Saturday, May 1, 2010


10:15a ET Saturday, May 1, 2010
Dear Friend of GATA and Gold (and Silver):

In his weekly interview with Eric King of King World News, silver market analyst Ted Butler announces that the Anti-Trust Division of the U.S. Justice Department has told a Butler newsletter subscriber that it is investigating a complaint of silver market manipulation against JPMorgan Chase & Co.

In a subsequent King World News interview, market analyst James G. Rickards, senior managing director for market intelligence at the Virginia-based research consultancy Omnis Inc., notes that the Justice Department's reply to the Butler newsletter subscriber went out of its way to mention Morgan Chase, even as the Butler newsletter subscriber, in writing to the Anti-Trust Division, had not mentioned the investment bank. Thus, Rickards says, the Anti-Trust's Division's reply is "a stunning communication."

Rickards speculates that the Anti-Trust Division's reference to Morgan Chase may have been prompted by press reports linking Morgan Chase to silver market manipulation. Of course such press reports have arisen from the complaint brought by GATA to the March 25 hearing held by the U.S. Commodity Futures Trading Commission about trading practices in the precious metals futures markets. At that hearing GATA presented the story of London trader Andrew Maguire's attempt to walk the CFTC through an ongoing market manipulation by traders for Morgan Chase, and the CFTC's seeming lack of interest.

The King World News interview with Butler is 10 minutes long and you can find it here:

The King World News interview with Rickards is 12 minutes long and you can find it here:

This revelation, "IF" acted upon with due diligence by the Anti-Trust Division of the U.S. Justice Department, is HUGE news for Precious Metal Investors, particularly those that invest in Silver. The curtain may be about to be raised on The World's Biggest Fraud.

Over looked in today's breaking news was this letter written to the Department of Justice by Silver marksman Jason Hommel. Jason published this letter on the Internet on April 8, 2010.
He pulls no punches, and minces no words calling JP Morgan onto the carpet with his precise anti-trust accusations regarding JP Morgan's activities in the Silver Market.

Citizen Complaint Center
Antitrust Division
950 Pennsylvania Ave., NW
Room 3322
Washington, DC 20530

Re: Reporting Antitrust Concerns

Step 1: Fully Describe Your Concern

1. What are the names of companies, individuals, or organizations that are involved?

The CFTC, the Commodity Futures Trading Commission, is withholding the names, with the excuse given that they cannot reveal the names, because of statute. But, a statute, which may violate other laws, is no excuse for obstruction of justice, dereliction of duty, misprison of fraud, or conspiracy to defraud the United States.

The COMEX, owned by the CME Group, also has the data on who is primarily involved, as the antitrust violaters trade on their exchange.
JPMorgan Chase & Co. has been named by thousands of writers in the private sector, all over the internet, based on the reports of the BIS, the Bank of International Settlements and the OCC, the Office of the Comptroller of the Currency at the US Treasury, that they manipulate the precious metals markets by fraudulently selling metal that does not exist. This Bank report indicates that JPMorgan Chase & Co. is heavily involved, far more than any other, in derivatives, exceeding $72 trillion.

JPMorgan Chase & Co.

270 Park Avenue
New York, NY 10017

2. How do you believe they have violated the federal antitrust laws? (For details on federal antitrust laws, see Antitrust Laws and You.)

RE: Sherman Antitrust Act
This Act expresses our national commitment to a free market economy in which competition free from private and governmental restraints leads to the best results for consumers. This Act outlaws all contracts, combinations, and conspiracies that unreasonably restrain interstate and foreign trade. This includes agreements among competitors to fix prices, rig bids, and allocate customers, which are punishable as criminal felonies.

JPMorgan Chase & Co. holds a large, concentrated, short position in silver futures contracts at the COMEX that allows them to unreasonably fix prices for silver lower than they should be, which resulted in widespread shortages of retail bullion, and 1000 oz. silver bars, over several months in 2008, at which time, I became a bullion dealer to help relieve the shortages caused by this price manipulation. I had to wait up to 5 weeks for delivery of 1000 oz. bars from one of the world's largest wholesale suppliers at the time.

