JPMorgan recently admitted to its role in the manipulation of both the Treasury and precious metals markets. The company did so using a tactic called “spoofing.”
Will Rhind, the CEO of GraniteShares, recently gave an interview where he discussed how JPMorgan manipulated the market. He also mentioned that their illegal actions affected precious metals prices.
Grumblings Present for Years
Rhind said he never had direct knowledge of the manipulation but had been hearing grumblings about it for years. He says anyone who made the accusations was dismissed as a “conspiracy theorist.”
“This is really quite extraordinary because throughout my career there have always been these mutterings of manipulation of the gold market. And a lot of the people who were talking about that were really written off as being fringe or conspiracy theorists, an extreme view. And those people have been right.”
He added. “It’s not as if people haven’t been talking about this or indeed making allegations, and indeed at one point, I think several times, there were allegations made to the CFTC, to regulators, regulators did have a look but nothing was found in terms of the findings.”
Rhind said the extraordinary aspect was that it wasn’t a small “boiler room” company that got caught. Actually, it was one of the largest banks in the world.
He described it as an “extraordinary situation,” considering what happened. It’s a scenario “where one of the largest banks in the world had to pay a monumental fine. I think it’s the largest fine that’s ever been paid for spoofing – market manipulation – in this particular order and really sets a massive precedent.”
JPMorgan Isn’t The Only One
While JPMorgan is the one paying a nearly $1 billion fine, Rhind said they weren’t the only bad actors.
“Some of the emails, the chats have been made public now. (They’re) extraordinary and show the depth of this, not just one bank, but multiple banks and traders coordinating to manipulate prices.”
JPMorgan is accused of “spoofing” or manipulating the price of gold by putting in massive orders. Then, they quickly pulled the orders before they are executed. Rhind said even though the orders weren’t real, they still had a “cause and effect” on the markets.
“In this particular context this is about spoofing. And spoofing is a word for when you put in a fake order, essentially is what it is. So you put in an order in the market to buy or sell, but you withdraw that order before it is executed. So that obviously (has a) cause and effect if you put in an order and it’s a sizeable one that can have other consequences in terms of other orders that then move the price of that particular.”
He says it’s impossible to say how the spoofing affected the precious metals markets.
“As far as how much that has actually affected the price on a day-to-day basis, I think that’s very, very difficult to determine. So I think the minutiae of it is almost going to be impossible to determine. But I think it’s more the fact that this was happening, that people knew or suspected that it was happening,” he adds it’s really been made public.