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View Full Version : Firestorm Erupts Over Gold, Silver Shorting by U.S. Banks



Cajus
08-31-2008, 07:14 AM
A very few and very large banks seemed to have positioned very well ahead of the plunge in prices for gold and silver, but in the process they may have bought more than they bargained for – possible class-action lawsuits...

An internet firestorm erupted over an August 5 report issued by the Commodities Futures Trading Commission (CFTC) which report revealed an unprecedented exponential one-month spike higher in short positions in gold and silver futures reported by two U.S. banks in silver and three U.S. banks in gold. Investors and bullion dealers may band together to seek legal recourse against the thus far unnamed banks...

Resource Investor - Got Gold Report – Firestorm Erupts Over Gold, Silver Shorting by U.S. Banks (http://www.resourceinvestor.com/pebble.asp?relid=45789)

Thanks to Caper at The "Unofficial" Kitco Refugees' Gold and Metals Forum for spotting this one.

fl57caveman
08-31-2008, 08:35 AM
i suspected..there was no way that sydney & hongkong selling did that..

had to be a few big rats in the wall to do that size of drop that quickly..

thanks for the link

MGoldman
08-31-2008, 11:46 AM
what action can be expected on POG at COMEX? will it go shorter to punish those shorters??? they got the PM at low so going long will benefit them. either way they win..... if it goes shorter.... CHINA and RUSSIAN may just grab them....but no physical can be delivered and that cheap price.

ladybug
08-31-2008, 12:10 PM
I am not usually a conspiracy theorist. But this last drop in PM prices really was bizarre.

I had a feeling that manipulation through short selling was a definite possibility:

https://www.kitcomm.com/showthread.php?p=315726#post315726

I wasn't sure if they would just short contracts or if it could be done less noticeably through ETF's.

But, IMHO, I think that the banks got lucky to a degree. The environment had to be just right to pull this off, trading volume had to be low so the shorting would have the greatest impact, the average investor's attention had to be focused on other things (Olympics, Russia, etc.) so that the few who were paying attention would be less likely to realize what had happened. And, the banks had to coordinate their efforts with each other to take advantage of the opportunity. I don't see this as something that could happen on a regular basis, unless several more banks were involved and not just 2.

Now that I kinda get how they did it, I'd like to have a better understanding of why.

Gold is supposed to be a barbaric relic so it shouldn't even be relevant to banks - they shouldn't even care about it at all. But instead, these two banks went to great lengths to manipulate the market, so how does it benefit them to force PM prices down? Was this a dry run to see what could be accomplished through coordinated shorting amongst the banks in commodity markets in general or just PMís, and will more banks get involved in this? Gold is a small market and would be easy to seize control of if a few more big banks were interested in doing so, but there couldnít be much profit involved in it, certainly not when compared to their other banking activities, so is this about something else. I donít get it..... smells fishy :(

A couple weeks ago, the Fed stepped in and made it illegal (for a short period of time) to short certain financials that they were trying to protect, so the Fed knows all about these activities. Does anyone know if the Fed plans on putting permanent controls/regulations in place to limit or prevent short selling, or are they done with that issue?

I admit that I donít understand a whole lot about short selling and naked short selling, but from what Iíve read of it so far it all sounds an awful lot like fraud. I am not sure why the Fed and the SEC would have ignored the practice for so long, except in special cases, unless the practice benefits the Fed and Gov. somehow.

Feral child
08-31-2008, 01:21 PM
Having a report issued by the Commodities Futures Trading Commission which reveals the shenanigans behind the scenes is a good thing, but expecting anything serious to come of it might be like expecting Chang to condemn Eng to death. I'll be pleased if this goes anywhere at all,but not holding my breathe meanwhile.

johndaniels
08-31-2008, 01:54 PM
I am not usually a conspiracy theorist. But this last drop in PM prices really was bizarre.

I had a feeling that manipulation through short selling was a definite possibility:



sorry guys, its my fault. I bought heavy just before...

GoldAddict
08-31-2008, 02:28 PM
Gold is supposed to be a barbaric relic so it shouldn't even be relevant to banks - they shouldn't even care about it at all. But instead, these two banks went to great lengths to manipulate the market,

That is what I'm saying...

polcat
08-31-2008, 02:41 PM
This is big and it seams no one here is paying any attention to it. That's odd this is a gold and silver web site.

PersianKing
08-31-2008, 02:55 PM
I was looking for a dip in POG in month of July to increase my PM position significantly. As much as I'm sad that these banks could have had an impact on POG but I used the month of August to buy as much as GOLD as I could.

POG has only one direction to go now: UP !!!:D

PK