Thereis no silver lining to the activities of JPMorgan Chase and HSBC in theprecious-metals market here and in London, says a 40-year veteran ofthe metal pits.
The banks, which do the Federal Reserve'sbidding in the metals markets, have long been the government's leadactors in keeping down the prices of gold and silver, according to aformer Goldman Sachs trader working at the London Bullion MarketAssociation.
Maguire was scheduled to testify last week beforethe Commodities Futures Trade Commission, which is looking into theactivities of large banks in the metals market, but was knocked off thelist at the last moment. So, he went public.
AP
Brokers and traders transact gold futures on the Comex floor of The NewYork Mercantile Exchange, Thursday, April 6, 2006. Gold prices topped$600 an ounce in Comex trading Thursday. (AP Photo/John Marshall Mantel)
Maguire -- in an exclusive interview with The Post -- explainedJPMorgan's role in the metals pits in both London and here, and howthey can generate a profit either way the market moves.
"JPMorgan acts as an agent for the Federal Reserve; they act to haltthe rise of gold and silver against the US dollar.
JPMorgan isinsulated from potential losses [on their short positions] by the Fedand/or the US taxpayer," Maguire said.
In the gold pits,Maguire sees HSBC betting against the precious metal's price withouthaving any skin in the game in the form of a naked short.
"HSBC conducts an ongoing manipulative concentrated naked shortposition in gold. Silver is much easier to manipulate due to its muchsmaller [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 thecommodities firm CPM Group, said that the LBMA, the physical deliverymarket for gold and silver in the UK, has been using leverage, which isanother way to depress the price of gold and silver.
Christiansaid that the LBMA -- the same market Maguire trades in -- has leverageof about 100-1 on the gold bars settled on the exchange. In layman'sterms, that means if 100 clients requested their bullion bars bedelivered, the exchange could only give 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 Antitrust 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 lawsuitbrought by precious-metal clients, who alleged that Morgan offered tobuy gold and silver and store it for the investors, but never purchasedany metal and still charged them storage fees.
Morgan Stanley denied the charges at the time, but "settled thecase to avoid the cost and distractions of continued litigation," thefirm said.
Despite gold's rise each of the last 10 years,Murphy believes the price of gold today would be closer to $2,300 anounce if the price just moved with inflation.
Maguire believesthe price should be even higher given the fear trade that would havesent prices spiking during the financial crisis in 2008-09.
Both precious metals have seen a recent spike since Maguire's e-mailsbecame public. Gold has gained 6.5 percent to close at $1,161.55, whilesilver has spiked 10 percent to $18.38.
AP
Brokers and traders transact gold futures on the Comex floor of The NewYork Mercantile Exchange, Thursday, April 6, 2006. Gold prices topped$600 an ounce in Comex trading Thursday. (AP Photo/John Marshall Mantel)
According to the e-mails Maguire sent to CFTC regulators, he wasspot-on in his expectations of how the precious metals would trade onrelease of the January jobs report.
This message is to"confirm that the silver manipulation was a great success and playedout exactly to plan as predicted yesterday. How would this be possibleif the silver market was not in the full control of the parties wediscussed in our phone interview," Maguire wrote to a staffinvestigator after the trading day.
CFTC commissioner BartChilton said, "I'm appreciative of the information Mr. Maguire providedand 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
Thoughtit may be helpful to your investigation if I gave you the heads up fora manipulative event signaled for Friday, 5th Feb. Scenario 1. The newsis bad (employment is worse). This will have a bullish effect on goldand 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.
Scenario2. The news is good (employment is better than expected). This willresult in a massive short position being instigated almost immediatelywith no move up. This will not initially be liquidation of longpositions but will result in stops being triggered, again targeting keysupport 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 manipulationwas a great success and played out EXACTLY to plan as predictedyesterday. How would this be possible if the silver market was not inthe 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 andreviewed your email communications. Thank you so very much for yourobservations.