It has been estimated that JPMorgan Chase & Co. has held up to, and over, 90% of the commercial short interest in silver futures contracts, essentially dumping silver on the market, silver that does not exist, in an attempt to contain, thwart, suppress, and manipulate the price of silver lower than it should be, and otherwise would be.

RE: The Sherman Act also makes it a crime to monopolize any part of interstate commerce. An unlawful monopoly exists when only one firm controls the market for a product or service, and it has obtained that market power, not because its product or service is superior to others, but by suppressing competition with anticompetitive conduct.

World silver prices are monopolized by this price manipulation that takes place at the COMEX, and also in the London market, which is even more heavily leveraged due to excessive selling of silver on paper that does not exist in the real world. Their primary product, "silver on paper" is clearly inferior to real silver, in that the key difference is that real silver does not depend upon the financial solvency of JPMorgan Chase & Co. for its value; and paper silver will lose all value if JPMorgan Chase & Co. goes bankrupt. Competition for real silver as an asset is suppressed by their choice to sell paper silver at a discount to the costs of delivering real physical silver, which must include shipping, manufacturing, and mining costs. Other popular forms of silver for investment, such as 100 oz. bars, and 10 oz. bars, and 1 oz. rounds also include manufacturing costs, which are also not included in their "paper silver" investment products, such as the ETF, SLV, futures contracts at COMEX, options on futures contracts at COMEX, and the standard LBMA "unsecured bullion accounts".

RE: The Clayton Act
This Act is a civil statute (carrying no criminal penalties) that prohibits mergers or acquisitions that are likely to lessen competition. Under this Act, the government challenges those mergers that careful economic analysis shows are likely to increase prices to consumers. All persons considering a merger or acquisition above a certain size must notify both the Antitrust Division and the Federal Trade Commission. The Act also prohibits other business practices that may harm competition under certain circumstances.

The Clayton Act was likely violated when JPMorgan Chase & Co. acquired Bear Stearns, and inherited their short position in silver, giving JPMorgan Chase & Co. even more control over silver market prices, due to their even larger and more concentrated short position. "Higher prices for consumers" is a result if the consumers are silver investors, and if they lose the value of their silver, and thus, have to pay relatively higher prices for everything else in the economy as a result.

Read the entire letter here:

It is unknown by this writer if the Department of Justice reacted to the letter by Mr. Hommel, but his accusations are certainly damning. My hunch is that the 18 month CFTC investigation into the Silver market has revealed a "crime in progress" too big for them to handle and they have called in the Department of Justice to take over the case, and prosecute if the findings are substantiated. Heads are gonna roll...

And if this "breaking news" wasn't enough to pin the tail on the JP Morgan donkey, a story I spotted on Harvey Organ's - The Daily Gold this afternoon will certainly raise the eyebrows of those searching for American Banking exposure to Greek and associated PIIGS potential sovereign debt default:

29 APRIL 2010

When You Lie Down With Them Dept: Morgan Stanley Has 69% Tier 1 Capital Exposure to the PIIGS

That statistic about Morgan Stanley was an eye opener in terms of percent of capital exposure. No wonder Angie Merkel is playing hard to get, holding out for more than another back rub. Morgan Stanley looks like it done slipped in the pig wallow, don'cha know.

Gentlemen, start your presses.

JPMorgan Has Biggest Exposure to Debt Risks in Europe
By Gavin Finch
April 29 (Bloomberg) -- JPMorgan Chase & Co., the second- biggest U.S. bank by assets, has a larger exposure than any of its peers to Portugal, Italy, Ireland, Greece and Spain, according to Wells Fargo & Co.

JPMorgan's exposure to the five so-called PIIGS countries is $36.3 billion, equating to 28 percent of the firm's Tier-1 capital, a measure of financial strength, Wells Fargo analysts including Matthew Burnell wrote today. Morgan Stanley holds $32.4 billion of debt in the region, which equates to 69 percent of its Tier 1 capital, Burnell wrote.

