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Are you having those deleted posts reviewed by admin? Sounds like deliberate censorship to me. Are the mods the dumpers or is the pumper crew long gone? Personally I saw no TOU violations.
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Butler's latest on silver:
A Simple Decision
By: Theodore Butler
-- Posted 7 April, 2009
One thing you can say about the recent sharp sell-off in silver, at the very least, is that it forces you to think. In fact, my friend and mentor, Izzy Friedman, wrote an article with that title a couple of years ago. http://www.investmentrarities.com/07-03-07.html Nothing focuses an investor’s attention more than a sudden decline in price, especially in an item one thought was undervalued to begin with. This is as it should be.
I’m not going to completely rehash the premise of the original article, but instead try to simplify the lesson of this most recent sell-off in silver. Why did it occur? And what should you learn from it?
Was there any obvious real world developments in actual silver supply and demand fundamentals that caused the price to decline? Not from anything I‘ve observed. Investor demand for real metal remained strong for every measurable category from strong ETF flows and record coin production and sales, to dramatic COMEX warehouse withdrawals, to continued disruptions in silver production and refining. Industrial consumption, admittedly weak, didn’t suddenly plunge anew in the last few weeks.
The explanation for the sell-off was the same as it ever was - price rigging on the COMEX. The big commercial shorts engineered the market lower to force leveraged longs on margin to sell, in order for the big shorts to buy back futures and other derivatives. Once again, the derivatives market tail wagged the real world price of silver dog. The good news is that the concentrated short position, while still large and manipulative, appears to be just about as low as it’s going to get, after this recent sell-off and the engineered decline over the past 8 months.
OK, if that’s the answer to why silver sold off, what’s the lesson? The lesson is that you must approach silver in such a way that you are not a victim of the manipulators. Buy for cash, don’t borrow or go on margin. You can’t prevent silver from dropping due to these rigged sell-offs, but you can prevent your silver from being taken away from you by forced margin call selling.
There’s a simple decision that every silver investor must make. You must decide whether you believe that the price of silver is manipulated or if it is functioning as a free market. This may sound weird at first, but if you decide that silver is not manipulated in price, but is trading free from control, you shouldn’t buy it or continue to hold it as an investment, in my opinion.
That’s because if you believe that the price of silver is free from an active downward manipulation, you must believe it is priced in accordance with everything you see around you. You must believe that consistent record demand for an item should result in sharply lower prices. You must be comfortable with delays and rising premiums being compatible with lower prices. You must be able to disregard documented proof of an unprecedented concentrated short position as unconvincing, and regulator stalling and double-talk as reassuring. You must see something I don’t see.
Instead, if you do see manipulation permeating the silver market, that is the best reason for buying. If you see manipulation, you see an artificially depressed price, a price screaming to be bought. If you see manipulation, you see a condition that can’t last, that must end. If you see manipulation, then everything makes sense about silver’s price history and circumstances. If you see manipulation, you know the usual commentary about silver is nonsense. If you see manipulation, you can understand the sharp sell-offs. If you see manipulation, you know it will end explosively to the upside.
While deciding for yourself whether silver is manipulated or not, here are some additional reasons to consider silver at this time.
TEN REASONS TO BUY SILVER NOW
Amid all the recent attention I’ve placed on the continued manipulation in silver, some may mistakenly assume that diminishes the case for silver. Nothing could be further from the truth. I’m convinced that silver is a better buy than ever before. Here are detailed reasons why I believe that is the case.
One, the near-term emotional temperature of the market is low. There is no bullish "fever" where uniformed investors are driven to buy silver because of a sharply rising price. That will happen, but it’s not true now. While silver is still above the price lows of last fall and higher than year-end prices, the recent price action is nothing to write home about. The price has been below most of the important moving averages, causing silver to be "oversold." This is a much better time to buy than when prices have already climbed and many are buying just because prices are rising. At those times the risk of a sharp sell-off is high. Now the risk of a prolonged price decline is much lower. Now is the time to buy low.
Two, leveraged speculators who normally buy COMEX futures contracts and Over The Counter (OTC) derivatives do not hold a historically significant number of long contracts. The big dealers have been so successful at forcing long speculators out of the market, that the speculative long position is at important low levels. This means that long speculators have already been forced to sell and no big selling from them appears probable. On any rise in price, they are likely to buy, adding a force to rising prices. Buy before they turn buyers.
Three, available wholesale silver inventories appear to be tight. These physical silver inventories are falling into stronger hands. For decades the world’s largest stockpiles of silver were the COMEX warehouse inventories. These COMEX inventories were considered mostly commercial in nature with some portion being held for investment purposes. The COMEX inventories peaked at around 280 million ounces in the early 1990’s, and accounted for 90% of all visible silver inventories. After the introduction of silver Exchange Traded Funds (ETFs), there was a profound shift in the location and structure of world visible silver inventories.
