Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
FLMP just traded for $1.00 for a 400% increase in about two weeks.
Crude oil went up more today than it cost per barrel in 1998.
About two weeks ago FLMP was around .20.
Today gold closed down .50 at $878.00 and silver closed up .35 at $17.15. So far this week gold is down $8.10 and silver is up .28.
Kevin, I have been very busy this week. I had two meetings in Olympia yesterday and I am going to Seattle today. The posting will continue this evening or tomorrow. I believe that you are right. The summer vacation months have always been very flat for the precious metals.
"Gold production in Australia dived to the lowest levels in about two decades for the March quarter as miners treated lower ore grades, a Melbourne-based mining consultancy said at the weekend.
At 53 t, Australia's first-quarter gold production showed a 16% drop on the previous quarter's figure, and was 12% lower year-on-year".
Kevin, but I do remember several years ago when I walked into a super market and several employees were changing prices on nearly all products. It was a race to see if a person could get to the product before the employee. At that time President Nixon froze prices to try and control the inflation that was taking place. So it could happen.
Kevin, I don't see it happening either. It would have to be projected a few days into the future from the announcement date. The individual gas stations would have to be able to get rid of the gas on hand that they bought at much higher prices.
Today gold closed up $9.10 at $886.10 and silver closed up .27 at $16.87. For the week gold is down $38.10 and silver is down $1.32.
I just saw on Fox news that there is a movement to cap gas prices in the US at $2.49 a gallon.
Right, Kevin. They knocked the price down by .57 this morning in less than an hour.
Today gold closed down $4.40 at $899.90 and silver closed down .01 at $17.41. So far this week gold is down $24.30 and silver is down .78.
I feel very sorry for you. lol! I didn't retire until I was 47.
The euro is now at $1.5680 This is killing the US tourism to Europe. A tourist from the US can only get $3197.00 for $5000.00 US. It is about the same all over the world. The US dollar is even losing badly against small country currencies. I have been to New Zealand on six occasions. The New Zealand dollar was about .34 US ten years ago. Now it is at .7848 or up over 130%.
TheRavininexile, I agree with everything that you said. The only reason that gold and silver is dropping is that the bullion banks are increasing their PM short sales. The increase has been astronomical for the past four years. There will come a time when they will have to pay the piper.
I see no silver or gold of any significance in the coin shops in the northwest. I deal with one of the largest in Seattle. The owner tells me that he has many orders that he cannot fill, especially for the silver one ounce rounds. Even the NW Territorial Mint is having trouble putting out silver bullion. Northgate Precious Metals offered me a premium for my one ounce rounds, an offer I quickly rejected. A few months ago I sold a 100 ounce ingot to see what would happen. It sold before I got out of the shop.
The bullion banks are losing hundreds of millions and I believe that they will be in big trouble within a year.
I agree Kevin. You are exactly right.
Today gold closed down $19.90 at $904.30 and silver closed down .77 at $17.42.
LOL!
I disagree Tsafi! Toilet paper is more expensive.
This drop is in the face of a weakening US dollar which lost 1/2 cent against the euro this morning.
Kevin, I have seen no valid reason for the large drop in gold and silver this morning other than the paper players scrambling to ease their losses. Silver was down .72 in the first hour and ten minutes.
Today gold closed up $3.80 at $924.20 and silver closed up .23 at $18.19. For the week gold is up $22.60 and silver is up $1.25.
Today gold closed down $11.40 at $920.40 and silver closed down .02 at $17.96. So far this week gold is up $18.80 and silver is up $1.02.
lol... That sounds like a good deal to me. I believe that you are right. I am in real estate and precious metals. I see both as a very good long term investment. I would wait for a while on the real estate though. The prices seem to be still falling in the US.
When I was in Israel I found that most cars were Mercedes as well as many large trucks. They should be able to afford high gas prices. Also, Israel is a very small country and things are more consolidated there. People are not required to travel as far for goods and services.
Complaints in the US are because of the shipping costs of all consumer goods. The price of oil is creating a very strong inflation situation. The price of nearly all consumer goods are going up at an alarming rate. The drivers and owners of millions of 18 wheeler trucks are paying about $5.00 a gallon for diesel now.
