top stories thousands rally behind president assad in the syrian capital with the regime claiming terrorist groups for escalating violence ahead of the ceasefire deadline as the u.n. denounces damascus for recent attacks. it's emerged the tear gas and water cannon we used on crowds in bahrain on friday as thousands marched in support of the children the government activists demand spin on hunger strike now for two months has been treated in a military hospital. and relentless cuts and record unemployment leave investors cagey over whether spade really a state bail out new territory hundreds of thousands of people out in protest they say the government's leaving them on the breadline. next to the great financial

fire part of london drinking out of a candle will credit markets lauren mr weighs in with tonight's capital account. good afternoon and welcome to capital account i'm lauren lister here in washington d.c. these are your headlines for april sixth two thousand and twelve hedge funds and investors have reportedly been puzzled by weird movements in credit markets and according to the wall street journal they've been rattled by a suspected one trader with deep pockets being called the london whale who it's believed works for j.p. morgan so this really goes to show how individuals and firms can move markets and today we're going to talk about manipulation in the gold and silver market will have mike maloney founder of gold silver dot com and u.s. payrolls for market growth far less than expected which means people are talking again about the extension of the federal reserve did millis measures more buzzing

about q.e. you know we talk a lot about currency and practical reserve ponzi schemes but what about the fractional reserve of gold ponzi we'll look at the evidence as the f.t.c. commissioner bart chilton says. because it's out there all the time and. we have a. little we. got the condominium and bureau of u.s. and some asian markets are closed for the easter holiday so no big market reaction there today but you can still get a reaction here to the response your comments let's get to today's capital accounts . now a few years ago this statement by jeffrey christian an established member of the commodities

industry and founder of d.p.m. group became a really big deal when it confirmed a lot of suspicions when he admitted the leverage in the paper market for gold take a listen the previous owner was talking about use of paper on paper and that's exactly right precious metals are from the usual way in life currencies and she bills and she's gone for the trade in the multiples of a hundred times the underlying physical so in other words there were many more outstanding claims on gold then there was physical gold now this issue remains open to this day nothing has been resolved concerns about market manipulation continue and here to tell us how to what extent and really fill us in is michael malone and he's founder of both silver dot com and author of guide to investing in gold and silver part of the rich dad poor dad series and first of all we're thrilled to have you in our l.a. studio to talk about this thanks for being on the show thanks for having me lauren

absolutely now this is something we've heard very often it is something that dad a congress a lot and that's the manipulation of gold and silver prices and we know that markets really have been a manipulative kind of since the beginning of time so i guess the question isn't if the gold and silver market is being manipulated it's really to what extent and does this affect prices and investors in a way that material. well it effects everybody the common man isn't really feeling it yet but the main thing is all manipulations eventually fail when you try and suppress the price on something it becomes less processed profitable profitable to produce over time and then shortages develop because there is less and less production less companies producing that product once shortages develop eventually the free market will overwhelm the manipulation and the price suddenly spikes now gold and silver are the canaries in the coal mine they are the

alarm bells that signal whether world central banks are doing a good job of managing their currencies or not right now as most people know the federal reserve is doing a really poor job of managing the currency if gold and silver spike can cause a financial global financial crisis and so they do try to manage the gold price and manipulate it and there is a ton of evidence for it get it has been tracking gold mostly guy named theodora butler has been tracking silver there's what's interesting is anybody that investigates this. comes to the conclusion that gold and silver are manipulated if you dig into it and look at the facts they come to this conclusion anybody that says that the mainstream media is usually dismissed as a lunatic and the people that dismiss them as lunatics haven't investigated it there is no investigation where the conclusion is that gold and silver are trading

freely and fairly that there is no manipulation was nobody that says i've investigated here's all the evidence of mike pollution is that there is no manipulation and we're going to get to them it is evident a little later in the interview because you had found that you that you share but that's from their office of the treasury first how carolina and they're finding so there is a lot of death i want to get to one thing you touched on before we really get into have. this works which is the government's role because the london gold pool famously worked to manipulate the london gold market back in the sixty's to maintain bretton woods so we know for a fact that governments have been involved in this in the past it's not just private markets the what evidence do we have is there evidence that governments are involved in gold and silver manipulation today. well there's. a man named frank venter also is a commodities analyst that did a marvelous job of analyzing. gold from i believe five different using

