DOJ Investigates Gold Silver Manipulation Charges

Welcome to CrushTheStreet.com’s Weekly Market Wrapup!

Our top story for the week is a stunning revelation by the Department of Justice that they will begin investigating charges of potential manipulation in the gold and silver markets. Included in the investigative scope are unusual trading activities within specific U.S. Treasury markets, as well as certain sectors within the broad crude oil exchange. What is especially noteworthy is that the mainstream media, courtesy of Bloomberg, is running the headline, and not what many would consider to be a “conspiracy theorist” resource. However, those that have staunchly held the view that the precious metals markets are manipulated will likely have an uphill battle in extracting an open-admission by the powers-that-be.

Prominent voices within the manipulation crowd, in particular, Ted Butler of Butler Research, and Bill Murphy of the Gold Anti-Trust Committee, have for decades rallied against the alleged collusion between big banks and the government. They accusation is that powerful entities have a vested interest in keeping gold and silver prices artificially low so that global fiat currencies appear comparatively strong or stable. The problem, of course, is that the movement hasn’t gained much mainstream traction until now. But even with this newfound revelation, the nature of the gold manipulation argument would logically imply that the DOJ investigating such charges amounts to a fox guarding the henhouse. Should real indictments be handed down by authorities, the accusation would then be that “patsies” are given the fall in order to divert attention away from the real source of market injustice.

Still, this is welcome news to many who have asserted collusion in the metals market, and offers realistic hope that some sort of structural change will be implemented, at least to give the pretense of free-market enterprise. The investigation into gold and silver manipulation was a natural extension of the DOJ’s analytical model, which was used extensively to track statistical deviations in foreign currency exchanges and which ultimately led to official charges against major banks in what has become known as the LIBOR scandal.

This conspiracy involved multiple currency traders colluding to manipulate key exchange rate benchmarks, bringing into question the integrity of the financial markets but also the embarrassing ability for corrupt individuals to side-step established safeguards. The resulting scandal led to more than 20 traders being placed on leave or outright terminated. In September of 2013, UBS came forward and submitted information to the DOJ in the hopes of cutting a lenient deal, a tactic that they honored just a few weeks ago. By pitting the elite banks against each other, the Justice Department hopes to induce more squealers, getting to the bottom of the manipulation charge at the quickest rate possible.

Financial News

In financial news, the U.S. equities sector built off previous gains made in the middle of the week as optimism regarding the Greek debt deal buoyed market sentiment, with the benchmark S&P 500 closing up two-tenths of a percent. The precious metals complex continued to slumber, with gold down slightly at 1,180 while silver dipped 4-cents below the 16 dollar mark. Palladium also had a slow showing, down a little over a tenth of a percent against the prior session. Finally, bitcoin did manage to gain some momentum later in the week, with the digital currency trading just beneath 230 dollars.

And that will do it for this edition. Thanks for watching and we’ll see you next week!