Tsafi, has the price of gas reached $8.00 in Haifa yet?
Silver dropped 17 cents in 20 minutes after the NY market opened.
By: David Morgan, Silver Investor, Silver-Investor.com
-- Posted 22 May, 2008 | Digg This ArticleDigg It! | Discuss This Article - Comments: 0
This week I must address the latest Commodity and Futures Trading Commission (CTFC) findings that, “The U.S. commodities regulatory body found no evidence that silver prices had been manipulated downward by short sellers after re-examining long-term and recent allegations of misconduct.”
I was asked by Dow Jones to comment on the CFTC findings. The first point I stated was, “It is not possible to manipulate the trend in a market, but it is possible to “manage” the price within silver’s uptrend.” I went on to state that the price of silver can be managed, within certain boundaries, through short selling. I believe silver would be far higher if not for selling of “vast amounts” of silver that doesn't exist, or “naked shorts.”
Now some I know well in the industry build a case that all or almost all of the silver sold short on the exchange is not sold naked but indeed is true hedging, primarily by base metals mining companies.
This at the surface level may appear to be correct, until it is realized that almost all of the real physical silver that is delivered to end users (primarily to industrial consumers) is accomplished by means of over-the-counter contracts known as “forwards.” This is not accomplished in the futures market!
My point is simple: If the true sale of physical silver is done in an unregulated market based upon private contracts, then what is the purpose of the futures market?
Why did the London Bullion Management Association trade nearly 30 billion ounces of silver last year?
Why did the futures and options exchanges trade almost 60 billion ounces of silver last year?
Let’s get a bit real here. If the total silver supply is roughly one billion ounces and we can measure NINETY times that amount being “traded” on the reporting exchanges, does it not beg the question why?
Further remember, there is a whole vast amount of silver “trading” going on in the OTC market that does not report at all. It could easily be as large as the reporting exchanges. Let’s be conservative here and state only 10 billion ounces of silver is dealt in the OTC market.
So when I state naked sales and can prove perhaps ONE HUNDRED TIMES the amount of silver exists on paper than exists in the physical world, you must question the logic of “hedging.” The derivatives markets are alive and well in both silver and gold, and there is roughly one hundred ounces “claimed” on paper for every physical ounce of silver.
So, ask a very basic question: How is the price of silver set? As if there is less than half a billion ounces of physical silver? Or is the price acting as if there is a hundred times as much silver? For those who don’t know, this is a rhetorical question! Think fractional reserve banking system, which keeps about one percent of the total (reserve), because what depositor is going to cash in on their demand deposits? One percent is what the bank needs to keep the present day scheme going. In the case of banking, more “money” can be created by a computer keystroke. But real silver, well . . . that will pose a problem.
Another question that has always bothered me is, Why does the CFTC set a limit of 7.5 million ounces of silver as the most that can be taken off the exchange in a given delivery month? If you look back and see the Comex inventory level change when Warren Buffett made his purchase, you will notice a huge off take of physical silver from the Comex. This cannot happen again; the rules state there is a limit on the amount of physical silver that can be taken off the exchange. So, for the umpteenth time, I will answer the following question.
“Why doesn’t some big investor come along and just buy up the remaining silver?”
Answer: It cannot be done. There are delivery limits now! Let me repeat!! It cannot be done, there are delivery limits NOW!! Oh, you might ask, “Is there any limit to the amount of silver that can be sold on paper?” Well, the main purpose of this missive is to prove that there is no limit to the amount of paper silver that can be created!
I could go on, but I think I’ll cool off and continue this discussion next week. In summary this week, I will share a letter I received very early on when addressing this same issue. This came from a Comex floor trader. Notice the price level in the letter—the price action can be “managed,” but the trend, as I said then and am stating again, is higher. Much higher. As Abraham Lincoln said, “You can fool some of the people all of the time, and all of the people some of the time, but you cannot fool all of the people all of the time.”
