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Proposed Global Class Action Gold & Silver Manipulation Lawsuit

This news was originally disseminated by GATA on February 5th.  A British law firm, Leon Kaye Soliciters, has proposed the initiation of a class-action lawsuit charging that six “well known” financial services groups conspired to manipulate the London Gold Fixing from 2004 – 2014.   The proposal cites the recent settled Deutsche Bank class action suit for in New York and the ongoing billion dollar class action suit in Ontario, Canada.  The class action suit would be open to investors globally.  If interested contact Leon Kaye at info@leonkaye.co.uk.  Here’s a summary of the proposal:

Based on documents in the public domain to which we refer below, we consider that there are good grounds to believe that members of six well-known financial services groups combined together to manipulate the outcome of the London Gold Fixing between about 2004 and 2014 and that members of four of those groups combined to manipulate the outcome of the London Silver Fixing between about 1999 and 2014. The effect of this was to create false market prices, in particular by artificially depressing prices after the 3pm (London time) Gold Price Fixing and to increase bid-offer spreads in physical gold, physical silver and their respective derivative instruments. The relevant institutions did this to increase their profits from their own activities in these markets at the expense of other market participants who have therefore suffered loss and damage, probably running into hundreds of millions of pounds in aggregate.

If it can be established that these financial institutions participated in price fixing then we consider that there can be little doubt that they have breached section 2 of the Competition Act 1998 and are liable to pay damages to any other market participant that suffered loss and damage as a result.

Market participants who have suffered loss and damage are entitled to claim damages in proceedings in the Competition Appeal Tribunal (“CAT”) in a class action pursued either on an ‘opt-out’ or an ‘opt-in’ basis.

You can read the entire announcement here:  Proposed Precious Metals Class Action Suit

While I’m skeptical that this will have an impact on the market, even if the suit is ultimately filed, there’s always the chance that court-ordered discovery – assuming these banks have not destroyed and wiped clean any evidence – could reveal the truth.   And the truth will set the gold/silver price free.

U.S. Political Crisis Foments While China & India Devour Gold

The demand for gold in India and China so far this year has soared, a fact which is completely ignored by the western financial media. The ex-duty Indian gold import premiums (approximately $10 earlier this week) are quite remarkable, “as the need to import kilo bars only arises if Indian demand is not satisfied by Dore imports (which had a duty advantage of $15.52/oz this afternoon) and smuggled gold. Reports of apprehensions at Indian airports are continuing to appear, indicating that smuggling has in fact revived” – John Brimelow’s Gold Jottings, brimelowgoldjottings@gmail.com).

Brimelow also reported that 162 tonnes of gold were delivered into into Shanghai Gold Exchange on Monday this week, preceded by 79 tonnes on Friday. The Friday delivery is the largest by far that I’ve observed in watching this statistic over the last several years.

While the eastern hemisphere is busy converting fiat currency into physically delivered gold, the United States political system is becoming increasingly unstable and unpredictable, as the Trump White House, in an effort to repair the frayed relations with Russia, is under systematic attack from the Deep State.  Trump’s erratic leadership combined with the Deep State’s political terrorism will likely spark political and social chaos in the U.S.

The relentless buying strength of physical gold in the east along with the incipient instability of the U.S. are fundamental catalysts to drive the price of gold and silver a lot higher.  Furthermore, the emergence of accelerating price inflation thrown into the mix has the potential to create the “perfect storm” for higher precious metals prices.

In an earlier post I explain why now is the time to use the manipulated paper gold price take-downs as buying opportunities.  This viewpoint was vindicated during the two-day Fed Chairman staged Congressional propaganda event, which historically is a period  in which the banks slam the gold market with tonnes of paper gold in order to prevent the price of gold from signaling a message that conflicts with the economic and financial fairytale artfully spun by the Fed-head (or not so artfully, as it were, in Yellen’s case).

