The CFTC and the sad joke of "Regulation"

Mon, Sep 16, 2013 - 3:05pm

By now, everyone in the precious metals investing arena has read the confirmation of what we have known for years. On Friday, September 13th 2013, well-known metals trader Andrew Maguire went public with knowledge he had held closely for over a year- that the Commodities Futures Trading Commission had been informed more than a year earlier, by two separate inside whistleblowers directly involved in the operation, that J P Morgan has been deliberately manipulating precious metals markets. The whistleblowers gave the CFTC direct confirmation of these illegal activities, including account numbers in foreign countries, records of transfers of funds, and records of specific trades.

What is particularly telling is that these whistleblowers provided this information to the CFTC more than one year ago, yet the CFTC has seemingly done nothing to either call JPM to account, or to even curtail these activities on the part of J P Morgan. If the allegations are true, there are millions of victims of this ongoing fraud. Any person whose retirement account includes an index fund owning gold or silver mining companies has been defrauded as a result of these actions. Any investor who owns gold or silver has been defrauded by these actions. Any person who, in desperate times, has had to sell gold or silver at a “cash for gold” shop has been defrauded by these actions. Though the CFTC will undoubtedly attempt to defend themselves by claiming that the investigation is “ongoing”, the fact remains that nothing has been done to curtail this fraudulent trading activity in the twelve long months since they first received this information. Indeed, highly questionable market action strongly suggests that it is still being done today.

At what point does the continued inaction of the CFTC indicate that they are acting less as the regulator in this case, and more as an enabler of an ongoing fraud? At what point should the CFTC, having full knowledge of what is being done and in possession of sworn testimony indicating the extent of the fraud being committed yet failing to act, be considered a co-conspirator to this ongoing criminal activity? At what point should the CFTC be considered nothing more than a bad joke? Well, they already are, and have been for some time.

People on the outside of the precious metals investing world might be amazed that this information was such common knowledge, shared so widely for such a long time by so many people, that the “JPM fraudulently manipulates the metals AND the CFTC knows and does nothing” meme has been a long-running joke on this site. Please note that for humor to work, the audience must understand the underlying premises of the joke and believe me- the audience understood these jokes, and the situation, all too well.

The Criminal Fraudsters:

J P Morgan CEO Jaime Dimon and former head of commodities trading Blythe Masters are the two figures most closely associated, whether rightly or wrongly, with the general knowledge that JPM was routinely manipulating commodities. The current whistleblower revelations appear to corroborate small investors views of these two individuals, and they were given a central role in my joke photoshop assemblage over time.

Here’s Jaime Dimon as a “Bill Lumberg from Office Space” character, blandly requesting market manipulations as easily as TPQ reports.

On a particularly bad day for the metals, I envisioned Dimon as ‘Buffalo Bill’ from Silence of the Lambs, ritually abusing investors. “It sells its shares so I can win, or else it gets the hose again”.

Very rarely, I would use these photoshops as a bit of fantasy wish-fulfillment, day-dreaming that someone, somewhere, would actually enforce the law and see that justice was done to right the wrongs perpetrated on small investors by these people. Hey, I did acknowledge that this was pure fantasy, didn’t I? We have a better chance of seeing moonwalking leprechauns throwing Skittles at the Loch Ness monster than seeing this:

Still, the idea of Jaime going out all Scar-face style in a cocaine-fuelled blaze of destruction was more than a little enjoyable to imagine. Look at the newspaper headlines I placed on his desk, and think about the whistleblower revelations from this weekend… this was made six months ago.

Blythe Master, former head of Commodities trading, has also been quite prominently features in my joke photoshops. Here is Blythe as “Honey Bunny” in Pulp Fiction, done during a particularly brutal beatdown to keep my mind off of my trading account:

People generally knew, or at the very least had a strong suspicion, who was largely behind the blatantly manipulative selling that occurred at specific points in the chart- people joked “Here comes Blythe” when large numbers of contracts were dumped to drive price down.

Blythe insisted on a CNBC interview that rumors of JPM manipulating silver were completely bogus, famously proclaiming “We only hedge on behalf of our clients”. This movie poster send-up of Blythe was posted 16 months ago on the 1 year anniversary of the “May Massacre”, a particularly egregious manipulative event in the wee hours of the morning of May 1, 2011.

