tracks with the curtains open.
This second part of the train ride is where the US finds itself now. The train is broken down on the tracks, and the curtains are down, so everyone can see the truth. Many people are getting off.
If precious metals break to the upside like bitcoin did early in 2013, then there will be no disguising that the US dollar has been in a bubble.
So, precious metal’s management is still very important. That is where the paper markets come into play, which have played a more central role in the management of the precious metal’s price than the silver fix. The gold-and-silver fix are essentially symbolic in this day-and-age. With high frequency trading, mainstream media and other tools, there are far more sophisticated ways to manage precious metal’s prices than a cabal-esque meeting between banking interests. That is far to old world and transparent.
COMEX OUTFLOWS, JP MORGAN STOCKPILING
Significant outflows of silver in COMEX registered gold and silver inventories has been the focus of the New Media. But there has been another change in recent months-years, during this consolidation period in silver and precious metals, which is JP Morgan stacking the largest known physical silver holding in the modern world. Since the silver peak in May 2011, the bank has purchased between 100 and 200 million ounces of physical silver. The equivalent in metric tonnes is between 3,110, and 6,220.
The amount of silver held by JP Morgan is higher than that held by the Hunt Brothers and/or Warren Buffett at the height of their silver hoarding.
Between May 2011 and December 2013, 250 million ounces about of silver reached the investment market, to put it into perspective just how much silver JP Morgan has purchased. JP Morgan’s quarterly profit is $5 billion, which is approximately 200 million ounces of silver.
JP Morgan faked getting out of the silver market last fall when an announcement that Citi would take over its position hit the wire.
But, it turns out, it has only used its knowledge of the silver market to accumulate massive stockpiles at low prices. Much of buying took place immediately after the May 2011 crash in the silver price, where after 60 million oz were sold in a two month span, only to be purchased right back up by a buyer.
SHANGHAI SILVER EXCHANGE
When the Shanghai Silver Exchange opened on May 10, 2012, many people did not know what to expect. Too many believed that THAT was the end of silver command-and-control management, but were proven wrong. Over the following months and years, silver remained a deadened market.
In fact, in a way, the Shanghai Silver Exchange can merely be seen as a shift in the global precious metals market eastward. This is happening in precious metals markets generally, with new mines and refineries opening in the east to counter western dominance of the market.
What we are seeing is possibly a lot of hoopla about nothing. The precious metals market is evolving and coming into the modern world. It will continue to be manipulated until we begin seeing a crisis in the stock market and the ETF industry. Once the overall economy and its financial veneer collapse, precious metals shops around the world will dry up.
Silver manipulation is entering a new phase, it’s growing up. It now has a slicker, cleaner facade.