Gold was slammed nearly $20 just prior to and during Yellen’s hot air exhalation sessions on Capitol Hill on Tuesday and Wednesday.  The catalyst was a series of paper gold volume surges on the Comex in which the NY Fed and its agent bullion banks drop a payload of gold futures on both the Comex floor and into the CME Globex trading system, targeting the stop-losses set by hedge funds that are long gold contracts.  This detonates an avalanche of selling by momentum-chasing hedge fund algos.

Subsequent Yellen’s freak show on Capitol Hill, gold promptly defied the paper market deviance and shot up $21 to a new year-to-date high.  If the deteriorating economic fundamentals manage to chew through the safety-net that has been placed beneath the stock market, a real rush into gold – physical and derivative – will be triggered.   In the meantime, the nature of the precious metals trading has shifted from shorting rallies and covering those shorts on sell-offs to buying dips and selling rallies.   Eventually the hedge fund algos will be programmed to buy dips and aggressively buy rallies.  That’s when the real fun begins, especially in the junior mining stocks…

Gold & Silver: Buy The Paper Price Attacks

These premiums [the ex-duty import prices being paid for legal kilo bar imports in India] are actually quite remarkable as the need to import kilo bars only arises if Indian demand is not satisfied by Dore imports (which had a duty advantage of $15.52/oz this afternoon) and smuggled gold. Reports of apprehensions at Indian airports are continuing to appear, indicating that smuggling has in fact revived. – excerpt from John Brimelow’s Gold Jottings Report (contact John at brimelowgoldjottings@gmail.com to learn more about his service)

The price of gold & silver have had a big move since mid-December, despite the flood of “fake news” connected to the temporary disruption of gold imports into India precipitated by Modi’s now-failed attempt to limit the ability of Indians to buy physical gold and despite the plethora of fake news about the quantity of gold flowing into China both before and after after the week-long Chinese New Year observance.

Brimelow goes on to assert in one of his Monday updates that, “Viewed from a US-centric and technical perspective, gold’s friends have something to worry about. However the Asian buying is about as strong as it ever usually gets and for that reason the Bears’ prospects are probably limited.”  Note, the “technical perspective” indirectly references that use of paper gold by the western bullion banks in their attempt to control the global price of gold.

As an example of the price-control mechanism implemented in the western paper market, you’ll note that after a surprise bounce in gold on Friday, likely stimulated by paper short-covering on the Comex, was met with an attack after the Monday a.m. LBMA gold price “fix” and again right after the Comex floor paper gold trading commences:

These are typical times during the day, when the physical gold buying markets in the east are closed for the day and the western paper market manipulators take control of global gold trading via LMBA forwards and Comex futures and OTC derivatives.

Just as notable about Friday’s move higher in gold during NY trading hours is that fact that the price was moving in correlation with a move higher in both the dollar index and the U.S. stock market.  Often, there is an inverse correlation between gold and the USDX/Dow/SPX.

There’s is an “invisible hand” in the market pushing the prices of gold and silver higher in defiance of the attempted price control schemes being exerted in London and New York. This silent operator is without the pressure being exerted in the physical market.

This week I’m sure will prove to be a bit of a price roller-coaster, as the semi-annual “Humphrey-Hawkins” (as it used to be called) Fed Chairman testimony on monetary policy and the economy is a time used by the western CB’s and bullion banks to control the price of gold using paper. After all, they can’t have the price of gold moving higher when the Fed’s El Hefe is extolling the virtues of the fiat currency and fractional banking system in front of Congress and the world, which begins today.

The point here is that it’s my view that the next longer term trend move in gold is higher, which means that price attacks should be used as buying opportunities, both for the metal and the mining shares.  In fact, the mining shares were quite stubborn about going lower when gold was being hit hard in New York after being hit hard in London.  Typically this is a signal to the market that prices in the precious metals sector are going higher.

 

What Happens To Gold & Silver When Trump Attacks The Dollar?