Blythe’s ability to stop a rally in the metals dead in its tracks (usually capped at 1%, and never EVER allowed to rise more than 2% in a single trading day) was legendary, proving her complete control over the matrix, errrr, I mean the “free market”. It’s funny because it’s true.

The CFTC- Bumbling imbeciles or just plain crooked?

If we in the general public were aware of what was going on for such a long time, then it was almost incomprehensible that the regulators at the CFTC didn’t know. In fact, well before the recent information came to light we all assumed that since everyone could see how blatantly the metals were manipulated, then the CFTC surely knew it too. The fact that they continued to do nothing while investors were defrauded time and again left us with only two options: either the CFTC was the biggest group of incompetent morons since the Three Stooges, or they were simply on the take. Rightly or wrongly, when making my joke photoshops I generally placed Bart Chilton in the former category, and Chairman Gary Gensler in the latter. Here’s one of Chilton as the bumbling Inspector Clouseau, earnest but utterly clueless:

And here is a silly one illustrating the suspicion that Gary Gensler, a TBTF bankster man to the core, was aware of what the JPM “desk monkeys” were doing, but chose to look the other way because of, well, let’s call it “self interest”. And if you think this is a bit harsh, let me ask you two questions- 1. Why has Gensler stonewalled the 5+ year investigation into silver manipulation and ignored the whistleblower information serving up JPM on a platter, and 2. What do you think the odds are that Gensler, when his chairmanship is up in the next few months, will be rewarded for his ‘fine public service’ with a really fat multi-million dollar salary from one of the TBTF banks whose trading desks he was supposed to have been regulating? Anyone want to bet me on that? (crickets chirping) That’s what I thought.

The spectacle of market regulators being so deliberately obtuse in the face of obvious manipulation inspired me to create this one, picked up by several PM websites:

This one was done nearly six months ago… that is half a year before the whistleblower revelations and news of CFTC inaction were made public by Maguire. You could say I am a visionary, but that would be wrong. I did this because WE ALREADY KNEW this was going on, the recent revelations have only confirmed it.

This picture more or less illustrates the core of our situation today: CFTC commissioners speak no evil, see no evil, and hear no evil… while JPM chief Jaime Dimon pulls the strings for yet another manipulated take-down in the metals, and (former) JPM Commodities chief Blythe Masters sees to the, uh, details of the operation. Kinda funny, right?

Well, please note that this humorous ‘spoof photoshop’ was posted 18 months ago in March of 2012. That is half a year BEFORE the two whistleblowers stepped forward, and 18 months before their allegations and the CFTC inaction were made public by Maguire. Yet even back then people thought this was really funny and hat-tipped the hell out of it. You know why? Because we fucking knew. Everyone knew. This spoof was funny because it was true- I just had the poor taste to render, in visible form, what everyone already knew was going on. Speak no evil, see no evil, hear no evil… Public serpents indeed.

. . .

I’m going to tell you two things; one impossibly cynical, the other irrationally hopeful. The impossibly cynical thing is this- we already know that in the “too big to jail” economy, nobody is going to do time for defrauding investors of millions (and possibly billions) of dollars. This is the reality of our pathetic situation, so deal with it.

But here’s the thing: we also have an exceptional opportunity here! We have a brief, fleeting chance to actually do something other than bitch and moan ineffectually (or make silly photoshops to make ourselves feel better about our helplessness). There is a very small window of opportunity associated with an event like this, so we better make the most of it because they do not come around very often.

WE HAVE A CHANCE TO EMBARRASS THE HELL OUT OF THESE PEOPLE. We have a chance to make their dishonesty, their stonewalling, their perfidy a matter of public knowledge and maybe... just maybe... the light will shine bright enough to stop them from doing it. Wanna see freely traded markets? It's not going to happen while this stuff remains insider knowledge and on the fringes of public consciousness. But we can change that.

Each and every one of you needs to get up off your lazy whining ass and take five minutes of your time to do something to publicize these revelations and try to shine as much light on these insectile vermin as we possibly can. I have written a generic draft of a letter below, and I would like to ask every one of you to copy it, modify it, or write your own, and email it to both Senators of your State, your District member in the House of Representatives, and/or to any media personality whose show you listen to.

