Posted: 03 Jun 2014 11:02 AM PDT

Two weeks ago when news broke about the first confirmed instance of gold price manipulation (because despite all the "skeptics" claims to the contrary, namely that every other asset class may be routinely manipulated but not gold, never gold, it turned out that - yes - gold too was rigged) we said that this is merely the first of many comparable (as well as vastly different) instances of gold manipulation presented to the public. Today, via the FT, we get just a hint of what is coming down the pipeline with "Trading to influence gold price fix was 'routine'." We approve of the editorial oversight to pick the word "influence" over "manipulate" - it sound so much more... clinical.

When the UK's financial regulator slapped a £26m fine on Barclays for lax controls related to the gold fix, the UK financial regulator offered more ammunition to critics of the near-century-old benchmark. But it also gave precious metal traders in the City of London plenty to think about.

While the Financial Conduct Authority says the case appears to be a one off – the work of a single trader – some market professionals have a different view. They claim the practice of nudging a tradeable benchmark in order to protect a "digital" derivatives contract – as a Barclays employee did – was routine in the industry.

Well, then, if gold price manipulation, pardon, "influence" was routine, be it to avoid digital option trips or any other reasons, then it's all good, right?

Apparently not, especially if a "customer" of a bank that was running a prop trade against the customer ended up costing said customer millions in lost profits.

As a result, customers of Barclays and other market-making banks may be looking to see if they too have cause for complaint, according to one hedge fund manager active in the gold market.

The only piece of actionable information from the above sentence is that Barclays actually has customers: we expect that to change. After all, with the exception of Goldman's muppets, there hasn't been a more clear abuse of client privileges than what relatively junior trader Daniel Plunkett did while at Barclays. However, Plunkett is just the first of many. Many, many.

"If I was at the FCA I would be looking at all banks trading digitals. This could be the tip of the iceberg – there's a massive issue with exotic derivatives and barriers."

That, naturally, assumes that the FCA wasnt to catch more manipulators, pardon, "influencers" of gold and other OTC derivative prices. Which is hardly the case: after all one never knows which weakest link rats out the people at the very top: the Bank of England itself, and perhaps even higher: going all the way to the BIS and those who equity interests the BIS protects.

So just what is the most manipulated product with either gold or FX as underlying?

In the City, digital options are common in the precious metals sector and, especially, in forex trading. A payout is triggered if a predetermined price – or "barrier" – is breached at expiry date. If it is not, the option holder gets nothing.

One former precious metals manager at a big investment bank says there has long been an understanding among market participants that sellers and buyers of digitals would try to protect their positions if the benchmark price and barrier were close together near expiry.

Ideally, the underlying will be relatively illiquid, with a price fixing set by a small number of individuals, individuals who can be corrupted or simply onboarded to your strategy, thus incetivizing them to keep their mouth shut and assist you in ongoing rigging attempts.

In the case of gold, this means trying to move the benchmark price, which is set during the twice daily auction "fixing" process run by four banks, including Barclays.

That is what the Barclays trader, Daniel Plunkett, did on June 28, 2012. Exactly a year earlier, the bank had sold an options contract to an unnamed customer stating that if after 12 months the gold price was above $1,558.96 a troy ounce, the client would receive $3.9m.

By placing a large sell order on the fix Mr Plunkett pushed the gold price beneath the barrier, thus avoiding the payout. After the counterparty complained, the FCA became involved. Barclays paid the client the $3.9m, and was fined. Mr Plunkett was also fined – £95,600 – and banned from working in the City.

In its ruling, the FCA criticised Barclays for its poor controls related to the gold fix and said the bank had failed to "manage conflicts of interests between itself and its customers".

"We expect all firms to look hard at their reference rate and benchmark operations to ensure this type of behaviour isn't being replicated," said Tracey McDermott, the FCA's director of enforcement and financial crime.

Still, why did gold manipulation go on for as long as it did? Because the Barclays trader was an amateur, and instead of taking the money of one of the "old boys' club" participants, ended up robbing an outsider, someone who had the temerity fo lodge a formal complaint.

The identity of the Barclays client has not been revealed. But a senior gold trader with knowledge of the transaction says it was not another investment bank or hedge fund. "This was not professionals going head to head," he says.

