Keith Neumeyer: Damage Inflicted by Precious Metals Manipulation Is in the “Multi Billions”
Listen to the Podcast Audio: Click Here
Mike Gleason (Money Metals Exchange): It is my privilege now to bring in Keith Neumeyer, founder and CEO of First Majestic Silver Corp, one of the top silver mining companies in the world. Keith has an extensive background in the resource and finance sectors and has also been an outspoken voice about the manipulation that has been occurring in the futures market pricing of silver.
It’s a real privilege to have him on with us again today. Keith, thanks so much for joining us and welcome back.
Keith Neumeyer (First Majestic Silver Corp): Thanks, Mike. I think we have got lots of juicy things to talk about.
Mike Gleason: Yeah, we certainly do. To start off here Keith – and before we get into the subject of manipulation, which I definitely want to cover with you today – next week Donald Trump will be sworn in as the next president here in the United States and it will mark a new era in American politics. It will also mark the first time in nearly a decade that we don’t have a democrat in the white house. It’s a new environment here for metals investors. We know many are wondering what a Trump presidency is likely to mean for metals and commodities as a whole. What are your thoughts on the subject? Will Trump and his policies ultimately be good or bad for precious metals?
Keith Neumeyer: I’m not even sure who in the office as the presidency really matters. We’ve gone through decades of presidents. Donald Trump, he talks a good story and I know there’s lots of optimism around him taking on the presidency. It’s interesting that during the election campaign everyone is saying doom and gloom if Trump gets in. Now everyone’s saying it’s going to be great for the world that he’s coming in. He’s going to industrialize the United States, it’s going to be great for metals and copper, uranium’s moving, everything seems to be moving. The Dow’s setting new highs or close to new highs. S&P’s doing the same thing.
So, there’s a ton of euphoria surrounding all of this. I think we’re just going to go back to the normal thing that we’ve been noticing or witnessing for the last decade where the Federal Reserve continually does what it does and manipulates markets and prints money. And I think all that will be very supportive for precious metals.
Mike Gleason: Keith, you have been an outspoken advocate for more honest metals markets and price discovery for years now. The people at GATA, the Gold Anti-Trust Action group, yourself, and many others have been making the case for manipulation. And it was certainly well supported with plenty of evidence but it wasn’t until recently that we got “smoking gun” evidence turned over by Deutsche Bank as part of their settlement in a civil class action suit. There are chat logs and voice recordings of metals traders at major bullion banks planning and executing schemes to cheat their own customers and other players in the market. So, I’m sure none of this was surprising you Keith, but what went through your mind when you saw the transcripts and read up on this information which was recently released?
Keith Neumeyer: I think vindication would be the simplest way of describing it. I think that people sometimes put me in a bit of a quack category even though I don’t look at myself that way at all. Being an ex-trader myself and knowing how the financial markets work and seeing a lot of things that are happening on a daily basis with my own eyes. I know that this stuff happens and has been shocking to me that there’s been so many people that are saying, “No, no, it’s not possible. There’s no manipulation.”
We see the LIBOR scandal; we’ve seen other scandals where manipulation has been proven. There’s been billions and billions of dollars in fines paid by the banks for manipulating a variety of different markets. Yet, for some reason people have said, “Oh, no the gold and silver market are unique. They’re not manipulated.” Which is a complete joke and of course they are manipulated and have been manipulated for over thirty years. It’s nice to see that one of the banks has come out and actually admitted to it. And I think that’s going to create a whole series of events occurring over the next couple of years. I’m optimistic that the banks will get out of the market and we will see true price discovery as a result.
Mike Gleason: You spoke directly with one of the attorneys leading the class action suit against Deutsche Bank and a handful of others. Tell us what you can about that conversation. Are you expecting First Majestic to join that class or would you expect to form a new class, perhaps represent producers specifically? What did you learn that you can share with us publicly?
Keith Neumeyer: I actually have thought of doing something specifically from the producers but unfortunately the mining companies for the most part aren’t very supportive of this. I don’t really know why. Whether they just don’t want to waste their time or feel like they’re wasting their time in dealing with lawyers or paying legal bills or spending management time on these types of issues. I just can’t speak for them. I know it’s important to me personally, it’s important to our shareholders, it’s important to our employees and the communities that we’re active in. So, I feel that it’s our responsibility, it’s my responsibility to at least try to do something to create change and that’s what I’ve been doing.
I did reach out to the lawyers that are involved in this particular case. It is a bit of a long process. It’s not been deemed a class action lawsuit yet. I know a lot of the headlines have been misquoting the actual lawsuit. They’re trying to get it elevated to a class action lawsuit. Once it does get elevated, assuming they’re successful in doing it, then that’s the time where other plaintiffs such as First Majestic will then jump onto the case. I’ve made it quite clear to the lawyers involved in this that First Majestic would be willing to join if they felt it would help the situation… either prior to it being elevated to a class action lawsuit or as it gets elevated to a class action lawsuit we’re available in either case. We’re basically just on hold and waiting to see how this all transpires.
Mike Gleason: Do you have an opinion about the settlement amount Deutsche Bank roughly a hundred million dollars combined for rigging in gold and silver. Is it reasonable? Will the evidence that they provided likely yield much larger settlements or damage awards for other banks involved?
Keith Neumeyer: What is reasonable really? When you see these markets get whipped around the way they do and these banks are making hundreds of millions, if not