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Two More Wall St Traders Sentenced In Precious Metals Price Manipulation

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This week, the Department of Justice announced the sentences of two additional Wall St traders in a decades long price fixing scheme to manipulate the price of precious metals.

According to court documents, the defendants, Edward Bases, 61, of New Canaan, Connecticut, a former senior trader who worked at both Deutsche Bank and Bank of America in New York and the second trader, John Pacilio, 59, of New York, who worked as a senior trader at Bank of America and Morgan Stanley in New York, were both sentenced to one year plus one day in prison.

Both traders manipulated precious metals market prices up or down by placing large “spoof” orders in the precious metals futures markets that they never intended to fill. The convictions show that they intentionally manipulate prices for their own gain and for the banks’ gain.

The men defrauded other traders on both the Commodity Exchange Inc. (COMEX) and the New York Mercantile Exchange Inc. (NYMEX), both of which are operated by the CME Group Inc.

Both men were convicted at trial in August 2021 of conspiracy to commit wire fraud and multiple counts of wire fraud affecting a financial institution. Pacilio was also convicted of commodities fraud.

Each were sentenced to one year and one day in prison.

The fake orders that these traders performed intended to induce other traders to buy or sell at prices, quantities and times that they otherwise would not have traded by creating the false appearance of supply and demand. At times, the traders would place hundreds, and in some cases, thousands of orders that they had no intention of fulfilling.

These convictions stem from a broader, long-lasting investigation by the SEC and FBI into commodities market manipulation practices by Wall Street banks and brokerage trading firms.

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A New Global Gold Standard?

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Gold has been an instrumental component of the economy since before the American Revolution.

Our founding fathers had the forethought to include gold and silver coins in the Constitution.

A metallic standard was a central foundation for the economy in the United States based on gold and silver coins.

The US Mint was established on April 6, 1792, prior to the Declaration of Independence.

Recently, legislation has been introduced into the House of Representatives that is intended to move the United States back towards a gold-standard.

The sponsor of the bill, Representative Alex Mooney (R-WV), has stated that the purpose of the Bill is to give greater visibility of the spending by politicians in Washington.

Jerome Powell has said that gold bullion has no purpose in the US economy. The rest of the world is still remembers the Nixon Shock and other major events in the global commodities markets caused by US foreign policy.

Gold has been a core, instrumental component of the global economy, politics and international trade for thousands of years.

With the Moscow World Standard posited to compete with the LBMA, COMEX, Shanghai and other global trading markets.

* gold.org

Many speculate that Moscow is trying to position itself as an economic leader in the global economy. Earlier this year, the Moscow World Standard was announced by the Russian Finance Ministry as an open and fair competitor to the LBMA.

Moscow hopes that many of the BRICS nations and developing nations that are abundant in natural resources have opportunities to trade more fairly in global markets.

Minerals like cobalt, lithium, manganese, nickel and other rare earth minerals that are necessary for the production of batteries for electric cars, houses and other future energy needs. Silver is used in the manufacturing of solar panels and other electrical components.

All of these natural resources are also part of a national initiative to secure resources necessary to build new supply chains for the reemergence of high-tech and semi-conductor manufacturing on American soil.

An emerging Global Gold Standard built on Blockchain Auditing

Outside of the US, private gold ownership continues to grow, particularly amongst Asian markets including China and India.

Russia responded to economic sanctions by starting a program to buy gold from citizens in exchange for rubles and began requiring payment for oil, natural gas and other energy needs in Rubles as a way to stabilize the Russian economy following the invasion of Ukraine.

Bloomberg reports that at least 4 accounts in Rubles have been opened with Gazprom PJSC.

The government of Zimbabwe began to issue gold coins as currency as a way to stabilize their economy following decades of inflation due to corruption.

Many developing nations in Africa, Central and South America and Asia are rich and abundant with natural resources.

Having direct access to global markets for selling commodities such as lithium, cobalt and other minerals is of interest to leaders and businesses of many nations, some of which may be looking to renegotiate contracts with global conglomerates as a way to better leverage their local resources to rebuild their local economies following the pandemic.

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What Is COMEX?

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COMEX is a commodities futures exchange where the supply of future raw materials and other goods is traded for delivery in the future.

KEY HIGHLIGHTS

  • COMEX is the world’s largest marketplace for futures and options trading for precious metals.
  • It is a division of the Chicago Mercantile Exchange (CME).
  • Precious Metals futures are mostly used for hedging and are not typically delivered.
  • The COMEX acts as an intermediary.
  • Each Silver Futures contract is the equivalent of 10 American Silver Eagle Monster Boxes.


COMEX is an electronic trading platform that allows investors and brokers to trade futures contracts on a variety of consumable resources, both man-made and natural.


Oil, pork bellies, orange juice and precious metals like gold and silver are just some of the natural resources that are traded via futures contracts.


Gold, silver, platinum and other metal and mineral resources that are bought and sold with futures contracts.

One reason for the COMEX market to exist is to give manufacturers of both consumable and durable goods some indication of what the cost to manufacture their products will be in the future.


Many manufacturers use silver in many of the tiny electrical components that are used in everyday items such as cell phones, hearing aid batteries and solar panels. Silver is a great conductor of electricity.

On average, electric vehicles that are being built today each have roughly 2 troy ounces of silver.

Precious metals prices can be volatile.

Trading silver futures on the COMEX market allows manufacturers to secure mined resources like gold and silver at a fixed price months before it is needed for manufacturing.

This also affords mining companies some indication of what they will be paid for getting silver out of the ground.

This helps manufacturers to more effectively manage the upstream supply chain and be able to go to market with a product that is competitively priced.

