Ten years of silver market manipulation. Deutsche Bank shows evidence.
The investigation of silver market manipulation is underway and Deutsche Bank shared their insider knowledge of an artificial undercutting of the price of silver. This is why DB will be hit with a penalty of only 38 million USD. If DB was not so cooperative this fine could have additional zeroes at the end.
The evidence is primarily messages sent between those participating in manipulations. The material is damning. Conversations between DB, UBS and HSBS traders organising coordinated sell-outs and keeping grins on their faces. Their actions were aimed at selling enough silver to trigger stop-loss of investors pushing silver price off the cliff.
In case you would want to check traders banter click HERE. You can see a time horizon since August 2007 and small magnifier icons showing a dialogue between accused bankers.
From the materials online we can imply two major conclusions. Firstly, this investigation now includes not 4 but 8 banks. Most probably this number is going to grow higher. Secondly, mining companies could be able to claim damages from the perpetrators of the manipulations. Without these machinations profit of miners could have been 200-300% bigger.
Venezuela – Bolivar lost 64%... in a month
We already have heard about problems of the socialist conundrum in Southern America but October delivered a huge blow to Venezuelan currency (VEB). On 24th October 1 USD was sold for 1221 VEB. The government in Caracas decided to increase the minimum wage by 40% and dollar jumped to 4538 VEB, pushing the inflation rate in October to 64%.
Prices are rising so quickly that some businessmen now weigh their cash instead of counting it.
One of them said he feels like Pablo Escobar having so much cash – reports Guardian.
Former head of UBS and Credit Suisse: “Central Banks are past the point of no return”
Oswald Grubel, (UBS, Credit Suisse) shared his criticisms regarding the policy of central banks. Swiss newspaper Sonntags Blick in an interview with a telling title “A Recession is sometimes necessary” gave Grubel a podium he used without biting his tongue.
He pointed that central banks gained too much power over the market and negative interest rates are comparable to weapons of mass destruction. After last crisis, politicians took over banking sector and left shaping the economy to central banks.
In previous decades the risk was shared among thousands of banks but now it is on the shoulder of the government and the taxpayer’s wallet – he added.
Grubel is another person who officially stood up for limiting banks' unsupervised activity. I would like to add that until 1999 the Glass-Steagall Act prevented banks from linking their investment and commercial banking together. Because of this act being repealed we now see “too big to fail” banks that survived 2008 crisis thanks to public bailouts from our pocket.
Western Europe changes direction
After the US elections relations between Washington and Moscow had a chance to be warmer. This was not acceptable by European politicians and they… joined the train of warm words soon after. Once again we saw how independent EU bureaucrats truly are.
The first signal to change the attitude was 15 countries giving support to Germany trying to create a new deal with Russia regarding arms control. This group includes France, Italy, Austria, Belgium, Switzerland, the Czech Republic, Spain, Finland, Netherlands, Norway, Romania, Sweden, Slovakia, Bulgaria and Portugal.
Another example of the wind change in the Western Europe is a recent admission of Jean-Claude Juncker. The Head of the EU Commission said that Barack Obama made a mistake when he called Russia a ‘regional power’. Juncker added that the EU is ignorant when it comes to Russian topic and still has to learn a lot.
Improvement of US-Russia relations can lead to the end of economic sanctions. We still have to wait for that after recently they have been extended.
One thing we can be sure of is that no longer Russian market will be demonised. We already pointed out Moscow stocks are one of the cheapest and most attractive today.
OPEC reached the deal
OPEC and the rest of oil producers worked out a compromise when it comes to cutting production. There are two exceptions - Libya and Nigeria – they do not need to lower their output. Both of these countries are already damaged with their unstable internal situation.
Lower production pushed the price of crude higher until the news of a rate hike in the US was official. Oil price reached 56 USD. This level is below my prediction of 70 USD at the end of 2016. Ultimately, oil will be heading for 100 USD and with this price budgets of most countries will balance.
Merkel is actively working to censor the internet
Chancellor Angela Merkel has recently announced that she will fight for her 4th term. In her speech, she addressed the problem of “Russian propaganda” which spreads over the internet thanks to the so called ‘alternative media’.