Tsafi, a few months ago I bought MPET at .86. Now up 180% at $1.94 and plan to let it run a little more. About four years ago I bought MPET at $1.08 and sold at $3 80. Good one to play but not too often.
Today gold closed up $14.20 at $918.80 and silver closed up .72 at $17.66. So far this week gold is up $17.20 and silver is up .72.
I believe that the preceding post confirms my statements about the paper players still shorting silver and gold. The short positions in silver have gone from 180 million ounces on 5-25-04 to 400 million ounces on 3-11-08.
Ted Butler Interview
By: Theodore Butler & James R. Cook
-- Posted 20 May, 2008 | Digg This ArticleDigg It! | Discuss This Article - Comments: 0
Cook: The Commodity Futures Trading Commission just issued a staff study that finds no evidence of market manipulation in silver futures. Did this report catch you by surprise?
Butler: Not at all, I wrote that something was coming out from them the day before it did.
Cook: Was that a guess?
Butler: No, a Commissioner told me about it privately, starting about two months ago. I guess I was surprised then, but not on the day it actually came out. While I was prepared for the denial of a manipulation, I was still disappointed that they didn’t step up to the plate and do the right thing.
Cook: So, obviously, you disagree.
Butler: Of course.
Cook: They make a big deal that the composition of the four largest traders, in terms of net positions, changes over time. Does this alter your position that the big shorts are up to no good?
Butler: No. They are talking about changes over the past few years. There have been no changes in the 8 or less traders composition this year.
Cook: How do you know?
Butler: The concentration is too extreme and the positions haven’t changed enough to allow for different large short traders to come and go
Cook: They go on to say that their trading positions are driven by their customers. How does this matter?
Butler: It doesn‘t. They are making up shallow excuses. Their Large Trader Reporting System deals with the holdings of single entities, not a commingling of customers.
Cook: They say that concentration levels in silver are comparable to gold, copper, and platinum and palladium. Doesn’t that hurt your claim about concentration levels in silver are unprecedented?
Butler: Not in the least. I have been writing a lot about the record concentration levels in gold for a while. Both silver and gold have a concentration level that, in and of itself, has to be considered manipulative.
Cook: What about copper, platinum and palladium?
Butler: To include copper, as they did, is just plain silly. Copper has a long concentration larger than its short concentration. As for platinum and palladium, their true concentration levels, while very high, are not as large as gold and silver, once you net out the spreads. Besides, their total open interest are so small compared to gold and silver, that it is incomprehensible why they included them in the first place, except to confuse..
Cook: Anything else?
Butler: Yes. They seem to be really saying that platinum and palladium may be additional candidates for manipulation, not as proof silver and gold are not manipulated. Like a kid telling his mom that Billy was throwing rocks too. And guess what - all their examples are traded on the NYMEX, that bastion of integrity. How about some examples from other exchanges, like the CBOT?
Cook: They also claim they couldn’t see any relationship between concentration levels and silver prices.
Butler: The issue is not about price, the issue is an extreme concentration of more than 80% of an entire market. Price is a symptom of a concentration and manipulation. Remove or reduce that concentration and then we’ll talk about price.
Cook: But they say prices have risen and because silver outperformed gold, platinum and palladium that means silver prices are not depressed. You claim they are depressed and the big short position in silver is the main reason. Right?
Butler: Yes. Prices have risen, in spite of the manipulation. That’s just stating the obvious. I’ve never claimed that the price alone proves the manipulation. My case is simple - the concentrated short position is the prima facie proof of manipulation. Without that concentration, gold and silver would be much higher in price. They are doing everything they can to avoid dealing with that simple statement
Cook: They even say that the large short position in silver is associated with higher silver prices, not lower. Is that right?
Butler: I’m not sure of what they are saying, and I don’t think I should interpret for them. By the way, we keep saying they said this and they said that. It’s unusual that no one’s name appears on the report. Not that I blame anyone for not signing it. They did mention Gorham’s name on the old report, but he resigned right after that report came out.
Cook: At one place in the report they say there’s no relationship between concentration levels and silver prices. In another place they say "something opposite, larger short, futures positions are associated with higher, not lower prices." Can you sort out this inconsistency for us?