Wait a minute... this smells remarkably familiar to the LIBOR rigging - after all there it was one "sophisticated" investors against another: the impact of rigging the IR market hardly ever escaped the arena of "sophisticated" influencers, pardon, traders. It is also why Libor was manipulated for a decade before the regulators finally figured it out: because while banks may have lost money to this rigger or that, they were all in it together, and better to lose money individually than to sink everyone at the same time. Alas, that is precisely what happened with Libor.

And now it is coming to gold.

"If you have Goldman Sachs on one side and JPMorgan on the other, the gloves are off. But not everybody in the market has the same level of sophistication and vindictiveness."

The gold trader familiar with the Barclays case expresses some sympathy for Mr Plunkett, saying in the pre-financial crisis days the trader may have been censured by his bosses if he had not defended the digital option sold by the bank.

it gets worse:

"What's changed now is the market morality," he says. "We can't simply say: it's always been done this way."

Well that's ironic: because it has always been done this way. Influenced. Or manipulated... or however you want to call it.

And while in the case of Libor the regulators could get away with it by stating only other professionals were impacted by years of wholesale market rigging because tracking the impact of daily gyrations in a rigged fix are virtually impossible for normal individuals to trace, and thus prove monetary impairment, with the gold market they may find some significant resistance using this approach.

So what approach will they use? Why, just like in the case of HFT: there may have been manipulation, but it only impacts hedge funds and other "sophisticated" investors they will say. Because when it comes to rigged markets, mom and pop have surely never had it better.

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When Will Gold Price Bottom? :: The Market Oracle :: Financial ...

Posted: 03 Jun 2014 10:35 AM PDT

Commodities / Gold and Silver 2014 Jun 03, 2014 - 05:35 PM GMT

By: Ed_Carlson

Gold lost $46/oz. last week to close at $1,245.60 and, while it might not feel like it, gold is still up $43.70 for the year. My price forecasting model generates a target of 1,206 for this decline. Seasonally, gold tends to make a bottom of undetermined degree in the period from June to July.

This year, inflation expectations have me wondering if gold might bottom earlier rather than later during the two-month period. In the chart below, inflation expectations (blue) show a large jump-up this spring and can be seen at the right. Inflation expectations are highly correlated to the price of gold and have a tendency to lead gold at bottoms. They've gotten a big lead this time (bigger than most instances) and I have to believe that the only thing holding gold down is waiting for seasonality to be right for a bottom.

Another week like last week would get gold to my price target. I find two different Middle Sections pointing to lows on Friday June 13 and Monday June 16.

Want to know more about the work of George Lindsay? Order your own copy of the George Lindsay Training Course at SeattleTA.

Ed Carlson, author of George Lindsay and the Art of Technical Analysis, and his new book, George Lindsay's An Aid to Timing is an independent trader, consultant, and Chartered Market Technician (CMT) based in Seattle. Carlson manages the website Seattle Technical Advisors.com, where he publishes daily and weekly commentary. He spent twenty years as a stockbroker and holds an M.B.A. from Wichita State University.

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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Silver and Gold Prices Rose with the Gold Price Closing at $1244.30

Posted: 03 Jun 2014 03:46 PM PDT

3-Jun-14	Price	Change	% Change
Gold Price, $/oz	1,244.30	0.60	0.05%
Silver Price, $/oz	18.73	0.02	0.12%
Gold/Silver Ratio	66.426	-0.050	-0.07%
Silver/Gold Ratio	0.0151	0.0000	0.07%
Platinum Price	1,435.50	-3.20	-0.22%
Palladium Price	83.62	4.15	5.22%
S&P 500	1,924.24	-0.73	-0.04%
Dow	16,722.34	-21.29	-0.13%
Dow in GOLD $s	277.81	-0.49	-0.18%
Dow in GOLD oz	13.44	-0.02	-0.18%
Dow in SILVER oz	892.72	-2.24	-0.25%
US Dollar Index	80.60	-0.08	-0.10%

Be still, my beating heart! The GOLD PRICE rose sixty cents today (not fifty-nine, but sixty) while silver rose 2.3 cents, an amount no self-respecting person would bend over to pick up off the sidewalk if he saw it lying there. Gold ended at $1,244.30 and silver at 1873.2 cents.

By the way, Commitment of Traders reports show that gold dropped last week not due to longs selling, but huge new short positions. Nothing new there.