Get prepared because we’re going to have the worst economic problems we’ve had in your lifetime or my lifetime. – Jim Rogers, Macro Outlook in the Trump Era – MacroVoices

Make no mistake, it’s going to get ugly at some point in 2017. Elijah Johnson at Silver Doctors invited me to discuss why I believe Trump’s policies, assuming he gets anything passed and implemented, will be phenomenal for gold. Another factor not being discounted or widely discussed is an acceleration in the rate of inflation over and above the ability of the Government’s CPI sausage grinder to mute actual price inflation in everyday consumables.

11.1 Tonnes Of Paper Gold Dumped In Sixty Seconds

Central banks stand ready to lease gold in increasing quantities should the price rise.  – Alan Greenspan, 1998 in Congressional testimony on OTC derivatives

Gold has been in a steady uptrend since December 18th, bottoming at $1131 after a four and half month price correction.  Firmly back over the 50 dma, the price momentum appears to be a threat to the “bullion”  banks who suppress the price of gold in the paper derivatives market on behalf of the western Central Banks and, ultimately, the BIS.

The banks must feel threatened by the recent activity in both physical and paper gold trading.  This morning the price of gold was attacked in the Comex paper market after St. Louis Fed-head, James Bullard, delivered remarks about interest rate policy that should have propelled the price of gold higher:  “We think the low-safe-real-rate regime is unlikely to change in the near term. This means the policy rate can also remain relatively low over the forecast horizon” (link).

Instead, the Comex was bombed with paper:

At 9:54 a.m. EST, 3,927 April gold futures contract (paper gold) was dropped on the Comex. Prior to this, the the average number of contracts per minute since the Comex had opened was under 500 contracts. This is 11.1 tonnes of paper gold which hit the Comex trading floor and electronic trading system in a 60 second window.  It represents approximately 30% of the total amount of gold the Comex vault operators are reporting to be available for delivery under Comex contracts – dumped in paper form in 1 minute.

This reeks of fear.  The western Central Banks have grossly underestimated the eastern hemisphere’s appetite for physically deliverable gold.  Despite an attempt by the BIS to mute India’s demand by restricting the availability of cash in India’s banking system, India’s current demand is robust and will likely increase as Indian’s now have cause to fear the Indian Government’s war on cash.

In addition, China’s demand for gold seems to be accelerating.  Based on Swiss export numbers, 158 tonnes of gold was shipped to China in December.  Far higher than the numbers presented by “official” organizations tracking gold flows.   Current premiums to the global market price of gold on the Shanghai Gold Exchange are running in the low teens.  So far this week well over 100 tonnes of gold have been delivered onto the SGE.  Except for the PBoC, all gold distributed inside China must first pass through the SGE.

The western Central Banks will have a problem if the price of gold begins to take-off, as they will lose control of their ability to control the price using derivatives.   Perhaps in addition to the standard price containment operation on the Comex this morning, the attack on the price of gold in the paper market was in response to Eric Sprott’s comments on King World News yesterday:

“There’s no doubt about it if they (investors) keep coming in and buying that kind of tonnage. At some point they will look inside at what little gold is left in the Western vaults and say, ‘No mas. We can’t keep doing this at the rate that they are buying tonnage because we will run out of gold.’ And if they see that they are going to run out of gold in a year or so, when do they raise the white flag? I have told you many times that the Western central banks have been making up for the imbalance in term of supply and demand by dishoarding their gold hoard surreptitiously”

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Trump Will Be Great For Gold And Silver (If Nothing Else)

I love days like today when both gold and the dollar are green. Historically, some of the best moves in gold occur as gold and the dollar move up together for short period of time. Today, of course, is just one day. And there’s no question that the Trump Government will need a significantly lower dollar in order to stimulate U.S. industry, assuming the latter is at all possible anymore.

On the other hand, if somehow Trump manages to get Congress to pass his border control and excise tax proposals, consumer prices on the products being imported at prices much lower than the same products can be produced domestically will soar. Let’s not forget, gold loves inflation.

