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Received via email on
5/16/08 from David Kass of the CFTC:
Dear Mr. Weir, you probably have already seen our
new report on the silver market… http://www.cftc.gov/stellent/groups/public/@newsroom/documents/file/silverfuturesmarketreport0508.pdf
The public may not always see the results, but we
do put in a lot of time monitoring these markets to ensure that they are not
being manipulated.
David Kass, Senior
Economist
Market Surveillance Section
Division of Market Oversight
Commodity Futures Trading Commission
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Attention: David Kass @ CFTC (dkass@cftc.gov)
Dear David:
This will be my final correspondence with officials at
the CFTC as I have concluded that your organization is not competent enough
to understand or conduct a proper investigation into the ongoing silver
market manipulation. All further requests for information, enforcement and
actions will be forwarded to A. Roy Lavic,
Inspector General of the CFTC as well as Michael B Mukasey,
Attorney General of the United
States of America.
The following is my analysis of your investigative
paper entitled “Report on Large Short Trader Activity in the Silver
Futures Market”. (http://www.cftc.gov/newsroom/index.htm).
Although the report suggests that the CFTC is only looking at the short
trader activity from 2005-2007 and not the entire silver futures market
manipulation picture, your reference to the report on the CFTC website (New Study Finds Silver Futures
Market is Functioning Properly), your email to me above
and the CFTC press release announcing the report all promote the false
impression that the CFTC has investigated the silver manipulation issue
thoroughly in your conclusion that there is no silver market manipulation.
Release: 5499-08
For Release: May 14, 2008
New Study Finds Silver Futures Market is Functioning
Properly
Study Finds No Evidence of Manipulation
Washington, DC—The Commodity
Futures Trading Commission’s (CFTC) Division of Market Oversight (DMO)
today released a report that re-examines long-term and recent allegations of
misconduct in the silver markets and finds that there is no evidence of
manipulation in those markets for the trading period examined…
http://www.cftc.gov/newsroom/generalpressreleases/2008/pr5499-08.html
First of all I would like to state that the four
most important questions I posed to you on March 26, 2008 have not been
addressed and there is currently another “unsolved crime” in the
COMEX silver manipulation story. The questions were concerning the downward
price manipulation of silver from $21/oz to $17/oz in 4 trading days from
March 17-20, 2008 where there was no physical silver available for purchase.
These questions that I posed to you over 2 months ago remain unanswered:
1) The $4 drop in the price of silver was directly
in contrast to the availability of physical silver for the majority of market
participants. Please explain why the CFTC believes this is a normal market
occurrence in line with the physical market dynamics.
2) The silver supply shortage that exists today clearly exposed the
manipulative nature of the 310M+ oz short position. Why is it allowed exist and why is it allowed to grow?
3) The CFTC’s 2004 letter concerning the
manipulation of silver states as its main argument that the reason there is
no manipulation by the few large silver shorts is that there is no supply
deficit. Now that the silver shortage is very apparent around the world, what
is being done to stop the manipulation of the price of silver due to the
silver shortage?
4) With thousands of complaints filed with the CFTC regarding silver
manipulation, why wasn’t the CFTC able to preemptively
stop the serious silver shortage that is now clearly deterring silver
investors from obtaining physical metal at today’s “below
market” manipulated prices? What is being done to make sure that the
majority of physical silver purchasers are not locked out of the market ever
again?
I am still waiting for the CFTC to answer these questions ESPECIALLY in light
of your recent declaration the silver markets are NOT being manipulated.
Now let’s talk about your investigative techniques, methods and
expertise used in your investigation of silver manipulation. According to
your report and analysis you draw the following conclusion: “There is
no evidence of manipulation in the silver futures market” based on
these factors:
1) Silver cash and futures prices have risen dramatically between 2005 and
2007, with silver outperforming the gold, platinum and palladium markets,
suggesting that silver futures prices are not depressed relative to other
metals prices.
2) NYMEX silver futures prices tend to track closely the price of physical
silver.
3) Concentration levels for the top four short futures traders in the silver
futures market are comparable to those observed in the gold and copper
futures markets, and generally are lower than the levels seen in the platinum
and palladium futures markets.
