Deutsche Bank Settles in Gold-Fixing Lawsuit

On Friday, Deutsche Bank agreed to settle privately. Traders and investors brought antitrust litigation against the German bank. They accused the company of conspiring to fix gold prices at their expense. This case holds particular interest to me personally. The prosecuting counsel asked me to give testimony to some of the dubious trading patterns I observed over the years. Those from participating in the futures market.

The preliminary settlement was filed in New York this week and consists of a $60M package.

This follows a similar settlement the bank agreed to pay in October of $38M for conspiring to fix silver prices. It remains in question which classes of traders or investors are eligible to receive compensation from the settlement. We also don't know the total payout per individual. Which, is unlikely to amount to more than a few hundred dollars. Further, I should note that the combined settlements of $98M represent a tiny fraction of the bank's $47 billion revenue for 2015. So the settlement will have a negligible impact on the company. Deutsche Bank officially denies wrongdoing. However, the fact that the bank is willing to settle the case is unprecedented in and of itself. Here we have, for the first time, a large multi-national bank agreeing to pay for actions related to manipulation of the precious metals markets. With this settlement, it is possible that further class action lawsuits could be brought against Deutsche Bank by other parties in the coming years. Barclays, Bank of Nova Scotia, HSBC, and Societe Generale are four other banks listed as defendants in the case. They have not agreed to settle yet. Should the case go to trial, a ruling against these banks could result in much harsher penalties than the $98M Deutsche Bank is paying?

Manipulation Theories Go Mainstream

In years past, theories that banks were attempting to manipulate precious metals prices were considered the realm of conspiracy theorists. Mainstream media often dismissed them. However, it is increasingly clear that the precious metals markets represent a particular focal point for many institutions. Attempts to manipulate their values are indeed occurring. It has long been my contention that such manipulation attempts do occur. However, I also believe that such efforts are not more powerful than the market forces themselves. Ultimately, the market will win out. And, attempts at suppression will fail. This is a lesson from countless examples throughout history-- attempts to suppress a given market only result in that market moving higher once the destruction is overwhelmed. The market action on a given day or week is related to manipulative attempts of legitimate buying and selling. However, we should still pay attention to where price signals appear on the charts. Both manipulation and legitimate market action do impact the prices at which we must buy and sell the physical metal. Also, as well as the revenues and hence market valuations of the companies that mine for the metals in the ground. Over the long run, we should not want to be involved with precious metals if people can manipulate them ad infinitum. The fact that we as investors are here means we must have faith that such suppression will fail and the market forces will seek correct values. Over the next few months, we will continue to monitor the settlement and litigation proceedings of these cases. Then, report on any actions that individual investors should take on the possibility of reparation payments. *****

Italians Vote "No" -- Signals Establishment Discontent

Early Monday morning, we received reports that Italians have voted "no" on Premier Matteo Renzi's reform referendum. Additionally, further reports are that Renzi will resign on Monday. The outcome usually means a representation of victory for "anti-establishment" voters. Italy's corporations, banks, and establishment institutions went to firmly back the reform referendum. So, the defeat sends a message that is similar in context to Britain's Brexit vote and Trump's victory here in the US. Here we see over the last six months three major western nations delivering strong anti-establishment and anti-globalist messages to their politicians. While the impact on the precious metals markets has been minor in the overnight Asian trading immediately following the vote the "wind of change" that is blowing in various corners of the political world is gaining momentum.

A Political to Economic Trend?

From a dual political/economic standpoint, we cannot help but wonder: when will even a small fraction of those discontented with the current system connect the dots and vote against the same system? (and willing to vote against it in an election). This can be done tangibly by selling the local currency and buying gold/silver instead. It would not take many of the world's disgruntled citizens to only buy a few ounces of silver or a single ounce of gold for the prices to skyrocket to multiples of the current level. The timing for this scenario remains speculative still. Yet, we can indeed see shifts in sentiment in front of our eyes. One thing is for sure: political systems and their fiat currencies are intrinsically related. Manipulation from Deutsche Bank or any other institution will be able to hold back the "voting" of the global currency market when it finally moves in favor of gold.

Christopher Aaron, Bullion Exchanges Market Analyst

Christopher Aaron has been trading in the commodity and financial markets since the early 2000s. He began his career as an intelligence analyst for the Central Intelligence Agency. This is where he specialized in the creation and interpretation of the pattern of- life mapping in Afghanistan and Iraq. Technical analysis shares many similarities with mapping. They both base on the observations of repeating and embedded patterns in human nature. His strategy of blending behavioral and technical analysis has helped him and his clients. That is- to identify both long-term market cycles and short-term opportunities for profit.