Every now and again, something comes up that is so curious it just needs to be mentioned, regardless of how paranoid it makes us look. The emerging scandal over manipulation of the silver market is one of those things. Some have said it is the largest fraud in history. To make the story even more dubious and enthralling, we shall start ... at the beginning:
How many US presidents have been assassinated while in office? (That's right, the story begins here.)
The answer is four.
Of those four, how many were sound money advocates (favoured gold or silver backing of the currency) and had sound money as one of their key policies?
All four of them.
Lincoln favoured silver backing of the currency after the America Civil War. McKinley and Garfield fought for the gold standard against their presidential opponents. Kennedy managed to reintroduce silver backed dollars before being knocked off. Those silver backed dollars were subsequently taken out of circulation by the Federal Reserve. The "Dead President's Society" conspiracy is its own story, but not one to be covered here.
The next intriguing bit of history comes from the Credit Rivers case, an obscure but insightful 1968 U.S. court case that bears on whether or not bank money is "real" money. But before we get into that case, one has to understand a basic concept of contract law. For a contract to be binding there must be an exchange of consideration, which is something of value. That is why gifts are not legally binding exchanges. The giver does not receive consideration in return.
The importance of the Credit Rivers case comes from the fact that the presiding Justice recognised that fiat currency is not valid consideration, as it is simply created out of thin air by banks. "Only God can create something out of nothing" is the famous quote from the case. For all the proceedings from that case, you can go here. But the main point is that the Justice (of the Peace) held that the bank could not foreclose on the house in question, as the loan it had created was not valid consideration.
Justice Mahoney then held that the bank could not appeal the decision, as it failed to pay the $2 court fee for lodging such an appeal. Amusingly, the bank had paid this fee, but had done so in the same fiat currency that was previously held to be worthless, thus invalidating their payment!
Justice Mahoney died in a fishing accident after giving his decision. His precedent was not followed.
You may be wondering how on earth is all this relevant to the latest development out of the gold and metal market.
Well, to understand the concerns that people have, you have to understand the history. Now, on to the more recent developments.
Precious metals trader Andrew Maguire informed the commodities trading regulator, the Commodities Futures Trading Commission (CFTC), that there was substantial manipulation of the metals market occurring on a regular basis. For example, he alleges that by purchasing Bear Stearns, JP Morgan had gained control of the precious metals market and was using this control to make significant profits. Other savvy metals traders caught on and simply hung on for the ride.
The CFTC didn't seem particularly interested in his claims, so Maguire gave them several predictions, based on the manipulations that metals traders expected. Those predictions were completely accurate, but the CFTC simply stated that it was investigating, as it had previously done.
Imagine the police had an informer telling them that a rape would occur, when it would occur and who was going to be the perpetrator and the victim, but they merely watch it happen and then "investigate". That is what the CFTC did.
Andrew Maguire was thoroughly annoyed at this point and went to GATA, the Gold Anti-Trust Action Committee. GATA has campaigned to expose such market manipulation for many years. The organisation is frequently ridiculed by the mainstream press. But with Maguire's claims it is now apparently armed with the credible witness it needs.
Representatives from GATA appeared at a CFTC hearing, armed with their new whistle blower's information, and promptly blew the commodity regulator's committee out of the water. Unfortunately, the camera filming the testimony happened to break shortly before the GATA chairman began speaking. It began working again shortly after he had finished.
Andrew Maguire, the whistleblower, was recently subject to a hit and run traffic accident. All major media organisations have cancelled their scheduled interviews with GATA. The press is not covering the developments.
It has since emerged that the London Bullion Market trades on 100 to 1 leverage, meaning that for every ounce of real gold, there are 100 ounces of paper gold being traded. If, or when, people try to take delivery, there could be a dramatic shortage, leading to a huge spike in the gold price.
Some have estimated the size of the fraud to number in the trillions.
[Editors note: Please take the time to inform yourself of developments in this story. Only a fraction of it was covered here.]
