One of the 'Masters' of the universe gets a market manipulation question on CNBC


10:50p ET Thursday, April 5, 2012

Dear Friend of GATA and Gold (and Silver):

Though the monetary metals have been under the most severe attack for the last few weeks, today may be considered a great victory for our side, insofar as a softball interviewer on CNBC managed to question JPMorganChase commodity executive Blythe Masters about whether the bank is manipulating the metals markets:

Masters acknowledged that this has become an issue. "There's been a tremendous amount of speculation, particularly in the blogosphere, on this topic," she told CNBC. "I think the challenge is it represents a misunderstanding of the nature of our business. ... Our business is a client-driven business where we execute on behalf of clients to achieve their financial and risk-management objectives. ... We have offsetting positions. We have no stake in whether prices rise or decline."

The latter remark caused a bit of a sensation and mockery on our side but it was, in fact, only what JPMorganChase CEO Jamie Dimon said several times a few years ago when similar questions about monetary metals market manipulation were put to him -- that the bank has little exposure of its own in those markets and that the metals positions on the bank's books are client positions.

... Dispatch continues below ...


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As Morgan's positions in not only the monetary metals markets but also the interest-rate derivatives markets are beyond comprehension and what any private company could possibly carry on its own, GATA has always believed Dimon (and today believes Masters too) and has long maintained that the positions on Morgan's books are actually U.S. government positions and that the bank is essentially a government agency. For example:

GATA consultant Rob Kirby of Kirby Analytics in Toronto has often written in detail about the government-MorganChase connection:

After all, MorganChase has 150 years of experience in market rigging and fronting for the U.S. government at critical moments. This is a matter of public record and established history extending from the bank's Federal Reserve-engineered acquisition of Bear Stearns & Co. in 2008 back to the panics of 1893 and 1907, when the bank was run by its founder, the financier and industrial monopolist J.P. Morgan himself, who arranged bailouts not for the government but of the government and considered it his civic duty to do so:

In Chapter 7 of her prize-winning 1999 biography, "Morgan: American Financier" --

-- Jean Strouse describes how Morgan's first big score came in the fall of 1863, when, perhaps foreshadowing his firm's current endeavors, he cornered the gold market in New York.

Watching today's CNBC interview with Masters, Zero Hedge's Tyler Durden figured things out quickly:

"JPMorgan has intimate access to U.S. government officials, and particularly the Federal Reserve, which will in turn take advantage of all JPM facilities, including its trading desk, to preserve the sanctity and foundations of the +$30 trillion in custodial assets and the rehypothecation system, which further means that any potential implication that fiat money is impaired has to be wiped out. ... Soaring prices of gold and silver are the primary if not only means left to express rising doubts not just of the future viability of the dollar but of the viability of the fiat system in the first place. Which means that the Fed is, without a doubt, one of the biggest 'clients' of JPM in a symbiotic crosshold, where what the Fed wants JPM has to execute and vice versa. ...

"There is one simple explanation that would make Blythe's story 100 percent correct: Would JPMorgan consider the Fed, whose interests are in keeping the price of precious metals as low as possible and are aligned with those of JPM for the reasons listed above, its client? Because, if so, then absolutely everything falls into place, as JPMorgan is merely the overt conduit by which the Fed, and specifically the New York Fed, conducts monetary policy in the commodities space, just as [the New York Fed's] Brian Sack would conduct open market operations in the bond arena, and as the New York Fed uses, on occasion, Citadel and its high-frequency trading expertise to execute its discretionary stock trades. (Yes, we know about those too.)"

Or as GATA's Washington conference heard four years ago this month, "There are no markets anymore, just interventions":

But in discouragement people increasingly ask us: How much longer will all this go on? What will stop it?

GATA sure doesn't know, as there are too many variables, like how much real metal is left to the Western central banks for market rigging and how much more they are ready to lose; the strategy of those nations that would escape or even overthrow the dollar empire; and the perceptiveness and indignation of the American people themselves, or their lack of such virtues. We'd like to think the outcome will have something to do with our work. But probably it will be determined only by what usually brings down the bad guys -- themselves, when they go too far and wake up even the morons and enrage even the timid.

The same question -- how much longer? -- was often put to the greatest liberator of modern times, Martin Luther King Jr. Marching right up to the face of the most evil hatefulness in Montgomery, Alabama, in March 1965 (your secretary/treasurer's father was in the march too), King proclaimed a religious faith in justice. He answered, "Not long," and quoted James Russell Lowell:

Truth forever on the scaffold, Wrong forever on the throne,
Yet that scaffold sways the future, and, behind the dim unknown,
Standeth God within the shadow, keeping watch above His own.

But Lowell's next two lines may be consolation for us tonight as well:

We see dimly in the present what is small and what is great,
Slow of faith how weak an arm may turn the iron helm of fate.

For if one of the "Masters" of the universe now gets market manipulation questions even on CNBC, the word is getting out, and we'll press on in the morning, if only out of spite. We can't let the bad guys think that nobody is on to them.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

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