There are some who dispute that the precious metals markets are being manipulated by a large “short” position.
However it’s worth keeping in mind that in addition to all of the other evidence that’s been uncovered, Deutsche Bank actually got caught almost 2 years ago. One of the conditions of their settlement was the release of trader transcripts, which show bank traders from multiple firms bragging about committing felonies.
Exhibit A:
“On Oct. 15, 2010, a UBS trader wrote, “Gonna bend this silver lower.”
A Deutsche Bank trader responded, “Oh dear. my boss just said he bought some.”
The UBS trader said, “I have to be sneaky then.”
Then later, “Had to really work that one. told u I’d bend it lower for u.”
Exhibit B:
A UBS trader admitted his bank’s ability to influence the silver market in a Aug. 11, 2011, chat with a Deutsche Bank trader.
“If you want to accelerate it…go short 20k silver,” the UBS trader wrote. “Stay on the offer in 1s…doesn’t require much ammo.”
“Ack,” the Deutsche Bank trader responded.
“Avalanche can be triggered by a pebble if u get the timing right,” the UBS trader wrote.
I find this example particularly interesting because it speaks to what I believe are the mechanics of how the market is manipulated.
How the scheme is executed mechanically, is that large selling pressure is applied in order to get the high-frequency trading vehicles triggered. Once that happens the price drop accelerates. Then, when prices move lower, the same traders that initiated the selling buy back at a profit.
Well-respected silver analyst Ted Butler commonly reports that the same banks continuously show up on the exchange reports coming out a winner on this trade without ever losing. Which in my career as a trader is unheard of, even for the best traders. It just doesn’t work like that.
(In a somewhat unrelated yet interesting side note, when I was going through my trader training, one of my mentors once told me that if you won on 100% of your trades that wouldn’t necessarily be the best outcome. It might be good, but it would be indicative that you were too conservative and passing up opportunities that might not always win every time but had greater expectancy in the long run).
Exhibit C:
On April 1, 2011, a UBS trader commented on plans to manipulate silver transactions with Deutsche Bank, according to the court filing. “If we are correct and do it together, we screw other people hard,” the trader wrote. !
In an Aug. 5, 2011, chat, a UBS trader wrote, “Bro lets make a slight adjustment to our plan today.”
A Deutsche Bank trader responded, “K.”
The UBS trader then wrote, “Depending on where the mark is we go short around 11-11:30 am I make sure to let u know if I do something.”
“Ok Im definitely going short lol,” the Deutsche Bank trader said.
“Lol revenge huh? That’s what’s driving u,” the UBS trader responded.
“It is but I dun care.”
This is interesting for a variety of reasons.
Far from a lawyer am I, although my understanding is that when a manipulation is coordinated between separate entities, that it also then becomes collusion. Feel free to email and alert me if that’s not correct, although I believe it to be the case.
Perhaps more significant is that in 2017 a former Deutsche Bank trader reached a settlement, while another trader from UBS was arrested. Part of the settlement included cooperation, and there is at least one class action lawsuit pending against the bank (of which I myself am a plaintiff).
So while it’s stunning how regulators at the CFTC manage to ignore the massive elephant in the room, keep in mind that the facts have not changed, and the bankers themselves have told you all you need to know.
-Chris Marcus
November 22, 2017
(This report is an excerpt from Arcadia’s Monthly Market Snapshot. Click here to get the full report.)