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Jurors were told that JP Morgan has been ripping off the gold and silver markets for years.
Lucy Jennings, a prosecutor with the Justice Department's fraud section, said, "This case is about a criminal conspiracy inside one of Wall Street's largest banks," adding, "To make more money for themselves, they decided to cheat."
Three former JPM employees are in the firing line, including veteran head of precious metals, Michael Nowak, gold trader Gregg Smith and Jeffrey Ruffo, an executive director who specialized in hedge fund sales. They are all charged with racketeering conspiracy as well as conspiring to commit price manipulation, wire fraud, commodities fraud and spoofing from 2008 to 2016.
Spoofing was banned by law in 2010. It involves vast orders that traders cancel before they can be executed in a bid to push prices in the direction they want to make their actual trades profitable.
Smith, a lead gold trader, was said to have executed 38,000 layering sequences over the years, or about 20 a day, prosecutors said in filings. Nowak himself primarily traded options, but he would dip into the futures market to hedge those positions. He tried his hand at layering in September 2009, according to filings, and went on to use the technique some 3,600 times. Ruffo is alleged to have told Smith where he needed the market in order to fulfill orders involving at least two of his hedge fund clients. Moore Capital Management and Tudor Investment Corporation, according to court filings....
Gnome there was a good discussion about spoofing on Kitco, that I have also seen back in the 80’s with cable as the pound was moved a couple of cents in minutes. The point is it has a big intraday bearing ie on very short term movements but is quickly left behind as settles back where it was, so not the real movements that affect us, says Kitco and what I saw, ie rising real rates and falling dollar that still presage gold down despite snake oil salesmen’s positive talk. One day there will be a bottom and gold will turn and make new highs but which miners will still be here, Centamin if it reduces costs so the losses are less and conserves cash cutting divis, but the market is saying perhaps not the likes of Hoc which have costs as nearly as high as Cey but no way to bring them down instead rising, of course both of these two also have major political/economic risk in Egypt and Peru as higher rates and dollar plus massive food and oil inflation hit those two poor and indebted countries. All imho but it is not spoofing that is our problem nor the myriad conspiracy theories here but real lives and real economic problems that have been building now sing 2007 coming home to roost big time. We thought that would help gold but didn’t see the massive interest rate and thus dollar rise ….
Thanks Sotolo
The traders who do the manipulation are reasonably expert, and I believe they have deep pockets of OPM's. They rarely trade on the one hit principle, but they often use the "creation of SP momentum". BUt of course there are many ways to skin a cat
Churning: When a trader works with other investors' money, they may execute an excessive number of trades in order to increase trade commissions. Even though the trader does not necessarily make the investor more money, they generate a lot of commission for themselves.
Ramping: An investor can ramp a market when they own a lot of money or a lot of a certain security. They can either sell their entire stock at once or buy a security with all their available capital. By doing this, they can cause prices to spike in a favorable direction.
Wash Trading: This is a method of market manipulation where a large investor would simultaneously place buy and sell orders on an asset. This registers as tremendous trading volume, which draws the attention of other investors.
Bear Raiding: Bear raiding is the trader's attempt to push down the price of a security in order to cover a short position. This is normally executed when the trader believes the price will not fall down in their favor, prompting them to manipulate the market.
Rampproofing: This is a mechanism used to ignore any public information that was published with the purpose of misleading the market. Publishers of this information tend to hold high stakes in the market.
Pools: These are illegal agreements between investors, where one of the pool investors is given full control of the pooled funds. This is illegal since that one investor normally holds a tremendous amount of power that could be used to manipulate the market.
Pump and Dump: These schemes are common among small investors. Communication channels would be established where a leading individual would signal a large group of investors to invest in one specific security. When they all work together, they can cause a single stock to rally significantly within seconds.
Cross-Market Manipulation: This is a complex process that relates to how a trader would trade in one market with the objective of causing movement in a correlated market. This activity requires thorough knowledge of a market and substantial reserves of capital.
Quote Stuffing: This is done with high-frequency trading bots that have the capacity to execute immense trades in milliseconds. This gives them the ability to flood markets and capitalize on the slow movement of human traders. Although using these bots is not illegal, they may not be used to manipulate the market.
Stock Bashing: This is a form of financial manipulation that is done through marketing. Stock bashers would publish false information about a company that would cause its stock price to tumble. These investors then capitalize on the downward movement by shorting the company's stock.
and so on, and so forth ...
What a lovely Sunday morning lesson. However many economists would say all of these have short term effects an in the end with shares profits will out as with Cey fall. Gold is another matter and in the longer term dependent on how many think it will rise or fall, which depends more on the opportunity cost of holding combined with worry and fashion, and like now how much it has already risen above trend in expectation of inflations, but the pundits don’t seem big enough to affect the latter, nor the conspirators the former - also I suppose it is like fashion columnists who predict longer hems every year, they can’t always be right! But for us here the short term is unpredictable noise. Have a lovely day (or for you night)