Thursday, June 5, 2014

Lawsuits Taking Place in New York Over Alleged Gold Manipulation

I’ve been very closely involved in the news surrounding these lawsuits. I’ve read through the court cases, and spoke with some of the lawyers involved before the suits were filed to see what kind of work they had done. Knowing what the prize could be, these lawyers have put a lot of effort into creating a bona fide class action case.

If the suit is authorized, we will be able to go look through records and find out, for instance, who sold 100 percent of the annual supply of silver in one day and 50 percent of the gold supply in one day. The way I see it, where there’s smoke there should be fire.

I think that these are not frivolous lawsuits. As many as 20 firms showed up in court two days ago to press for the classification as a class-action lawsuit. There should be a lot of money and power directed at getting this thing to court. Based on the data that we have looked at, there will be some revelations.

I would point back to the comment by Germany’s regulator, BaFin, who said that possible manipulation in gold could be worse than LIBOR. I am actually surprised by the massive sums that are traded each day in gold. The gains to be made by gaming the system are very substantial – we’re talking billions of dollars, and the fixing process appears to be a complete joke. When the Chairs of the committee to fix the price of gold in London got together, about four or five people knew where the price was going to be post-fixing. They were probably the same people doing all the trading around it, including the derivatives trading, which is an easier way to make money because it is a much bigger market.

I hope that the proceedings take place and that we are able to see evidence of who was doing what in these markets over the last 10 years.

- Source, Eric Sprott via Sprott's Thoughts