This £26 million fine is of course a drop in the ocean when compared to fortunes made over the years by the price manipulators. But the fine is big enough to start drawing mainstream media attention to the skulduggery going on in gold.
An article by Bloomberg is particularly revealing, relying as it does on the FCA’s document that reports its investigation of this one particular gold price manipulation by Barclays Bank. It makes clear how the paper market is being used to manipulate the price of physical gold, which ignores the reality that the supply of physical gold is limited, while the supply of paper commitments to deliver gold is essentially unlimited.
This means that gold - and silver too - operates on a fractional reserve basis. In other words, there are far more commitments to deliver physical metal than there is physical metal available, so when the music stops - which it always does eventually - the result will be a systemic failure as occurred in 2008 when Lehman Brothers was unable to meet all of its derivative commitments.
The important point is that the FCA report illustrates how the Barclays “exotic options” trader, Daniel Plunkett, twice conjured up out of thin air up to 150 LBMA good delivery bars that he did not own (then valued at $93.5 million) in order to force the price of gold lower during the fixing process. He then covered this short position by ‘buying back’ these non-existent bars from the trader at Barclays spot metal desk.
The Bloomberg article is worth reading, as is the FCA’s report. Here are these two links for the convenience of KWN readers.
This one incident is just the tip of the iceberg of bad practices regularly followed by banks. What’s more, the mainstream media has yet to get to the heart of the matter, which of course is government price manipulation.
A select group of bullion banks are simply the front-men, acting as agents of the gold price suppression scheme devised and engineered by governments, and Barclays Bank may not even be among this chosen group. After all, it was accused of manipulating the gold price by a dollar around the London fix, but the FCA did not investigate the big $18 drop in the gold price that had already occurred from the previous day. The FCA only went so far to note the impact on the gold price from extreme selling in the US market by reporting that there was “a drop in the price of August COMEX Gold Futures (which was caused by significant selling in the August COMEX Gold Futures market, independent of Barclays and Mr Plunkett).”
So who was the real manipulator of the gold price that day? Why isn’t the CFTC doing its job by investigating this manipulation? And what about investigating the flash-crashes where imponderable weights of gold are sold on the COMEX in mere seconds?
You will get old waiting for an investigation. We all know that the CFTC turns a blind eye to the manipulations by the US government. But at least something is being done in London. The FCA made a small step in the right direction, and so has the LBMA.”
at http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/6/2_The_Stunning_Truth_About_The_FCA_Gold_Market_Investigation.html
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