five different methods coming to the conclusion that the world's central banks have been leasing gold into the markets and it's least very very low interest rates like one quarter of one percent per year. that gets sold into the market and then the bank can use the proceeds to do whatever they want with. when they would be leased it and then it gets sold its supply into the market that pushes the price down. then alan greenspan in testimony to congress and this was buried in his testimony where he was arguing that the over the counter derivatives market should not be regulated so this was his argument to not regulate over the counter derivatives but there was one line in that speech where he said that the world's central banks stand ready to release gold in increasing quantities should the price of gold rise now the word that lets you know that the manipulation was going on is when he said

increasing i think creasing means they're already doing it should the price of gold rise means that the target is to keep the price of gold down so he admitted in testimony to congress that they were manipulating gold so the federal reserve is part of the only part of the equation part of their life some large banks and so on that are involved in this also and let's get into that how that works because let's take an example j.p. morgan has really become the poster child in the financial blogosphere at least of manipulation in the filter market and from what i understand the essence of how this works is that basically j.p. morgan floods the market with a bunch of sell orders regardless of their physical position in athens that would be above and beyond their present position and this is known as naked shorting for those who want a technical term and then this drives down the price and then that's when they go away and really can buy it's kind of the opposite of a pump and dump scheme i guess you could say person is that accurate. well yes it's

accurate and you can see. some of the evidence in the way things trade. first of all these large entities these brokerage houses have trading platforms where they can see all of the sell stops the offers to sell should a price drop to a certain point and traders will will place these cell stops to protect themselves they they want to make sure that they don't experience a certain amount of loss they're willing to take x. amount of risk and at that point they want out and so they place this sell stop that's an automatic trigger and it's at a certain price and we tend to act like herding animals we all sort of think the same and what you see is if you look at these trading platforms where you can see all of these sell offers is that there's clusters of them huge clusters because we

tend to think sort of our round round numbers so we'll play something that is at one thousand dollars or nine hundred ninety dollars. and then. just as an example and also support resistance lines previous peaks or previous bottoms we'll place these cell stops at those resistance lines. when an entity can see all of those and they've got the deep pockets to be able to sell as much gold and silver as they want because when they trade gold and silver they're not trading gold and so they're trading ious for the silver they're known as futures contracts and it's basically just iou silver and you sell that. market right they can sell tons and tons and tons of silver and they can do it in milliseconds they can also put in a sell order and then and cause the price to start to drop and then cancel the seller and once it's triggered other people sell stops there's

a cascading effect the price drops because of all of those sales and it blows the next set of sell stuff so the price drops further and it blows the next set the price drops further so it's basically the big banks the brokerage houses that have insider information being able to game the system well and i want to talk a little bit about when they do get trading or at least what they show because there's a great chart that you have to show the difference and i want to bring it up this is with a gold market a big difference in how much you would make a day on gold depending on when you traded it ok and it's a difference in making a lot of money making a little money or losing money what is this tell you about manipulation and who and when traders are buying and selling well this shows that there is a manipulation it's in it's very clear the green line in the middle represents the

entire precious metals board market gold rose from two hundred fifty bucks an ounce roughly to one thousand nine hundred bucks an ounce it's around six hundred fifty or something like that today. and what this is showing is that if you had put a million dollars into gold and just bought it held you would have six point six million dollars today. now the red line is if you went long you bought gold at the open of new york trading hours when the commodities exchanges open in new york and then you closed your position every evening you would have lost seventy percent you were a million dollars in a pin a time period where gold went up more than five hundred percent your million dollars you would have lost seventy percent of it it would be down to three hundred thousand now what happens is in the overnight market the overseas trading that goes on in the rest of the world gold will rise on most nights and make up all

of the losses and then some this is what the reason that there are gains over the past ten years the overnight market makes up for the manipulation that happens during the the new york trading hours and really interesting mike you want to sell a whole bunch of futures contracts or place a gigantic order during new york trading hours that's when most of the trading is going on in the world and if they cause a sudden price drop it scares people out of the market and it sort of manages the gold price up slowly now those same entities once the gold price has dropped they can buy back in the overnight market very slowly instead of dumping a whole bunch of contracts on the market at the same time they can buy back a very slowly not causing a price spike but

a very very slow rise and basically they get to fleece the plot public that top line the blue line is your gains if you were to be short cool during the you know betting that the price of gold is going down during new york hours and then long gold during the rest of the world's trading hours that's the. really interesting mike. that's really close to five thousand dollars well that's really interesting everything that you just pointed out and when we get back from a break i want to play you what j.p. morgan says about these allegations you could say and i want to talk a little bit more about some of the evidence we referred to earlier in the show we will be back after a break with more with mike maloney author and founder of gold silver dot com and markets may be close but still ahead we're trading in loose change first and viewer feedback my responses your comments just ahead.