Now, the combined inventories in the ETFs and other investment vehicles tower over the holdings in the COMEX by almost 4 to 1. (Over 400 million ounces in the ETFs compared to 120 million oz in COMEX inventories). Given the long-term nature of ETF investment holdings, this massive and historic shift in inventory composition means much less silver is now available to the market. This will exert a strong upward influence on price.
Four, all signs indicate that physical investment demand for silver on both a retail and wholesale basis is strong and could surge further. Until a few years ago, there was no net silver investment buying for decades. That pattern has changed with a vengeance. Clearly, the introduction of the ETFs has played a major role in this investment transformation.
The strong buying that we have seen does not appear to be "hot" money, but sober and determined accumulation. It wasn’t surging prices prompting buyers over the last six months. It’s due to a growing awareness and conviction about silver’s real supply and demand fundamentals. Importantly, there has been practically no buying of silver on a leveraged or margin basis. It’s mostly been cash on the barrel. These strong silver buyers will wait for significantly higher prices before selling. With higher prices inevitable at some point, the hot-money crowd should come in and blow the doors off the price.
Five, silver production is tightening, given the byproduct-nature of silver mining. As I have written recently, base metals production like copper, lead and zinc appears to have fallen significantly, also reducing the production of silver as a byproduct.
Six, world economic and financial conditions appear lined up to favor higher silver prices, no matter what occurs. If financial conditions remain unsettled, flight to quality buying in silver appears likely. If the world does return to better economic growth patterns, silver will benefit as a result of increased industrial consumption. Heads silver benefits, tails it also benefits.
Seven, more investors than ever have come to realize that the silver market has been manipulated and the government regulators and exchange officials are unable to persuasively address the growing evidence of a silver manipulation. The manipulation debate has become widespread in metal circles. It isn’t going away. The best the regulators have been able to do is to stall and pretend to be investigating. Fewer people are being fooled by such actions. A scam like the silver manipulation can’t continue when so many know about it. This scam will end suddenly and sharply in a price jump to the upside.
Eight, industrial demand for silver will continue to grow in the years ahead. New uses for silver appear regularly. A robust worldwide economy will initiate a new phase of silver demand. Higher prices will not diminish this demand because small amounts of silver are used in each industrial application.
Reasons nine and ten, silver prices are cheap on several important objective measurements. Silver is cheap compared to its own recent price. It is down more than 40% from its highs of one year ago, in spite of the strongest physical demand in history. More investment silver has been purchased over the past year than at any other period in history. At precisely the same time that prices have declined so sharply, more ETF-type buying has occurred than ever before and more Silver Eagles have been sold by the US Mint than ever before. We have witnessed the highest premiums on all retail forms of silver in history. This isn’t just me saying silver is cheap, this is the investment world voting with its collective wallet. Clearly, there is something wrong with this picture that can only be explained by manipulation on the COMEX and the OTC market by a few giant financial institutions, led by JPMorgan.
Silver is cheap on a cost of production basis. Never have the net operating results of so many different silver miners been so poor. The common denominator is too low a price for their main product. Silver is up three-fold from the lows of a few years ago, yet the silver mining industry still suffers. That’s because the cost of production has risen faster than the price of silver. That must be rectified.
Silver is dirt cheap relative to gold. While there is less above ground silver than gold, silver’s price has rarely been this low compared to gold.
The manipulation that explains why silver is so cheap cannot exist in a bona fide physical shortage. If the price stays low, growing numbers of investors buy real silver. That makes it harder for the manipulators to keep the price contained with paper derivatives. Some fret the scam can be continued indefinitely. If it were just a question of printing more money or more paper derivatives, perhaps that might be true. But it’s not about an unlimited supply of paper silver, it’s about a limited supply of physical silver that guarantees the manipulation will end soon. The termination of controls on the price of silver will be something we look back upon and marvel over how long it existed. Just make sure you are looking back while holding as much real silver as you can.
Each company is different when realizing sales. It usually depends on their own accounting rules. Some book the revenues when the sales are made, others don't book the revenues until they are received. It may be a good question to ask Tony on the next phone call.
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just posted a $5.70 trade bidwack, it's almost a joke.
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Products are selling should sell more big time, couldn't agree more. But real investors want those numbers, want the bottom line. Prise/earnings, price/sales, earnings per share. Good company with bright prospects and bad numbers- share price goes no where. Mediocore company with good numbers- share price goes up. It's all in the numbers. Prospects only go so far.
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Saraman- I think it will be a long ride but worthwhile in the end. If not I would have been long gone on those 3's. I don't think 25-30¢ is reaching too far.
Met a lot of good Navy guys on the gunboats in the delta. Good people, go Navy.
........al
I think it's going to be the K's and Q's that will provide the reality check. And it's going to take a lot of patience to get there.