4) The composition of the traders comprising the top four short futures
traders, in terms of net positions, changes over time. These traders
represent a diverse group, and their futures positions are driven by an even
more diverse group of customers.
5) There is no observable relationship between short-futures-trader
concentration levels and silver prices.
6) There is a slightly positive relationship between the total net position
of the large short futures traders and silver prices; this suggests that
larger short futures positions are associated with higher, not lower prices.
The CFTC feels that this report was a HOMERUN in your fight against
proving the silver manipulation promoters wrong in their quest to prove
silver market manipulation. Using this baseball analogy, I intend to show how
many complete WIFFS were made in your attempt to hit the ball out of
the park.
I will address your final conclusions one at a time:
1) Cash and futures prices have risen dramatically…
The fact that the prices have risen “dramatically” points more
to the fact that the price of silver was and is significantly UNDERVALUED
rather than fairly valued. Did you ever ask yourselves WHY silver is rising
so dramatically? There shouldn’t be “undervalued assets” in
a freely traded market. Dramatically rising prices is more evidence of the
many years of manipulative price suppression by market participants. (STRIKE 1)
http://www.silverbearcafe.com/private/5.08/witch.html
2) NYMEX silver futures prices tend to track closely the price of physical
silver…
WRONG. The CFTC uses the London
Metal Exchange as a price gauge for the physical price of silver. David Morgan pointed out in a recent article
entitled “Silver Price Manipulation” that the LME traded 30
BILLION oz of silver last year alone!
http://www.silver-investor.com/davidmorgancommentary/articles/5-22-08_ibtimes13_silverpricemanipulation.html
That would equate to 120M oz of physical silver being transferred every
trading day. To picture how far off of physical reality this is, imagine 1,250 three ton capacity armored
cars being loaded and unloaded out of LME warehouses EVERY DAY! Impossible!
The LME has NOTHING to do with the realities of the physical silver market.
There are currently reports of silver shortages around the world including
from your counterparts at the US
Mint. The #1 proof of COMEX manipulation according to your 2004 letter is if
the COMEX prices diverge with the physical market. The recent 20% COMEX
silver price dive with no physical availability of silver is the smoking gun
of silver price manipulation. (STRIKE
2)
3) Concentration levels for the top four short futures traders…
First of all, the Gold Anti Trust Action Committee (GATA) has already
proven that the gold market is manipulated so if silver is tracking gold then
silver, by definition, is manipulated also.
I’m not an expert on the COT reports but Ted Butler is. He is known
around the world as the #1 expert on your COMEX Commitment of Traders Report.
This is undisputed. His conclusion is that the 80% short concentration
by less than 8 traders when there are THOUSANDS of other market participants
is 100% proof of short side manipulation no matter how much the CFTC wants to
deny it. Read his research for yourself (http://www.investmentrarities.com/tb-archives.html). But the
bigger question here is why doesn’t the CFTC hire or consult with Ted
Butler? And why don’t they talk to David
Morgan or Jason Hommell or Izzy Friedman or Charles Savoie
all of which are world renowned experts on all aspects of silver. In the
latest CFTC report the ONLY people consulted with were the 10 LARGEST SHORT
TRADERS! Imagine a cop walking up to a gang of bank robbers and asking them,
“Did you just rob that bank?” After the obvious “No
sir” the cop walks away and tells the world “They said they
didn’t do it so the bank was never robbed!” Sickening display of
improper investigative work. (STRIKE 3).
4) The composition of the traders comprising the top four short futures
traders, in terms of net positions, changes over time. These traders
represent a diverse group, and their futures
positions are driven by an even more diverse group of customers…
Of course they do but they all have the same goal of suppressing the price
of silver just like the members of the Silver Users Association. Since the
mining companies have been pretty much silenced on the subject of silver
price manipulation, the only group advocating a freely traded silver market
are individual silver investors which only make up less than 10% of the
annual physical silver demand (at the moment). The remaining 90% of silver is
consumed in industrial, photography, jewelry and silverware applications ALL
of which have a significant financial interest in keeping the price of silver
as low as possible!
