Barrick Gold Corp. and J.P. Morgan Chase & Co. Accused of Illegal Gold Market Manipulation

Press Release ^ | 18 December 2002 | Unknown

[LSUfan]

An anti-trust lawsuit filed today accuses Barrick Gold Corp., Toronto, and J.P. Morgan Chase & Co., New York City, of "unlawfully combining to actively manipulate the price of gold" and making (US) $2 billion in short-selling profits by suppressing the price of gold at the expense of individual investors.

[hchutch]

Oh, God forbid anyone make a profit!

[Matchett-PI]

I figured this was coming! It all has to do with derivatives. Doesn't surprise me a bit!

[Cicero]

These are undoubtedly the parties most likely to be involved in gold manipulation. Barrick is famed for selling gold ahead massively, and Morgan is famed for its immense holdings of gold derivatives.

Whether the suit can succeed is another matter. I suspect that the Fed is involved as well, and that they may intervene in the same way that they did against the Hunt Brothers' silver holdings. As the old saying goes, you can't fight City Hall.

[Sangamon Kid]

This is great news! Anyone holding physical ought to be pretty happy. Shine the light on those cockroaches.

[dtel]

Thought this might be of interest.

[Cuttnhorse]

From the article: "If gold had kept pace with inflation, the price today would be approximately $760 (per ounce)."

No need to read any further...this guy is a looney. If my stock portfolio had kept pace with inflation, I'd be retired!!
Welcome to the investment world and good luck on your court case. LOL!!

[BearCub]

The problem is that the bullion banks sell gold that doesn't exist. If everyone who had an option to buy the gold tried to cash in, the world financial markets would implode. Nothing wrong making a fair profit, but conspiring to keep the gold price low by selling gold that doesn't exist is unfair to those who are trying to sell gold they actually own.

[Soren]

This case was already known to many goldbugs. I read about it several weeks ago. I doubt they will be successful, but the case will draw attention to the large short positions, which is bullish for gold. In the last few days, I have heard segments on Bloomberg, CNBC, and local AM radio that were moderately bullish on gold. The general public is starting to become aware of what goldbugs have known for the last 2 years.

[razorback-bert]

Thanks

[hove]

"Oh, God forbid anyone make a profit!"

Hey..I'm with you. Screw anybody....as long as their is a profit to be made.

[shrinkermd]

There is a better source on CBS MarketWatch. Here are some key paragraphs:

"The suit was filed by Blanchard and Company, Inc., New Orleans, the largest retail dealer in physical gold in the United States, and by Blanchard clients who bought gold bullion. Blanchard (www.blanchardonline.com) is paying the costs of the suit, which asks the Federal Court to terminate the trading agreements between Barrick and J.P. Morgan Chase and other, as yet unnamed, bullion banks. It also seeks the payment of treble damages to Blanchard's clients for the losses they have suffered as a result of Barrick's and J.P. Morgan Chase's unlawful price manipulation, anti-trust violations and unfair trade practices.

"Since the end of 1987, when the collaboration between Barrick and J.P. Morgan began, the growth of global income and wealth would have lifted the gold price to approximately $740 if the price had been able to respond to the normal laws of supply and demand," stated Blanchard's Chief Executive Officer, Donald W. Doyle, Jr. "If gold had kept pace with inflation, the price today would be approximately $760."

"The lawsuit claims that in the past five years Barrick and J.P. Morgan Chase injected millions of additional ounces of gold into the market - additions that were several times as great as the annual production of every gold mine in South Africa, the largest gold producing nation in the world. By using privately negotiated derivative contracts and concealing the addition of billions of dollars worth of (physical) gold with off-balance sheet accounting, Barrick was able to make it virtually impossible for gold analysts and investors to determine the size and the market impact of its trading positions.

"The same type of accounting maze that hid Enron's debts made it possible for Barrick to manipulate the price of gold without the checks and balances that come from public scrutiny. As a percentage of Barrick's total assets, its off-balance sheet assets make Enron look like a champion of full disclosure," said Doyle. "Is Barrick a gold mining company, or is it a hedge fund with a mine out back?"

"The suit alleges that J.P. Morgan Chase financed Barrick's repeated short selling with remarkably advantageous terms not available to others, including deferred repayments and no margin calls. Doyle said the short-sales scheme between the bank and Barrick appears to be the proverbial "money for nothing."

"Over the past five years, J.P. Morgan Chase loaned gold to Barrick at approximately 1.5 percent; sold the gold into the market and invested the dollar proceeds at approximately 6.5 percent; then paid both the proceeds from the sales and the 5 percent interest differential to Barrick whenever it repaid any of the borrowed gold. During a period when the price of gold dropped by more than 25%, Barrick's annual operating cash flow increased by more than 400%."

If the above proves to have merit, count on class action suits with there not being enough money in defendants control to pay all the claims. This may be also curtains for Alan Greenspan and several or more Treasury Secretaries, but not the present one.

[Afronaut]

Did you read this? Pure Garbage. Good luck.!! :)

[rohry]

Thanks for the bump. GATA tried to sue these guys (along with The Fed, and a few other government and quasi-governmental agencies) but the case was thrown out because they didn't have "standing." These guys (a huge gold dealer) obviously has "standing."

I believe a Freeper with the screen name mountaineer was working a similiar case...

[MamaLucci]

This may be also curtains for Alan Greenspan and several or more Treasury Secretaries, but not the present one.

Do you mean Rubin? If so, how so?

[mountaineer]

Thanks for the bump. I wrote a news story about the Reg Howe lawsuit several months ago, and have been planning to do a follow up. It looks like this is the time!

[rohry]

"I wrote a news story about the Reg Howe lawsuit several months ago, and have been planning to do a follow up. It looks like this is the time!"

Better hurry! The word on the street is that the gold derivatives market blow up when gold gets to $348:

[berserker]

You should read the self-serving press release (filed by the company that is suing the banks) before you respond.

[arete]

Yes, I'm glad to see that this situation is finally getting some attention.

Richard W.

[shrinkermd]

Gold is up 3.70 in overseas trading tonight.