April 2010


In his weekly interview with Eric King of King World News, silver market analyst Ted Butler remarks that “the worst is behind us” for gold and silver investors dealing with the recent decline in prices; that the big silver short, JPMorgan Chase, is not increasing its short position in silver; and that investors should get out of “pooled” and unallocated gold and silver accounts and shift to accounts that identify their gold and silver bars by hallmark and serial number. The interview is not quite 13 minutes long and you can find it at the King World News Internet site HERE
Metal$ Are in the Pits
Trader Blows Whistle on Gold and Silver Price Manipulation
By Michael Gray
New York Post
Sunday, April 11, 2010
There is no silver lining to the activities of JPMorgan Chase and HSBC in the precious-metals market here and in London, says a 40-year veteran of the metal pits.
The banks, which do the Federal Reserve’s bidding in the metals markets, have long been the government’s lead actors in keeping down the prices of gold and silver, according to a former Goldman Sachs trader working at the London Bullion Market Association.
Maguire was scheduled to testify last week before the Commodities Futures Trade Commission, which is looking into the activities of large banks in the metals market, but was knocked off the list at the last moment. So he went public.
Maguire — in an exclusive interview with the Post — explained JPMorgan’s role in the metals pits in both London and here, and how they can generate a profit either way the market moves.
“JPMorgan acts as an agent for the Federal Reserve; they act to halt the rise of gold and silver against the US dollar. JPMorgan is insulated from potential losses” on their short positions “by the Fed and/or the US taxpayer,” Maguire said.
In the gold pits, Maguire sees HSBC betting against the precious metal’s price without having any skin in the game in the form of a naked short.
“HSBC conducts an ongoing manipulative concentrated naked short position in gold. Silver is much easier to manipulate due to its much smaller [market] size,” Maguire added.
“No one at JPMorgan is familiar with Andrew Maguire,” said Brian Marchiony, a company spokesman. HSBC declined to comment.
Also during the CFTC hearing, Jeff Christian, founder of the commodities firm CPM Group, said that the LBMA, the physical delivery market for gold and silver in the UK, has been using leverage, which is another way to depress the price of gold and silver.
Christian said that the LBMA — the same market Maguire trades in — has leverage of about 100-1 on the gold bars settled on the exchange. In layman’s terms, that means if 100 clients requested their bullion bars be delivered, the exchange could give only one client the precious metal.
The remaining requests would have to be settled for cash equivalent. “That is tantamount to a default on the trade,” says Bill Murphy, chairman of the Gold Anti-Trust Action Committee.
Maguire goes further and calls it a fraud: “If you sell something you do not own, then that is fraud.”
Back in 2007, Morgan Stanley agreed to settle a $4.4-million lawsuit brought by precious-metal clients, who alleged that Morgan offered to buy gold and silver and store it for the investors, but never purchased any metal and still charged them storage fees.
Morgan Stanley denied the charges at the time but “settled the case to avoid the cost and distractions of continued litigation,” the firm said.
Despite gold’s rise each of the last 10 years, Murphy believes the price of gold today would be closer to $2,300 an ounce if the price just moved with inflation.
Maguire believes the price should be even higher given the fear trade that would have sent prices spiking during the financial crisis in 2008-09.
Both precious metals have seen a recent spike since Maguire’s e-mails became public. Gold has gained 6.5 percent to close at $1,161.55, while silver has spiked 10 percent to $18.38.
According to the e-mails Maguire sent to CFTC regulators, he was spot-on in his expectations of how the precious metals would trade on release of the January jobs report.
This message is to “confirm that the silver manipulation was a great success and played out exactly to plan as predicted yesterday. How would this be possible if the silver market was not in the full control of the parties we discussed in our phone interview?,” Maguire wrote to a staff investigator after the trading day.
CFTC commissioner Bart Chilton said, “I’m appreciative of the information Mr. Maguire provided and I’m glad it was introduced into the investigation.”
… High, low silver
The prices of gold and silver have been allegedly suppressed by JPMorgan Chase and HSBC, according to a London whistleblower.
Andrew Maguire, who laid out the banks’ plan in e-mails to the CFTC prior to trading on the Comex on Feb. 5.
1.) From: Andrew Maguire
To: Ramirez, Eliud [CFTC]
Cc: BChilton [CFTC]
Sent: Wednesday, February 03, 2010 3:18 PM
Subject: Re: Silver today
Thought it may be helpful to your investigation if I gave you the heads up for a manipulative event signaled for Friday, 5th Feb. Scenario 1. The news is bad (employment is worse). This will have a bullish effect on gold and silver as the US dollar weakens and the precious metals draw bids, spiking them higher. This will be sold into within a very short time (1-5 mins) with thousands of new short contracts being added.
Scenario 2. The news is good (employment is better than expected). This will result in a massive short position being instigated almost immediately with no move up. This will not initially be liquidation of long positions but will result in stops being triggered, again targeting key support levels. Kind regards,
2.) From: Andrew Maguire
To: Ramirez, Eliud [CFTC]
Cc: BChilton [CFTC]; GGensler [CFTC]
Sent: Friday, February 05, 2010 3:37 PM
Subject: Fw: Silver today A final e-mail to confirm that the silver manipulation was a great success and played out EXACTLY to plan as predicted yesterday. How would this be possible if the silver market was not in the full control of the parties we discussed in our phone interview? Kind regards,
3.) Andrew T. Maguire
From: Ramirez, Eliud
To: Andrew Maguire
Sent: Tuesday, February 09, 2010 1:29 PM
Subject: RE: Silver today Good afternoon, Mr. Maguire, I have received and reviewed your email communications. Thank you so very much for your observations.

King World News today received more detail about yesterday’s attack on its Internet site, which happened soon after the posting of Eric King’s half-hour interview with GATA Chairman Bill Murphy, board member Adrian Douglas, and your secretary/treasurer about last week’s hearing of the U.S. Commodity Futures Trading Commission.
The major Internet hosting company that maintains the King World News site reported to King World News: “Your hosting account is the target of a distributed denial of service attack. To protect the network resources, we have temporarily placed your Web site behind a network filter. Once the attack has ended, service will be restored to normal. … Computers were attacking your account.”
Wikipedia says a distributed denial-of-service attack “is an attempt to make a computer resource unavailable to its intended users. Although the means to carry out, motives for, and targets of a DDoS attack may vary, it generally consists of the concerted efforts of a person or people to prevent an Internet site or service from functioning efficiently or at all, temporarily or indefinitely.”
Eric King told GATA today, “We are on one of the top grid server systems in the world, where traffic is not an issue, and this has never happened before. This was a case of an entity needing to silence the messenger.”
No Internet site has given as much voice to GATA and other pro-gold and free-market advocates as King World News has, so given the scope of the attack on the the King World News Internet site, it is hard not be awfully suspicious about it.
King’s interview with Murphy, Douglas, and your secretary/treasurer can be found here:
Meanwhile, GATA’s friend Trace Mayer, proprietor of RunToGold.com, reports that his March 28 commentary on last week’s hearing of the U.S. Commodity Futures Trading Commission —
— was followed by a similarly massive attack on RunToGold’s Internet server. “To handle spikes in traffic,” Mayer says, “I am on an expensive enterprise-level cloud server with a company that handles hosting for some of the big dogs, like Sony and Toyota, and my server got hammered. The site was down for 2 1/2 hours, from about noon to 2:30p PT on March 30. There were no issues with my hosting provider and it appears we have everything under control now. I have never had an issue like this before. Anyway, it looks like we have someone’s attention. Keep yanking on that tail.”
GATA indeed will keep yanking on that tail but our friends also risk getting bitten. We’re grateful to them for that.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
Internet servers hosting the King World News Internet site, which today posted a half-hour interview with three GATA board members, were attacked and disabled tonight from approximately 8 to 10 p.m. ET.
The servers are maintained by one of the largest Internet site hosting companies in the world and one of its technicians told King World News proprietor Eric King, “We cannot figure out why this cluster of servers is being attacked.” The King World News site host has maintained the site on a “grid” system of servers so that ordinary technical problems with any one server cannot disable the site, but tonight’s attack was sophisticated and brought down the entire grid.
King and his family have not been attacked and one may suppose that what happened tonight at least is preferable to being rammed by a hit-and-run driver, as CFTC whistleblower Andrew Maguire and his wife were rammed in London the day after GATA disclosed at last week’s hearing of the U.S. Commodity Futures Trading Commission that Maguire had given the commission detailed warning of a manipulation of the futures market and the commission had done nothing about it.
At this hour the King World News interview with the three GATA board members — GATA Chairman Bill Murphy, Adrian Douglas, and your secretary/treasurer — appears to be accessible again here:
If King World News is becoming Radio Free America, this sort of thing may happen again.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.