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" but will the potential ever start to reflect on the bottom line"
That is the question of the month. I have, and if everyone else would be honest about it so have they, thought about this in the same light. I think the answer lies more in an individual's time line than anyplace else. Yes, it's been a long road so far based on investment returns of which most are in the red right now. But the question I ask myself is- Is the company still on track to really make something out of it's potential? I've seen them falter in the past and I imagine I will see mishaps again in the future. But are the7y still going in the right direction? Personally I believe they are. Don't take that opinion as a recco to buy the stock. First do some serious reading and looking and decide for yourself. Right now my vision is somewhat clouded by this uplisting mess. SEC has approved all financials and paperwork yet FINRA seems to be fooling around with their end. Some see conspiracy. If so what else is new in the financial world of late. I think once this cloud is lifted the way will be much clearer for all to see. Nothing will happen overnight. Regular reports to the SEC will have judgements passed on by investors and traders. It will still be a BB stock and as such be subject to some manipulations at times. I am still seeing loads of free advertising on the products. Call it a novelty or niche market, the products are selling. The current state of the economy will definately have an effect on this company as well as every other company in America. No one is immune to the severe depression we are entering. I've traded a lot of stocks over the years. I haven't traded this one at all. My outlook is long term and I believe this will be the real deal in a few years.
Saraman, my thanks to you for stating some real thoughts and not just spewing out negativity. It's what these boards are all about. And one final thought,- Yes I do think EI must step up to the plate real soon.
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I just researched and found the same info to send to dff. I guess he has already read it. Thanks to you for being way ahead of me. Could have saved myself some time by reading your post first, LOL. O well it's a rainy day here anyway.
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The big question remains. With LABS having upwards of 25 million shares accumulated, why are they still high on the bid and way above the ask? They have done all this buying yet are not willing to sell. Just food for thought.
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profiteer- some nice pics in that link. I hope everyone sees them. Casket and urn.
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dff- no, it's just something I recall reading a few years back. I'll do some research and come up with a better answer for you.
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Read him a long time ago. Scary for the unprepared.
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Not bashing here but I see a red flag. Why the need to raise the OS if you are not planning to sell new shares into the market? Seen this too many times. OS raised and all of a sudden the float steadily increases. Old holdover from the Diamond days here hoping for the best, but that's a big red flag. Keep in close contact with the TA.
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And that opinion ties in very close to the precious metals and commod
dities bulls that are saying a 20 year bull market is ahead.
Last nite I was visiting a friend that went to a seminar yeaterday. It was financial in nature, but the sponsors were into wills and trusts and not selling securities and not a brokerage. Their opinion was that this mess will take close to 20 years to work out. Reasoning behind that theory was that the markets will not come back until the kids currently in high school start to look at and invest in stocks and bonds. Just another opinion.
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and also one of the biggest contributors to the politicians now throwing our tax dollars down that drain. AIG is criminal and until the morons running this country realize it nothing will change.
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And since then have a 90 million dollar accumulated deficit. Have derived almost all revenues from selling shares. Former CEO indicted on securities fraud yet is still kept on as a consultant after he resigns over the indictment. Look back at some of Camguy's posts on how their website stacks up against competitors. This company has been toast for many years. All they have been doing for years is selling billions of shares to unsuspecting investors that believed their misleading PRs. Then they do the reverse split thing and start all over. Change the ticker and symbol to throw off the newbies. All the while supporting lavish lifestyles for Alex and the gang.
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In my own personal opinion, this company is toast. Too much debt to survive.
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If one cannot understand the concept of sarcasm they really shouldn't be in the penny stock market. When lurker posts about diluting shares of the company you just gotta know he is being sarcastic. Unless of course one has only read just that one post from lurker. Then I can understand the misconception.
No dilution today judging by trading so far, LOL
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Butler's response to CFTC:
All Talk, No Action
By: Theodore Butler
-- Posted 31 March, 2009 | Digg This ArticleDigg It! | Discuss This Article - Comments: 1
Last week, Commissioner Bart Chilton of the CFTC responded to those of you who wrote to him about the silver manipulation. Commissioner Chilton confined his remarks to my commentary of March 3rd, "The Smoking Gun, Part II" http://www.investmentrarities.com/03-03-09.html In this article I demonstrated how the 4 big traders in COMEX silver futures held a true net short position of between 72.5% and as much as 76% of that entire market after removing all spread positions. He did not comment on my recent and continuing allegations concerning JP Morgan being the big silver short or how all new silver short selling from the first of the year was established by existing big concentrated shorts.
Commissioner Chilton’s remarks can be found here. I have omitted a news article he included as it was unrelated to the issue of market manipulation. First, I would like to thank Commissioner Chilton for responding to many of you. He is still the only one who directly responds to investors. In turn, I would like to thank those who forwarded to me his response, as I don’t hear from the CFTC directly. Virtually all of you have asked me to comment on Chilton’s response.
Commissioner Chilton writes that this is the first silver investigation in many years, and we must be patient in awaiting its outcome. He claims there are many factors to be considered and this is not an "open-and-shut matter."