Butler: I think the expression is talking out of both sides of your mouth. They also say in one place to be careful of those that advise buying silver, as they did in their 2004 letter when silver was under $6. In another place they show how silver has shown the best investment performance of any metal.
Cook: What does that tell you?
Butler: It tells me not to rely on them for investment advice. Let me ask you a question.
Cook: What’s that?
Butler: When are we going to get to the real issue here?
Cook: What do you mean?
Butler: I mean are you going to keep asking me to respond to all their intentionally misleading points or can we fast-forward to the important stuff?
Cook: Like what?
Butler: Like what their drawn-out 16 page response is really all about.
Cook: Please let us know.
Butler: This is a very significant report, as was the one in 2004. If you use a little common sense, you can see that there’s a real problem in silver. The regulators and the big shorts are stuck and they know it and this report proves it.
Cook: How is that?
Butler: The fact that the CFTC took such pains to say there is no problem in silver. This issue of the large concentrated short position being so large goes so clearly to the heart of their main regulatory function that they can’t address it straight on. They have to throw this much ink on paper to avoid confronting the real facts.
Cook: Are you saying they are confusing the issue?
Butler: Exactly. I admit that this can be a complex topic Most people can’t even grasp the concept of a short sale - how you can sell something you don’t own. That’s why I try to explain things as simply as possible. But the CFTC has resorted to taking a complex subject and making it more complex by not directly answering my simple questions and allegations.
Cook: Why would they do that?
Butler: They have no choice. What are they going to say? Yes, there is a problem in silver because we have such a large and concentrated short position that we don‘t know how to resolve it without blowing the price sky-high and disgracing ourselves?
Cook: You really think that?
Butler: Absolutely. If they acknowledged even a little bit of a problem, then they would have to do something. By saying there is no manipulation, they are not forced to move against the shorts. Be sure that if there were any markets that had an 80% concentration on the long side, the regulators would be all over it, like white on rice.
Cook: That’s because of what?
Butler: Because commodity law is clear - the Commission must move to prevent and eliminate excessive concentration. Concentration is the prime requisite for manipulation. There has never been a futures market more concentrated than silver (and now gold).
Cook: So by issuing a report saying there is no manipulation, you think they forestall any problem?
Butler: Exactly. They just kicked the can down the road a bit. Look, they bought 4 years with their last report. Silver investors aren’t complaining, because prices rose 4-fold from the last CFTC report, but I don‘t see how they bought much time with this report. The problem has grown so severe.
Cook: How do you mean?
Butler: We have less, not more, real silver in the world than 4 years ago, and the concentrated short position has exploded. And yet, in spite of those obvious and verifiable facts, the Commission issues a report that never mentions that. Concentration levels have, quite literally, exploded since their last report in 2004. The real concentration percentages of the largest traders is 100% higher than it was then. In terms of contracts, the amount of silver held short by the largest 4 and 8 traders has recently been more than double what it was shortly after the 2004 report was issued.
Cook: Could give an example?
Butler: OK. For the COT of 5/25/04, the eight largest traders were net short 180 million ounces of silver futures. At the recent extreme on 3/11/08 they held more than 400 million ounces short.
Cook: So, you are saying that we have less silver in the world, and of that silver that still exists, very little belongs to the concentrated shorts? And these few shorts have doubled their short position?
Butler: Bingo!
Cook: Are they the same traders?
Butler: Who cares? The issue is not if they are the same. The issue is what would the price of silver be, if 8 traders didn’t hold a concentrated short position of 400 million ounces. Even the CFTC report acknowledges this point
Cook: Where?
Butler: On page 11. In fact, this is the key two sentences in the report and the heart of the whole issue. They write, "Clearly, in the short-run, a massive unilateral liquidation of short futures positions would be expected to increase futures prices due to a strain on liquidity in the market. Over a longer period, the rise in prices would be expected to draw more sellers to the futures market, thereby exerting a downward pressure on prices."
Cook: Why is that the key?
