Free Markets At Work - Gold and Silver 'Owners Per Ounce'

"The government is the potent omnipresent teacher. For good or ill it teaches the whole people by its example. Crime is contagious. If the government becomes a lawbreaker, it breeds contempt for law; it invites every man to become a law unto himself; it invites anarchy.

To declare that the end justifies the means -- to declare that the government may commit crimes -- would bring terrible retribution."

Louis D. Brandeis

I was curious to see what the big price smackdown had done at The Bucket Shop relative to the 'claims per ounce' in the precious metals.

I will be checking again tomorrow to see what the little extra kick we saw this morning might have accomplished.

In summary in silver the 'claims per ounce' actually rose a bit. This is not surprising so much because this is an active month for silver, and it clings stubbornly, almost as if by its fingertips, to the $15 handle.

Gold was as you know hit harder, being smacked down by an avalanche of futures contract selling into one of the quietest periods of the overnight trade.

The open interest actually declined a bit, but significant amount of new gold for delivery appeared, so the 'claims per ounce' as I prefer to call it dropped only to about 97:1.

They did, however, break the uptrend which had been driving towards 100:1.

Have you ever heard the rarely told story from the great bull market of the 1920's, about an unremembered  'publicist,' which is a five dollar word for a simple 'bagman,' named A. Newton Plummer?

'An investigation later discovered that business journalists for at least eight papers promoted stocks in their writing in return for bribes. The most embarrassing were at the Wall Street Journal, where reporters who wrote “Broad Street Gossip” and “Abreast of the Market” took payoffs for stock tips in the 1920s.

The revelations about the Journal reporters came out during hearings by the Senate Banking and Currency Committee in 1932, more than three years later, when Congressman Fiorello LaGuardia produced cancelled checks written to the Journal reporters from publicist A. Newton Plummer. The stories based on the bribes had gone as far back as 1923. The Journal ran the story about the testimony before the committee on page 11 the next day.

University of North Carolina, History of Business Journalism

We are very fortunate that such a thing could not happen today.  Can you imagine any self respecting analyst or media type or politician accepting physical checks?  In our modern era it would be much more likely to be hot tips on which way the HFT wind will be turning, or some drinks and dinner, maybe even hookers and blow. The only risks there might be some nasal cartilage or some extra time at the gym.

A. Newton Plummer apparently presented a whole suitcase full of cancelled checks to the Congress in 1932, and wrote a book about it titled The Great American Swindle Incorporated.   There were only 2,000 copies printed.   There is one in my library.

"I would say that practically all the financial journals were on the take. This includes reporters for The Wall Street Journal, The New York Times, The Herald-Tribune, you name it. So if you were a pool operator, you’d call your friend at The Times and say, “Look, Charlie, there’s an envelope waiting for you here and we think that perhaps you should write something nice about RCA.” And Charlie would write something nice about RCA. A publicity man called A. Newton Plummer had canceled checks from practically every major journalist in New York City."

Robert Sobel in PBS, The Great Crash of 1929

Of course with so many other innovations in finance, the information sharing culture of privilege has moved from the inkstained cubicles of 'journalists' to the hallowed halls of the Congress.  This was the most read story of all time at Le Café when first published.   

And since then you will be happy to know that the Congress has officially told the SEC to go take a hike, that they are immune to any laws against insider trading and dealing in dodgy information, apparently even for 'pay.'  There is even a cottage industry of lobbyists who share information with the Congress on behalf of hedge funds.  Nice to see entrepreneurship at the lower levels who can never expect to bring in the big bucks making 'appearances' and giving 'speeches' for fabulous fees.

The precious metal pool operators can surely make some nice profits on their short bets on related items after their latest escapades, and then acquire quality mining assets on the cheap for the next trip up when you know what hits the twirling blades, thanks to their servants' gross mismanagement and policy errors.

Well done.

So many assume that the 'rig' in the metals is similar to the London Gold Pool and past operations that were undertaken in order to support some otherwise unsustainable policy and persuasion initiative.  

