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In my latest dispatch to subscribers, I tried to describe the favorable set up for higher
prices present in silver and other metals markets. That favorable
set up may be in the process of unfolding. This set
up was created, particularly in silver, as a result of the engineered takedown we just experienced.
Having already discussed what may develop from
this point, I would like to vent a bit about what just occurred.
It still amazes me that so few seem to be outraged by what transpired in the silver market starting on Sunday, May 1. That
night, silver plunged sharply, by $6 an ounce (or
13%) in minutes, setting the stage for a one-week price decline of 30%. Simply stated, a 30% decline in one week in any commodity market is a very
big deal, especially when there was
no supply/demand news to account for it. More outrageous is that the primary regulators of the silver market, the CFTC and the CME group, have not publicly commented on the big market plunge
in silver.
Let me see if I can put this plunge and the lack of comment
by the primary regulators
into some perspective. Try to imagine a tragic
commercial plane crash with no comment from the Federal Aviation
Administration or the National Transportation Safety
Board for three weeks. Or a case of tampering with a common cold remedy (Tylenol) that resulted in public harm that the Federal Drug
Administration refused to comment on. Or a
stock market crash of 30% in a week
that drew no comment from the Securities & Exchange Commission or the New
York Stock Exchange. Such occurrences and no comment from
the primary regulators would be unimaginable.
Yet this just occurred in the silver market.
The Commodity
Futures Trading Commission (CFTC) holds that its
primary mission is to protect the public from fraud, abuse and manipulation. Yet
the public has just been subjected
to fraud, abuse and manipulation in silver by virtue of the one-week 30% intentional price plunge and the Commission
has not lifted a finger to protect the public.
Or even to comment on it.
How deep of a silver market plunge would it take
for the agency to comment – 50% or 90%?
I realize that silver had
climbed in price sharply before its sudden plunge,
rising by more than $20
per ounce from the end of
January to a high of $49
by the end of April. That climb took
three months. Almost $15 of that gain was wiped out in one week. I know that the popular version of what caused the price surge was irrational
speculative buying which created a bubble in price that burst. But I also know that the actual data directly contradicts the popular
version. CFTC data in the Commitment of Traders
Report (COT) indicate speculative
selling into the price peak, accompanied
by commercial buying (short-covering). Granted, the
intentional price smash generated further speculative selling, but that doesn’t change the fact that speculative
buying did not cause the silver run up.
By remaining quiet
on the matter, the CFTC is
aiding and abetting the
manipulation and the dissemination of false market information. This is as contrary to commodity law as is possible. In light of
the highly unusual circumstances that surrounded the sudden decline in silver (on no fundamental developments) the Commission’s silence creates
the impression among many
that it may be complicit
in the decline. No good purpose
is served by the
impression that the CFTC is
ineffective, or worse, in its
most basic mission of protecting
the public. Unfortunately, this
impression has been nurtured by a regular pattern of apparent neglect
of the public’s interest
by the Commission.
The public has notified
the Commission on numerous occasions and in great numbers concerning some very specific issues in the silver market, namely, position limits and the
concentration on the short side in COMEX futures.
The only reaction from the Commission comes in personal comments by Commissioner Bart Chilton. While Chilton is to be commended
for his acknowledgement
of the importance of these matters,
it is not right that the Commission stays silent on an official basis. I certainly
admit to my own role in pressing the Commission for answers
to straightforward questions and in suggesting solutions for consideration.
And that role included encouraging others to press the Commission
as well. Those that have contacted the CFTC
know that these are serious issues that deserved to be fully aired. Yet, with the exception of Commissioner Chilton, the agency has avoided responding to the public on all matters
related to silver. This is not the correct way to serve
the public.
Away from
the Commission, the silence on the part of the CME Group, owner
of the COMEX, is equally outrageous.
The latest intentional
silver takedown began with the blatant early Sunday evening assassination of the price. The
killing took place on the
CME-run Globex electronic
trading system, executed
by exchange insiders. It was
this electronic system that provided the means and opportunity and documented trading trail of the crime. The motive has always
been the buying back of an uneconomic
short position after first creating
distress selling through manipulative dirty tricks. The well-timed margin increases by the CME amounted to piling on and adding icing to the crooked cake.
Between the CFTC (which I still consider incompetent, rather than duplicitous)
and the CME (which I have always
considered an ongoing criminal enterprise), you would think
there would be enough silver
silence to go around. But there’s
more. It has been two and a half
years since I publicly indentified and accused JPMorgan as being the big concentrated silver short and chief manipulator. JPM has managed
to close out much of its
short position (at great loss) but still while bullying the market. Yet, in all that time JPMorgan has never uttered a word about being accused of the most serious market crime possible.
This despite countless law suits alleging
the same silver
manipulation some six months
ago. I know that allegations and legal findings can be two very
different things, but I never thought an entity like JPMorgan
(or the CME) would ever remain silent in the face of repetitive and specific allegations.
Lastly, the largest
money manager in the world, BlackRock, has joined the silver soul mates of
silence in not responding to allegations
of negligence. In allowing
the short position in shares of their
big silver ETF, SLV, to balloon to the equivalent of
more than 36 million ounces
just before the price smash, BlackRock played a key role in enabling the 30% price plunge. BlackRock knew, or should have known, that there was
no real metal backing up
the shorted shares and that served as a key silver
price depressant. As I do
with JPMorgan and the
CME, I make sure the highest
officials at BlackRock are aware of my allegations.
At the very
least, the CFTC, JPMorgan, the CME Group and now BlackRock, are at the very top of the regulatory and financial food chain. As such, they are not some 90-pound defenseless weaklings. By law, these entities must behave in an appropriate manner. I don’t believe that any of these entities have been behaving appropriately when it comes to protecting
the public interest in matters
related to silver. I know this is maddeningly frustrating to objective observers.
What can you do about it?
There is only one answer. You must
contact your elected officials. This is something that I have been neglectful in emphasizing, as a
subscriber recently reminded me. Before you conclude that this will
be a fruitless endeavor, please allow me to recall an incident that would suggest
otherwise. Back in 2008,
a reader of my articles took the time (at no suggestion
from me) to write to his local congressman about my findings of concentration in
the August 2008 Bank Participation Report. In turn,
this congressman wrote to the CFTC about my allegations. As a result of the
CFTC responding to the representative,
it was revealed that JPMorgan was the big short in COMEX silver. That
is what enabled me to discover the identity of the big silver short. If that reader didn’t take it on himself
to write in the first place, I wouldn’t
have been able to draw a bead
on JPMorgan and much of
the progress towards ending the silver manipulation
over the past two years would not have occurred.
The stakes here are far higher. We have just witnessed the most blatant act of manipulation in
the history of the silver
market with the take down that commenced on Sunday evening, May 1. Everyone involved who should have prevented this manipulation and protected
the public failed to do so.
Everyone involved who should have explained what took place afterward have failed to do so. This is unacceptable in a lawful society. The only remedy is to force these entities, namely, the CFTC and the CME Group, to do what they are required to do.
Everyone has someone
that they must answer to. The CFTC and the CME Group must answer to Congress. Congress, in turn, must answer to those who elect them
to office. That’s you.
Ask your elected officials to press the CFTC and the CME to do what
they must do – end this
silver manipulation. You don’t
have to put yourself in jeopardy
by making any allegations, as I’ve already done that for you. The allegations are contained in this article and other articles
I have written. Ask you senator and congressman to press the CFTC
and the CME to address the allegations.
Send them this article. I promise you that it won’t
do any harm and may do a great deal of good. I also promise you that these are serious matters in which you won’t
be wasting anyone’s time.
Theodore Butler
Butlerresearch.com
For subscription information to Ted
Butler’s private newsletter, please go to www.butlerresearch.com
Theodore Butler is an independent Silver Analyst who has been publishing
unique precious metals commentaries on the internet since 1996. He offers a subscription service with once or twice weekly commentaries
including detailed analysis of the Commitment of Traders
Report, regulatory developments, supply/demand considerations, and topics of
interest to investors in precious metals, with an emphasis on silver. Always outside the box. You can subscribe to his service by clicking here.
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