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. 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 instrument 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 outright alligned with your trading axe.

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, with the gold market they may find some 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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The Gold Price Closed Down $1.90 at $1243.70

Posted: 02 Jun 2014 04:15 PM PDT

2-Jun-14	Price	Change	% Change
Gold Price, $/oz	1,243.70	-1.90	-0.15%
Silver Price, $/oz	18.71	0.06	0.30%
Gold/Silver Ratio	66.476	-0.301	-0.45%
Silver/Gold Ratio	0.0150	0.0001	0.45%
Platinum Price	1,438.70	-16.00	-1.10%
Palladium Price	832.05	-3.60	-0.43%
S&P 500	1,924.00	1.40	0.07%
Dow	16,743.63	26.46	0.16%
Dow in GOLD $s	278.30	0.86	0.31%
Dow in GOLD oz	13.46	0.04	0.31%
Dow in SILVER oz	894.95	-1.27	-0.14%
US Dollar Index	0.24	0.25	-2500.00%

Silver and GOLD PRICES spake today with forkéd tongues. Silver rose 5.6 cents to 1870.9 but the gold price scraped off $1.90 to $1,243.70.

Far's the SILVER PRICE is concerned, it has fallen to long time support around 1865 - 1890 cents. Volume has dropped as this decline has proceeded (think of volume as the gas gauge on a move - more it drops, less fuel the move has left.) Indicators look rotten, but they always do at bottoms. Still, no concrete sign of a tergiversation yet.

The GOLD PRICE might stop here or at last-low-support about $1,237.50, maybe a buck or two lower. Or it might re-visit $1,180. Either way, it won't be long.

Behold, let us ponder the GOLD/SILVER RATIO. Go throw an eyeball on the chart.

Right strange, ain't it? It's a long rising wedge that is cycling very regularly at 14 - 21 days, sort of laddering up the bearish wedge. This suggests a dead market that is just plumb wore out. Next move'll be a big-un. Because the top of that wedge, now about 68.5, is so high, odds favor a fall out of that wedge.

Speaking of volume, it has clean dried up on the gold price. Wonder they even keep the market open, no more trading than it's doing. I read somewhere credible that the drop on Options Expiration Day was precipitated by huge sales. I have no trouble believing that, since a gold plunge guaranteed big savings for those who had sold gold call options.

Y'all just be patient, and look to buy either on a turnaround (Close above $1,280 or 1950c) or a sudden plunge. I'd buy that plunge, because I think if we see one, silver and gold prices will reverse immediately.

Y'all ever see somebody drop a 50 lb. watermelon off the roof of a three story house? From the time that thing is launched into the air it's as stable as can be, just looking at the watermelon. If you ignore the approaching terra firma, that watermelon looks just fine, but when it hits the ground -- oh, my! Watermelon everywhere!

So it is with today's markets. They appear quite stable, but this is not the real world. The watermelon has been thrown off the roof -- we're just waiting for it to hit the ground.

Stocks looked bright, cheery, and healthy as a three day dead mackerel today. Dow jumped up 26.46 (0.16%) to a new high at 16,743.63 but the S&P500 hopped only 1.4 (0.07%) to a new high at 1924.67. Other indices were all down. Reminds me of watching a family all arguing with each other, yelling and gesticulating and shaking their fists. They ain't going nowhere together.

Dow In Gold and Dow in Silver both rose today, the Dow in Silver to a new high for the move (I'm getting right tired of writing that). Dow in Silver rose 5.25 to (0.59%) to 893.52 oz (S$1,155.26 silver dollars) and is bumping hard on the overhead boundary of the rising wedge pattern. (Reminder: rising wedges point up on the chart but usually resolve DOWN on the breakout.) Still looking for a top no higher than 912 oz ($S1,179.15).

Dow in gold edged up 0.77% to 13.47 oz (G$278.45 gold dollars), about where it was when the Great Depression started. Not as sure about a target on this one but looks like its aiming for a double top with the 13.80 oz ((G$285.27) December 2013 top.

That sorry, scabby US dollar index pulled itself together sufficiently today to rise 24 basis points (0.3%) to 80.68. That pulls away from the 200 day moving average (80.47) and gives the US dollar index the embryo of a shot for 81.50. Clearly, though, the currency worm hath turned and it's the dollar's turn to gain for a while against the other two scrofulous, scabby central bank fiat currencies, the yen and euro.