History of COMEX

Commodity Exchange Inc. (COMEX) is the main exchange for silver, gold and platinum futures.

The exchange was founded in 1933 through the merger of four smaller exchanges based in New York.

Of the four smaller trading exchanges, gold and silver were mainly traded through the National Metal Exchange.

According to CME Group, more than 400,000 futures and options contracts trades are executed each day on COMEX.

This is the most active and liquid precious metals exchange in the world.

The trading activities of traders worldwide influence the spot price of silver and gold around the clock.

Today, COMEX is part of the New York Mercantile Exchange (NYMEX) and is an operating division of the CME Group.

Silver & Gold Futures Contracts

The current spot price is silver is the price per ounce of silver being traded for delivery sometime in the future.

The vast majority of the gold and silver contracts that are traded are never intended for physical delivery.
Only a small percentage of the gold and silver futures contracts that are bought and sold actually get delivered to a buyer.

Silver futures contracts are comprised of 5,000 troy ounces of silver to be delivered at a date specified in the contract.

The price of a contract is based on today’s silver spot price per ounce.

If silver spot price is trading at $20 per ounce then the cost to buy one full contract of silver would be $100,000.

The futures market is most often used by Commercial Banks, Wall Street trading firms, hedge funds and other investment focused companies as a hedging vehicle used to mitigate risk they have in other investments.

Less than 1% of gold and silver futures contracts ever get delivered. The majority of trades are made on the promise of delivery without any intent to deliver.

Taking physical delivery of silver contract is done quite often by brokers, clearing houses, private mints, sovereign government mints, large scale manufacturers and others.

It’s possible that private investors could also take delivery of a silver futures contract. Delivery of precious metals can be arranged via armored car services for shipment from COMEX Registered Vaults to your private home vault or other secure location.

How much silver is in 5,000 oz futures contract?

While 5,000 troy ounces sounds like a lot of silver, it’s the equivalent of just 10 Monster Boxes of American Eagle Silver 1 oz coins.

Each Monster Box of Silver Eagles contains 500 troy ounces.

Every month the US Mint mints millions of 1 oz silver Eagle coins.

That’s equivalent to around 2,000 Monster Boxes, or ten full silver futures contracts consumed by the Treasury each month just to produce their signature bullion coin.

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Why does silver sell above spot price?

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comex silver bars in warehouse

An explanation of silver premiums

Spot price is the paper trading price for a COMEX futures contract of 5,000 troy ounces of silver.

One way to think about it is like barrels of oil. A barrel of crude oil contains 42 US gallons and is trading at around $65 per barrel, or roughly $1.57 per gallon.

So why is the price of gas at my local gas station higher than $1.57 per gallon?

There is a markup that comes at each step in the supply chain before it reaches the consumer.

Let’s say that a private mint like Scottsdale Mint buys a 5,000 ozt contract from COMEX and takes delivery.

There are costs to take delivery of the raw product, including transportation, security, settlement costs, etc.

The delivery will most likely consist of five 1,000 ozt bars.

The next step is to cut up a 1,000 ozt into pieces that can be melted down or to feed into an extrusion line.

Labor costs, cost to operate the furnace, equipment costs, etc.

Once the bar is in liquid form it can then be poured into molds to form bars. Or if the mint is using extrusion, into sheets or extruded bars, etc.

After that it needs to be weighed and stamped or pressed then packaged up to be sent to wholesalers or retailers.

The wholesaler will need to pay the mint for the manufacturing costs plus their profit and the cost of transportation from the mint to the wholesalers warehouse or depository.

The wholesaler then incurs costs to warehouse the metal, employ people to take orders, and pack and ship to retailers.

The retailer will pay for the metal plus the profit margins the wholesaler needs, the transportation costs from the wholesaler to their warehouse, depository or retail store.

Then the retailer has overhead costs. Rent, employees, utilities, etc.

They also need to make a profit if they are going to stay in business.

Each step along the supply chain adds additional cost.

These costs are all factored into the premium, which is why it costs more than spot price to buy silver.

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How is the silver price per ounce determined?

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New precious metals investors often get confused by the fluctuating silver price per ounce. Silver is a commodity that is consumed for a variety of purposes beyond investment. Silver is used in jewelry making, electronics manufacturing, medical industry and others in addition to silver bullion.

Many of the industries that consume silver prefer to buy the silver they are going to use before it is mined. By prepurchasing their silver they are locking in the best possible price in order to stabilize prouduct costs. This also helps the silver miners to better understand what the market price for their product will be once it is mined.

What is COMEX silver trading?

The process of buying and selling silver as a commodity before it is mined is done by trading futures contracts. Futures contracts represent the delivery of mined silver bullion sometime in the future based on the delivery terms of the contract.

Futures contracts for precious metals commodities like silver are traded on the global Commodities Exchange (COMEX).

Silver futures or paper contracts are traded by commodities brokers around the globe 24 hours per day. As the paper contracts for the future delivery of physical silver bullion is traded the silver spot price fluctuates.

Silver Spot Price Per Ounce

Silver spot price is determined by the trading of silver futures contracts on COMEX. The spot price of silver has absolutely nothing to do with the actual supply and demand for physical silver bullion. The silver spot price is derived based on the
supply and demand of the silver futures contracts.

The spot price of physical silver bullion is set by the trading of futures contracts. This has led many to believe that the price of physical silver bullion is being manipulated by large banks and commodities traders.

Many believe that there exists a conspiracy to keep the spot price of silver artificially low so that banks and other wealthy individuals and organizations can accumulate and physical silver bullion before the next major global economic crisis.