Friday, July 26, 2013

Why Is Silver Manipulation So Absurd?

Adam English | Wednesday, July 24th

Every time someone in America buys electronics or a car — or even cracks open a can of beer — Goldman Sachs gets paid.
A breaking story from the New York Times has all the details...
Three years ago, this too-big-to-fail bank capitalized on special rules created by the Federal Reserve and authorized by Congress by buying an obscure company called Metro International Trade Services. It is one of the largest warehousing companies for aluminum in the country.
Since then, it has manipulated the system to pull in massive profits.
In spite of tepid demand for aluminum worldwide after the Great Recession, the amount of time required for aluminum delivery has increased 20-fold — from six weeks to 16 months — since the company was purchased. This could be explained by shortages or logistical issues, if any existed. The company is actively making the process inefficient.
Since 2008, the stockpile of aluminum grew from 50,000 tons in 2008 to a massive 1.5 million tons today. Industry rules require at least 3,000 tons be moved out of warehouses each day.
However, instead of delivering the metal to buyers, Goldman is just shuffling the metal between warehouses to skirt the intent of the rules.
The warehouses collect rent for each day the metal is stored. Storage costs are a primary factor for the premium added to the price difference between the spot market and the actual price charged for delivery.
Estimates show this premium has doubled since Goldman's acquisition. For every ton delivered, an extra $114 is charged. With how much aluminum is used in everything from soda cans to automobiles, estimates put the extra cost to American consumers at $5 billion over three years.
This business has been so lucrative that Goldman plans to expand the operations. It recently filed documents with the SEC outlining its plan to store copper in the same warehouses.
No Exception to the Rule
The list of manipulations by mega banks touches every corner of finance.
Virtually every commodity has been hit by massive positions that influence prices for illicit gains...
LIBOR and delaying interest rate information amounted to $880 trillion in manipulation alone, and affected every mortgage and loan worldwide. And JPMorgan is all over the news, turning money-losing power plants into profit centers by manipulating the market and being paid for not firing up the plants.
But bring up any of these topics, and you'll hear the same cynical responses. Mention silver manipulation, and it will be dismissed as fringe conspiracy theory.
In an age where everything is being manipulated, it defies belief that somehow silver prices aren't being abused for illicit gains. It requires willful ignorance. The fact is, there is plenty of evidence staring everyone right in the face.
Let's just have a look at JPMorgan...
Silver Manipulation
JPMorgan's Silver Cash Grab
JPMorgan inherited a massive amount of silver shorts priced between $20 and $21 when it took over Bear Stearns. Combined with HSBC, the two mega banks covered 85% of all silver shorts.
That right there is a solid case for manipulation — because the short position was so massive compared to physical silver trading and long positions. What's worse, the U.S. Treasury created the situation.
If the free market resolved the situation, silver would have more than doubled as the short position was covered and evaporated.
The massive position was maintained for years because it wasn't easy to wind down. Any large-scale attempts to unwind the position would be countered by other big traders and result in a loss. JPMorgan didn't have to, though; it simply needed to rig the system to turn a buck.
A precious metal trader named Andrew Maguire sent detailed information in an email to the CFTC on Feb. 3, 2010, about what to expect in two days after he noticed signals from JPMorgan and HSBC traders using after-hours high-frequency trades to crush prices.
His description was perfectly accurate. The trader, selling four hundred contracts per second, dumped 45,000 contracts into the market. Each was for 5,000 troy ounces for a grand total of 7,000 tonnes. The seller then suddenly shifted and started purchasing everything he could. Still moving far faster than other traders, he or she walked with $3.6 billion.
In more recent history, JPMorgan has been holding about 25% of the silver short market with the largest eight commercial silver shorts account for 50% to 60%. Estimates put paper silver positions at 143 times the actual amount of physical silver traded.
Massive volumes of sell orders are placed and canceled in fractions of a second by them. The lower sell prices still appear in market data for anyone that cannot handle trading by the millisecond, leading to panic selling by other (much slower) traders.
The high-frequency trading system then snaps up the positions for profit. After all, they never sold anything to begin with... they simply maintained short positions and canceled sales to buy at discounts.
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MAKE SURE YOU GET PHYSICAL SILVER IN YOUR OWN POSSESSION. Don't Buy SLV, or Futures or Pooled Accounts or any other BS paper silver product .Remember anything on paper is worth the paper it is written on. Go Long Stay long the bull market have even started yet

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