I would counter that this is the third silver investigation in 5 years, the first two of which resulted in detailed public responses in May of 2004 and 2008, denying any manipulation existed. I would also contend that this is very much an open-and-shut matter of explaining how one or two U.S. banks being short 25% of the world production on any commodity would not be manipulation. If there are many other factors pointing to silver manipulation that the CFTC feels it must investigate thoroughly, then they should do so. But in the meantime, that does not preclude promptly answering simple questions about the obscene short position by one or two U.S. banks. It is this specific issue that caused many hundreds of you to write to the CFTC. Let them explain that now and investigate other matters in due course.
Commissioner Chilton writes that the concentrated short position in COMEX silver futures does not take into account any other off-setting positions away from the COMEX. In essence, the concentrated short position might be hedged elsewhere. In Chilton’s own words, "Thus, it is not as if the short futures position represents the single position of a large trader…"
I would contend that the only silver market in which the CFTC has strict regulatory oversight responsibility and transparency, the COMEX, is where the concentrated and manipulative short position exists. How convenient it is that the non-transparent OTC market, now legitimizes a real and documented manipulative position. Usually it’s the other way around, with the CFTC claiming they are powerless to monitor and regulate what goes on in the OTC market. Now, when it suits their purposes, they use the opaque OTC market as their defense of a very real and visible manipulative position. I think the operative phrase here is talking out of both sides of your mouth.
As I wrote yesterday, all the evidence from the OTC market, as documented by the Office of the Comptroller of the Currency (OCC), indicates that the big U.S. banks, led by JPMorgan Chase, had been heavily short silver derivatives in the OTC as well. Since when do you hedge a short position with another short position?
Additionally, what Commissioner Chilton is suggesting is actually a worse form of manipulation than what I am alleging, if that is possible. Since the COMEX is clearly the dominant pricing force in silver, what he is saying, in effect, is that the big shorts may be buying somewhere else against their controlling COMEX short position. In other words, he is providing a motive for the big shorts, namely depress the price artificially on the COMEX to pick up off-setting long positions at distressed prices. Or, more likely, use a downward manipulation of COMEX silver prices to buy back short positions in the OTC market. Either activity is highly illegal.
Finally, I hope everyone notices that the argument that the big shorts have physical silver behind them has been jettisoned. Where the CFTC used to imply that the big shorts possessed physical silver, now it’s completely non-transparent swaps, forwards and lease positions. The same paper garbage derivatives that have just about ruined our financial system.
Commissioner Chilton characterizes my analysis in removing all spread transactions in order to calculate true net total open interest as a spin and he claims that there is no good economic reason to calculate on this basis. He further states that it is wrong to look at the aggregate position of the large traders, as it could include proprietary as well as customer positions. He (or Commission staff) sees no evidence of collusion among the large short traders.
I would counter that, as I explained in my original commentary, spread transactions are distinct from true outright positions and must be considered as separate and different from outright positions. In fact, the CFTC confirms this in their breaking out of non-commercial spread positions in every COT report. Look, I know Commissioner Chilton is relying on staff input in his message, but this must be embarrassing for him. Spreads must be removed to calculate true net open interest and concentration. Any representation to the contrary is plain dishonest.
As far as the aggregate position of the large traders, I would suggest that Commissioner Chilton and staff bone up on CFTC regulations. The Large Trader Reporting System (LTRS) outlines aggregation guidelines. http://www.cftc.gov/industryoversight/marketsurveillance/ltrp.html
What matters in determining aggregation is financial interest and control. Let me give you an example.
If a hedge fund, with a thousand individual investors, buys or sells commodity futures in its name on behalf of those investors, its position will be listed as a single trader in the COTs. That’s because the hedge fund is in control and decides when to buy and sell, not the investors in that fund. That’s the way it should be. The whole purpose is to monitor the market impact of the hedge fund and guard against manipulation.
Likewise, when JP Morgan controls the buying and selling of its customers, that trading is aggregated as one account, also as it should be. If certain customers of JP Morgan decide when to buy or sell independent from Morgan and are of large reporting size, those customers will be listed as separate traders in the COT. Therefore, this business that aggregation explains away the concentrated short position of JP Morgan in silver is bogus. If they control the trading, then they are considered a single trader.
As far as there being no evidence of collusion among the few large short traders, let me point out a truly remarkable statistic. Prior to June 2007, it was relatively rare for the net short position of the 4 largest traders in COMEX silver futures to exceed the total net commercial short position. Yet, for every week since August 5, 2008 (coincidently the date of the Bank Participation Report that kicked off the investigation), the 4 largest traders have had a larger net short position than the entire commercial short position. That’s 34 weeks running. What does this mean?