Merkel worries over society being manipulated as opinions are not being created just like 25 years ago. German Chancellor added that she will resort to legalising internet censorship should this solution be deemed necessary.
Head of the German government sustained her position during her recent meeting with Barack Obama. Angela Merkel definitely learnt a lot from Joseph Goebbels. The infamous head of German propaganda once said “a lie told a thousand times becomes the truth”. According to this motto, she will try to sell an idea of the internet being a free market of ideas as something dangerous to the masses.
British pursue regulatory limitation of forex trading
European governments smelled the blood after recent Belgian bill, now the British government wants regulate forex in the same fashion.
British financial supervisory authority (FSA) presented statistics about forex clients. It shows that 82% those who put money into currency speculation lose their funds. Similar research in Poland showed this data point at 81%.
To increase security UK will try to introduce limits. Maximum leverage for individual investors will be 50:1 and in the case of new accounts 25:1. Another point on the FSA's plan is to remove any bonus and premiums given to clients for opening an account.
Stocks: The USA vs Europe – the biggest difference since 2009
After Donald Trump won the US election his plan to rebuild infrastructure in the US made American equities climb very fast. This only increased the spread of P/E of S&P 500 and P/E of STOXX 600. Today it is at the highest level since 2009.
Contrary to the US stocks, in Europe you can still find some underpriced markets. Russia, Poland, the Czech Republic but also Spain, Portugal or Italy. Last three candidates have CAPE on the same level as Singapore. Problem is that countries from Western Europe are still in danger of the fall of Eurozone and they are big debtors. Comparing them to Singapore shows clearly who wins in immediate head-to-head. Asian economy has no net debt, stable currency and positive GDP growth. This is why I would not recommend investing in Portuguese, Spanish or Italian stocks.
Gold: East is on the buying spree
Below you can see the demand for gold of 4 countries (Russia, China, India and Turkey) in the last 20 years.
At the bottom, you can see that monthly purchases often are higher than global production of gold. This chart does not include other important buyers like the Middle East.
The trend is evident. The East (excluding Japan) is chasing higher gold reserves in case of monetary reset. This will help them gain trust in their own currency, another option is to introduce a system based on gold trade notes when USD fails or is very unstable. This trading system based on gold was used by Iran when it was cut out of SWIFT by the US.
China: capital is leaking abroad
Asian superpower is losing capital. Currency reserves in China in the last 18 months dropped from 4 to 3 trillion USD. The problem here is that another trillion USD is in illiquid assets like mining companies in Zimbabwe. Approximately trillion USD is going to be the price to add to Chinese banks’ capitalisation. If this happens Chinese currency reserves will fall down to only one trillion USD.
Asian authorities could enact stringent regulations to limit this haemorrhaging but this is not as easy as few years ago. Today, Yuan is one of the five currencies in the SDR basket being supervised by the IMF. Any intervention of Beijing in capital flow is not going to be appreciated by the IMF.
Fake News: 25 years ago and today
It has been few weeks since Donald J. Trump became the President-Elect. Every one of us remembers how MSM were furiously attacking Trump. Finally, American people decided for themselves and voted against propaganda onslaught. Media – market creatures – have to adapt and effects are truly comical. Take a look at the Time’s covers.
Compared to the early '90s, people are much more sensitive to media manipulation. It is worth to see a piece of propaganda history.
During the War in the Persian Gulf, CNN reporter Charles Jaco was ‘reporting’ events straight from the war zone.
Behind Jaco we see fake palm trees and blue wall in the studio. Later, Jaco has a different coat and uses gas mask with his friend wearing a helmet. Alarm signal and missiles flying are parts of this performance. All this time the camera is never moving sideways nor showing the sky.
If you still do not believe that propaganda news can be made in the studio please watch “Wag the dog” film.
I want to give the summary to David Rockefeller and his speech in 1991.
“We are grateful to the Washington Post, the New York Times, Time Magazine and other great publications whose directors have attended our meetings and respected their promises of discretion for almost 40 years......It would have been impossible for us to develop our plan for the world if we had been subjected to the lights of publicity during those years. But, the world is more sophisticated and prepared to march towards a world government. The supernational sovereignty of an intellectual elite and world bankers is surely preferable to the national autodetermination practised in past centuries.”
Independent Trader Team