In terms of the fundamentals supporting gold, the Fed’s unanimous decision to leave rates unchanged confirms my suspicion that the likely next move sometime later this year will be some sort of loosening of monetary policy. Consumer liquidity continues to dry up. This is especially evident in the retail sales reports plus the big drop reported for January auto sales.

In addition, various price inflation reports are starting to emerge. On Feb 1st, Bloomberg reported that the Citigroup Inflation Surprise Index, which is a global index that measures price surprises relative to market expectations, is at its highest in more than five years. Even the Government-produced inflation reports in the U.S. have been coming in “hotter” than expected. This is a difficult feat given all of the hedonic adjustments plus other various gimmicks the Government statisticians inflict on the data in order to mute the ability of the index to measure true inflation (note: the manipulation of the CPI was implemented by the Arthur Burns-led Federal Reserve shortly after Nixon closed the gold window – they knew what was coming, which was massive money supply expansion and the resulting price inflation).

In other words, even the Government will be unable to hide fully the effect that trillions of QE and credit expansion is having on consumer prices. This will act as a turbo-booster on the price of gold when this reality eventually grips the capital markets.

In the physical markets, despite China’s week-long closure to observe the Chinese New Year (Year of the Rooster), the eastern hemisphere markets continue to “consume” a lot of physical gold. Premiums all week in India have been high enough to reflect moderate to heavy legal kilo bar importation. Dore bar imports have been flowing steadily for several weeks.  Additionally, Vietnamese were paying $135 over world spot gold, indicating voracious demand.

The latest official Swiss gold export report for December shows that the Swiss exported 154 tonnes of gold to mainland China in December. This was almost four times higher than exports to Hong Kong and more than three times the amount of gold shipped from from HK into China’s mainland. This would be the gold that enters China via Beijing and Shanghai that goes unaccounted for by the World Gold Council and the GFMS data-keepers. Additionally, East and South Asian countries accounted for 87% of Swiss gold exports in December.

Thus, contrary to the popular mainstream financial fake news, China’s appetite for gold remains voracious. Needless to say, all the “stars are aligning” for what could be a spectacular year for the precious metals and mining stocks. Not the least of which is the unpredictability of, and the undefinable nature of, the Trump presidency.

Most of the above commentary was an excerpt from the February 2nd Mining Stock Journal.  In that issue I reviewed five previous names presented, of which three are significantly higher from when the MSJ presented the idea.  Of the other two, one is down about the same amount as the sector since August and the other one is a silver exploration company that is percolating on top of what may turn out to be one of the larger silver deposits in the world in addition to containing large quantities of zinc, lead and gold. I also mentioned an emerging producer that may be acquired before summer.

You can subscribe to the MSJ here:  Mining Stock Journal.  The publication is a bi-weekly newsletter with unique insight on the gold and silver market that also focuses on undervalued junior exploration and emerging producer ideas.  New subscribers, for now, will receive all of the back-issues.

I am a subscriber to both of your journals.  I just want to say “WOW” to this post on your site. Thank you for all your work. As a financial professional of 28 years’ experience, I can tell you why there is no churn in your journal subscriptions. Your work is extremely sound and well done even in a massively manipulated environment.  –  recent email from a subscriber to the Mining Stock and Short Seller Journals

Major Silver Bounce – Can It Last?

The bullion bank gold cartel pulled out all of its stops last week in order take down the price of gold and silver. Particularly useful was selling by longs connected to fear over the week-long closure of China in observance of the Chinese New Year’s celebration (Year of the Rooster). Interestingly, last year gold was volatile during the Chinese New Year week off but traded sideways, not lower.

In addition, this upcoming week features the FOMC meeting and the January employment report. On average and in general, both of these events typically are accompanied by a take-down in the price of gold. On Friday, however, after the obligatory smashing of gold and silver associated with Comex options expiration (Thursday), gold snapped back sharply $9 from its Thursday low of $1181 and silver soared nearly 50 cents from its Thursday low.

