Perhaps this is why Deutsche Bank could not find a single buyer for its seat on the London Fix: the bank, along with HSBC have been officially accused on manipulating the silver fix in a new suit filed in federal court in Manhattan over the weekend.
It appears that critical mass is finally being reached amongst the lawsuits that are being taken against the Gold Fixing bullion banks. Yesterday, in Federal District Court in New York, more than 20 plaintiffs met up to coordinate their lawsuits against the five investment bank members of the Gold Fixing.
The first lawsuit was filed in March by Kevin Maher, a former New York gold trader. However, over subsequent weeks, multiple lawsuits were filed, leading to a decision to try to consolidate the suits and appoint a lead lawyer.
According to The New York Times, the courtroom in Manhattan was so full of lawyers yesterday that it took nearly 15 minutes for the army of lawyers to introduce themselves.
It will therefore be interesting to see how these lawsuits progress now that the lawyers appear to have joined forces.
The Financial Times reports this morning that global gold prices may have been manipulated on 50% of occasions between January 2010 and December 2013, according to analysis by Fideres, a consultancy.
The findings come amid a probe by German and UK regulators into alleged manipulation of the gold price. Prices are set twice a day by Deutsche Bank, HSBC, Barclays, Bank of Nova Scotia, and Societe Generale in a process known as the London gold fixing.
Fideres’ research found the gold price frequently climbs, or falls, once a twice-daily conference call between the five banks begins, peaks or troughs, almost exactly as the call ends, and then experiences a sharp reversal, a pattern it alleged may be evidence of “collusive behavior.”
Fideres concluded that this “is indicative of panel banks’ pushing the gold price upwards on the basis of a strategy that was likely predetermined before the start of the call in order to benefit their existing positions or pending orders.”
“The behavior of the gold price is very suspicious in 50% of cases. This is not something you would expect to see if you take into account normal market factors,” said Alberto Thomas, a partner at Fideres.
In its current form, the London gold price fixing takes place twice each business day, at 10:30 A.M. and 3:00 P.M. in the “fixing room”.
Five individuals, one each from five major gold-trading firms, are involved in the fixing.
Each representative at the fixing keeps an open phone line to his firm’s trading room. Each trading room in turn has buy and sell orders, at various prices, from customers located all over the world. In addition, there are customers with no existing buy or sell orders who keep an open line to a trading room in touch with the fixing and who may decide to buy or sell depending on what price is announced.
The representative announces a price at which trading will begin. Each of the five individuals then confers with his trading room, and the trading room tallies up supply and demand — in terms of 400-ounce bars — from orders originating around the world. In a few minutes, each firm has determined if it is a net buyer or seller of gold. If there is excess supply or demand a new price is announced, but no orders are filled until an equilibrium price is determined. The equilibrium price, at which supply equals demand, is referred to as the “fixing price.”
HSBC has quietly moved into acquiring large amounts of silver bullion. The bank has secured another deal to buy silver bars from KGHM which brings their total purchases of silver from KGHM alone in the last 12 months to $876 million or PLN 3.65 billion. KGHM is one of the largest producers of silver in the world and is the second-largest producer of refined silver in the world. They produce silver bars registered under the brand KGHM HG that are attested to by “Good Delivery” certificates issued by the London Bullion Market Association and the Dubai Multi Commodities Centre. Listed metals producer KGHM signed an estimated PLN 1.67 billion deal on 2013 sales of silver to HSBC, KGHM said in a market filing yesterday. The deal puts the total value of deals between KGHM and HSBC in the last 12 months to PLN 3.65 billion or $876 million, the filing read. KGHM is one of the largest companies in Poland and one of the largest mining & metallurgy companies in the world.
Federal US District Court Judge Robert P. Patterson Jr. has dismissed the class-action litigation suit brought against JP Morgan (and originally HSBC) regarding silver market-rigging. Judge Patterson cited lack of specifics and claims of bad intent necessary to bring the suit to trial.
Perhaps Judge Patterson never bothered to actually read the litigation, because if he did, (assuming he was not paid off) he would have come to the same conclusions we did when the suit was filed in September of 2011:
The lawsuit completely exposes JPMorgan’s silver manipulation from insiders’ perspectives for ALL TO SEE.
We’re talking your wife streaking on the field during the opening kick-off of the Super Bowl type of exposure.
Que the CFTC announcement that their 4 year silver probe found no evidence of market manipulation in silver.
Full details of Judge Patterson’s dismissal of the suit, as well as the full original suit below:
The Doc sat down with Harvey Organ again for the 2nd of several interviews regarding the recent massive cartel intervention in the gold and silver markets post the QE4 announcement, the fiscal cliff, the CFTC’s silver probe, and the unprecedented 20 million oz of silver still standing for December delivery.
Harvey stated that recent evidence seems to validate his long held suspicions that China is behind the big gold & silver shorts, and stated that the nation is draining massive amounts of physical metal East.
Harvey also made the shocking allegation that COMEX is settling allocated delivery & storage requests with paper metal, and stated that he no longer has any faith whatsoever in the numbers reported in the COMEX gold and silver inventories.
Harvey Organ’s EXPLOSIVE 2nd interview with The Doc is below:
In this Bloomberg interview, HSBC’s Chief Commodities Analyst James Steel discusses why a major rally in gold is imminent, and believes gold will end 2012 near it’s all-time nominal high over $1900/oz.