The charge of manipulation is this: YES, they are conspiring together to
artificially suppress the price of silver for their own benefit. It is easy
to do without CFTC intervention and is most likely coordinated by computer
trading programs trading back and forth on high volumes to set the price
where the manipulators want it to go. I can supply you with the name of
the company who most likely orchestrates these trades if you are ever
interested in performing a real investigation into silver market
manipulation. (STRIKE 4)
5) There is no observable relationship between short-futures-trader
concentration levels and silver prices.
I don’t know why this is even mentioned as they do not necessarily
have to correlate for there to be manipulation in the silver markets. The
fact that 80% of all the silver shorts are controlled by only a handful of
participants trading these positions back and forth like a hot potato should
be enough evidence that they are in complete control of the short side of the
market. It is also clear that if this huge short position was never allowed
to happen then the price of silver would be much higher than it is today.
Let’s face facts: the short position is gigantic, it is controlled by a
few traders and the price of silver is below where it should be had the
position never been allowed. (STRIKE 5)
6) There is a slightly positive relationship between the total net position
of the large short futures traders and silver prices; this suggests that
larger short futures positions are associated with higher, not lower prices.
In March 2004 the net short position of the 4 or
less traders on the COMEX was approximately 150M oz and the price of silver
was around $6/oz. In March 2008 the net short position of the 4 or less
traders had DOUBLED to over 300M oz and the price of silver had risen above
$20/oz. My question for the CFTC is WHAT WOULD THE PRICE OF SILVER HAVE BEEN
IF THE EXTRA 150M OZ SOLD BY 4 OR LESS TRADERS NOT BEEN ALLOWED????
Would the price of silver be $40/oz? How about
$100/oz? An ounce of common sense will tell you that it would not have been
lower. So now, because of these 4 or less short traders, the price of silver
does not reflect its “fair market value”. Prices are set on the
margin so it’s anybody’s guess as to where silver should be
trading today had the 150M oz of paper shorts not been added to the mix. Yes,
there is a positive relationship between the total net position of the short
futures traders and the silver prices BUT, given the fundamentals of silver,
that relationship SHOULD have been exponentially higher in price and
substantially lower in manipulative shorts by the 4 or less traders. (STRIKE 6)
I have just bothered to address your 6 main points
of proof that there is no silver manipulation but there are many more statements
littered throughout your latest letter that are either flat out false or
meant to mislead the reader. Out of these top six homeruns all I see are six
strikeouts.
In my opinion the CFTC made no attempt to
investigate the potential that the commentators and investors claiming silver
manipulation could actually be correct. There was no analysis of the silver
market fundamentals, no investigation (or audits) into physical silver
available for delivery against the short positions, no investigation of potential
collusion between the 8 largest shorts, no analysis of silver leasing,
swapping or lending, no interviews with market analysts or commentators, no
analysis of silver market slam events and no attempt to explain the COMEX
silver crime committed on March 17-20, 2008.
Mr. Kass, I had high hopes when we started our
correspondence last year that you could somehow bring some truth and honesty
to the COMEX trading floor. You have let me down.
They say you can’t fight city hall but where
would the United States of
America be without our founding fathers who DID fight their corrupt government? They fought for
our future and now I am fighting to preserve the truth, honesty and freedom
that this country was founded upon. The market rigging operation you are facilitating
is not only illegal but completely un-American and you should be ashamed of
your participation in it.
I am going to continue the fight and given that the
CFTC refuses to stop the long term manipulation of silver that fight will now
have to be against the CFTC.
I wish you well in our upcoming battles.
Sincerely,
Bix Weir
Cc:
A. Roy Lavic, Inspector General of the CFTC
Michael B Mukasey, US Attorney General
Bix Weir
Bix
Weir is a freelance author and analyst dedicated to exposing the long term
manipulation of the gold and silver markets. He has worked closely with the
Gold Anti-Trust Action Committee helping to pull the curtain away from the
Cabal of International Bankers that have taken control of our free market
system.
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