Banks Rigged Silver Markets and Monte Paschi Bank Woes Worsen with Italian Political Chaos

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In a year of countless bank scandals that include LIBOR- and currency-rigging charges, the hits to the international banks' sullied reputations just kept on coming this past week. Now Deutsche Bank records divulged to prosecutors have revealed that the troubled German lender conspired with other friendly global mega-banks headquartered in especially Britain, but also Switzerland, France, the United States, and Canada to rig the worldwide silver markets pricing. Italian Bank Monte dei Paschi di Sienna, the world's oldest financial institution, this week found itself clinging to the edge of a geopolitical cliff as its ally Prime Minister Matteo Renzi fell from power and the almighty ECB refused to grant the nation and bank's request for more time to boost its capital base by a critical five billion euros. OPEC and Russia finally hammered out a convincing enough deal to kick start falling oil prices significantly higher. Everywhere you turn in the international news headlines, you see more than enough troubling reasons to hold onto your gold retirement holdings with two hands.

Banks Rigged Silver Market Prices Per Deutsche Bank Documents' Revelation

Fully eight months following their settlement of a lawsuit which alleged largest German lender Deutsche Bank conspired to manipulate both gold and silver market prices, documents it released in the settlement demonstrated a clearly smoking gun which implicated its global co-conspirators British HSBC, Swiss UBS Group, Canadian Bank of Nova Scotia, British Barclay's Bank, British Standard Chartered Bank, French BNP Paribas, Belgian-Luxembourg-Dutch Forits, and American Bank of America Corporation.

The damaging evidence surrendered by embattled German institution Deutsche Bank convincingly demonstrated in written records the ways that a concerted effort by both submitters and traders who coordinated their daily market opening trades with an advance phone call to their friendly rival-competitors allowed them to set opening silver market prices. They also did this to manipulate the silver spot market in an effort to fix the silver spreads they provided to their clients. Illegal strategies were also jointly employed in order to rig the ultimate silver prices.

“UBS was the third-largest market maker in the silver spot market and could directly influence the prices of silver financial instruments based on the sheer volume of silver it traded. Conspiring with the other large market makers including Deutsche Bank and HSBC only increased UBS's ability to influence the market,” the plaintiffs argued. This chart on silver spot prices in one single 24 hour period below illustrates the dramatic power their efforts had over silver price movements.

As if this were not bad enough, Deutsche Bank is also the new negative poster boy for efforts to help failing third largest Italian lender Monte dei Paschi di Sienna Bank in Italy to hide its losses for years by employing complex derivative instruments it cheerfully helped them to construct to fool European and Italian regulators and investors alike.

Italian Prime Minister Falls, Pulling Troubled Monte Paschi Bank to the Brink

The political execution of Italian Prime Minister Matteo Renzi after his Italian reforms referendum failed was the latest “shot heard round the world” from the proverbial populist movements' firing squad. A new prime minister has been anointed by the Italian President from the same majority in Parliament party in the person of the former finance minister. The biggest problem he is facing currently is that Renzi's fall has occurred exactly the same week that embattled Italian lender Monte Paschi was desperately trying to close on its five billion euros in emergency recapitalization funding in order to continue operating.

Italy appealed to the European Central Bank last week for more time for the bank to complete its financing efforts in the wake of the disastrous Italian political scene unfolding that had rattled investors from finalizing their commitments to Monte Paschi Bank. The European Central Bank threw a cold bucket of water on the proceedings by refusing to extend any additional time to the troubled oldest bank in the world to finance ongoing operations. They stated sanguinely that they had already provided more than two years to Monte dei Paschi to handle its bad debts and soured loan book. They had been working with the third largest Italian bank's financial problems since 2014 when it failed its first of two ECB-engineered stress tests.

The stock price of Monte Paschi had already taken a clobbering over the past several years. It cratered still another over seven percent after this latest troubling news broke from Reuters. The rejection has stepped up the pressure on both the Italian bank and its national politicians to come up with an urgent and convincing solution. Italy is now one step closer to being forced to provide an illegal state-funded bank bailout in order to stem the contagion from taking down other Italian lenders and banks.

Since this is illegal under EU regulations, the European competition authorities may fine Italy for providing illegal state-sponsored aid if they go through with such a drastic and desperate measures bailout. Besides the political and financial troubles the bailout would create with the rest of the onlooking EU member states, it could cause still more anti-establishment and anti-European Union feelings in an Italian electorate that is already being driven away into the arms of Beppe Grillo's Five Star Movement and Italy's Northern League parties. Fitc,h the respected Credit Ratings company, stated in a general note Tuesday that the referendum results may similarly destabilize other recapitalization in progress efforts of even larger Italian banks, such as that of largest Italian bank UniCredit. “The sector's ability to access the institutional markets for funding and capital, which has become more difficult and expensive this year, could deteriorate further,” warned Fitch.

OPEC and Russian Led Other Producers Collude to Substantially Increase Oil Prices

OPEC and Russian negotiators have been haggling back and forth for months now over proposed oil production output cuts which they desperately need in order to salvage plummeting oil prices on the global markets. This week, they finally reached a conclusive and convincing arrangement to slash non-OPEC nations' oil output by a significant 558,000 barrels per day. This catapulted oil prices to more than $53 per barrel on the news of the historic and sweeping production cut deal signed with the major non-OPEC member states over this past weekend. OPEC had already signed up itself to slash its member state output by over 1.2 million barrels per day earlier. Analysts are convinced that this time it is different as OPEC and non-OPEC nations alike are in earnest to see the production cuts through to support rising prices they all desperately need.

Higher oil prices helped to carry the embattled Euro currency along with them as the bonds of Eurozone area countries climbed on the back of the historic landmark deal. Germany's key 10 year bond yields galloped ahead five basis points to reach .40 percent. The 30 year German bond yield rocketed up nine basis points to reach 1.23 percent. Higher oil prices generally lead to higher yields and real interest rates and are similarly a Euro currency net positive. Gold remains your safest place to hide from the geopolitical and populist propelled storm raging around the globe both now and always.

David Crowder
David Crowder

W.D. Crowder is an American published author. His background and areas of expertise include history, economics, expatriate living, international relations, investments and personal finance. A widely read and top of his class graduate of Stetson University, he obtained his bachelor of arts degree in History with minors in Latin American Studies and International Relations and a special emphasis in Economics. He was President of his Phi Alpha Theta (National History Honors Fraternity) Stetson University chapter and a Phi Beta Kappa (National Honors Fraternity) member.

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