By Hard Assets Alliance Team
By Justin Spittler, Hard Assets Alliance Analyst
Lately, it seems as though a week doesn't go by in which a major financial institution isn't entangled in accusations of fraud, market manipulation, or some other unscrupulous behavior. Last summer, it was the Libor price-fixing scandal that captured headlines. Proving that the incident was far from an anomaly, many of the same institutions purported to be involved in said scandal are suspected of having rigged the ISDAFIX, another privately calculated rate that acts as the basis for interest-rate swaps.
Of course, high-finance collusive manipulation isn't limited to esoteric benchmarks. JPMorgan Chase and Goldman Sachs have recently received unwanted press for their supposed roles in manipulating aluminum's commodity price by hoarding massive inventories. Then there's the infamous muni-bond rigging scheme that has—reportedly of course—played out over years and involved a who's who of the country's name-brand financial institutions. As one can imagine, the list goes on and on.
Too Big to Jail
What's more troubling than the revelations themselves is the response—or lack thereof—from regulators that have done little to punish offenders or enact meaningful reform. Sure, big banks have doled out multimillion-dollar settlements here and there. In each case, however, the fines have come out of the corporation's coffers rather than the pockets of high-level executives complicit in the wrongdoing. Furthermore, Attorney General Eric Holder has only brought criminal charges against two senior executives for Wall Street's role in the housing collapse, and one of those cases was lost. I guess being too big to jail goes hand in hand with being too big to fail.
Luckily, the Department of Justice has good reason for coming down so softly on banksters, and it's got nothing to do with the revolving door between high finance and big government or the steady influx of campaign contributions from fat-pocketed financiers. If you can believe it, Attorney General Eric Holder actually confessed that the reason for not prosecuting offending banks was out of fear of destabilizing the economy or, more specifically, to avoid "collateral consequences."
Surely there's no reason to think that a complete lack of accountability won't cause far greater harm to the economy over the long haul by setting the stage for future excessive risk-taking and acts of market manipulation.
All Hope Is Not Lost
As stories of corruption continue to pour out of the financial sector, the idea of a rigged market no longer stinks of conspiracy theory. It has become increasingly evident that powerful banking interests have a hand in fixing the price of just about everything, from commodity prices and mortgage rates to the esoteric derivatives. With regulators either ten steps behind the industry or simply guilty of turning a blind eye to infractions, it is no surprise that confidence in the financial system has sunk to all-time lows.
Even with the odds seemingly stacked against everyday investors, now is no time to tuck one's hard-earned cash under the mattress. Successful investing is still possible in today's rigged economy; however, to achieve this, investors must come to grips with the fact that the market not only acts irrationally at times, but is also characterized by an asymmetrical distribution of information, opportunities, and privilege.
To stay afloat in these shark-infested waters, investors must refocus their sights on the big picture rather than attempting to play the unpredictable gyrations of the market. Over the long term, financial markets ultimately converge with economic reality; therefore, those keen to the fundamental forces at play discover opportunities to reap tremendous rewards even while playing against a loaded deck.
The Hard Assets Alliance website and the SmartMetals Investor are published by Hard Assets Alliance, LLC. Information contained in such publications is obtained from sources believed to be reliable, but its accuracy cannot be guaranteed. The information contained in such publications is not intended to constitute individual investment advice and is not designed to meet your personal financial situation. The opinions expressed in such publications are those of the publisher and are subject to change without notice. The information in such publications may become outdated, and there is no obligation to update any such information.
Any Hard Assets Alliance publication or website and its content and images, as well as all copyright, trademark, and other rights therein, are owned by Hard Assets Alliance, LLC. No portion of any Hard Assets Alliance publication or website may be extracted or reproduced without permission of Hard Assets Alliance, LLC. Nothing contained herein shall be construed as conferring any license or right under any copyright, trademark, or other right of Hard Assets Alliance, LLC. Unauthorized use, reproduction, or rebroadcast of any content of any Hard Assets Alliance publication or website is prohibited and shall be considered an infringement and/or misappropriation of the proprietary rights of Hard Assets Alliance, LLC.
Hard Assets Alliance, LLC reserves the right to cancel any subscription at any time. Cancellation of a subscription may result from any unauthorized use or reproduction or rebroadcast of any Hard Assets Alliance publication or website, any infringement or misappropriation of Hard Assets Alliance, LLC's proprietary rights, or any other reason determined in the sole discretion of Hard Assets Alliance, LLC.
Affiliate Notice: Hard Assets Alliance has affiliate agreements in place that may include fee sharing. If you have a website or newsletter and would like to be considered for inclusion in the Hard Assets Alliance affiliate program, please contact us. Likewise, from time to time Hard Assets Alliance may engage in affiliate programs offered by other companies, though corporate policy firmly dictates that such agreements will have no influence on any product or service recommendations, nor alter the pricing that would otherwise be available in absence of such an agreement. As always, it is important that you do your own due diligence before transacting any business with any firm, for any product or service.
© 2013 Hard Assets Alliance, LLC.
With gold, silver and Uranium stocks being out of favor one must decide if this is a problem or an opportunity. We have steadfastly refused to buy gold and silver mining stocks for the last two years and as evidenced by the HUI we feel that our decision to hold back has been vindicated. The damage done to the mining sector may not be over yet but this demise is starting to offer up some exciting opportunities in my view.
Great care will be needed in the selection process in order to generate a reasonable profit and that’s where our new venture begins. ‘Stock Trader’ has begun trading on behalf of ourselves and our much valued subscribers, all exciting stuff which we are really looking forward to, if you wish to join us then please subscribe below;
Subscribe for 12 months with recurring billing - $199
Buy 12 months of subscription time - $199
Don’t forget if you are new to investment in the precious metals sector then you can subscribe of our FREE newsletters regarding gold stocks, silver stocks and uranium stocks, just click on the links and enter your email address and we will email you our articles along with other interesting posts.
Please remember to check your spam folder once you have subscribed to ensure that your verification has not gone astray and you are getting our emails.
As regular readers will know skoptionstrading has capped its membership, so the best we can offer you at the moment is a place you on the waiting list which you can do via this link, thank you.