Quite simply, this means that without these 4 large traders (commercials by process of mathematical elimination), there would be no commercial net short position at all. In other words, the 4 big traders’ short position is so large and concentrated that if it did not exist, the combined position of the remaining commercials would be net long. And in the history of the COTs, COMEX silver is the only market in which the commercials have never been net long. Because they represent the entire effective short position in COMEX silver, it is not possible that these 4 commercial traders are not colluding to depress the price of silver. Actions speak louder than words.
Commissioner Chilton takes issue with my calculations and writes that even if you calculated as I did, the results of the true net concentration of 72.5% to 76% by the 4 large traders would be less than that. While not stating the exact number the staff calculated, the implication was a much lower level of concentration than what I concluded..
I would counter that numbers are numbers, and there is no need for implication. I would doubt that the Commission staff’s true net percentage results were more than one percent different than mine. They should just state their calculation and stop with the innuendos.
Lastly, Commissioner Chilton proposes there should be hard cap speculative position limits to deal with the issue of concentration.
To that, I would counter - Amen Brother! I would also agree that we should have an open public hearing on this silver matter, as Commissioner Chilton has suggested. But agreeing on something and actually doing it are two different things Talk is cheap. Actions are dear.
The enforcement of hard, legitimate speculative position limits in silver is the real solution to ending the silver manipulation. Ironically, this is the solution I have offered privately to the COMEX and the CFTC for more than 20 years and in countless articles. Legitimate speculative position limits will eliminate and prevent any concentration and manipulation.
Unfortunately, there is a great misperception about what actually constitutes hard legitimate speculative position limits. Ask any regulator or politician what they really mean when they call for legitimate speculative position limits, and it becomes immediately clear that they are referring to limiting speculators who buy, or go long. There is never even the slightest thought given to limiting speculative positions on the sell, or short side of the market.
Yet, in silver (and gold) there is no apparent concentration on the long side of COMEX positions, at least not when compared to the concentration on the short side. There is no legitimate suggestion that silver prices are too high. Certainly, no silver miner is generating big profits, and most are in the red. There is no obvious flood of physical silver coming to market, motivated by high prices. If there is a flood, it is one of buyers, not sellers. The sellers are very few in number and very large in terms of position size.
Since the problem of concentration is clearly on the short side, that is the side that needs legitimate speculative limits the most. And that’s where we run into a road block. We call the short side speculators, not speculators, but commercials. We label them hedgers, when these big banks are clearly speculating. We call them market makers, when they are strictly gambling and using lax oversight to dominate the market. That’s not a market, it’s a racket.
If Commissioner Chilton is serious about hard speculative position limits, he should first address the lunacy that allows big banks to pretend to be hedgers when they are clearly speculating. It is big financial institutions speculating that is at the root of all current economic problems. In fact, what we have been witnessing in the ongoing silver manipulation is a microcosm of our broader economic difficulties, namely, a lack of legitimate regulatory oversight and the application of common sense.
The bad news is that we must recognize that it is unlikely that the regulators will ever step up to the plate and do the right thing. The CFTC has denied that there is anything wrong in silver for so long, that it is impossible for them to admit otherwise. But is important to get them on the record, even if it is all talk and no action on their part. I promised you that if you contacted the regulators and elected representatives on this issue, you would receive dignified and serious replies. My promise is intact, as this is evident in Commissioner Chilton’s response.
The good news is that we don’t need the regulators to end the manipulation, even though they should. This crime in progress will end in spite of them refusing to perform their sworn responsibilities. The reality of the artificially depressed price and the developing silver shortage guarantees an abrupt end to the manipulation. This is all the more obvious in the behavior of the big shorts. They are clearly reducing their combined short position (COMEX plus OTC) as much as possible. This should tell you that they expect much higher silver prices and are positioning themselves for it. Unlike the regulators, the manipulators are all action and no talk. Do as they do - buy silver.
There will be one more article tomorrow.
CFTC respose to inquiries of silver manipulation:
Commissioner Chilton’s Response to Reader Emails
By: Bart Chilton
-- Posted 31 March, 2009 | Digg This ArticleDigg It! | Discuss This Article - Comments: 0
Thank you for your e-mail regarding silver. As many know, I called for an open hearing, and then for the investigation, which was announced last September. This is the first such investigation in many years. It is detailed and deep, looking at many aspects of the markets. The Commission has been briefed periodically on the investigation and I have had many additional meetings on the matter. We are making progress and I am pleased that the investigation is ongoing. That said, some believe that this is an open-and-shut matter, which can be resolved in days. They are incorrect. One thing I have repeatedly said is that I don’t want this to be a waste of taxpayer dollars. That means getting it right and doing a thorough job – a job that if need be can be taken to court and successfully prosecuted. I’m not suggesting we are going to file any charges—only that these are important matters and they need to be addressed in a comprehensive and professional manner.
I view my job as having a primary purpose—protecting consumers—all else follows. I’ve tried to do all I can in that regard, most recently calling for cri minal autho rity to put folks who violate the Commodity Exchange Act in jail and trying to alert people to the large number of Ponzi and Ponzi-like schemes out there.