"Regulatory data suggests JPMorgan's exposure is largest in aggregate, but Morgan Stanley held the largest aggregate exposure to the PIIGS relative to Tier 1 capital," the analysts wrote. Overall U.S. bank "exposure to Greece is lower than exposure toIreland, Italy and Spain.

"Bonds and stocks plunged across Europe in the past week on concern the Greek debt crisis is spreading across the euro area. Standard & Poor's this week cut Greece, Portugal and Spain's credit ratings as concern the nations may fail to meet their debt commitments increased.

U.S. banks held a total of $236.8 billion of exposure to the five nations, including $18.1 billion to Greece, Wells Fargo said. European banks have claims totaling $193.1 billion on Greece, according to the Bank for International Settlements, with another $832.2 billion of claims on Spain.


Notes: JPMorgan has the biggest exposure to defaults of the "PIIGS" nations. JPMorgan has 36.3 billion dollars of loans to these nations and it represents 28% of their tier 1 assets.
(Please understand...this is tier 1 (good assets) as compared to tier 3 which is toxic or worthless junk)

Morgan Stanley holds a lesser amt of 32.4 billion but this total represents 69% of its tier 1 assets.
Thus a default by these nations will bring down Morgan Stanley and most likely JPMorgan who would have other problems because of credit default swaps which is not included in these figures.

Note: all the usa banks hold 236 billion dollars to these 5 nations. This should wipe out most of the usa banks reserves.(credit default swaps are not included in this figure)

Note: European banks hold 193 billion dollars on Greece alone...naturally this would wipe out all reserves at European banks.(credit default swaps are not included in this figure)

Note: take a look at the total claims on Spain of 832 billion dollars. This is from the BIS and this figure INCLUDES CREDIT DEFAULT SWAPS.

Ladies and Gentlemen: from these figures you can see a systemic disaster is waiting to unfold.

The latest from Rolling Stone contributor, and Wall Street nemesis, Matt Taibbi is the icing on today's cake:

The Feds vs. Goldman
The government's case against Goldman Sachs barely begins to target the depths of Wall Street's criminal sleaze
By Matt Taibbi
On the day the Securities and Exchange Commission filed suit against Goldman Sachs for securities fraud, shares in the company plunged 12.8 percent, closing at $160.70. The market, it seemed, was finally passing judgment on a decade of high-stakes Wall Street scammery that left America threatening Nigeria, Indonesia and Belarus on the list of the world's most corrupt economies.

A few days later, Goldman announced its first-quarter numbers. Profits were up 91 percent, to a staggering $3.4 billion.

Compensation and bonuses soared to $5.5 billion, up from $4.7 billion in the first quarter of 2009. Battered in the press, Goldman was raking up on the bottom line. So investors once again leapt into Goldman's arms, pushing the stock as high as $166.50, not far from where it was even before news of the SEC suit broke.

Goldman isn't dead – far from it. But this new SEC suit officially places it at the center of a raging national discussion about the hopelessly fucked state of American business ethics. As a halting, first-step attempt at financial regulatory reform makes its way toward a vote in the Senate, the government has finally thrown open the door and let a few of the rottener skeletons tumble out.

On the surface, the failure-to-disclose rap being leveled at Goldman feels like a niggling technicality, the Wall Street equivalent of a tax-evasion charge against Al Capone. The bank will try and – who knows – might even succeed in defending itself in a court of law against these charges. But in the court of public opinion it was doomed the instant the SEC decided to put this ghastly black comedy of a fraud case on the street for everyone to see. Just as Pittsburgh Steeler Ben Roethlisberger will never recover from the image of him (allegedly) waving his dick at a scared 20-year-old coed in the darkened hallway of a Georgia nightclub, Goldman may never bounce back from the SEC's brutal blow-by-blow account of how the bank conspired with a hedge-fund magnate to bend one gullible business partner after another over the edge of the subprime housing market.;kw=[3351,136554]?RS_show_page=0

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