New York court investigates claims silver and gold prices rigged, by Trevor Sykes in the Australian Financial Review.

Lest this topic seem a little obscure, note that gold is the only non-paper item held by central banks, the current masters of our financial universe. Gold was the basis for western money for most of the last 5,000 years, until 1971. It cannot be printed, unlike the current money. All paper currencies in the past have failed, usually after one or two generations (it is now 45 years since 1971, when western money was last based on gold). Our previous coverage here and here.

The court case, in the southern district of New York, has so far been unreported in Australia. A group of plaintiffs sued Deutsche Bank, the Bank of Nova Scotia, HSBC and their private company the London Silver Market Fixing Ltd…  alleg[ing] the banks rigged the silver market by publishing false prices.

On April 13, Deutsche Bank shocked the market by unilaterally agreeing to settle. The amount it has agreed to pay remains undisclosed. …

More importantly, the allegations also extend to the gold market. A total of 96 plaintiffs are suing 22 defendants with claims that the gold market has been manipulated.

Again, it has been reported that Deutsche Bank is negotiating to unilaterally settle the claims. The repercussions from such a settlement are potentially huge. …

If that is so, the gold market is truly distorted because the price is being set in US and UK derivative markets and not by the physical market. If the US lawsuit extends into the heart of gold price fixing, the revelations could be explosive.

There is widespread speculation that this current huge debt bubble will be resolved by a huge dose of controlled inflation. The debt is causing global economic stagnation. Jubilee and default are less politically palatable than a moderate inflation for a few decade or more. See A Global Debt Crisis? BIS Warns Of ‘Gathering Storm’ Over Excessive Borrowing (includes graph).