With specific regard to the commentary article from March 3rd that many have written to me about, I want to make several points.
First, the commentary refers to the concentration levels of the net shorts. These positions that the CFTC includes in our Commitment of Traders report (COT) do not take into consideration all the positions held by the shorts that maybe used to hedge positions that they have with their customers—e.g. swaps, physical forward positions, lease positions, option contracts, etc. Thus, it is not as if the short futures position represents the single position of a large trader, but rather represents a position taken as a result of looking at an aggregation of many trades—on and off-exchange.
Second, the commentary makes an attempt to calculate a “true net” concentrated short position for the top four largest net short traders. The calculation was based on the COT (dated February 24). The COT rep orted a concentration ra tio of 46.7% for the top four net short positions for futures only. Staff has examined the calculations and has noted that the basic premise of the commentary is to inflate the reported ratio of 46.7% to “72.5% to 76%.” It appears that this was basically accomplished by subtracting non-commercial and estimated commercial spread positions from the overall open interest (futures only). The main argument of the commentary to be that “four or fewer traders controlling 72.5% or more of either the long side or short side of any regulated commodity futures market is a de facto manipulation.”
Again, I called for the investigation and I want ensure we are protecting consumers, but we also need some reality here and not spin things out of proportion. Specifically, there is no strong reason to look at only the aggregate concentration percentage of the top four net short in isolation to determine whether or not there is a “manipulation.” Looking at the aggregate percentage of a group of independent large commercial owners in isolation does not imme diately imply there is manipulation unless there is some evidence that all of these four traders are acting in collusion and trading together to influence the direction of the market.
Don’t get me wrong, I am still concerned about concentration. That is why I think we need some mandatory hard cap position limits for traders. Currently we have only accountability levels. These levels (which can be abrogated, and in fact are run through frequently) merely mean that the traders above the accountability levels are looked at more carefully. I think we need to do more, and have said so publically. I have taken the liberty of also pasting a recent news article on this matter for you further information. It is interesting to note that all four of these commercial traders are members of the London Bullion Market Association and are established traders in the silver and other metal markets. The positions represent not only proprietary positions but also customer positions as well.
Additionally, the percentages used in the commentary are for futures only, which was 46.7%, but if one were to look at futures and option positions combined the percentage was lower at 36.8%. There is no real economic justification for subtra cting out the spread positions from the total open interest other than to inflate the reported concentration ratio. Again, we need to look at facts here. Stating a number much larger than the reported 46.7% and labeling that as the “true net” concen tration position is misleading, especially since the commentary’s derivation is largely based on making some questionable assumptions in addition to using an estimated commercial spread number. With regard to the commercial spread number, since our COT report does not report commercial spread positions, only non-commercial spread positions, the commentary makes an attempt to calculate it. The commentary also notes a caveat that “(p)lease remember that this methodology is peculiar to silver and is not applicable to all other commodities . . . .” However, our staff ran the data to calculate the actual commercial spread, in addition to finding some minor mathematical errors when replicating the calculations, our staff found that the actual number was lower than the commercial spread estimated in the commentary. Therefore, even if one were to accept that spread positions should be subtracted from the total open interest in calculating concentration ratios, the concentration ratio of the top four commercial net short was lower than the commentary’s estimation.
All of that said, I still believe that t here are many areas of inquiry that the CFTC needs to focus on—including but certainly not limited to concentration issues. While I can’t give you details of our investigation, I can tell you that it is thorough and that we are making progress.
Thank you again for your e-mail.
Bart Chilton
BChilton@cftc.gov
agree. I've been watching this happenning for many years, decades in fact. It's all coming together now with this depression we're in. Obushma is no different, just another stooge for big money. It's not about wealth anymore as they have plenty of that. It's all about power and control now. Why would trillions of dollars be freely given to the banks with no strings attached, yet when the auto companies ask for help, concessions are demanded from the working class.
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JAMES P. PINKERTON: Obama’s New Wealth Order
Welcome to the New Wealth Order. It’s a strange place, kind of a bizarro world, in fact, where “liberal” Democrats focus on Wall Street and ignore Main Street. In this New Wealth Order, it’s not just the valuations of people’s houses that are “upside down,” it’s national priorities that are upside down. And so the Obama administration spends its political capital–and your tax money–redistributing wealth upward. Upward to Manhattan, Beverly Hills, and Greenwich, Connecticut. Does that make sense? Of course not! Unless, of course, you are living in the bizarro New Wealth Order.
The blunt reality is that Wall Street and Main Street are increasingly disconnected. Except when they need a bailout from Washington, the gamblers-turned-welfare-kings of Wall Street now put their focus mostly overseas, to other countries, and their markets.