Eric Dubin and the Doc invited me onto Silver Doctors’ weekly Metals and Markets Report to discuss the factors behind last week’s gold and silver trading activity and the reasons why gold and silver could turn in a better 2017 than 2016:

If you agree with the views in the above podcast, the Mining Stock Journal offers great junior mining stock ideas to help you take advantage of the next move higher in the precious metals sector. You subscribe using this link:   Mining Stock Journal subscription link.   As subscription includes all the back-issues and superior customer service.

Hi, i really like your mining stock newsletter. I am fairly new to the mining sector and i did start investing in last febuary pretty much at the lows  –  recent new subscriber “Thomas”

 

Upside Surprise For Gold And Silver In 2017

To date, the price of gold and silver have followed a very similar trading path that was taken by the metals in early 2016, with gold and silver bottoming in mid-December and staging a strong rally through mid-January.  Technically, as our Shadow of Truth guest Craig “Turd Ferguson” Hemke point s out, all of the stars were aligned for a take-down of the gold price using paper derivative gold.

These “stars” include:  January contract trading expiration, February options contact expiration, an “overbought” technical condition and the upcoming FOMC meeting and employment report next week.  ALL of these variables are factors which are used to help the bullion bank gold cartel take down the price of gold and silver using the paper gold derivatives traded largely without enforcement of the regulations in place in New York and London.

But now the market is set up for an upside surprise.  Contrary to recent “alternative facts” media reporting, India has continued consuming a lot of gold on a daily basis. This includes legal kilo imports, dore bar importation (subject to a lower import duty than kilo bars) and smuggling, the latter of which is estimated to be as high as 300 tonnes per year now.  The “authorities” in the media who track gold into India fail to account for dore bar flow and smuggling.

In addition, a favorite false narrative of the World Gold Council, Bloomberg and Reuters is that gold imports into China slowed down at the end of the year because of import restrictions put on gold by the Government.  Nothing could be further from the truth.  The “fake news” reports are based on imports into Hong Kong, which are publicly reported by Hong Kong authorities.  But a few years ago China began to allow gold imports through Beijing and Shanghai, which is not reported, specifically to obscure the true amount  of gold flowing into China.

But it’s easier to build a false narrative around easily observable data rather than look for the greater truths intentionally hidden from public purview.  As it turns out, nearly 100 tonnes of gold were delivered onto the Shanghai Gold Exchange on the last trading day before China closes shop for the Chinese New Year celebration.  Of course, if any of that gold flowed through Beijing or Shanghai, it would go unaccounted for by the entities listed above that only account for gold going from Hong Kong into China.

We at the Shadow of Truth are forecasting a better year for the metals in 2017 than in 2016. We invited Turd Ferguson on the show for lively two-part discussion of the factors that will drive the metals higher:

Part 1:

Part 2:

Essential Commodities: Gold, Silver And Popcorn

JBGJ regards Indians buying less gold as cash crunch bites primarily as evidence that FOBs (Friends of Bloomberg) are not in gold. If India’s domestic gold market was as weak as presented there would be a significant discount to the world price…In reality the Government has struck a shattering blow at the trust Indians have in holding wealth in any form accessible to the Authorities. When things finally unglue, India’s propensity to hold gold will probably be found to have risen – John Brimelow’s Gold Jottings report – LINK.

Yesterday’s sell-off in gold occurred after the Comex floor had closed for the day.  The period of time between when the Comex closes  – 1:30 p.m. EST – and the CME’s Globex computer system trading closes for about an hour – 5 p.m. EST – is one of the least liquid trading periods of the 23 hour, 5-day trading week.  It makes that period of time susceptible to manipulative price take-downs.

As it so happens, likely not coincidentally, Janet Yellen began speaking about monetary policy at 2 p.m. EST.  She stated that the Fed expects a few interest rate hikes per year until 2019.  Geez, that would take the Fed funds rate up to maybe 2%?  Of course, helped along the by the bullion banks, the hedge fund trading algos grabbed the soundbytes spewing forth from Yellen and concomitantly sold paper gold and bought dollars.  The dollar spiked up and gold was taken down to $1200.  It traded below $1200 overnight on the “fumes” of yesterday.

