|
|
If you have not heard of Martin Armstrong, it is worthwhile having a
look at his work. http://economicedge.blogspot.com/ is a good place to start.
Some interesting comments regarding precious metals by Martin were made in
http://fofoa.blogspot.com/2009/04/martin-armstrong-on-goldman-sachs.html that
I have reproduced below:
During the late 1970s, the silver market was claimed to be
"cornered" by the Hunt Brothers. That was far from true, for what
they failed to understand, was that the attitude of the major brokerage houses
was not that you were a pure trader-customer, but someone to pick—off
for profit. During the 1980s, I had to take on some hedging projects that
were awesome. One was in platinum. When you are the largest trader in a
narrow market, they watch everything you do. If I was to sell, they assume
the whole lot is being sold and jump in front. You suddenly find yourself
trapped. I was a witness to the Hunt collapse. They couldn't get out of the
market at any price. The dealers were selling in front of them taking short
positions looking to buy back when the Hunts were in a state of panic dumping
at any price.
I learned early on that to professionally hedge, one had to navigate the
brokers. The only way to deal with them, was to play one-off-against-another,
use related markets to confuse and hide your strategy, or else fall prey to
the Investment Bankers. In other words, if you had a large position of gold
that you wanted to sell, you go to a broker asking for a market in silver. He
gives you a quote, and you then buy taking what will become an intentional
loss. You go back to the same broker and now ask for a quote on the real
market you are trying to sell - gold. He will anticipate you intend to buy
because of the silver, shifting the quotes to pick up extra profit assuming
you are a buyer. when you sell the gold, you just got a higher bid, you are
out of the position, and he is scrambling to cover with other brokers. If you
hit all the brokers the same way at precisely the same time, they are all now
short, and are trapped trying to get out selling back gold that they just
bought from you.
These games are at times necessary in the cash markets because the brokers
themselves are not satisfied with just making a real market. They need to
create an edge. So when you are the 800 pound gorilla, you need defensive
measures. It helps to understand the method to the madness of the game.
The market manipulations that really began back in the 70's with force,
became intermixed among the Investment Bankers with technology. we began to
see grouping of houses by the later 1980s and early 1990s. Perhaps at first,
they were looking for another Hunt. They needed to sell some billionaire on
the virtues of cornering and manipulating a market.
The first real coordinated scheme began back in 1993 that I could verify. The
target market was silver, and the central player, broker-dealer, was Phillips
Brothers who were a big commodity outfit in Connecticut, picked up by Salomon
Brothers who was later absorbed as well. This ms known as PhiBro
of the same fame relating to Marc Rich.
PhiBro had a huge client who they were acting for
to buy up the silver market in 1993. This was an aggressive professional
strategy. The Commodity Futures Trading Commission could easily see where the
buying was centered in real force. They went to PhiBro
demanding to know who their client was. PhiBro
refused to give up the name. The CFTC ordered PhiBro
to just get out of the market. They did. They just dumped everything at the
market wiping out small investors in the blink of an eye.
The CFTC just walked away. Had this been a small broker or money manager, he
would have been criminally prosecuted. But the CFTC is notorious for never
even once bringing a complaint against a major house. The sources I relied
upon, gave me the name of the client —Warren Buffett. Based upon this
information and belief, when his name came up again in 1997, it is not a
shock.
---
We kept track of what the "club" was doing and warned our clients
whenever their antics were conflicting. One of the big ones that blew the lid
off, was again silver. In 1997, I warned that silver was going to rise from
$4 to $7 between September and January 1998. I was even invited to join them,
and told to stop fighting, and put out false forecasts. I declined. Their
strategy became insane.
At first, a friend of mine who had been Prime Minister Thatcher's economic
advisor became a board member of AIG in London. He called one day and asked
if he could drop in to Princeton the next morning when he arrived from
London. I naturally said OK. To my surprise, he arrived with the head trader
from AIG London who then proceeded to try to convince me to stop talking
about the manipulations. I told him I would not ever reveal any names, and
the government didn't care anyway.
Things got insane thereafter. An analyst on the payroll of PhiBro had a main contact at the Wall Street Journal.
They decided to slander me and get the press to target me claiming I was
trying to manipulate the market. It was an interesting strategy, but one I
cared nothing about since I was primarily a institutional and corporate
advisor, and they were not really interested in silver.
The journalist from the Wall Street Journal called me. He accused me of this
nonsense and we argued. It got quite heated. He said if silver was being
manipulated, then give him the name. I told him he wouldn't believe me
anyway. He demanded the name and so I said fine, go ahead, let me see you
print it, knowing he never would. The name I gave him was Warren Buffett. He
laughed. Told me everyone knew Buffett did not trade commodities I told him
that was how much he knew.
The Wall Street Journal published the article. The London newspapers were fed
stories by the "Club" that I was now the largest silver trader in
the world. This became all a joke to me. Even the CFTC could look at
positions and knew I was not a big player in silver.
The mistake made by the "Club" by turning out the press against me,
was they actually created such a worldwide story that the CFTC was forced to
call me. They knew I was not the source. They asked me, where was the
manipulation taking place? I told them it was in London, out of their
jurisdiction. They told me that they could pick up the phone and find out. I
told them that they had to make that clear decision. I hung up. Never did I
expect that they would really do anything.
A few hours later, my phone rang. It was a good source in London who also was
helping to monitor the "Club" actions. He told me that the Bank of
England had called an immediate meeting of all silver brokers in London in
the morning. I was shocked. The CFTC had made the call. But then again, I had
given them no names so perhaps in their mind, this was fair game.
Within the hour, Warren Buffett made a press announcement. He admitted he had
purchased $1 billion worth of silver, in London. He denied he was
manipulating the market. Claimed the silver was a long—term investment.
Everyone was shocked that Buffett was suddenly exposed as a commodity trader
after all The next day, the wall Street Journal called me. The writer asked
— "How did you know?" I told him it was my job to know!
Silver thereafter declined and made new lows going into 1999. So much for the
long-term investment.
---
There have been major manipulations of markets such as rhodium and then there
was the manipulation of Platinum. Cornering a supply is far too risky. What
the "club" did was to join forces with Russian politicians. The
deal struck was to recall the Russian supply of platinum to suddenly take an
inventory. Platinum soared in price. Of course the long positions were
already laid in before the announcement. Russia had never before recalled its
entire supply to take an inventory. Nevertheless, it worked. They were able
to force platinum up for the auto—industry were buyers. At the top, the
"club" sold their long positions, reversed into short positions,
and then instructed the Russians to end the inventory. Platinum crashed. Even
Ford Motor Company sued over that one.
Bron Suchecki
Goldchat.blogspot.com
Bron Suchecki has worked in the precious metals
markets since 1994, when he joined the Perth Mint as an Administration
Officer in their Sydney retail outlet. In 1998 he moved to Perth to work in
the then fledgling Depository division. He has held a number of roles since then
in the treasury, risk and governance areas of the Mint.
All posts are Bron's personal opinion and not
endorsed by the Perth Mint in any way.
|
|