well. it's technology innovation all the developments around russia we've got the future covered. the world welcome back we're talking gold and silver market manipulation and before the break we brought to j.p. morgan as kind of the poster child for silver market manipulation in particular and

black masters the head of global commodities for j.p. morgan was asked about this concern about their metals and specifically silver positions and this is how she defended it. often when customers have that metal stored in our facilities they hedge it on a forward basis through j.p. morgan. hedges itself in the commodity markets if you see only the hedges and our activity in the futures markets but you aren't aware of the underlying client position that we're hedging that it would suggest in accurately that we're running a large directional position so that's the official defense let's bring mike maloney back into the conversation because the if he believes that it holds weight again he's founder of gold silver dot com also an author and mike she says essentially j.p. morgan is hedging its position hedging its physical holdings of silver is that legitimate . to some extent it is legitimate but you know j.p.

morgan and at times this these positions can be up to twenty five thirty percent of the entire futures market the entire. above ground silver that is being headed in the world do you really believe that j.p. morgan that there's all those cars a third of the world silver customers are having j.p. morgan store their silver for them and do their hedging and then. that all those customers are going to do synchronous trading with this shorting and so on where they all acquire silver at the same time and. it's a good speech and she needs is needed to address this because what is happening is that more of the story gets out the more people sort of get on this bandwagon and want. proof or they want this to end now it is illegal and

if it if the allegations are true it's a crime in progress. but. personally i sort of like it it gives me the opportunity and my customers the opportunity to buy gold and silver artificially suppressed prices well that is in a silver would be far higher than it is today if the price had never been manipulated and so the manipulation offers an opportunity for people to protect themselves and it offers us the opportunity to get more gold and silver into the hands of the middle class. has the middle class goes so goes the country the middle class defines a country with its vote and when the middle class gets wiped out those people get scared and they're likely to vote for anybody that is where hitler came from and that the play play can i want to ask about that because one of the you said this is an opportunity for that question i want to get. because the office of the state

treasurer of south carolina did a study and it they found exactly what we're talking about they said it's similar to commodities the value of gold and silver is determined by supply and demand as well as speculation and they basically identified at j.p. morgan the london bullion market if this association the federal reserve has a fee holding for practicing fractional reserve banking and engaging in naked short selling causing artificial price suppression of gold and so forth the finding of their report as they were looking at investing in gold and silver was that it wasn't a good use of taxpayer money it wasn't a good idea because of the market manipulation but is this the wrong conclusion because as you said this is an opportunity and it is the our business is telling us basically by physical gold and silver as opposed to getting into these kind of speculative schemes yeah there's this story was broken by my one of my staff chris trigger cea. it's the first government admission that there is

a manipulation of the precious metals going on so this is great to have the government finally coming out and saying that yes this is happening but the really dumb thing was they were saying the price is being suppressed so we're not going to invest in it it's dangerous well that's the price is being suppressed when they lose control which direction is the price going to go it's going up and they always lose every manipulation that has ever occurred throughout history and someday. this will and the price will go up but. what their conclusion was that they're going to go with the safe bet and buy more iou more u.s. bonds more foreign just any type of debt so they decided to invest in. i for an asset that is no one else's liability an asset that has intrinsic value versus somebody saying i'll pay you some day yeah i'm not kind of the point of

going so i guess my final question because we just have a minute is what is the impact of these paper gold products one example of an e.t.f. an exchange traded fund is there enough physical gold to back up these i.o.u.'s well you know you were talking earlier about the or jeff christian was stating that gold is leverage one hundred to one that means there's a hundred people that think that they can lay claim to the same ounce of gold the thing is there's somebody you know this is a giant game of musical chairs and there's ninety nine people dancing around the room and there's one chair and there's already one guy sitting there he's the guy that's got his physical you know really owns it and when the music stops everybody thinks that they own that ounce of gold that this has already got his hands on it and they're just to confirm that the message i get is that everyone on the team and our own physical gold is the answer to it. and that's what i believe yes it's a giant ponzi scheme and it's engineered for the big banks the big end of these two

