QUESTION: You always say the markets cannot be manipulated. Deutsche Bank is turning over the smoking gun. Any comment?
ANSWER: It seems you are using the term “manipulation” extremely loosely. You are mixing this term up with collusion and coordination, yes with the intent to “move” a market within the immediate trend which is not “manipulation” as it is being thrown around. Front-running and pressing or spoofing a market does not translate into systemically suppressing a market to prevent it from ever rallying for decades. Nobody does that and it would produce no instant profit. All the emails and text messages in the Deutsche Bank released illustrate collusion and coordinated events to press the market within the immediate trend. They do not show systemic perpetual manipulation. Here is what I wrote in Behind The Curtain back in 2009. The information now surfacing from the Deutsche Bank files confirms what I wrote about years ago:
Look Behind the Curtain, April 9, 2009.
During the late 1970s, the silver market was claimed to be “cornered” by the Hunt Brothers. That was far from true, for what they failed to understand, was that the attitude of the major brokerage houses was not that you were a pure trader-customer, but someone to pick – off for profit. During the 1980s, I had to take on some hedging projects that were awesome. One was in platinum. When you are the largest trader in a narrow market, they watch everything you do. If I was to sell, they assume the whole lot is being sold and jump in front. You suddenly find yourself trapped. I was a witness to the Hunt collapse. They couldn’t get out of the market at any price. The dealers were selling in front of them taking short positions looking to buy back when the Hunts were in a state of panic dumping at any price.
I learned early on that to professionally hedge, one had to navigate the brokers. The only way to deal with them, was to play one-off-against-another, use related markets to confuse and hide your strategy, or else fall prey to the Investment Bankers. In other words, if you had a large position of gold that you wanted to sell, you go to a broker asking for a market in silver. He gives you a quote, and you then buy taking what will become an intentional loss. You go back to the same broker and now ask for a quote on the real market you are trying to sell – gold. He will anticipate you intend to buy because of the silver trade, shifting the quotes to pick up extra profit assuming you are a buyer. When you sell the gold, you just got a higher bid, you are out of the position, and he is scrambling to cover with other brokers. If you hit all the brokers the same way at precisely the same time, they are all now short, and are trapped trying to get out selling back gold that they just bought from you trying to play you for the fool.
These games are at times necessary in the cash markets because the brokers themselves are not satisfied with just making a real market. They need to create an edge. So when you are the 800 pound gorilla, you need defensive measures. It helps to understand the method to the madness of the game.
The market manipulations that really began back in the 70’s with force,became intermixed among the Investment Bankers with technology. we began to see grouping of houses by the later 1980s and early 1990s. Perhaps at first, they were looking for another Hunt. They needed to sell some billionaire on the virtues of cornering and manipulating a market.
The first real coordinated scheme began back in 1993 that I could verify. The target market was silver, and the central player, broker-dealer, was Phillips Brothers who were a big commodity outfit in Connecticut, picked up by Salomon Brothers who was later absorbed as well. This ms known as PhiBro of the same fame relating to Marc Rich.
PhiBro had a huge client who they were acting for to buy up the silver market in 1993. This was an aggressive professional strategy. The Commodity Futures Trading Commission could easily see where the buying was centered in real force. They went to PhiBro demanding to know who their client was. PhiBro refused to give up the name. The CFTC ordered PhiBro to just get out of the market. They did. They just dumped everything at the market wiping out small investors in the blink of an eye.
The CFTC just walked away. Had this been a small broker or money manager, he would have been criminally prosecuted. But the CFTC is notorious for never even once bringing a complaint against a major house. The sources I relied upon, gave me the name of the client – Warren Buffett. Based upon this information and belief, when his name came up again in 1997, it is not a shock.
We kept track of what the “club” was doing and warned our clients whenever their antics were conflicting. One of the big ones that blew the lid off, was again silver. In 1997, I warned that silver was going to rise from $4 to $7 between September and January 1998. I was even invited to join them, and told to stop fighting, and put out false forecasts. I declined. Their strategy became insane.
At first, a friend of mine who had been Prime Minister Thatcher’s economic advisor became a board member of AIG in London. He called one day and asked if he could drop in to Princeton the next morning when he arrived from London. I naturally said OK. To my surprise, he arrived with the head trader from AIG London who then proceeded to try to convince me to stop talking about the manipulations. I told him I would not ever reveal any names, and the government didn’t care anyway.
Things got insane thereafter. An analyst on the payroll of PhiBro had a main contact at the Wall Street Journal. They decided to slander me and get the press to target me claiming I was trying to manipulate the market. It was an interesting strategy, but one I cared nothing about since I was primarily a institutional and corporate advisor, and they were not really interested in silver.