 

What if something like this started out that way, but then found its momentum in some mutually lucrative private profiteering that proved too easy and tempting and perhaps inconvenient to stop?  It certainly has been hard of late to overestimate the self-serving venality and audacious excesses of these jokers.

When you don't know, you don't know.  And that is how they seem to like it, what 'it' is.  In a society not of reason and laws but of secrecy and privilege, knowledge, like the ability to print and distribute money, is power.

.

UK Journalist Calls Out 'Fraud on Readers' in Coverage of HSBC

“An editorial operation that is clearly influenced by advertising is classic appeasement. Once a very powerful body know they can exert influence they know they can come back and threaten you. It totally changes the relationship you have with them. You know that even if you are robust you won’t be supported and will be undermined...

The coverage of HSBC in Britain's Daily Telegraph is a fraud on its readers. If major newspapers allow corporations to influence their content for fear of losing advertising revenue, democracy itself is in peril.”

A 'principled resignation' is a phenomenon somewhat unfamiliar to US readers.  Rarely does a public figure or a politician resign because they is something they won't do to get along.  They resign because they get caught doing something that is so repugnant to public sentiment that they are finished, at least for a while.  We have a marvelous way of excusing and ignoring behavior in the selected elite that would shame a garbageman into changing their name and moving.

And so a decline in journalistic standards is not as great of an issue in the States, because the major media was captured by a handful of corporations in the 1990's, in part thanks to Bill Clinton's change in ownership rules.

So one might ask, what standards?  What were the standards that allowed the lies that have led to war, that covered up mass spying and torture, and that allowed one of the greatest thefts of the public trust in history to occur in the 'bank bailouts,' with a coordinated suppression of any meaningful protest?

In the recent World Press Freedom Index, the US ranked 49th, in same tier as Romania, El Salvador, and Niger.

Their standards have long been so low that journalist may be more of a hollow title on a business card than a calling to a profession with time-honored standards.

 

In the States, journalistic independence and integrity were some years ago led down a blind alley, and quietly strangled. 

The capture of key institutions of democracy are already well underway or in place.  Where this leads, one cannot say.   But it does not bode well.

Even television spokesmodels and serial liars are considered 'credentialed journalists' in good standing as long as they remain within the well defined bounds of the corporatist credibility trap.

 

Related:  JP Morgan Tops New List of Risky Banks

 

Why I Have Resigned From the Telegraph

Peter Osborne

17 February 2015

...With the collapse in standards has come a most sinister development. It has long been axiomatic in quality British journalism that the advertising department and editorial should be kept rigorously apart. There is a great deal of evidence that, at the Telegraph, this distinction has collapsed...

This brings me to a second and even more important point that bears not just on the fate of one newspaper but on public life as a whole. A free press is essential to a healthy democracy. There is a purpose to journalism, and it is not just to entertain. It is not to pander to political power, big corporations and rich men. Newspapers have what amounts in the end to a constitutional duty to tell their readers the truth.

It is not only the Telegraph that is at fault here. The past few years have seen the rise of shadowy executives who determine what truths can and what truths can’t be conveyed across the mainstream media. The criminality of News International newspapers during the phone hacking years was a particularly grotesque example of this wholly malign phenomenon. All the newspaper groups, bar the magnificent exception of the Guardian, maintained a culture of omerta around phone-hacking, even if (like the Telegraph) they had not themselves been involved. One of the consequences of this conspiracy of silence was the appointment of Andy Coulson, who has since been jailed and now faces further charges of perjury, as director of communications in 10 Downing Street...

This was the pivotal moment. From the start of 2013 onwards stories critical of HSBC were discouraged. HSBC suspended its advertising with the Telegraph. Its account, I have been told by an extremely well informed insider, was extremely valuable. HSBC, as one former Telegraph executive told me, is “the advertiser you literally cannot afford to offend”. HSBC today refused to comment when I asked whether the bank's decision to stop advertising with the Telegraph was connected in any way with the paper's investigation into the Jersey accounts.

Read the entire article at OpenDemocracy here.

 

 

 Here are some selections from financial television.  I do not mean to pick on CNBC.  Bloomberg and Fox are certainly no better, and in many ways probably worse. 

And the mainstream media now pretty much follows the same patterns on its high gloss coverage whether it be on television or in print.

 

But if you watch the shows on Sunday morning where very serious people come to discuss important public and foreign policy issues of war and peace, basic freedoms, the economy, what you find is a pre-sorted selection of talking heads hurling the latest ying and yang of corporatist spin at each other, with the occasional honest individual, never to be invited again, who is harangued by the network 'journalist.'

 

Seder and Taibbi Discuss JPM and the SpokesModels of the Financial Press

"There's no such thing as good money or bad money. There's just money."

Charles 'Lucky' Luciano

"Why is JP Morgan getting so much heat? Maybe because it is a massive international crime syndicate."

Matt Taibbi

It may be unfair to take the measure of these news channels as journalists.  For the most part they are not journalists, and these are not news channels, although they do sometimes display facts in small boxes on their screens.

In defense of CNBC, Fox and Bloomberg are no better.    I have heard the same meme about money and Wall Street there many, many times. 

There is a mind set that puts the Wall Street and their embedded entourage of enablers apart from the shared reality of the public.  And the same thing is occurring with the press and politicians in Washington.

The financial press are too often spokesmodels acting in extended infomercials, talking about current events with financial graduates of the Charles Luciano School of Economics,  produced and put forward by the corporate interests and billionaires that own them and their careers. 

And this same problem of corporate cronyism is infesting the mainstream news departments as well.

Enjoy.

Here is a link to Taibbi's column on this video in which he makes a few additional comments.

NAV Premiums of Certain Precious Metal Trusts and Funds - Wall Street Glitter Gulch

"Life is a school of probabilities."

Walter Bagehot

The post-option-expiration hit on the metals arrived yesterday and today as gold was pushed back towards 1400 and silver was slammed back to 23.80, a decline of 1.20 from the recent high.

They were treading a bit lighter on gold because available for delivery is in short supply.

Inventory available for delivery took a sizable hit yesterday as there was a large transfer within the shrinking JPM vaults from delivery offered to storage.

The premiums on the Sprott funds are holding up remarkably well. The action in the miners has been fairly obvious with a price hit on that related sector preceding the bear raid on the metals.

That some analysts cannot refrain from drawing broad conclusions from such a small short term price fluctuation shows the desperation and poverty of thought in much of what passes for analysis today. Say and do anything for a raucous headline and some attention.

I almost fell out of my chair when I saw some fellow call the ten dollar decline in gold yesterday a sign that there would not be any military action in Syria. Ten dollars out of Fourteen Hundred. And they make fun of people for reading the fall of bones or chicken entrails. Freedom of speech does not demand freedom from thought.

This could be a deeper correction. Anything can happen. But typically not everything does happen, and that is why life is a school of probabilities. People fool themselves, and others, by making wild guesses, and then writing the hits in marble, and the many more misses in the sand. Well, that may work for coffee talk, but as actionable trading information it is a snare, and a death trap.

Don't get me wrong. I don't mind such chatter talk on chat boards by amateurs. Much of life is taken up in idle and largely harmless diversion and unstructured speculation. And all gamblers lie, and often shamelessly. The problem is when they lie to themselves.

I used to hang out with some of the older fellows at the Stardust's sports book, which was a marvel for the day.  We would watch basketball games and horse races, while they bet the over/under and mostly talked stuff about the old days, and who and what they know and knew.  Fun talk, but it never filtered into any of my wagers. I made some of the best returns betting against the skew of weekend tourist betting on their favorite California teams, against the odds. Gotta love those Lakers and the tourist spread.  And don't even talk about the poker tables.

Don't get me wrong. I am no god of gamblers.  No one beats the house in the long run if their bosses are doing the job right and the gamers are not cheating.   No one can beat true odds all the time. 

I knew a guy who had been the comptroller at Caesar's, who grew up in our old neighborhood back east. And he gave me a copy of Friedman on Casino Management, and set me straight.  I have won big, and lost big.  But the only truly winning bet I ever made there was thirty five years ago when I got married in a little church outside of town, in what was then the desert, but now is just another crowded suburb.

Wall Street reminds me of Las Vegas sometimes.  Pretty women, flashy callers, lousy odds, but no free drinks or cheap buffets. 

The pros and insiders in the US markets have shills and occasional enablers who go around and talk trash for them, but not on the little chatboards. That would be a waste of time and money, and there is no need for it.  There are plenty of parrots who can be taught to repeat lines in the hope of sounding wise.

I have previously mentioned the mostly unremembered testimony of A. Newton Plummer, a Wall Street 'publicist' who testified to the corruption of journalism and analysis by Wall Street money. And what made him credible was that he had a suitcase full of canceled checks to prove it.  They don't take checks or credit cards these days.   Information and high paying positions are the new coin of the realm for these sophisticates.  Journalism is approaching economics as a disgraced profession.

So let's see how the week progresses. September is not a delivery month so babies must play. But there is the problem of physical offtake of real bullion on the world markets that continues despite the antics on the paper exchange.

CNBC's Heavy-Handed Advocacy For Wall Street Is Painfully Evident in This Neil Barofsky Interview

Heavy handed and amateurish performance by the 'journalists' was the name of the game in this interview which CNBC conducted with former TARP inspector general Neil Barofsky.

I think Barofsky was taken aback and kept off balance for much of the interview, and did not present some of the alternatives to TARP that could have been discussed in a more intelligent and less adversarial venue.  I would have thought a former federal prosecutor would have been tougher, but I think he came in expecting a rational discussion and not a tag team group takedown.

This performance represents the level of journalistic quality and objectivity of its parent NBC, which is one of the corporate arms of General Electric.   And such a disregard for any pretense to journalistic principles is no longer the exception.

Maybe I am missing something but it seems astonishing that a major financial network can feature a stock advisor who bragged on tape about how he used reporters for planting stories favorable to his market manipulation to cheat the public when he ran a hedge fund, and apparently sees nothing wrong with it, up to and including breaking the law.

How cynical can a people get? How blindly worshipful of 'success?'

This calls to mind the interview that CNBC had with the California Attorney General who had the presence of mind to just stop the interview and ask the 'journalist,' "Are you pimping for (State Street Bank) the defendant?"

There was a time indeed when the financial journalists were paid for pimping for Wall Street, as recounted in the Congressional testimony of A. Newton Plummer, who had kept a suitcase full of the canceled checks which he had delivered to almost every journalist on the Street. The pool operators of the 1920's paid financial journalists to run stories favorable to their market aims.

A. Newton Plummer subsequently wrote a book about it, and his testimony to the Congress, that had a very limited run. I picked up a copy during my research phase in the late 1990's.

So as you can see, the integrity of journalism in reporting financial news is not merely an idealistic and theoretical concern during periods of excess and subsequent change. It is one of the major elements of corruption and therefore of reform. And laws were put in place to ensure fairness and diversity in the news media. And they were much later knocked down during 'the great deregulation' when ideology and PR campaigns trumped experience once again.

Do people still go to journalism schools and subscribe to certain principles that we used to take for granted that would be put forward if not always upheld?

How are the mighty fallen.

Here is a link to the interview at the CNBC site in case there are problems with access to it here.

Note:  Business Insider also covered this interview.  Their story here includes some of the tweets which Barofsky sent after the show.

When the Financial Journalists Were Indeed 'Pimping' for Wall Street

Here is a interesting moment in US financial journalism on CNBC. It does not describe the basis of the lawsuit very well, and does become a bit surreal at times. There is a nearly priceless moment at the end when the frustrated Attorney General of California Jerry Brown asks Dennis Kneale and Michelle Caruso-Cabrera, "Are you pimping for (State Street Bank) the defendant?"

You can watch the video and assess things for yourselves.

This question of the role of financial journalism brings to mind a little remembered vignette from the 1930's. After the Crash and the slide into Depression, there were a number of government investigations conducted into the varieties of financial fraud, of which there were many, and became the basis for a number of laws, most of which were overturned just prior to our current series of crises starting in 2000.

