Gold Stock Fortunes Update - Does Silver Manipulation Matter To The Price?
I believe the best way to provide subscribers with the service they require is to answer questions of general interest. My logic is that if one person is interested enough to pen an email, there are probably at least 10 more who have the same question but did not think to ask.
Here is one such example:
“Do you give much credibility to oft-heard claims of manipulation by the “banksters” to control the silver price? It’s an ever present claim among the conga line of silver stackers, and spruikers.
“However the attached post, including coverage of an article in the Financial Times, tends to lend some credibility to the concept. When one of the world’s largest supposed “Manipulators” meets with high-level politicians to discuss silver stocks, it makes one wonder!
“Would appreciate your insight Eoin into this concept of the “Banksters” and their supposed manipulation of the silver market. It’d be refreshing to get a level-headed commentary without all the hype and conspiracy theories.”
There is a lot of loose talk about manipulation of the silver market. The main issue is spoofing and market manipulation have been demonstrated to be real in the silver market.
In August 2023, two former JP Morgan precious metals traders were convicted for spoofing trades in the silver market. They were given two-year and one-year custodial sentences and paid fines of $50,000 and $30,000 respectively.
Their activities spanned eight years from 2008 to 2016 and they are estimated to have caused approximately $10 million in damages to other traders. Those trades took place across the silver, gold, platinum and palladium futures markets.
There are a couple of important points to make. The first is that $10 million for a trading desk like JP Morgan’s, over an eight year period, is trivial. The Department of Justice’s report clearly states the market manipulation was conducted by several other traders as well as the two defendants. It really is not a lot of money.
Between 2008 and 2016 silver rallied from $10 to $50 and back to around $14. Those were massive bull and bear markets so it is hard to argue the manipulation was particularly effective. In practice market spoofing might make a few ticks on either side of a trade but is unlikely to change the direction of the market. The big bull/bear trends support that view.