Butler: They are admitting that if the manipulative concentrated sellers were forced to cover, prices would explode until enough non-manipulative sellers emerged. In essence, this is exactly my point, namely that a free market would require non-concentrated sellers and higher prices. The only thing the Commission is leaving out is what the price would also explode if the concentrated shorts were forced to cover
Cook: How high?
Butler: If these big shorts tried to cover quickly, we’d be over $50 or $100 in a flash.
Cook: But since the CFTC isn’t about to do anything, what could force the big shorts to cover?
Butler: Physical demand, especially by investors. For instance, the big silver ETF is just gobbling up silver. These big shorts can only short paper contracts, not physical. It is the physical buying that will crush them. And almost perversely, this CFTC report might inflame more silver investment.
Cook: How?
Butler: There is an old saying, "Nothing ever exists officially, until the government officially denies it." By denying that a manipulation and problem exists in silver, the Commission is inviting scrutiny. Any sharp institutional investor who takes the time to study this report and the real facts in silver, will buy silver without question.
Cook: Why?
Butler: Because a sophisticated investor who reads this report will be able to read between the lines that they didn’t deny that there has been an over 80% short concentration in silver, or that hundreds of millions of ounces are held short in very few hands. Such an investor will quickly conclude that the shorts are in a compromised position and are subject to a potential royal reaming on the upside.
Cook: Go on.
Butler: Such an investor would not care if the market was called manipulated or not, he would simply see that the big shorts were already extremely extended and had little real capacity to short a lot more, due to how much they were already short and how little real silver was available at current prices.
Cook: So you are saying that this report could prompt big investors to buy silver?
Butler: Precisely. Those who never believed the market was manipulated will view this report as confirmation of that and will continue to avoid buying silver, as they have all the way up. Those who were convinced silver was manipulated will dismiss the report’s findings, and continue to buy and hold silver, to their great advantage. Plus new investors who investigate all the facts objectively will undoubtedly buy silver, as this report, in my opinion, confirms the vulnerability of the shorts.
Cook: Sounds pretty far out to me. In any case the study also questions how the big shorts would be able to profit from this trading activity. They imply they have no motive for their short sales. What do you say to this?
Butler: This is the biggest fib of all. In 2004 they said the same thing, when it was obvious that the commercial shorts had been skinning the tech funds out of tens of millions of dollars regularly. In other words, there was a clear profit motive behind the manipulation.
Cook: What about now?
Butler: Now they can’t skin the tech funds as efficiently as they did back then, but a new and more compelling motive has emerged. That motive is self-preservation and financial survival. If the big concentrated shorts tried to exit their position quickly, as I am convinced they would love to do if they could, they would drive the price sky-high and create immense losses for themselves.
Cook: In other words, they have too big of a short position to close out without a huge impact on the price?
Butler: Exactly. They are, quite literally, the biggest fish in the smallest pond in financial history. They are trapped. Their motive couldn’t be more simple, or compelling - they are postponing delivering actual silver because it doesn’t exist and delaying buying back their short positions because to do so will destroy them financially.
Cook: They also say that if the price was artificially low nothing prevents traders and buyers from entering the market and driving up the price. An open or free market makes manipulation claims implausible.
Butler: Good. It is very important that they came out and said this. It should prevent them from issuing arbitrary rules against the longs as prices rise. Let’s hope they don’t change their tune when the silver shortage hits in earnest and their big short buddies start screaming for help.
Cook: They also questioned your motives. They say that to the extent you’re compensated because of your cause, buying interest is the reason you claim silver is cheap. Pretty insulting wouldn’t you say?
Butler: Look, since I’m pretty insulting to them, I can understand the low blow. I think folks know I don’t get compensated for how much silver you sell, and that I’ve been alleging manipulation long before you started sponsoring my research. It would bother me a lot more if people lost money as a result of what I wrote. Fortunately, that hasn’t happened.
Cook: What about the following obvious conclusion from them? "The argument that silver prices have been, and continue to be, manipulated downward is consistent with a strategy to encourage the purchase of silver." Are they saying that the reason you write about silver is to encourage buying? That goes without saying, doesn’t it?
