Trial Begins in Gold & Silver Manipulation Case Against J.P. Morgan Official / Commodities / Gold and Silver 2022
Fears of further Fed tighteningcontinue to weigh on metals markets.
On Wednesday, the FederalReserve released the minutes from its most recent policy meeting. As CNBCreported, central bankers remain fixated on inflation.
CNBCReporter: The minutes of the latest Fed meetings show that officials agreedthat another rate hike of 50-75 basis points would likely be appropriate at itsmeeting later this month. Officials also acknowledge that there could be aneven more restrictive stance that could be appropriate if inflation remainshigh. Now, the minutes show that Fed officials were worried about inflationbecoming entrenched, that was debated several times in this document. Manyparticipants viewed that as a significant risk.
The Fed has abruptly pivotedfrom insisting inflation is transitory to scrambling to prevent it frombecoming entrenched. But worsening economic conditions may force it to pivotabruptly again to try to stave off a recession.
FOMC policymakers didn’tmention the “R” word in their latest statements. But markets are now pricing inan 85% chance of a recession. Data to come may confirm that we are already in one.
But as usual, the Fed will finditself behind the curve and late to act.
Among the indicators flashingrecession warnings is the copper price. Often referred to as “Dr. Copper,” theindustrial metal tends to have a better forecasting track record than most Ph.D economists.
Copper prices have plunged morethan 30% from their spring highs. Although they did rally strongly on Thursday,the magnitude of the decline suggests that industrial demand and thereforeeconomic output is heading down.
As for gold, it tends to bemuch less economically sensitive than base metals. It can even move in theopposite direction during recessions.
Despite strong, sustaineddemand for physical bullion, the paper trading markets for precious metalscontinue to be dominated by institutional short sellers. The ongoingsuppression of gold and silver prices is causing physical investors to feelfrustrated – perhaps even cheated.
These markets have often beenthe targets of organized manipulation schemes. But some of the bad guys havebeen caught red handed and now face being brought to justice.
This week brought some majordevelopments in metals market manipulation cases.
On Wednesday, a U.S. appealscourt upheld the 2020 fraud convictions of two Deutsche Bank futures traders.The traders had placed "spoof" orders for precious metals contracts,generating phony market action to manipulate prices in their favor.
And on Thursday, the trial ofone of the most powerful players in the paper gold market kicked off. FormerJPMorgan Chase managing director Michael Nowak stands accused of generatinghundreds of millions of dollars in profits from fraudulent precious metalstrades.
Using spoofing and othertactics to manipulate futures markets, Nowak allegedly helped enrich J.P. Morgan's top clients at theexpense of small traders. Prosecutors charge him and two colleagues withrunning a criminal enterprise.
The trial could expose some ofthe banksters’ most closely guarded secrets. They have a long history ofengaging in shady practices to dominate futures markets.
According to Bloomberg, J.P.Morgan controls three times as many precious metals derivative contracts as thenext biggest player. If the mega bank were forced to relinquish its marketdominance, it could be a game changer for price discovery in metals contracts.
But for now, J.P. Morgancontinues to throw its weight around in gold and silver markets on a dailybasis. And it continues to fuel suspicions that it is keeping an artificial lidon prices.
Gold and silver investors wouldbe wise to steer clear of futures markets and derivative products that arecontrolled by large financial institutions. There are no paper substitutes forphysical metal. And the fewer people who play in the rigged financial casinos,the less control the big banks will be able to exert on prices.
Turning to current marketconditions in the U.S. retail bullion market, premiums have not yet risen inresponse to overwhelming demand over the past week triggered by the latestmarket correction -- but that could change soon if the bargain hunting persists. With only a couple exceptions, there are noshipping or processing delays at Money Metals.
Meanwhile, bureaucrats at thedysfunctional U.S. Mint have again fallen flat on their faces, this time withrespect to 2022 Gold Eagle production. Poor planning at the government institution will lead to shortages ofnearly all types of gold Eagle coins -- and higher premiums as well.
Money Metals continues to encouragecustomers to steer clear of gold and silver Eagles andchoose from the many other more cost-effective ways to accumulate preciousmetals. There’s really no good reason totie up good money in high premium items when there are so many other greatoptions available – whether it be coins minted by other sovereign mints, orprivately minted rounds and bars.
By Mike Gleason
Mike Gleason is President of Money Metals Exchange, the national precious metals company named 2015 "Dealer of the Year" in the United States by an independent global ratings group. A graduate of the University of Florida, Gleason is a seasoned business leader, investor, political strategist, and grassroots activist. Gleason has frequently appeared on national television networks such as CNN, FoxNews, and CNBC, and his writings have appeared in hundreds of publications such as the Wall Street Journal, Detroit News, Washington Times, and National Review.
© 2022 Mike Gleason - All Rights Reserved
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