I expect that the GOLD PRICE will turn around either from here or between here and $1,230. The SILVER PRICE could re-visit its June 2013 lows. The last week has done a lot of damage to silver and gold prices, and delayed a rally further.

Makes no difference how long this drags out, it won't be much longer now. Sometimes, it seems, things take longer than they do.

Whenever things seem to work out illogically, I go back and check my premise, which is, INFLATION DRIVES GOLD and SILVER BULL MARKETS. Fed creates inflation for government spending and to keep the borrow-money-into- existence money system going. So if y'all are worried about silver and gold prices, get on the internet and look up the answers to these questions:

1. Has the US Federal Reserve been abolished? Are there any plans to abolish it?

2. Has the US government balanced its budget? Is there any plan to balance it?

3. Where does one-half of US GDP arise? Hint: Government spending.

4. Does any statesman appear anywhere with plan and resolve to abolish the Fed or curtail government spending, let alone restore sound money?

5. Can pigs fly?

Once you've completed that research, you'll understand why I remain so bullish on silver and gold prices.

Stock rally gets thinner and thinner, and so does the precious metals' plunge. But I reckon they can get thinner still.

While I'm thinking about it, the euro, scrofulous spawn of centralizing central banks and bureaucrats, has been dropping since 8 May, nearly a month with ne'er a rally. More, everybody in the world expects the ECB criminals to announce more inflation one way or another. In other words, once the ECB news hits Thursday, the euro might undergo a "sell the rumor/buy the news" rally. The euro's trend against the dollar has turned down, but a rally would burn the shorts and send them running, which would boost the euro. It closed today up 0.21% to $1.3627, but that's still below its 200 day moving average.

Can y'all even IMAGINE how much money, mind power, and productive capacity is wasted merely on currency exchange rates? If the world had only two monies, gold and silver, as it did for 6,000 years until 125 years ago, all of that ink, thought, and talk could be applied to some useful purpose, like indicting and trying central bankers.

US Dollar index backed up 8 big basis points (0.1%) to 80.60 after yesterday's 80.73 high. Trading up one day and down two. It remains, however, above its moving averages (200 is at 80.47) and above the downtrend line, so lazy as it is, remains in an uptrend and should rise further. Japanese yen dropped 0.16% to 97.54. Broke down yesterday below its uptrend line, but remains in the same range that has imprisoned it since February.

All stock indices fell today, but not decisively. Dow lost 21.29 or 0.13%, S&P500 eased off 0.73 to 1,924.24. Miss not that the bluer chip indices are rising faster than the others as risk appetite decreases and investors roll over to what they consider "safer" stocks. That does not foretell sharply higher prices.

Dow measured in metals backed off today but 'tis all sound and fury, signifying nothing -- yet. Just be patient.

Aurum et argentum comparenda sunt -- -- Gold and silver must be bought.

- Franklin Sanders, The Moneychanger
The-MoneyChanger.com

© 2014, The Moneychanger. May not be republished in any form, including electronically, without our express permission. To avoid confusion, please remember that the comments above have a very short time horizon. Always invest with the primary trend. Gold's primary trend is up, targeting at least $3,130.00; silver's primary is up targeting 16:1 gold/silver ratio or $195.66; stocks' primary trend is down, targeting Dow under 2,900 and worth only one ounce of gold or 18 ounces of silver. or 18 ounces of silver. US $ and US$-denominated assets, primary trend down; real estate bubble has burst, primary trend down.

WARNING AND DISCLAIMER. Be advised and warned:

Do NOT use these commentaries to trade futures contracts. I don't intend them for that or write them with that short term trading outlook. I write them for long-term investors in physical metals. Take them as entertainment, but not as a timing service for futures.

NOR do I recommend investing in gold or silver Exchange Trade Funds (ETFs). Those are NOT physical metal and I fear one day one or another may go up in smoke. Unless you can breathe smoke, stay away. Call me paranoid, but the surviving rabbit is wary of traps.

NOR do I recommend trading futures options or other leveraged paper gold and silver products. These are not for the inexperienced.

NOR do I recommend buying gold and silver on margin or with debt.

What DO I recommend? Physical gold and silver coins and bars in your own hands.

One final warning: NEVER insert a 747 Jumbo Jet up your nose.

Gold price | Gold Price Manipulation Was "Routine", FT Reports | Zero Hedge

Gold price | <b>Gold Price</b> Manipulation Was "Routine", FT Reports | Zero Hedge

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