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XMFSinchiruna (26.50)

Time to Drop the Incredulity Over Fraud in the Gold and Silver Markets



April 16, 2010 – Comments (11)

Over the past several weeks, a flood of new evidence has surfaced which supports the long-held claims of gold and silver investors like myself that the world's major bullion banks have been operating a shell game using paper instruments to generate illusory supply well beyond the sum of physical backing, and that these banks then use that fake supply to establish massive concentrated short positions on the major exchanges to limit the upward scope of price movements in gold and silver... and to knock those prices down decisively at every opportunity.

One of the most common reactions I observe when people are first presented this growing corpus of evidence is a sense of automated incredulity that the banks could not be so brazenly embroiled in such a grandiose fraud against the world's non-aligned and unsuspecting investors. This is but one of countless knee-jerk responses that unfortunately prevents many from ever taking the time to review the evidence on the merits, and therefore it acts as a barrier between investors and the truth about the very structure of our equity and currency markets. There are plenty of other knee-jerk responses that erect similar barriers to rational consideration of these topics, including a pronounced cultural prejudice against anything resembling a "conspiracy theory", but for today I wish to focus upon the barrier built by unfounded trust in our largest and most powerful banking institutions.

Today, we learned that the SEC has finally slapped Goldman Sachs with a lawsuit alleging fraud in GS' issuance of mortgage-backed securities that were selected by John Paulson precisely for their attractiveness for generating a large short position against those same securities. This is just the latest in a string of fantastical revelations concerning fraud among our largest banks, incluing the infamous repo 105 that Lehman (and how many others?) employed to defraud shareholders by disguising debt and risk. We have also learned that Goldman Sachs helped Greece to mask the extend of its indebtedness, to the detriment of an entire continent's fiscal security. What are these institutions not capable of, I ask you? We'll leave alone for the monent the degree to which Goldman Sachs alumni have pervaded every level of our Treasury department and various government agencies. Suffice to say, the conundrum of the fox guarding the henhouse is prevalent in our financial and political systems.

Despite everything we now know about fraud and malfeasance pervading the entirety of our financial system -- the ludicrous complicity of our ratings agencies, the fabulous insufficiency of our monoline insurers, the brazen indifference of our banks to the safety and welfare of the people, the embarrassing failure of government oversight, the existence of giant ponzi schemes with fancy corporate facades, the sweetheart fed-brokered deals for JP Morgan at the height of the crisis, the $739 billion bailout proposal from Bank of America that preceded the TARP by more than half a year, the continuing failure to value banks' toxic assets at anything approaching market value (thereby continuing to deceive investors into a state of unwarranted complacency), the uncontested ability of banks to engage multi-billion-dollar supercomputers to conduct trades that can out-compete any unassisted human, etc., etc., etc. -- depite all of these things we now know to be true ... still I must face dogged incredulity when presenting evidence of fraud and malfeasance by the banks in relation to their obvious suppression of gold and silver prices and the persistent maintenance of concentrated short positions by key institutions on the world's major exchanges.

I am calling for an end, at the very least, to that instinct of incredulity. I am not asking for anyone to permit baseless speculation to outflank the need for verifiable evidence ... I am merely asking that people conquer their own incredulity to a sufficient degree to permit an objective study of the available evidence. Over the past decade, vast collections of evidence have been compiled by numerous sources outlining both the structure and the dynamics of manipulation and fraud within the precious metals market. Think this topic doesn't concern you because you're not invested in precious metals? Think again ... this is the very means by which interest rates can be kept artificially low, thereby disguising the true nature of inflation via devaluation of our currency. The stakes could not be higher, the implications could not be more far-reaching ... I believe this to be the largest and ultimately the most dangerous case of fraud in financial history. I can accept many reasons why individuals may come to a different conclusion, but that knee-jerk response that banks could not be capable of such a grandiose and widespread scheme to deceive and defraud simply does not hold water within a rational discussion given the documented events of the past few years (let alone the deeper well of history beneath it).

So, what will your reason be for failing to objectively review the available evidence? 



11 Comments – Post Your Own

#1) On April 16, 2010 at 12:40 PM, XMFSinchiruna (26.50) wrote:


Have you noticed a pattern in the intraday price action for precious metals?

It doesn't take a market guru to recognize that something is afoul when smackdowns like this occur day after day after day. Lately these smackdowns have occurred between the hours of 11am and noon EST. As the chart below reveals, on average from March 2006 to march 2010, these pronounced drops have occurred between 9 and 10am EST.

Don't believe me? Start watching. Historical daily charts are available in the archives on Kitco for anyone wishing to conduct a thorough historical investigation of their own. 


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#2) On April 16, 2010 at 12:55 PM, 100ozRound (28.55) wrote:

I was noticing that too.  Seems like the spot prices have a strong urge to drop right when the NY market opens and before London fix closes.  Coincidence?  I think not!

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#3) On April 16, 2010 at 1:01 PM, uclayoda87 (28.55) wrote:

The first step in beating the system is understanding how the system works and determining if there are weakness or flaws that can be exploited.  As a small investor it is not possible to influence a market, but it may be possible to either short-term trade the market manipulation or long-term dollar cost average into a position which should benefit greatly when the system no longer works.

Option 1 is day trading the miners with preset limit orders based on historical price patterns.

Option 2 is building a mining and metals portfolio and waiting for China to break away from the US dollar.  This may take 2 to 5 years, but at the rate that the US and EU are pilling on debt, the wait is not likely to be very long.