Butler: Even though I have stated this numerous times, please allow me to state it again. My main motive has been and still remains doing what I can to end this manipulative crime in progress. A side benefit of the manipulation is that it has presented investors with a tremendous opportunity because silver prices are much lower than they would be if there were no manipulation. The fundamentals in silver are spectacular and getting better. The manipulation is icing on the cake. So I guess I agree with them, buy silver because of the manipulation.
Cook: Let’s revisit the big shorts. You say they are trapped and can’t deliver or buy back their positions without causing the price to explode. Are you saying they may be incompetent?
Butler: No, but they have badly miscalculated on the short side of silver. Being big and financially strong and well-connected doesn’t immunize you from making mistakes. In fact, it almost guarantees that if you do make a mistake, it’s likely to be a doozy. Bear Stearns was a financial powerhouse and maybe some of the smartest guys in the room, but that didn’t protect them from the blunder they made in the mortgage market.
Cook: Can a manipulation go on this long?
Butler: When I first started complaining to the CFTC 20-25 years ago about the silver manipulation, I didn’t have the clear evidence that exists today. Back then, the proof I had was basically the overall size of the short position on the COMEX. But things have changed in the past couple of years?
Cook: In what way?
Butler: The concentration. More short contracts are being held by fewer traders. What the market is telling us clearly is that the price of silver is so depressed in price that fewer and fewer participants are interested in selling it short. More and more investors are interested in buying silver, and fewer care to sell short. When you get that type of concentration on one side of any market, that’s a neon billboard declaring manipulation.
Cook: Frankly, I don’t see how there can be such a dichotomy between you and them. What do you make of that?
Butler: I have to tell you, there is a very ugly side to all this. It has to do with the very process involved in this CFTC report.
Cook: What do you mean?
Butler: I mean I can answer, logically and backed by facts, any specific point raised by the Commission in denying a silver manipulation.
Cook: So?
Butler: It’s not hard for me to debunk what the Commission brought forth in this report. So why didn’t they ask me before they issued this report?
Cook: Why should they ask you?
Butler: Who else should they ask? The only reason they issued this report was that the issue of concentration and manipulation is so important and because I’m the one who raised the issue in the first place.
Cook: True enough.
Butler: What kind of fair and balanced investigation, or analysis, or study can anyone do on such an important subject when you completely ignore one side of the story? The Commission stated that they interviewed the shorts. What are the shorts going to say, other than we’re not manipulating the market? Why didn’t they interview me and test their reasons for rebuttal on me? I would have proven to them that what they came up with in this report was bogus. They didn‘t want to risk that, because they needed to reach their conclusion before they even started to pretend to investigate. Any other conclusion would have required them to act against the shorts. This whole process stinks. It is un-American.
Cook: Un-American?
Butler: Absolutely. It’s like going into court, and the Judge and the Prosecution and the Jury have already secretly agreed on the verdict beforehand and the defense is not permitted to present its case. That’s not due process. That’s a kangaroo court. That’s obstruction of justice.
Cook: Those are pretty strong words.
Butler: Worse, the verdict is proclaimed far and wide by the power of the government’s press relations apparatus, so that no appeal is possible. It’s presented as a done deal. Let me be clear, I think the Commission acted in an illegal manner, by not fairly and equitably pursuing the truth, as is their sworn duty.
Cook: Anything you can do about it?
Butler: I can sure try.
Cook: You know, many would say this is just a disagreement between you and the Commission. Why not just agree to disagree and move on? Why not just get over it?
Butler: Yeah, I get that a lot. But here’s the problem. If I’m correct about this manipulation, as I am sure I am, then this is the most serious market crime possible. And it is a crime in progress. Too me, it’s like seeing some old lady getting mugged on the street and pretending you don’t see it and walking on by.
Cook: Frankly, I don’t see how there can be such a dichotomy between you and them. Apparently they believe they are right and you believe you are right. What’s going to happen to prove one side right or wrong?
Butler: The bloodless verdict of the market. And please don’t think for a second that they believe they are right. I’m convinced that they have to know that they are wrong, but have no choice but to pretend otherwise. No government agency is going to set off market turmoil intentionally. They must pretend there is no manipulation.
