Dear Friend of GATA and Gold:
In their latest incisive criticism of the U.S. government's repeal of the Glass-Steagall Act in 1999, a decision that allowed federally insured banks to trade stocks and derivatives and thereby put the bank deposits of ordinary people at risk, Pam and Russ Martens of Wall Street on Parade reveal a telling detail about JPMorgan Chase Bank.
The detail comes from the latest quarterly report from the U.S. Office of the Comptroller of the Currency about banks that trade stocks and derivatives. The Martenses write:
"JPMorgan Chase Bank NA also appears to have a stranglehold on trading gold and silver contracts inside its bank. Table 21 in the latest OCC report shows that all commercial banks, savings associations, and trust companies with derivatives account for $483 billion in precious metals contracts. Of that sum, JPMorgan Chase Bank NA holds $281.7 billion, or 58%.
"That concentration of activity by one bank in precious metals is being tolerated by federal regulators despite the fact that the U.S. Justice Department criminally charged JPMorgan Chase just four years ago with engaging in 'tens of thousands of episodes of unlawful trading in the markets for precious metals futures contracts. ...' The bank admitted to the charges."
The Martenses' analysis is here:
The failure of government regulators to act against JPMorgan Chase's domination of monetary metals derivatives trading really shouldn't be a mystery. The bank almost certainly is allowed by regulators to dominate monetary metals trading because the bank is operating less for its own account than for the U.S. government's. It's possible and maybe even probable that other banks trading the gold and silver futures markets also are doing so as brokers for the U.S. government or other governments, providing camouflage for market rigging.
Responding to complaints of silver market manipulation in 2012, the chief of JPMorgan Chase's commodity desk, Blythe Masters, told CNBC that the bank had no proprietary position of its own in silver and was trading silver only for clients:
https://www.youtube.com/watch?v=gc9Me4qFZYo&t=2s
https://www.gata.org/node/11216
Of course, the CNBC reporter conducting the interview failed to ask Masters whether those clients included the U.S. government.
Back then JPMorgan Chase CEO Jamie Dimon made similar assertions that the bank traded silver only for clients and wasn't manipulating the market.
Four years ago U.S. Rep. Alex Mooney, R-West Virginia, repeatedly posed to the U.S. Commodity Futures Trading Commission a question GATA had posed but couldn't get an answer to: Does the commission have jurisdiction over manipulative futures trading undertaken by or at the behest of the U.S. government? Eventually, the commission acknowledged Mooney's question but still refused to answer it:
https://www.gata.org/node/19917
Fortunately for the U.S. government, mainstream financial news organizations refuse to pose the question themselves and refuse to publicize the commission's refusal to answer it.
Special architecture for surreptitious market rigging by governments long has been publicly in place in the United States. It's the Central Bank Incentive Program maintained by CME Group, operator of the major U.S. futures exchanges. The program provides volume trading discounts for governments, central banks, and international government-sponsored organizations for surreptitiously trading all CME Group futures contracts -- not just financial futures but also oil, metals, and agricultural futures:
https://www.gata.org/node/18925
So what explains the several prosecutions undertaken in recent years by the U.S. Justice Department of JPMorgan Chase traders caught "spoofing" the monetary metals futures markets? Presumably that "spoofing" was undertaken by the bank's traders on their own, separate from any "spoofing" done for the government. Maybe they were front-running government trades.
Documents entered as evidence in the prosecution of those traders showed that as of 2010 at least 10 central banks had placed gold in JPMorgan Chase vaults. The only reason for that would be so the bank could trade gold for central banks:
In any case, the architecture for surreptitious market rigging by the U.S. government and allied governments long has been in place, out in the open, and the CFTC's refusal to say whether it has jurisdiction over manipulative futures trading undertaken by or for the government really gives the game away, coming, as it does, on top of the official documentation, extending over decades, of U.S. government and Western central bank policy to suppress monetary metals prices, documentation compiled by GATA here:
https://www.gata.org/node/20925
It all evokes the observation by the late Charles Peters, founder of The Washington Monthly and a longtime advocate of reforming government to serve the public interest rather than the special interest. The biggest scandal, Peters said, is not what is illegal but what is perfectly legal.
In the United States and most other countries, market rigging by the government is indeed perfectly legal and is usually concealed lest people realize how they are being cheated. The cheating would be easily exposed and would fail quickly if most mainstream news organizations weren't corrupt or cowards. Indeed, the greatest power of government is not its power to create infinite money but its power to corrupt or intimidate journalism.
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