Market Manipulation Comes out of the Tin Foil Hat Era

I mentioned in the A.M. Update that I'd have more to say on manipulation of the market , specifically speaking about the USD/JPY.

If you've been around the market and specifically precious metals the last 5 or so years, actually since Bear Stearns was taken in by JPM, then you probably remember the viral campaign to break the Silver manipulation fix by Blythe Masters of JPM. When JPM took on various units of Bear Stearns just before the Lehman crisis in 2008, they inherited a VERY large short position in Silver.

Silver has historically had a fixed price ratio compared to gold prices, it has jumped around over the years, but if you knew what gold was selling for you'd have a rough idea of what silver should be going for, that ratio just kept going lower and lower after 2008 as gold started to run and silver essentially went no where.

If I remember correctly, the line in the sand for Silver prices was about $19.50 in SLV (adjusted). Finally the JPM manipulation of Silver led by the infamous Blythe Masters was broken and this is what happened next...

After 2008 JPM maintained silver in a range, you can see a pretty clear breakout, increased volume and some short squeeze, although I don't know if JPM had dumped their silver short by then or not.

In analysis by a 40 year veteran of precious metals trading, he concluded the following about JPM's price rigging and manipulation of the silver markets, some may sound VERY familiar to you (my bold added for emphasis)...

"While the key to the silver manipulation is JPMorgan’s dominant market share or market corner on the short side (same as in the London Whale case), there have been some important outside factors that have contributed to the silver price-rigging. The most important have been in the modern mechanics of trading, from HFT to the presence of technical traders and funds which mechanically and consistently buy and sell on price signals; buying as prices move higher and selling and selling short as prices decline. These technical funds are the enablers which allow JPMorgan to sell high and buy low in silver. These technical funds and traders are important contributors to the perfect market manipulation."

Unfortunately, the CFTC never charged JPM with manipulation on a massive scale. 

Silver Price-Manipulation Probe Closes

CFTC Files No Charges, Says Not Enough Evidence

"U.S. commodity regulators closed a five-year-long investigation of silver-market manipulation claims without filing charges, the latest setback for authorities cracking down on alleged trading abuses.

The Commodities Futures Trading Commission said there is no "viable basis" for a case that had its roots in emails commissioners received from investors amid market volatility in 2008. The decision to close the case amounts to a victory for J.P. Morgan Chase & Co., a large silver trader that was the subject of manipulation allegations."

However, in another price rigging/manipulation of another precious metal, Gold, Barclay's just received a slap on the wrist.

Barclays slapped with $44 million fine over gold price fix

""(Reuters) - Barclays Plc has been fined 26 million pounds ($43.8 million) for failures in internal controls that allowed a trader to manipulate the setting of gold prices, just a day after the bank was fined for rigging Libor interest rates in 2012.

Britain's Barclays is the first bank to be fined over attempted manipulation of the 95-year-old London gold market daily "fix", although a source familiar with the fine said it was a one-off and not part of a wider investigation into gold price rigging."

The key to all of the manipulation which is just scratching the surface, today's Max-Pain options expiration is nothing other than manipulation. Our article last night detailing what we expected this week from last Friday, 

A FEW EOD CHARTS is nothing short of manipulation, how else could we predict what was going to happen this week almost perfectly a week in advance (relating to action around last week's bear flag and the move above with a Crazy Ivan shakeout)?

This is a market wide problem, luckily we have tools that allow us to see what's going on under the surface of price action and we've seen these manipulations play out so often and so consistently that they have become concepts that we know to expect with fairly high probabilities, such as the "Volatility shakeout of the initial stages of stage 4 decline (a shakeout of shorts at the break of a top like a H&S ), the head fake move that we see right before reversals approx. 80% of the time and on ANY TIMEFRAME and in ANY ASSET.

The bottom line is this happens every day, likely every minute of every day and adjusting to the market rather than following century old technical concepts and thinking outside the box give us an edge over other traders, as the precious metal expert said,

"there have been some important outside factors that have contributed to the silver price-rigging. The most important have been in the modern mechanics of trading, from HFT to the presence of technical traders and funds which mechanically and consistently buy and sell on price signals...

These technical funds are the enablers which allow JPMorgan to sell high and buy low in silver. These technical funds and traders are important contributors to the perfect market manipulation."

 Don't run with the rest of the sheep, if there's anything I want to pas on through our analysis and trade examples, it's to think for yourself and never doubt the lengths these Wall St. criminals will go to, I'm sure even with our most imaginative thoughts, we don't even scratch the surface of how much they manipulate the market. Luckily, we follow what they are doing.