Gold, silver and the mining stocks have had a nice move from late December to now.  They will not go straight up.  Technically the sector was set up to be susceptible to trading activity related to Fed soundbyte propaganda like yesterday.   This is yet another buying opportunity.  Buy a little every month when the price gets taken down in the paper market. According to the Indian data presented by Brimelow, India is a huge buyer of gold below $1200.   China is a steady buyer regardless of the price.

The Trump presidency will usher in a period in which Orwell’s prophecies will shift into overdrive.  Popular mistrust of anything and everything Government will accelerate and Big Government’s attempt to counter-act this movement will take place in the form of intensified propaganda and a further reduction in  civil rights.  Along with this influx of political and media chaos will be an increasing distrust of fiat paper “fake” currency, which means the public will likely buy even more gold and silver than it did in 2016.  Note:  the U.S. mint sold a record amount of gold eagles in 2016.

In today’s episode of the Shadow of Truth, we continue our discussion of the precious metals sector, including some analysis of the gold / silver ratio:

Momentum Traders Shift To Gold And Silver

“All the reasons being advanced for gold’s rise this week were fully in place at the November 8th election. Perhaps the subsequent slump will eventually be seen as an aberration.” – John Brimelow from JB’s Gold Jottings Report – Contact link

The dollar went nearly parabolic after the election, along with the Dow and the S&P 500. The move was not supported by fundamental factors in any respect.  Rather, it was momentum-chasing game fueled by the empty promise of “hope.”  While “hope” is a valid emotion for those who believe in life after death, “hope” in the absence of valid fundamental factors can quickly turn into fear – the fear of losing money.

Bank of America released a survey of Wall Street “professionals” in which the respondents stated that the “long U.S. dollar” trade is by far the most overcrowded trade.  The dollar index has already retreated about 3.5% since the first of the year.  If the index breaks below 100, the current exodus from the long dollar trade could quickly turn into a stamped toward the exit.

On the flip-side of this is gold, which has rallied nearly 6% since late December, and silver, which has rallied 7.8% since its end of December low.   The fundamental factors driving gold vs. the dollar would be the continued surge in U.S. Treasury debt issuance; which has doubled in size over the last eight years, contracting economic activity notwithstanding the plethora of fake economic reports;  a rapidly expanding Government spending deficit; and a rapidly expanding trade deficit.

The quick-fix band-aid for Trump will be to implement a policy that attempts to push the dollar lower.  He tweeted as much earlier today.  The spike-up in gold is being attributed to that tweet.

But not so fast, fake news adherents.  50% of gold’s move occurred on Monday, while the U.S. was closed in observance of MLK’s birthday and well before the Trump tweet.  Mining stocks in Canada moved up sharply yesterday.   This tells us that there are other factors behind the move in gold besides the expectation that the dollar is going to sell-off.

One of the Fed Governors, Lael Brainard, gave a speech today in which she somewhat back-pedaled from the Fed threat of four rate hikes during 2017.  We knew this was coming.  Gold will begin to anticipate an “easing” of the Fed’s stance on monetary policy, likely to occur at the next meeting, especially in light of the December’s retail sales / consumer spending disaster.

As the dollar falls below the 100 level on the dollar index,  hedge fund algos will shift from buying dollars and selling paper gold to dumping dollars and piling back into paper gold. But that’s just for starters.  The Modi cash removal initiative has failed to put the brakes on Indian gold imports and China and Russia continue to inhale vast quantities of physical gold.   This will help infuse “substance” into the hedge fund-driven paper gold/silver trade.

On today’s episode of the Shadow of Truth, we chat about the factors that will drive gold, silver and the mining stocks higher this year, possibly in a move that will be bigger and longer than the move in 2016: