Gold Daily and Silver Weekly Charts - More Criminal Manipulation in the News

There were two new developments in the ever unfolding crime drama known as the Anglo-American financial system.

Peter Madoff, brother to infamous Bernie and long time 'chief compliance officer' for the Madoff fund, is pleading guilty to the charge of 'falsifying documents.' As you may recall Harry Markopolos had attempted to call the fraudulent nature of the Madoff investment model to the attention of the regulators for years and was ignored, ridiculed, and threatened.

The bigger news of the day was the settlement with Barclays in the absolutely egregious fraud of fixing the LIBOR market rate. The Bank will pay a $450 million fine and incur no criminal penalties or trading sanctions.    The American CEO Bob Diamond says he will forgo his personal bonus as well.

Other banks were involved, but Barclays has settled. Barclays Pays 450m to End LIBOR Prove

Bart Chilton of the CFTC was on the news claiming victory for the regulators.

A read of the some of the emails discovered in the case shows that the manipulation was almost as blatant and obvious as placing food orders at a takeaway restaurant.

Ah hey old boy, our positions are up against it, so would you be a good chap and knock 50 basis points off LIBOR for us tomorrow morning please.

Anything for your my good man. Consider it done.

The Bloomberg TV crowd had fun with this story about Barclay's, with Matt Miller chuckling that the fine is 'only six weeks profits' for the Bank, and the market obviously doesn't take it seriously because 'look at the stock price.'  Barclay's stock finished the day down 3 cents.

Manipulating LIBOR is a BIG deal, one of the worst and most pervasive frauds to actually come to light since the widespread fraud in the CDO market.

That the firm faces no criminal charges, will not be barred from any markets, and is taking what the financial commentators dare to taunt openly as a minor fine is a disgrace.

And those who say that the markets should be without regulatory oversight and set the key interest rates without outside interference are living a romantic or ideological fantasy.

Do governments manage rates? Of course they do. That is a role of the Fed. They do it for policy decisions, and spend some time announcing and discussing those actions.

But this is not the same thing as private firms manipulating rates secretly for their private profit at the sake of other's losses. People who say they are equivalent are serial self-deceivers, and probably blinded by ideology.

Have no illusions. The fix is in, and often, in these markets. Those who scoff at such assertions as 'conspiracies' might bear both Madoff and Barclays in mind, not to mention Enron.

There will be more revelations of criminal conspiracies to defraud the public and the markets in the coming months.  But LIBOR is very significant.  It is a market touchstone.  And it was foul for a long time. 

SP 500 and NDX Futures Daily Charts

There are at least three major cross currents here.

First of course is Europe and the EU summit meant to speak to their sovereign debt crisis. There is much talk that Merkel will veto any action on Italy, Greece and Spain on behalf of Germany. Today Bloomberg TV was making the case that the EU skip the countries altogether and give the money directly to the Banks, so none is wasted. Nice sentiment if one is of the porcine clan. Personally I would just nationalize the banks, and take it from there with a forced restructuring based on their insolvency, and deal with the countries next.

Second is the US Supreme Court decision on the Healthcare Reform Bill. The court is expected to overturn at least a portion of the act, which may have a short term positive effect on equities.

And Third is the end of quarter and the painting of the tape by the funds to make their results (and bonuses) look better.

A consideration is the Fourth of July holiday in the States next week.

Gold Daily And Silver Weekly Charts - The Money Matrix - Sic Transit Gloria Mundi

As a reminder, today was the silver option expiration on the Comex.

The EU Summit meeting is on Thursday and Friday of this week, 28-29 June.

Next Wednesday is the US 4th of July holiday.  I would expect many punters would like to be leaving early this week if they can.

This is also the last week of the second quarter.

The US Supreme Court is expected to rule on Obamacare on Thursday, overturning at least a portion of it. This may provide a sellable rally.

Quite often the markets search for some level, and then try and let the junior traders hold it in light volumes, unless something happens.

With algos running we sometimes get some interesting intraday action but little in the way of progress.

This is a week that also brings some important metals events.

June 26 Comex July silver options expiry
June 26 Comex July copper options expiry
June 26 Comex July silver futures last trading day
June 27 Comex June gold futures last trading day
June 27 Comex June copper futures last trading day
June 27 Comex July miNY silver futures last trading day
June 29 Comex July silver futures first notice day
June 29 Comex July copper futures first notice day

I made an effort to describe a relatively simple model of the US banking system briefly and in relatively common terms in an intraday commentary today. Back Again To Money: Money Creation and the Banking System - A Forecast of Sorts

It is a 'barebones' version of the domestic money model I keep in my head, to help incorporate new events and interpret them within some greater context. It really is not so hard to do, if you put a little effort into it. I think you might find it helps to understand some of the things that are happening today.

The international money system adds a significant layer of complexity, but one thing at a time. I plan to write something on that in the future.

Basically gold and to a somewhat lesser extent silver, are annoying rivals to fiat money. In times of distress they are a haven for individuals in protecting their wealth, and a threat to the status quo banking system because they are fundamentally difficult to manage and to control since they do not rely on a promise.

Bullion banks and trading desks, with the likely cooperation of the government and the banking system itself, have created a leveraged paper market that surrounds gold and silver bullion like a large, opaque cocoon, many times the size of what is apparently owned itself.

At some point that reality will be revealed, and all hell will break loose as various groups seek to grab bullion ownership as fast as they can. It will make what happened at MF Global look like recess on the schoolyard.

This in a nutshell is the premise that GATA has put forward for some time, and it makes sense based on everything that I have seen.

The world financial system has been slowly and surely changing since the 1990's. In keeping with that change, central banks have turned from net sellers to net buyers of gold, particularly in the faster developing economies, a fact that should not be ignored since it is very likely a sign of things to come.

The international sovereign and banking debt crisis is hardly resolved, and while it is interesting beyond the norm to someone like myself, it also carries a tinge of concern, fear if you like, with it, because the safekeeping of productive wealth is essential to modern life with its predominant division of labor and production.

So we all strive to understand what is happening, and look for the important events and sort them from the trivial, to formulate our own responses to change as best we can. And it is not an easy task because of the fog of confusion and misdirection that surrounds even such a novelty as a currency war.

I told my son the other day that in my experience managing the disposition of water and energy are the principal tasks in maintaining a home, in addition to normal wear and tear, particularly of the childhood variety. It's always something.

Similarly, the principal problem today in managing personal wealth, besides obtaining it in the first place, is identifying and managing risk and return. Thanks to the central banks, returns are hard to come by. So risk looms larger, and mispriced counterparty risk in particular, because it can come like a thief in the night.

"O quam cito transit gloria mundi."

"How quickly pass the glories of the world."

Thomas à Kempis

Gold held closely is, in the recent words of the regulators, a 'riskless asset.' I might add silver is as well, although to a slightly lesser extent.

Proposed Bank Regulation Would Drive Gold Prices Higher - WashingtonBlog

Draw your own conclusions from all that. Diversity of portfolio is an insurance against improbable events.

SP 500 and NDX Futures Daily Charts - Limbo European Style

The market is holding its breath waiting to see what happens in Europe.

The European Summit meeting is June 28-29, which may cause some cross currents into the weekend.

This week is also the end of the second quarter. 

The US Supreme Court is also expected to overturn a portion of Obamacare on Thursday. That may produce a brief but sellable rally ahead of the EU and the weekend. Very hard to say what will happen in these thin markets.

Next week Wednesday is the US July 4 holiday.