These two interviews are a good place to start:
Interview with the whistle blower and a GATA representative
Interview with the GATA board and the whistle blower
Nickolai Hubble
for The Daily Reckoning Australia
P.S. to get The Daily Reckoning direct to your inbox sign up to our free e-mail newsletter or if you prefer to use RSS, subscribe to the Daily Reckoning RSS feed.
Related Articles:
- Making Friends With Precious Metals
- DMCC and their Precious Metals Vault
- Gold and Silver!
- Golden Shell Games
- Whiff of Economic Recovery Sends Prices of Industrial Metals Soaring
About the Author
Having recently escaped from academia, Nick decided to drop his tights (the required attire of a trapeze artist) and joined Port Phillip Publishing. Instead of telling everyone about the Daily Reckoning, he now spends his time writing for the weekend edition.
Comment by John Isaacs-Young on 16 April 2010:
With regard to the manipulation of the metals market, I note from the article that savvy traders have been piggy backing on the trades of the big two manipulators. Could you Nickolai, or one of you, please research and teach us all how to do this - to piggy back? If they don't stop the manipulation and nobody who can, is willing to stop them, what would happen if everyone joined in behind them? Would it make them uncomfortable? Would it spoil the plan or what?
Comment by gut feeling on 19 April 2010:
Incredible. Thanks for the article!
Comment by Colin D. Brodhead on 22 April 2010:
I support the sentiment of this article, but it omits an equally important question: i.e. How many U.S. Presidents had a sound money policy, but were NOT assassinated?
Comment by Eddie on 22 April 2010:
What Mr. Hubble so bravely writes about makes perfect sense to me. Anybody (Which includes all central bankers and their lackeys ie. g-men) would of course defend their money creating power by any and all means. We the people can only hope that enough people around the world will come to understand what is going on, and demand more from their representatives and governments.
I fear though that the banksters are always several steps ahead of us and will find a way to deflect our anger and we will turn on each other while waving our respective flags. Sad
Comment by Burticus on 22 April 2010:
You forgot to mention the mysterious fire at CFTC offices, destroying the silver records, just before the hearings.
Comment by Chuckey on 22 April 2010:
If position limits are introduced and enforced in precious metals markets in the US as the CFTC is currently recieving public comments about, this would prevent the kind of market intimidation that JP Morgan and HSBC enjoy on the COMEX. I have written the the Minerals Council of Australia, the Minister and Shadow Ministers for Resources urging them to represent Australia's gold producers with comment before the 30th April.
Comment by Matt L. DeTectre on 22 April 2010:
It's obvious that LBMA, JPM, and Goldman Sux have found the Lost Dutchmans Gold Mine, the 8 minute gap in the Nixon tapes, and Pamela Anderson's shorts and are keeping it a secret.
Comment by gary mcmillan on 22 April 2010:
Thank you Mr. Hubble, for helping to keep the story "out there."
i read your piece compliments of Chris Powell of GATA.
Nice to see open honest reporting from down under. Here in Canada, we are mainly under ground. The main line business news media are reluctant to report on capitol market corruption; but the stories need to be screamed from the house tops, not suppressed by equally corrupt milly-mouthed chicken-little spineless media outlets.
Comment by beta adjusted on 22 April 2010:
Interesting article. Not being an expert on the individual metals markets, I and many others would like to know whether our Physical metal ETFs e.g. ETFS Physical gold/silver etc. are in fact safely backed by the physical metal, or whether there is a risk here too!
Thanks
Comment by Angela on 23 April 2010:
When the treasury has bonds and notes to auction, the dollar is miraculously strong, sucking money out of the stock market and into treasuries - usually, but not always, gold will be weak. Those auctions end around 1 pm, and gold often starts back up before noon eastern time in the states.
http://www.treasurydirect.gov/RI/OFAnnce
Comment by Lenny Pike on 23 April 2010:
Then obviously we need leaders that will make another attempt or a leaderless uprising that will instill enough fear in our current ones to obey the law. It will not be the present ones, you can believe that.
Comment by John on 23 April 2010:
The "management" of gold and silver will, in my view, continue until the use of "paper" is no longer satisfactory to the market participants. At this point, a new form of "paper" will be used - "laws" that outlaw private gold ownership in the United States as has been done before!
Comment by robert on 23 April 2010:
I support the sentiment of this article, but it omits an equally important question: i.e. How many U.S. Presidents had a sound money policy, but were NOT assassinated?
Don't know - you tell me.
Comment by daddyfatsacks(usa) on 23 April 2010:
To the person asking how to invest in companies which own gold... the answer is simple: do not invest in a paper promise, buy as much physical gold as you can! The article mentions that the number of ounces available to those sold on paper are 1:100. This means that they can not really back up the gold promised on paper. If you want to invest in precious metal then buy a safe and fill it with precious metal. If the dollar busts and everyone tries to claim their gold then the companies will not be able to full-fill their obligations. With a paper promise at best maybe you will get a refund of your devalued money. Also,if this happens then the companies will also likely bust leaving investors losing out. Of course before this happens most of the big investors will have gotten out due to the inside knowledge they received from the cheat they have conspired with to rip off the little guy!
Comment by Eddie on 23 April 2010:
Keen Daily Reckoning reader here
Can anyone verify , if JPM is indeed taking delivery of as much physical Silver they can get their hands on while shorting the Silver market with their massive short positions taken over from Bear Stearns, when that went under.
This would make sense, I anticipate a Massive upswing in the Silver price shortly .
GATA needs to be supported by everyone around the world for their great work. And we need an alternative news service on TV to balance out the lies we are being fed on mainstream TV
Kind regards
Eddie
Comment by Eyes Wide Open on 23 April 2010:
What I want to know is WHEN will presidents, heads of state et al start doing some assassinating of their own?? The have the resources at hand....all the resources that is barring a spine and testicles. Most leaders live in fear of the invisible cartel, so why instead of fear and capitulation do they not instead go on the offensive and have a good ol spring cleaning??
A good place to start would be to have a "terrorist" attack on the meetings of the Bilderberg Group, The Trilateral Commission and all such sociopathic gatherings, they will get the message sooner or later or they will be dead. Speaking of "terrorist" attacks, ever noticed how the seats of power (White House etc) and politicians in general are never victims of terrorism?? Dont bring up the Pentagon as the missile...er plane hit a largely unoccupied area "under renovations" to be blast proofed (gimme a break)
Yeah so maybe it is time someone stood up to these pricks and sent them a message they could not possibly misunderstand.
Sic Semper Tyrannis - Deo Vindice
Comment by chumbe4ls on 23 April 2010:
when i sell my remaining silver,then the price will skyrocket
Comment by dogismyth on 23 April 2010:
Thank you for the article. I have heard about this previously through Jim Willie and his rants. I'm still in awe of the power of gold, and the unrelenting desire to have this metal for personal security. I'm strong on my own and have needs other than to own part of the Earth. I hope one can look at where our society is today, and come to the realization that what we treasure with gold is truly of little value in the big picture. Many a man has been burdened by his weight of gold, and has died with its whereabouts unknown. Have faith in yourself and others. Gold is just an earthly metal that has no real power beyond that in your imagination.
Comment by Charlotte Creamer on 23 April 2010:
It's really all just a game of "Let's pretend!" when it comes to valuation, it's always been a game of "Let's pretend!", and shiny yellow rock has been the universal "it" for thousands of years of our mass collusion.
Whether we're all pretending that shiny yellow rock is worth this today or that tomorrow, or that non-existent pieces of paper (essentially just blips on a computer screen) represent shiny yellow rock on the trading floor, it's all part and parcel of the same lie. Thus, the "revelation" that paperless blips don't actually relate to anything tangible (there being at the very least 100 times more papers [or blips] than actual rocks) is simply a further extension of the original collective delusion, and not really anything to get our literal knickers in a figurative knot about.
The only things of any real value are immaterial, and can't be bought or sold -- things like love, faith, and a dog's loyalty.
Mind you, I opine all this from the perspective of one who has never so much as as been within spitting distance of shiny yellow rock, let alone held or owned any. Perhaps if I had some of my own (or even maybe just a blip or two), I'd think differently.
Comment by Dan on 23 April 2010:
Gold and oil have always traded on a par with just tiny bumps in the last runup. I suspect that gold is held down to keep oil from going skyhigh. There is much talk about gold at $ 5500. Imagine oil at $ 400.
Comment by mikey on 23 April 2010:
I don't know anything about the stock market or trading but I do know human nature and if people think that there is no one trying to better themselves at the expense of the others, well I got a bridge to sell you in a swamp.
The rich get richer while the poor and middle class sink lower.
Comment by Stillgotshoeson on 23 April 2010:
Comment by Dan on 23 April 2010:
There is much talk about gold at $ 5500. Imagine oil at $ 400.
Gold at $2500USD and Oil at $200USD are not to be discounted in the next 2 years..
That could well equate to $3000AUD Gold and $260AUD Oil
Comment by Lester on 24 April 2010:
Re: Eyes Wide Open; see if you can connect the concept of Armageddon with this push by power-brokers for total control over the masses. Perhaps the PTB are aware of a house-cleaning coming, and are doing their best to stay on top. And the Zen master said: we'll see!
-------------------------------------------
Curiously, many think that Bunker Hunt attempted to corner the silver market by demanding delivery. When he managed to squeeze the Big Shorts, amazingly the CFTC found the means to impose position limits, changing the rules of trading midstream. Funny how the Big Shorts were saved from default by bankrupting the "manipulating Hunts".
Today the CFTC is still protecting the same by not imposing limits.
Comment by Ron on 24 April 2010:
I think most are missing a major point. Gold in many respects is as useless as paper money. Sorry to sound fatalistic, but if all hell breaks out (and it will) the only thing that will have value is what you can eat & drink, and gold gives me gas, and the paper will only be good for "hygiene" purposes. I would expect many would respond "that would never happen", and explain why it would not by using some economic based rationalization. Over time many "major" civilizations have fallen, not directly because their economic models went bad, but because their people went bad, meaning their grasp of reality, and their lost ability to simply control consumption and desires. Consider Rome, it just fell apart over the long run. Ah …yes, but today we are much more civilized and smarted then those ancient Romans, which is clearly evident in Wall street, and reality TV.
I would not expect an epiphany in the US (or for that matter in any major world economy, including China, and the EU) any time soon, or at all. And the circle continues, and history repeats itself. And now I’m going to play my fiddle and watch Roman burn (albeit slowly), and at a safe distance. And I'll invest a few buckks in my vegatable garden this weekend - peace, love, and good fortune to you all.
Comment by Bud Chappell on 24 April 2010:
Anyone know about the value of Gold Plated Tungsten? I'd like to see that addressed also . . .
Comment by g.carr on 24 April 2010:
A safe full of gold...And when word gets out, and it must if one is to make use of this post paper gold, do you have a platoon or more of highly armed, skilled guards?
I am adjusting my portfolio. Adding more lead and community goodwill.
Comment by Takem Down on 24 April 2010:
Old American history shows that treasonous people like these were drawn & quartered.
Comment by chris on 25 April 2010:
To gcarr- that's why I reckon its good to also buy food!
Comment by Chris Ashley on 13 September 2010:
Talking of manipulations. How about the media's manipulation over 9/11 demolitions. The whole thing is a disgrace. There is certainly very little free press on this planet. I wonder just how long the internet is going to survive as a free area of interchange of ideas an knowledge.