Cook: What can anybody do about it?
Butler: At the end of this interview, I will ask you to print a letter I just sent to the Inspector General of the CFTC, asking him to investigate what I believe is the unfair process of this study on the concentration and manipulation in silver.
Cook: Think that will do any good?
Butler: It could. You have to fight fire with fire. The Office of the Inspector General (OIG) is an important part of every federal agency and exists to insure the agency operates on the up and up. The OIG exists for issues just like this. If you don’t think the CFTC actions were above board in this silver matter, here’s something you can do about it. In fact, the OIG function is so important that they even make provisions for people to contact them on an anonymous basis. They want to hear from you if you think something is wrong. And I think the more people that do contact them, the better, because they will take it very seriously. I’m asking every reader to participate.
Cook: Does this only apply to silver?
Butler: Absolutely not. Gold investors should also participate because the eight or less traders have an extremely high concentration in gold futures.
Cook: Who are the other silver commentators the study refers to? This is only in response to your argument isn’t it?
Butler: Yeah, I was scratching my head on that one. I see attempts to try to claim prior involvement in the issue of concentration by someone else, but I sure don’t remember any involvement before the Commission report. Some people see a parade starting or a worthy cause and they want to jump in front and try to lead it.
Cook: How about summarizing and explaining what this all means to silver investors.
Butler: This is the second landmark report by the CFTC in four years, in direct response to my research and allegations of a silver manipulation. That should tell you that the issue is important. Both reports stated there was no problem in the silver market and questioned my motives. Both reports implied silver was fairly priced.
Cook: Fairly priced?
Butler: Investors might be interested to know that on the day the 2004 report was released, May 14, the price of silver closed at $5.55. It never went lower than that, not even for a day, and subsequently climbed to around 4-fold that level earlier this year, greatly rewarding investors who saw through the Commission’s arguments.
Cook: Can it happen again?
Butler: Let me tell you why that may be conservative, both in price and time.
The fundamentals for silver are still spectacularly bullish. Demand appears strong for as far as the eye can see, thanks to world growth, in particular from the BRIC countries (Brazil, Russia, India and China.). Production, after a bump up in the next few years, looks constrained. Investors appear to have awakened to the potential in silver after ignoring it for decades. The silver ETF wasn’t even being discussed when the 2004 report came out. Today, it is devouring silver in incredible amounts. I can’t overstate the importance of silver investment demand surging precisely at the same time there is less silver available for purchase than ever before.
Cook: Anything else?
Butler: Most importantly, the issue of manipulation is much clearer and more pronounced today, than it was 4 years ago. Much has changed in four years. Concentration was not the issue in 2004 that it is today. Concentration tells you that the short side is being abandoned and that the few shorts remaining are having to short more in the futile task of fighting a rising tide of investor demand. The silver bargains will be gone the minute the tide overwhelms them, as it must.
Cook: Thanks for presenting your case.
Butler: Thanks for allowing me to present it.
* * * *
For those who have asked me what to do next, here’s the letter I sent to the Inspector General. For those who wish to remain anonymous, go to the CFTC home page and click upper right on "Contact Us," scroll down to "Office of the Inspector General," click on "report fraud waste" or "abuse e-mail" link, type and send.
Please feel free to reference this letter and interview and you have my permission to use any prior articles of mine in contacting the Inspector General.
May 19, 2008
A. Roy Lavik
Inspector General
US Commodity Futures Trading Commission
Three Lafayette Centre
1155 21st St, NW
Washington, DC 20581
Today gold closed up $3.00 at $904.60 and silver closed unchanged at $16.94 after reaching a high of $17.25. The $17.00 area seems to be the land of no return for the bullion banks. The drop looked like a dumping of silver paper by the bullion banks.
"Silver replacing platinum in auto catalytic converters. More new uses being found for silver all the time while supply dwindles".
http://www.edrsilver.com/i/pdf/ReutersApr23.pdf
Posted by jimh068 on RB.
Today gold closed up $20.60 at $901.60 and silver closed up .29 at $16.94. For the week gold is up $17.60 and silver is up .15.
oops! the preceding was an article by Jason Hommel.
