Dear Friend of GATA and Gold (and Silver):
Under renewed pressure by Commissioner Bart
Chilton to account for itself, the U.S. Commodity Futures Trading Commission
today issued a statement about its 3-year-old investigation of manipulation
of the silver market, asserting only that the investigation continues.
Those who have been taking the CFTC
investigation seriously may wax indignant over the delay in resolution. But
the delay speaks for itself, and eloquently: Thanks to the complaint about
market rigging by London silver trader Andrew Maguire and GATA's publicizing
it at the CFTC's March 25, 2010, hearing and agitating about it afterward,
the CFTC has probably realized that the rigging of the silver market is, like
the rigging of the gold market, a U.S. Government operation conducted through
intermediaries, primary dealers in U.S. Government securities, and thus can't
be examined in public without crashing the operation and impugning the whole
government of which the CFTC is a part.
The CFTC well may expect that the silver
business can be resolved by a confidential settlement of the class-action
lawsuit brought against the main silver market manipulator, JPMorganChase, in U.S. District Court for the Southern
District of New York. (See the lawsuit's consolidated complaint here: http://www.gata.org/node/10448.)
If the lawsuit survives a summary judgment
dismissal motion by JPMorganChase, which seems
likely, insofar as such a motion must presume that everything alleged in the
complaint is true, the lawsuit may be worth a few hundred million dollars to
the investment bank just to prevent any hostile law firms from inspecting its
books and interrogating its traders and managers in court-ordered discovery
and deposition. Such a settlement will make the plaintiffs' lawyers very rich
and let the CFTC off the hook even as it leaves the public with no formal
finding of what actually happened.
Will it end the manipulation of the silver
market, or will that manipulation be ended by whatever futures market
position limits the CFTC eventually decides to enforce? Maybe -- or maybe JPMorganChase will find intermediaries through which it can
continue to enter the market in disproportionate size and thus continue to
In any case silver investors probably should
be thankful enough that the CFTC held that hearing a year ago in March and
thankful particularly to Commissioner Chilton for insuring that GATA Chairman
Bill Murphy and GATA Board of Directors member Adrian Douglas were allowed to
speak and introduce Maguire's complaint in detail. On the day of the hearing
silver was hovering around $15 per ounce and had been going nowhere in
particular. By the end of the year it had doubled and this week it closed
above $34, and there are many signs of its physical shortage as the paper
hangers of the fractional-reserve precious metal banking system thrash around
desperately to regain control of the market.
Anything beyond this would require one agency
of the U.S. Government to execute other agencies of the government, agencies
much bigger and more sinister. Most likely the CFTC would be executed first.
Indeed, GATA often worries for Chilton's safety and is sometimes surprised
that he hasn't already been found in circumstances making it appear that he
had been struck by lightning, a meteorite, or a freight train.
So thanks, CFTC, but we don't need your silver
investigation anymore. You've already told us all we need to know.
The CFTC's statement is appended.
Additional comments made by Chilton today to
King World News, regarding the collapse of the trading firm MF Global, can be