Good morning Kevin. The following is for anyone who believes that the precious metals are not being manipulated. The entire article, which is a little long, is currently posted on the main page of Kitco.
A very few and very large banks seemed to have positioned very well ahead of the plunge in prices for gold and silver, but in the process they may have bought more than they bargained for – possible class-action lawsuits.
HOUSTON (ResourceInvestor.com) -- An internet firestorm erupted over an August 5 report issued by the Commodities Futures Trading Commission (CFTC) which report revealed an unprecedented exponential one-month spike higher in short positions in gold and silver futures reported by two U.S. banks in silver and three U.S. banks in gold. Investors and bullion dealers may band together to seek legal recourse against the thus far unnamed banks.
In that CFTC report it surfaced that those few banks took the huge net short positions in gold and silver futures just ahead of the largest and harshest fall in prices for gold and silver since the Great Gold Bull began in 2001 – 2002. The Got Gold Report covered it from the silver point of view earlier this week.
Sucker Punched
Speculation in the metals community since the issue was first raised by silver analyst Ted Butler on August 22 has centered around whether the few banks acted principally to profit by their own downward trading pressure after taking the extremely large short positions, or if those very large net short positions could have been legitimate positions put on as offsetting hedges to other over-the-counter trading positions, swaps and derivatives held by the very large banks.
Subsequent work done by independent analysts point to specific banks as the most likely actors responsible for the immense short positions. As examples, (and there are more), Rob Kirby of Kirby Analytics in Toronto opined that the action is likely the work of the U.S. Federal Reserve in concert with J. P. Morgan Chase in an August 25 piece on FinancialSense.com. Tom Szabo of Silveraxis.com researched FDIC Quarterly Banking Profiles and Call Reports and concluded the most likely “usual suspects” were J.P. Morgan Chase and HSBC. Investors keenly interested in this subject will want to read Rob and Tom’s comments carefully.
Since we’ve already looked specifically at silver in the previous Got Gold Report, this report looks closer at the gold positioning. The three unnamed U.S. banks went from holding long positions for 538,100 ounces of gold in July to holding short positions for 8,222,800 ounces one month and four days later. That’s a huge change in positioning for just three trading entities. (From $448 million dollars worth long to $6.8 billion dollars worth short if we value gold at $830.)