There was a particularly colorful character named A. Newton Plummer. He was a culprit, a bagman I think they were called, but also had become a whistle blower, a witness, after having been apprehended.

And a right effective witness he proved to be, since he had kept a suitcaseful of cancelled checks that showed that a great many, if not most, of the financial journalists in the major eastern media were regularly 'on the take' from Wall Street, in promoting certain ideas, certain stocks, legislation, whatever was required. Apparently in those days of stock operators and pools, prior to the SEC, it was a common practice to deceive the small investor through the manipulation of price action and news. Can you imagine that. And in less-regulated, naturally efficient markets.

We do not hear much about A. Newton Plummer. But he did write a book about what he had done as the bagman, after his testimony was buried, deeply. Probably to help restore public confidence in the troubled financial markets of the Great Depression.

The Great American Swindle Incorporated
Plummer, A. Newton
A. Newton Plummer, 1932. 2,000 copies.

I have a copy of his privately published book. It is an interesting read. Everything he said was documented. It was a time when the news media was undoubtedly 'pimping for Wall Street.' And they helped to create a credit bubble, the bubble that broke the world, and blamed it on a spontaneous mass delusion, and financial innovations like consumer credit.

While CNBC has its journalistic standards, this does not seem to be their finest moment. Both Dennis and Michelle are seasoned journalists. But Jerry Brown is a consummate politician, and is to be baited carefully, and at your peril.

CNBC Interview with the California Attorney General

Things are much more sophisticated these days, and the times of 'yellow journalism' with moguls like W. Randoph Hearst starting wars and promoting causes using the power of their media conglomerates are a thing of the past.

But journalists who specialize in a specific sector all the time, whether it be finance or politicians, must be on their guard not to closely identify with the industry which they are supposed to be objectively covering. An emotional attachment can develop, a mindset can be imprinted, when you spend all day speaking with people who have a particular viewpoint of the world based on their own needs and objectives and biases.

And it still bothered me that I came away from this interview without understanding the nature of the lawsuit, and obtaining no real facts about it. Dennis Kneale seems to imply that the Pension funds were promised a specific price and it was delivered, and California was merely griping about the deal unjustifiably. And then Michelle engaged in what might be charitably called an ad hominem attack.

So here are the facts as reported by The New York Times:

Still, the lawsuit raises troubling questions about the bank’s practices and controls. It grew out of an inquiry by California state investigators who were looking into claims made against State Street by unidentified whistle-blowers that accused the bank of adding a secret and substantial markup to the price of their currency trades. The whistleblowers alleged that the scheme cost State Street clients about $400 million annually and dated back to 1998.

According to the California Attorney General, State Street executed about $35.2 billion in currency trades for Calpers, the California Public Employees’ Retirement System, and Calstrs, the California State Teachers’ Retirement System, from 2001 to this fall.

State Street tellingly referred to the state pension funds as “dumb” clients since they allowed the bank to handle foreign exchange transactions for them, according to a complaint filed by the whistleblowers. Smart clients, it said, traded directly with the bank and obtained better rates.

The lawsuit contends that State Street concealed fraudulent pricing practices by entering false exchange rates into electronic trading databases and reporting false prices in the account statements that it provided Calpers and Calstrs. The lawsuit also accuses State Street of deliberately failing to include time stamp data in its reports so that the pension funds could not verify the actual cost of the trade.

It sounds to me that State is being accused of conducting trades for a fee, but then padding the associated trades to skim a bit extra. This is not an unheard of practice, especially when a trading firm is dealing with what they consider to be a 'dumb client.' There is a mindset among some trading groups that says if you are dumb enough to do business with me, I am justified in ripping your face off, even if it is a little bit at a time. We will have to see how the court case proceeds to find out if the accusations are true.

Now, would it have been so hard for CNBC to find these facts out and ask about them rather than take such a stumbling and ill-prepared stance into the interview, and then insult the interviewee and disparage his motives?

They are capable of doing much better professional work than this.