So, the CFTC says that there is no evidence that the silver futures market has moved silver prices to the downside?
If you are willfully blind, or complicit in the manipulation, you won't see anything, or you will say that.
Here is my proof that there has been manipulation, especially recently.
1. First proof:
Over nineteen major coin shops around the world ran out of silver as the price fell from $21 to $16, as I documented here: http://silverstockreport.com/ssrarchive.htm
from March 19th to April 2, and there are many reports even now that it will take a month or longer to get silver! Some of the big name shops included the Canadian Mint, the U.S. Mint, the Perth Mint, Kitco, Amark who is Johnson Matthey's number one silver distributor to the public, and Johnson Matthey is the largest silver refiner in the U.S. Other major online dealers popular with investors who ran out included Tulving, NWT Mint, CNI Numismatics, APMEX, bulliondirect.com and more.
How can the price go down, when there is no silver to buy?
2. Second proof:
On May 14, 2004, the CFTC wrote a report to deny allegations of manipulation in the futures market,
see: www.cftc.gov/files/opa/press04/opasilverletter.pdf
They continue to refer to this letter today. The author of the letter, Michael Gorham, director of the CFTC, resigned from the CFTC 3 weeks after writing the letter.
Shockingly, this letter admits the existence of fraud and manipulation in the silver futures market!
How so? They admit that no manipulation to the downside could exist as long as investors have "unrestricted access" to buy silver, but they admit that there are position limits that prevent that from taking place!
On p. 5, they write:
"Because there is unrestricted access to the market, many knowledgeable and well-capitalized traders would readily buy any silver offered at artificially low prices. The buying by these traders--buying that the alleged manipulators would have no way of preventing--would quickly cause the price to rise to its appropriate level."
However, on p. 8, they contradict that by stating:
"The Commission's guidance on speculative position limits focuses primarily on the spot month because, in our experience, physical delivery futures markets, such as silver, are most susceptible to threats of manipulation during the spot month."
In other words, they admit on page 8 that limits exist that prevent large investors from buying silver as they suggest they could do on page 5!
In other words, they are so twisted, that they believe it is a manipulation to buy physical silver!
3. Third proof:
The actual position limits are 1500 contracts per trader. However, these limits do not apply to the traders on the short side, only the long side. The positions on the short side are too large, and concentrated among too few traders. The 8 or less traders have controlled up to 83% of the market, as recently exposed by Ted Butler, in recent weeks; and this represents over 200 days of world silver production, or over about 50,000 contracts. Concentration is the ultimate evidence of manipulation, and it is ignored.
4. Fourth proof:
The very nature of silver itself is that it is not a promise, it is payment in full. All kinds of paper promises are by nature, a substitute for silver and gold, and hence a manipulation, because their very existence creates a substitute demand for something other than physical silver and gold. Thus, even paper money itself, and T-Bills, Bonds, CD's, savings accounts, are all manipulations that suppress the price of silver. Monetary demand, or investment demand for silver, is as low as it could ever be, since no nation on earth uses silver as money. This reduced demand suppresses the price of silver.
The size of the world paper money market and bond markets probably exceeds $100 trillion, which is $100,000 billion.
The size of the silver market is about 600 million ounces produced each year, and about 75 million ounces purchased by investors each year. At $20/oz., this suggests that the investment demand for silver is only $1.5 billion per year.
Thus, the size of the silver market is about 1 dollar out of 100,000.
In conclusion, I believe I, and now you, have stumbled onto the Achilles’ heel of the world's financial system. I'm somewhat skeptical that dow jones would let you expose this story to the world. I'd suspect that your story will get buried.
Today gold closed up $16.60 at $881.00 and silver closed up .16 at $16.65 after being up .48 earlier in the session.
Today gold closed down $1.70 at $864.40 and silver closed down .19 at $16.49. For the week gold is down $19.60 and silver is down .30.
I agree Kevin.
Good night Tsafi. I only post about EW because I believe that there is a good possibility that he may have cost some investors some money in the past concerning other very poor picks that he has pumped.