basically share the public except now they're doing. this saying in the financial industry it's sheer don't slaughter you don't want to slaughter your client you want them coming back to you so you can share them regularly and make a profit well now they're doing high frequency sharing high frequency sharing but you're on to it and you're finding a way for average folks to benefit i appreciate you being on the show and explaining how this all works it's been a very popular topic that our viewers have all been asking for thanks so much that was mike maloney author and founder of gold silver dot com. all right it's friday so it's time for your feedback and last friday we had eric

editor of daily reckoning on to talk about how billionaire investor warren buffett really doesn't seem like he wants to be taxed more despite what he claims now dead meat three poor three didn't agree with that said regarding buffett so you can buy some nobody on which is definitely not to boys an opinion and you not and agree to say whatever they say without using your own common sense buffett talks about income tax how does that not affect him buffett the guy who has pledged three point seven billion to charity and drive a fifty thousand dollar car is now some comic book evil bill into you know exactly what to talk income tax for buffett ok so you ask how does that not affect him well i do see your point i guess it does affect him if you consider that that tiny red sliver that you basically can barely see on the right. is buffett's personal attack the goal income if you consider that bigness again yeah i guess that would really hit him especially when you compare that to his share berkshire hathaway's net

income which is not part of his personal taxable income which is huge now giving to charity and driving a cheap car is really not the point of what we're saying we're not saying he's an evil comedy book villain who doesn't give to charity or you know drive a crappy car we're simply saying that the rhetoric of buffett think tax the super rich more tax me more doesn't really add up when you look at how what he is calling for which actually affect him personally and you are right i do not agree without using common sense when it comes to our gap i'm not in agree when i've done my homework and fact check out ok i choose to rely on facts and sound analysis and logic when it comes to these issues and whether i agree with or challenge my dad now we've got economist and professor steve keen on over his very highly covered in dr debate with paul krugman it lit up a blog and aaron jamieson graber said this episode got way too into the drama

between he and crewman stick to the ideas not the sensationalism thank you for your feedback we have to disagree we think ruben really represents the idea of establishment largely neo classical thinking dominate the mainstream economic debate despite failing to predict the financial crisis in large part now keane challenging that with alternative methods and actually getting a debate going on them all in the pages of the new york times represent an idea as to what to do with the ship will it be significant i don't know we'll see and i promise that i won't get into drama a little bit of time to make concepts like exogamous and dodginess money more personal to t.v. viewers probably not so you got me there just in a ninety nine said never ever rush a guest with their answers you can edit his answers for brevity later thank you for the tip i don't know. you've ever worked in live t.v. but that doesn't really leave a lot of room for editing interviews in post-production if you're talking about

pre-paid interviews i just want to make sure you know that we do this with very brief and limited satellite windows to those they don't leave a lot of wiggle room wriggle room or room for error either now we used to mitt romney's down by earlier this week to illustrate political rhetoric that either party uses against the other one in this mitt romney accused brock obama of european policies resulting in a european unemployment and a tail a one two three said someone needs to tell romney that germany's unemployment rate is lower than the us and has been for a few years so ok mitt romney according to growth that germany's unemployment rate is five point seven percent and as you know we just knew you bles unemployment numbers out today showing the u.s. unemployment rate at eight point two percent halo one to three our trusty viewer consider it done now we have more fodder on the show this week and he mentioned student loan debt more than a trillion dollars he doesn't think it can be repaid we talked about it and the end of the show we talked about in loose change how senior citizens are literally on

the hook for student loan debt still according to federal reserve research and t.-mo blue weighed in with some rock star advice from frank zappa so we appreciate it it's a quote frank zappa says if you want to get laid go to college if you want an education go to the library but there is some food for thought on the student loan debate and bam bam twelve wrote sometimes i wonder lauren scroll through these inane comments for example jerk your jerk jerk. well yes yes i most certainly certainly do and with that i'm going to leave you there thank you so much for giving us your feedback and that is it for the show they do so much for tuning in do not forget to follow me on twitter at war in the third you can also give us feedback on the show at youtube dot com slash tap. the account as i just let you know that not only do we respond to a lot of your comments we also read most of them too also next week be sure to tune

in we will have former lobbyist also spent some time behind bars for it jack able to really help us understand how wall street and the financial sectors lobbying works in washington but for now from everyone here at capital account have a great night.