What would happen if the staffs of House members started contacting the CFTC asking what the hell is going on? What would happen if a Sean Hannity, Andrew Wilcow, or Mark Levin (all of whom have sold physical gold to their listeners over the years, so they should be damn well concerned with this issue) started making noise about this on their shows? It would make things damn uncomfortable for the people involved, that’s what. In fact, it would be the first time that I can remember where the people who do these things with impunity might actually start sweating over their crimes/inaction/fraud/complicity.

I am going to repost this letter into a Forum in the Everything Else forum under “JPM / CFTC”. If you receive any reply from a representative, a media personality, etc., I would ask you to copy and post it to that forum. Let’s see if we can make some noise, folks. If you don’t do it then nobody else will. If you sit back and let this chance to tall them out slide, then there won't be another.


Senator XXXXXX:

I wish to call to your attention recent public revelations that J P Morgan Chase has been fraudulently manipulating the price of Gold and Silver. This information was provided to the Commodities Futures Trading Commission, which deposed two separate whistleblowers from within J P Morgan, both of whom provided detailed and specific testimony regarding these criminal trading activities. The account of these facts can be found here:

In particular, I wish to inform you of the fact that these whistleblowers provided this information to the CFTC more than one year ago, yet the CFTC has seemingly done nothing to curtail this activity on the part of J P Morgan. Though I am sure the CFTC will attempt to tell you that the investigation is ongoing, the fact remains that nothing has been done to curtail this fraudulent trading activity. Indeed, highly questionable market action suggests that it is still being done today. At what point does the continued inaction of the CFTC (in full knowledge of what is being done and in possession of sworn testimony indicating the extent of the fraud being committed) indicate that they are acting less as the regulator in this case, and more as an enabler of an ongoing fraud? At what point does the CFTC become a co-conspirator?

There are millions of victims of this fraud, including millions of investors in your own state. Any person whose retirement account includes an index fund which includes gold or silver mining companies has been defrauded as a result of these actions. Any investor who owns gold or silver has been defrauded by these actions. Any person who, in desperate times, has had to sell gold or silver at a “cash for gold” shop has been defrauded by these actions.

I would like to request that your office contact the CFTC and question them closely regarding the details of this case and their continued inaction on this matter. I am particularly interested to see if you are concerned that your constituents are being defrauded. The actions you and your office choose to take in this matter will certainly answer that question.



About the Author


Sep 16, 2013 - 4:00pm

Great Post and letter

I'll be sending a few copies of that letter. thanks Pining.

Sep 16, 2013 - 4:01pm

Like the song says:

Been down so long, it looks like up to me...

And the hits just keep on coming. The beats will likely continue until morale improves. I'm not even sure who in Canada I could write a letter to.....sheeit.

Sep 16, 2013 - 4:02pm


here you go:

Sep 16, 2013 - 4:05pm


Thanks, but I really need someone who knows about this to speak about it because if you search for Proof of Funds, you get a ton of companies doing this. Seems like another monster born of another crisis (08/09) but he's been making enormous money from it. I didn't know if those corps or trusts pay a massive amount for the short term funds to beef up the balance sheet. I figured someone here might know.


Sep 16, 2013 - 4:06pm

Nothing will change until.......


Please read the above line again and again until it sinks in. No amount of manipulation stories will influence anyone to take actions cause they control everything except supply/demand for physical precious metals. All all of our demands for fair market valuation will fall into deaf ears like it has been for decades!

There is but only one solution for all of us earthly peons:

Silver is more than 50 times cheaper than gold. It is easier to corner the smaller silver market than gold as history has shown in the past. And since gold is mostly hoarded while silver is being used up, it is silver that we need to concentrate on. Silver supplies are constantly being slurped up year after year. Now if we can only bring to attention to others and increase this demand, it is only natural that silver will be the first commodity to break the chains of manipulation.

Folks, this is our only weapon! We need to not only inform the public about this manipulations but show them steps on how to overcome it.

On a side note, Timothy has credentials to make a good Fed Chairman:

Sep 16, 2013 - 4:10pm

Sent to Feindstein...

I added "Think of how this has adversely affected all the children of these investors..." to get her attention! ;-)

Sep 16, 2013 - 4:11pm


My brother in law and a few friends lost a bunch of money on a very similar scheme. I'll try to get the name of it. They got shut down in the US and moved operations to Europe, promising all investors they would still get their money back. He was totally suckered--sold 5K of silver to get in.

Sep 16, 2013 - 4:18pm

How can we act on the legal field with this case?

All metal investors need to create a huge class action suit against JPM.

