JP Morgan Chase & Co, one of the world’s largest, most respected and most powerful banks, is seen in more negative headlines as it comes out that two former employees manipulated the gold market for years, giving themselves, their company and their clients, undeserved and fraudulent returns.
For close to a decade, two of JPMs top precious metals employees, Michael Nowak and Gregg Smith were spoofing trades. They forced the global price of gold to go up or down depending on how it impacted them. Smith was the top metals trader at JPM and Nowak was the managing director at the time. Spoofing orders and manipulating prices is highly illegal and can come with serious consequences.
This is not the first time our supposedly friendly and trusted banks have taken advantage of people and manipulated the most popular market in the free world. You may be wondering how two people could manipulate the worldwide price of gold, so let me tell you.
Gold is a very popular market, being known as a store of value. JP Morgan is more than a bank but is an asset manager as well. This means they control the money and invest for some of the world’s richest people. Due to the way commodities trade, there are ways of “spoofing” orders or putting fake orders into the market to move the price one specific way. When an institution is genuinely processing thousands of large orders consistently, including spoofed market orders probably isn’t hard, spoofing enough orders to move the price is the difficult part.
The price of gold, in itself, is not easily moved. Extensive work and coverup would have been required by the elite bank to not get caught. Market manipulation is arguably one of the biggest problem the equity markets have today all around the world. Influencers driving stock prices, politicians signing new laws to favor their investments and financial companies taking advantage of people trying to invest in one of the most stable and secure assets around the world.
Two Deutsche Bank traders fell to the same illegal activity recently as well, showing the world just how corrupt our banking and financial systems are. The two Deutsche traders received a one year sentence and unfortunately that’s probably what the US will hand the former JPM traders. This is a perfect reason why, even in America, we need decentralization and public ledgers. DeFi will disrupt the entire financial system given time, bringing financial accessibility, control, transparency and true ownership into the equation. This is 100% impossible with Bitcoin.
For media, content or writing inquiries please contact Patrick Hagerty at PatrickJHags@gmail.com