The New Yorker magazine’s Nicholas Lemann reports on the implications of Obama’s latest bailout plan:
“The administration’s new bank-rescue plan did push the markets back up—but it has the potential to generate returns for a fortunate few on a scale that will make the A.I.G. bonuses look like spare change.”
Those last words are worth repeating: “the potential to generate returns for a fortunate few on a scale that will make the A.I.G. bonuses look like spare change.” As I said, bizarro.
It’s great, of course, that the stock market is back up a bit but out there in flyover country, unemployment continues to rise. Seven states now suffer double-digit unemployment.
The blunt reality is that Wall Street and Main Street are increasingly disconnected. Except when they need a bailout from Washington, the gamblers-turned-welfare-kings of Wall Street now put their focus mostly overseas, to other countries, and their markets.
Yes, it’s true that when Wall Street does well, the retirement plans of ordinary folks get a boost, but corporate America has gone global: Indeed, the big publicly traded manufacturing companies–those that have survived–hire mostly overseas if they can, thereby avoiding American environmental regulations. (And that offshoring was evident long before the Green Left started talking up “cap and trade” and “carbon taxes,” industry-ending policies that will put the complete and final kibosh on domestic manufacturing.) And as for the big banks and brokerages, well, they are so brazenly globalist that they are even doing multi-billion-dollar deals overseas using Uncle Sam’s bailout money. That’s right: Your tax dollars at work–working to create jobs worldwide.
But in the meantime, Wall Street, and the rest of the worldwide hedge-fund overclass, stands to make billions, even trillions, thanks to the the hard work of their mole–er, man–in Washington, Treasury Secretary Timothy Geithner. As The New Yorker’s Lemann observes:
“Some very, very rich people are going to get much richer, thanks to once-in-a-lifetime favorable terms provided by the federal government and unavailable to the rest of us.”
Any more questions about the workings of the New Wealth Order?
Yoo Hoo! Yes, Mr. Cop - Over THERE! (AIG)
Hmmm..... this is interesting....
"He is the golden boy of the casino," said Rep. Speier. "They basically took peoples' hard earned money and threw it away, gambled it and lost everything. And he must be held accountable for the fraud, for the dereliction of his duty, and for the havoc that he's wrought on America."
Oh, I see. There's that nasty "F" word, and this one you can say on TV!
But let's not be misdirected by bonus payments and "special legislation" eh? After all, anyone who believes this guy acted alone must be smoking something....
After the huge losses became known, Cassano was fired from AIG in early 2008, but he still received a salary of $1 million a month until Congress intervened. AIG has received about a $180 billion in bailout funds so far.
Ah. Let me see if I can grok this. Here's a guy who allegedly "hid" huge losses, was fired for it, but got a $1 million a month "salary" after being "fired", and he acted alone? That's why they paid him $1 million a month after firing him?
You expect The American People to believe that?
It gets better:
An ABC News investigation found that Cassano set up some dozens of separate companies, some off-shore, to handle the transactions, effectively keeping them off the books of AIG and out of sight of regulators in the U.S. and the United Kingdom.
"This is the other very important issue underneath the AIG scandal," said Blum. "All of these contracts were moved offshore for the express purpose of getting out from under regulation and tax evasion."
Yes, and again, there was nobody else within the firm that saw something like "Lichtenstein Subsidiary Profit, $10 billion" in the internal accounting of the company and thought that was funny?
Anyone remember the infamous "barge transactions" from the era of ENRON?
Of course AIG's CEO didn't see anything wrong with this.....
Earlier this month, AIG CEO Edward Liddy told Congress Cassano had done nothing wrong.
"I'm not a lawyer but there is no evidence of wrongdoing in any of this," said Liddy.
Really Mr. Liddy?
There's nothing wrong with moving transactions offshore through a series of shell companies to both avoid taxation and regulation, nor with having the accountant assigned to that unit intentionally kept away from the guy who's structuring the transactions so he can't ask "too many" questions? You seem to imply that you knew about it, but that sort of subterfuge (if it is as reported) in a company you are operating is all ok?
I must admit that in my time as a CEO I never ran a company as large as AIG (or anything even close to it) but I did, a couple of times, find people in the company who were intentionally concealing some aspect of what they were doing from me (and by extension, the other shareholders.)
My response? They were immediately fired and no, they didn't continue to be paid their salary or bonus.
Oh, and what about the external auditors? AIG has those, right? After all, it is a public company. Hmmmm....
Again I ask - who's interest does Mr. Liddy represent? Is it the taxpayer (as it should be, since this firm would not exist but for our largesse) or is it Goldman Sachs and other banking interests, given that Mr. Liddy was a director at Goldman before Hank Paulson, Goldman's former chief, tapped him to work for a "mere" $1 salary?
This is what the NY Daily News said back on March 17th (which unfortunately went under my radar at the time):
Company auditor Joseph St. Denis became concerned about the Financial Products unit, but Cassano barred him from checking.
St. Denis later quoted Cassano as saying, "I have deliberately excluded you ... because I was concerned that you would pollute the process."
