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What does Deutsche Bank's confession mean for gold and silver investors?

By: Chris Powell, Secretary/Treasurer, GATA

 -- Published: Monday, 18 April 2016 | Print  | Disqus 

Dear Friend of GATA and Gold:

What do Deutsche Bank's confession to gold and silver market rigging and its pledge to incriminate other bullion banks mean?

Almost certainly they mean more litigation on top of the federal class-action lawsuit in New York that prompted the confession and pledge. Beyond that it's anyone's guess.

Of course gold traders, investors, and gold and silver mining companies and their investors are wondering what's in it for them. That's hard to say.

Ordinarily in a successful class-action lawsuit the court devises remediation that is available to everyone affected by the misconduct at issue in the suit -- available not just to the plaintiffs named in the suit but to everyone similarly situated, everyone damaged by the misconduct. Once the court settles on such remediation, its availability is publicized to potential members of the class and they are invited to register with the court so they may be paid. So no one has to become a plaintiff in the suit to receive damages.

But the focus of the Deutsche Bank class action seems to be narrow; it involves those who traded gold and silver on exchanges like the New York Commodities Exchange. It does not seem to cover trading and valuations that took place outside such exchanges, though of course other gold and silver transactions and the trading of the shares of gold and silver mining companies well may have been heavily influenced by the trading covered in the lawsuit.

For example, shareholders who were wiped out by the bankruptcy of Allied Nevada Gold Corp. a year ago have to be wondering whether the gold and silver market manipulation to which Deutsche Bank has admitted and in which the bank's associates also may have been involved harmed their investment and entitles them to damages. Indeed, shareholders of any gold or silver mining company must wonder whether Deutsche Bank and the other banks should be liable to them for damages as well.

Those concerns seem to go beyond the scope of the current class-action lawsuit. But once the court in that lawsuit puts substantial evidence on the record or makes a formal finding, all sorts of gold and silver investors and mining companies may do well to engage their own legal counsel to explore their options.

(If only gold and silver mining companies cared about the rigging of the markets for their products, or even understood the true nature of their products as money. If any mining company has even noted the development with Deutsche Bank, there is as yet no evidence of it.)

Deutsche Bank may not be culpable enough to be obliged to make whole every gold and silver investor and mining company in the world, but if enough other big banks are incriminated, they may create a target rich enough to invite many other lawsuits, individual and class-action.

Of course the bigger issue for GATA is whether the class-action suit against Deutsche Bank and the other banks alleged to have manipulated the gold and silver markets will expose the intervention of central banks, directly or through intermediaries. That is, for example, were Deutsche Bank and the other accused banks ever trading on behalf of central banks and front-running those central bank trades?

For reprehensible and illegal as it is, market rigging by big traders is not so unusual and tyrannical as surreptitious trading by central banks. For the world's sake, the latter sort of market rigging needs far more exposure.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

* * *

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