Option 3 is a combination of the above two, which is what I have been doing.

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#4) On April 16, 2010 at 1:36 PM, Starfirenv (< 20) wrote:

Strongman- Another excellent piece.
"Knee-jerk" response or blind faith in "Truth, Justice and the American Way"?  But definately "dogged incredulity" that this is the new 'Business as usual' and not only condoned by but backtsopped by US taxpayer $ at the highest levels i.e. the (non-Federal, privately owned) FED and our Treasury. More and more I see the US referred to as 'financial terrorists' in reading foreign media, and wondering less and less if this 'coinage' is undeserved. Much good could come of this when the dust settles.  Thanks Sinchi +1. Interesting times indeed. Regards.


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#5) On April 16, 2010 at 3:46 PM, ttboydxb (28.52) wrote:

Really well written!  BUT I hope this takes at least 12-24 months time to really gain traction (so start slowing down the posts Sinchi) so I have enough bullion in the safe!  :)

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#6) On April 16, 2010 at 8:12 PM, fockewulf (< 20) wrote:

You know, I really wonder how the powers that be that run TMF feel about the current situation.  Many people come to this website for financial education, to learn the ropes, how to make informed financial decisions, and how to avoid pitfalls.  Because of posts like this, and I am grateful to be reading them here, it´s just becoming more and more obvious that there is almost no part of the investment world that isn´t rigged, wracked by corruption, inflating into yet another bubble, or affected by proxy financial events such as the upcoming destruction of the fiat currencies.

I wonder just what kind of advice TMF is going to give next year or the year after that.  Right now, the current advice seems to be pick good stocks, do your DD, know them inside and out.  Don´t forget some of those high dividend stocks.  You have to be invested to make the potential gains.

 Perhaps that is a bit of a simplistic view of TMF´s advice strategy, perhaps not, but with all the crap going on today, what do you tell the small investers next?  Good luck?  Buy physical before you miss the spike?  Got food?

Looking foward to the next article.


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#7) On April 23, 2010 at 5:27 PM, Vet67to82 (< 20) wrote:

Great work.  In Dec 2009 ... I wrote a blog:

Manipulation in the metals (GOLD) markets

here's part of it:

Here is a must read perspective:

Gold Signals Possible New Shock


I myself blogged about 6 months ago:

" GS was recently "ordered" by USA gov't individuals (speculate), even though the lease rates for gold are NEGATIVE since the beginning of June, to "knock" the price of gold down on or about June 18th. GS followed orders and knocked gold down ... and took the rest of the commodities and the market with it. Of, course, the USA gov't needed to sell their 100+ billion in "funding" the week of June 22 - 26 soooo, the manipulation is okay ... if it's the gov't? AND ... what financial entity leases gold, diliberately, AT A LOSS (that's what WILL happen when the lease rates are negative) unless it IS manipulation? I'd LOVE to lease gold and payback LESS. Sign me up! "

   I have been wondering why the SEC is attacking GS ... when clearly GS is the USA's partner in crime ... keep in mind real OLD USA gold ( like, from the 1930's), based on the "quality" of the smelting, has shown up in the London exchange.  So on that basis, real USA gold would imply at least some of what's going on is more that just pushing pieces of paper around ....

  Still ... great work.  +1 Rec .... wish I could give you +10 


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#8) On April 27, 2010 at 12:14 PM, fockewulf (< 20) wrote:

Regarding Post#1, it looks like yet another smackdown started at 11:30 EST today hitting gold and silver and palladium and platinum.   Perhaps just as eyeopening was the run these metals had between 9:00 EST until the slapdown.  What do you need to do to get in on this racket? 

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#9) On April 27, 2010 at 1:01 PM, jesusfreakinco (28.19) wrote:


You need to have inside information from JP Morgan or one of the other friends of the Fed.

If you haven't listened to them, listen to the various interviews in the last few weeks from King World News.  There are some good ones that document the manipulation of the gold/silver market.

Andrew Maguire interview is priceless...


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#10) On April 27, 2010 at 1:40 PM, fockewulf (< 20) wrote:

Yeah, I heard all those interviews, and even though GATA and Maguire and others have done their damnest to blow the lid on this ongoing fraud, the MSM all but ignored this story even though they are well aware of what is going on. 

 I´m all in on physical anyway, regardless of these short term spikes and dips....still, it´s amazing to watch the manipulation.  After the deep slam from $18,35 to $18,12, which took about one half hour,  the silver price recovered about seven cents to the upside.  Wham!  From about 1:00 to about 1:15 EST another smackdown hammered the price down to $18,05.

The saga continues...

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#11) On April 27, 2010 at 4:21 PM, jesusfreakinco (28.19) wrote:

Gold bug brothers...

Sinchy is right.  Our day is upon us.  Look at today's session is USD and think about what this is in EUR and JPY terms given the USD index was up almost a point.   Gold is kicking butt and taking names.  It has truly asserted itself as the anti-fiat currency.

Sinclair, Rogers, Sinchy, Schiff, Sprott, and others have been calling for it... I think the meteoric rise is upon us.  Once we break through resistance at the former high, the question is how much higher - 1300, 1650, or more...???  A lot will depend on how quickly confidence is lost in the Euro which seems to be the whipping boy for now.

Spreads on Portugal and Italy incresing today.  Who is next?


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