Was AIG Also a PM Manipulator?

Source:

"Don't take our word for it. Take AIG's—see production document"

A little under two years ago, there was a big debate in the precious metals community, wherein two groups were arguing for and against possible silver market manipulation, via arbing the COMEX and the OTC. On one hand you had such distinguished economists/bloggers as Mish and Jon Nadler of Kitco claiming there is no such thing as a COMEX-OTC arb because markets are ultimately efficient, and the second a trade is effected in one market, it implicitly affects all other markets, making spread arbing, and thus "manipulation" impossible. On the other hand, you had C. Loeb making precisely the opposite argument. After a brief flare up, the debate died down, with a partial win acceded to Nadler, who ended the debate with the following rhetorical statement:
"Also, by the way, why not NAME the sinister manipulative banks in question? Why not ask them outright as to the motives behind their positions (or better yet, who their clients were) and whether or not they acted in a "willfully nefarious" manner? Conclusion: One can take any database and make it suit their conspiracy argument. That, however, does not make for proof of any kind."
Mr. Nadler was asking for a bank to confirm it was arbing the COMEX-OTC spread, which in turn would unwind his defense argument, and lend credence to the claim that some players, due to their massive scale, succeed in manipulating the silver (or gold) market by profitably spreading the legs of the trade in two completely different markets and arbing this spread. For the longest time, people looked exclusively at JPMorgan for clues. Boy, were they wrong. . .and are they about to be surprised that in addition to almost blowing up the world, AIG FP has admitted that it itself, as the de facto risk mastodon and suicide bomber under Joe Cassano, with "$426 billion in total on and off balance sheet risk equivalent delta," was precisely just this spread manipulator. But don't take our word for it—see AIG's production document (pgs. 34–35).

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