Deutsche Bank Confirms Silver Market Manipulation In Legal Settlement, Agrees To Expose Other Banks
Comment of the Day

April 14 2016

Commentary by Eoin Treacy

Deutsche Bank Confirms Silver Market Manipulation In Legal Settlement, Agrees To Expose Other Banks

Thanks to a subscriber for this article from ZeroHedge detailing continued attempts to prove manipulation in the silver market. Here is a section: 

According to Reuters, Deutsche Bank has signed a binding settlement term sheet, and is negotiating a formal settlement agreement to be submitted for approval by U.S. District Judge Valerie Caproni, who oversees the litigation. A Deutsche Bank spokeswoman declined to comment. Lawyers for the investors did not immediately respond to requests for comment.

As noted above, investors had accused Deutsche Bank, HSBC and ScotiaBank of abusing their power as three of the world's largest silver bullion banks to dictate the price of silver through a secret, once-a-day meeting known as the Silver Fix.

None of this will come as a big surprise to readers, most of whom have been aware that this took place for years.

But wait there's more.

In a curious twist, the settlement letter reveals a stunning development, namely that the former members of the manipulation cartel have turned on each other. To wit:

“In addition to valuable monetary consideration, Deutsche Bank has also agreed to provide cooperation to plaintiffs, including the production of instant messages, and other electronic communications, as part of the settlement. In Plaintiff’s estimation, the cooperation to be provided by Deutsche Bank will substantially assist Plaintiffs in the prosecution of their claims against the non-settling defendants.”

Eoin Treacy's view

The method used to set the daily benchmark rate for sliver changed to an electronic system in January. This change to a decades old method was in recognition of the fact that the honour based system that had prevailed previously was woefully inadequate. The admission by Deutsche Bank of culpability and its willingness to share correspondence pertaining to what amounts to conspiracy is likely to continue to make headlines and may draw more attention to the silver market. 

Silver rallied this week to post a new recovery high and has now broken its lengthy progression of lower rally highs. A sustained move below $15 would be required to question medium-term scope for additional upside. 

The Global X Silver Miners ETF surged right along with gold miners but pulled back today to suggest some consolidation of recent powerful gains is now underway. A break in the three-month progression of higher reaction lows, currently near $26 would be required to begin to question recovery potential. 

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