St. Denis would recall Cassano saying he did not want to be promoted even further up the corporate ladder "because it would separate [him] from the money." St. Denis would remember Cassano telling him "AIG's corporate management was "scared to death" of him."
That's very interesting. What's even more interesting is his written testimony to the House Oversight Committee:
"I have deliberately excluded you from the valuation of the Super Seniors because I was concerned that you would pollute the proces."
My belief is that the "pollution" Mr. Cassano was concerned about was the transparency I brought to AIGFP's accounting policy process.
Ah, so Mr. St. Denis, the accountant, puts in writing (on October 4th 2008, before much in the way of funds were disbursed to AIG) claims that appear to be a "smoking gun" in regards to what has been going on within AIG (read the whole thing; its rather ugly) and yet somehow both Henry Paulson and Tim Geithner agree to transfer nearly $170 billion of taxpayer money to AIG to "bail it out", with full knowledge of this written testimony not only within the administration but also within the Congressional Committee on Oversight and Government Reform!
And where did this guy (Cassano) come from?
Joseph Cassano started out at Drexel Burnham Lambert under Michael Milken, "the Junk Bond King." Drexel imploded in 1990 and Milken landed in prison.
AIG promptly hired a team of Drexel people to start a Financial Products unit, Cassano among them. Cassano became the head and began dealing in securities known as "credit default swaps" out of one office in Wilton, Conn., and another in England, dubbed "the London casino."
You can't be serious? Drexel?
How does this sort of thing "fly under the radar" in Washington DC? Why you just make some "campaign contributions" to Chris Dodd and Barack Obama, the latter of whom wins the election and then allows yet another slug of money to be funneled through your former "employer" to hide the bad bets you made that now are being paid down to foreign banks?
Nor does this appear to be "just him" giving those "donations" either:
In March 2009 Cassano was linked to e-mails he authored in 2006 which solicited contributions from AIG executives for Dodd's campaign due to Dodd's position as incoming chairman of the Senate Banking Committee.[10]
Oh Mr. Cop! Mr. Cop! Mr. ERIC HOLDER!
One has to wonder - is the reason that Mr. Eric Holder, United States Attorney General, is not after this is due to campaign contributions made to his boss?
Has Barack Obama told his employee Eric Holder not to go after this guy?
And how about Chris Dodd? Nothing wrong there either?
Hmmmmm.
And no, I will not be satisfied if the law just goes after Joe here. Every single individual and firm that knew of this and did nothing, if criminal culpability is proved (and it sure looks like this "business" was intentionally structured in an attempt to avoid regulatory oversight and perhaps to unlawfully avoid paying taxes!), needs to hang from the (lawful) yardarm, including the accountants, external auditors and every single person within our government who knew and yet allowed the Treasury to be looted to pay off these "bad bets", including Henry Paulson, Tim Geithner and the entire Federal Reserve Board who approved the AIG transactions with The Fed.
Anyone remember Arthur Anderson?
PS: Mr. Cassano is alleged to have very extensive property holdings in The United States as well as having been paid some $300 million dollars over the last few years. Can we find a cop interested in serving up clawbacks and forfeiture actions for lunch?
Earnings reporting is different for each company. It all is usually listed in their incorporation documents. Reporting requirements are all controlled by the SEC.
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Sorry, didn't mean to burst anyone's bubble. And dreams never hurt anyone. Playing penny stocks requires either nerves of steel and a sense of humor, or blood pressure pills, LOL. Keep sl miling as my 40¢ is conservative IMHO.
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not a bad flip from 1¢ to 2¢. I've settled for far less on many trades over the years.
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Big LOL there. $40 is to me outrageous, but 40¢ a share is certainly not out of the realm of possibilties. I've seen penny stocks do far better than that with a lot less going for them.
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the bad news- some heavy hits at the bid. the good news- the bid is holding strong.
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big hit there. looks like somebody needed a quick thousand in cash.
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why not? It would be nice to see some opinions come out. I always like to read opinions even if they are in direct contradiction to my own. Keeping a closed mind severly limits potential possibilities.
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ditto here. eom
buy at .006 and sell at .009 is a nice return. I don't know of anyone that would turn it down.
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another 100,000 at the ask. eom
games or whatever, I just wish we had a better idea of what is really going on. I lean towards to frontloading for a pump and dump theory.
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maybe, but 181,000 just went off at the ask of .009. surprised that wasn't a T trade to hide it.
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So what he thinks they are doing is using the large banks to suppress the POG with large short positions with one hand, while accumulating large physical positions with the other hand. Not surprising at all.
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"We all know":
If you jump into a body of water, you will get wet.
If you throw an object up into the air it will come back down.
If you hit a solid object hard enough with your car, it will cause damage.
What we all don't know is ETNL is not looking out for their shareholders. Perhaps the author has a mouse in his pocket and that is the whole world to him.
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