Speaking of the Franken-currency, it sank today upon growing speculation that at its policy meeting this week the European Central Bank criminals will engage in some kind of easing (money printing) or lower the already microscopic 0.25% interbank lending rate even further. Bugs Bunny could do a better job managing a currency.

The euro lost 0.28% to close at $1.3598 today, back beneath the 200 DMA and eyes firmly fixed on the abyss. Japanese yen gapped down below its 20 and 50 DMAs today, and closed below the uptrend line a-slanting up since early April. Looks as chipper as cholera. Dropped 0.6% to 97.68 cents/Y100.

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 Slipping Again While Silver Sees Further Risk :: The ...

Posted: 03 Jun 2014 03:50 AM PDT

Commodities / Gold and Silver 2014 Jun 03, 2014 - 10:50 AM GMT

By: GoldSilverWorlds

Gold: Slipping again

Gold Spot price (GOLDS-1,249.73, see Figure 28) retained a tight trading range through April and May, allowing speculation as to resolution. We have been neutral awaiting technical evidence of a directional move which has now taken place to the downside, breaking the lower band of the tight trading range and failing under the 2012 downtrend again.

The breakdown now suggests that there is a good possibility that 1,200 will again be tested. The wide trading range between 1,200 and roughly 1,400 has lasted for two years, not unexpected considering the degree of the prior decline. Now the momentum models from all three timeframes, daily, weekly and monthly are all negative, suggesting the decline could continue.

If 1,200 cannot hold, the bear market for Gold that began in 2011 will be extending to a new down-leg and there again would be further risk toward 1,100.

The S&P 500 to Gold ratio depicted herein last month has moved up in favor of the S&P 500 outperforming over Gold.

We have been very skeptical of owning Gold stocks since 2008 when the XAU / GOLDS ratio broke down, showing structural outperformance of Gold over the stocks (see Figure 29). The reason related directly to the Gold ETFs which enabled investment directly in the bouillon, avoiding fundamental stock risks.

A further breakdown occurred in 2013 and now the ratio looks poised for another break (see arrow), furthering the underperformance of the Gold stocks.

Silver: Further risk

Silver Spot price (SILV-18.82, see Figure 30) is failing along with Gold, currently below both MAs and breaching support at 19; risk 18 or lower. A lift through 19 again and then 20 would now be needed to suggest another rally attempt.

Platinum: Neutral

Platinum spot price (PLAT-1,452.75, see Figure 31) has moved little, retaining a sideways pattern above support at 1,400 and 1,325 for nearly a year, and more recently in a narrower range between 1,400 support and 1,500 resistance. The three-year downtrend remains in place, currently intersecting at 1,550, and weekly and monthly momentum are still barely positive and barely negative respectively … effectively still neutral. Price needs to exceed 1,500 to reverse the more negative bias of the downtrends. But maintaining the higher support at 1,400 is a short–term technical positive, any breach of which could return price to 1,300.

Palladium: Breakout extends

Palladium spot price (PALL-837.25) has consistently remained the strongest of the metals we cover and has continued to extend gains after successfully penetrating the trading range resistance near 790 (as depicted herein last month). The next outstanding resistance is at 851 from 2011, which price could easily achieve. The current support is 800, the point of breakout.

Subscribe to the monthly analysis of Louise Yamada for in-depth insights on ongoing market activity: www.lyadvisors.com.

One of the most respected technical analysts we are following is Louise Yamada. Her independent research company provides in-depth and thought-provoking analysis on all markets, including precious metals. She has a background of 25 years at Smith Barney and was top-ranked in "Institutional Investor" for four years in a row, before going independent.

We have been following Yamada's work for a long time and appreciate her analysis because it is truly unbiased, very sharp and broad (it covers plenty of markets worldwide). An outstanding feature of the analysis is that readers are offered different perspectives on each market, which sometimes reveals trends that are rather invisible. For precious metals investors it helps to put the metals markets activity in a broad perspective of ongoing market trends. In other words, understanding broad market activity is helpful to interpret the state of the metals market.

Source - http://goldsilverworlds.com/price/gold-price-slipping-again-while-silver-sees-further-risk/

© 2014 Copyright goldsilverworlds - All Rights Reserved 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.