The journalist from the Wall Street Journal called me. He accused me of this nonsense and we argued. It got quite heated. He said if silver was being manipulated, then give him the name. I told him he wouldn’t believe me anyway. He demanded the name and so I said fine, go ahead, let me see you print it, knowing he never would. The name I gave him was Warren Buffett. He laughed. Told me everyone knew Buffett did not trade commodities I told him that was how much he knew.
The Wall Street Journal published the article. The London newspapers were fed stories by the “Club” that I was now the largest silver trader in the world. This became all a joke to me. Even the CFTC could look at positions and knew I was not a big player in silver.
The mistake made by the “Club” by turning out the press against me, was they actually created such a worldwide story that the CFTC was forced to call me. They knew I was not the source. They asked me, where was the manipulation taking place? I told them it was in London, out of their jurisdiction. They told me that they could pick up the phone and find out. I told them that they had to make that clear decision. I hung up. Never did I expect that they would really do anything.
A few hours later, my phone rang. It was a good source in London who also was helping to monitor the “Club” actions. He told me that the Bank of England had called an immediate meeting of all silver brokers in London in the morning. I was shocked. The CFTC had made the call. But then again, I had given them no names so perhaps in their mind, this was fair game.
Within the hour, Warren Buffett made a press announcement. He admitted he had purchased $1 billion worth of silver, in London . He denied he was manipulating the market. Claimed the silver was a long – term investment. Everyone was shocked that Buffett was suddenly exposed as a commodity trader after all the next day, the wall Street Journal called me. The writer asked – “How did you know?” I told him it was my job to know! Silver thereafter declined and made new lows going into 1999. So much for the long-term investment.
There have been major manipulations of markets such as rhodium and then there was the manipulation of Platinum. Cornering a supply is far too risky. What the “club” did was to join forces with Russian politicians. The deal struck was to recall the Russian supply of platinum to suddenly take an inventory. Platinum soared in price. Of course the long positions were already laid in before the announcement. Russia had never before recalled its entire supply to take an inventory. Nevertheless, it worked. They were able to force platinum up for the auto – industry were buyers. At the top, the “club” sold their long positions, reversed into short positions, and then instructed the Russians to end the inventory. Platinum crashed. Even Ford Motor Company sued over that one.
Here is the New York Times from February 5th, 1998. Note that the CFTC had no comment because it was Buffett. The Wall Street Journal had called me and I was warning our clients in September 1997 “they” were going to take silver up to $7 by January. On September 30th 1997 the stories played headlines –
“Silver Prices Hit Six-Month High On Steadily Declining Reserves, By PALLAVI GOGOI AP-Dow Jones News Service Updated Sept. 30, 1997 12:01 a.m. ET NEW YORK — Silver futures surged to a six-month high at the Comex division of the New York Mercantile Exchange, a move analysts said was triggered by steadily declining warehouse stocks. The rally was boosted by preplaced purchase orders around the $5-per-ounce level…”
This was the news created for the manipulation the feed to the press that was constantly played out in the newspapers. The Wall Street Journal again reported on November 17, 1997:
“Silver Futures Prices Leap On Hints of Tight Supplies”,
and again on December 4, 1997 the Wall Street Journal from London reported:
“Silver Surges on Strength In Supply-Demand Status By NEIL BEHRMANN Special to The Wall Street Journal Updated Dec. 5, 1997 12:01 a.m. ET LONDON — Gold may be in the doghouse, but silver is soaring like a bird”.
The reporting of shortages continued to fuel the rally. The Wall Street Journal reported again December 24, 1997 with information feed to them by the manipulators:
“Silver Futures Advance As Inventories Plunge”
I have always wrote about how the “club” coordinated to move a market for a quick gain. That was it. Then they move to the next market. They did not stay and perpetually maintain the same trade.
So do not confuse coordinated trading with systemic manipulation claiming that is why the metals have not rallied. That is just not true. Look at the dollar and the entire surrounding markets. Take the blinders off for once. Just as the “club” put out news in the press to get people to buy the silver, they did the same going into 1980 telling the world it was the Hunts. They sucked in everyone at the top, changed the rules at the exchange who is in their pocket (corruption) and made it less to short than go long. They then told the CFTC to charge the Hunts for the whole scam.
Why did the CFTC not even question Buffett? The CFTC does what the bankers tell them to do all the time. They would never charge Buffett of Phibro for buying the silver in London to make it appear that the supply collapsed when all they did was move it from NYC to London. It was not used. Buffett then turned around and sold it all – so much for the long-term investment. Members of the “club” can do anything because they hire the lawyers from the CFTC and SEC known as the Revolving Door which is the real problem sustaining corruption. When you have mainstream media, courts, and the regulators all on a short leash held by the club, the club has been able to do as they please for decades.
You want to pretend I am wrong so you can feel better about being wrong? Have a nice day. And by the way, good luck with the losses. Technical Analysis will tell you when markets are being played. If you want to make a difference, stop the “manipulation” nonsense and deal with the real issue – the club owns the them all, media, courts, and regulators.