I this story has some legs, I can see 10 000+ people getting together on a trial, period.

And what about China an Russia? Their monetary base has been whipped out by the complicity of the US government? And you think these people will sit and do nothing?

Sep 16, 2013 - 4:18pm
Sep 16, 2013 - 4:20pm


Great idea. I'm in.


Subscribe or login to read all comments.


Donate Shop

Get Your Subscriber Benefits

Private iTunes feed for all TF Metals Report podcasts, and access to Vault member forum discussions!

Key Economic Events Week of 10/14

10/15 8:30 ET Empire State Fed MI
10/16 8:30 ET Retail Sales
10/16 10:00 ET Business Inventories
10/17 8:30 ET Housing Starts and Bldg Perms
10/17 8:30 ET Philly Fed MI
10/17 9:15 ET Cap Ute and Ind Prod
10/18 10:00 ET LEIII
10/18 Speeches from Goons Kaplan, George and Chlamydia

Key Economic Events Week of 10/7

10/8 8:30 ET Producer Price Index
10/9 10:00 ET Job Openings
10/9 10:00 ET Wholesale Inventories
10/9 2:00 ET September FOMC minutes
10/10 8:30 ET Consumer Price Index
10/11 10:00 ET Consumer Sentiment

Key Economic Events Week of 9/30

9/30 9:45 ET Chicago PMI
10/1 9:45 ET Markit Manu PMI
10/1 10:00 ET ISM Manu PMI
10/1 10:00 ET Construction Spending
10/2 China Golden Week Begins
10/2 8:15 ET ADP jobs report
10/3 9:45 ET Markit Service PMI
10/3 10:00 ET ISM Service PMI
10/3 10:00 ET Factory Orders
10/4 8:30 ET BLSBS
10/4 8:30 ET US Trade Deficit

Key Economic Events Week of 9/23

9/23 9:45 ET Markit flash PMIs
9/24 10:00 ET Consumer Confidence
9/26 8:30 ET Q2 GDP third guess
9/27 8:30 ET Durable Goods
9/27 8:30 ET Pers Inc and Cons Spend
9/27 8:30 ET Core Inflation

Key Economic Events Week of 9/16

9/17 9:15 ET Cap Ute & Ind Prod
9/18 8:30 ET Housing Starts & Bldg Perm.
9/18 2:00 ET Fedlines
9/18 2:30 ET CGP presser
9/19 8:30 ET Philly Fed
9/19 10:00 ET Existing Home Sales

Key Economic Events Week of 9/9

9/10 10:00 ET Job openings
9/11 8:30 ET PPI
9/11 10:00 ET Wholesale Inv.
9/12 8:30 ET CPI
9/13 8:30 ET Retail Sales
9/13 10:00 ET Consumer Sentiment
9/13 10:00 ET Business Inv.

Key Economic Events Week of 9/3

9/3 9:45 ET Markit Manu PMI
9/3 10:00 ET ISM Manu PMI
9/3 10:00 ET Construction Spending
9/4 8:30 ET Foreign Trade Deficit
9/5 9:45 ET Markit Svc PMI
9/5 10:00 ET ISM Svc PMI
9/5 10:00 ET Factory Orders
9/6 8:30 ET BLSBS

Key Economic Events Week of 8/26

8/26 8:30 ET Durable Goods
8/27 9:00 ET Case-Shiller Home Price Idx
8/27 10:00 ET Consumer Confidence
8/29 8:30 ET Q2 GDP 2nd guess
8/29 8:30 ET Advance Trade in Goods
8/30 8:30 ET Pers. Inc. and Cons. Spend.
8/30 8:30 ET Core Inflation
8/30 9:45 ET Chicago PMI

Key Economic Events Week of 8/19

8/21 10:00 ET Existing home sales
8/21 2:00 ET July FOMC minutes
8/22 9:45 ET Markit Manu and Svc PMIs
8/22 Jackson Holedown begins
8/23 10:00 ET Chief Goon Powell speaks

Key Economic Events Week of 8/12

8/13 8:30 ET Consumer Price Index
8/14 8:30 ET Retail Sales
8/14 8:30 ET Productivity & Labor Costs
8/14 8:30 ET Philly Fed
8/14 9:15 ET Ind Prod and Cap Ute
8/14 10:00 ET Business Inventories
8/15 8:30 ET Housing Starts & Bldg Permits