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With Bart Chilton Suddenly On Board, CFTC's Position Limit Plan Is Now A Go
Was today's broad and very much coordinated selloff in commodities a result of the just announced news that the CFTC's position limit plan may, contrary to prior expectations, be enforced very soon? It appears that outspoken CFTC commissioner has flipped in his stalling tactic and instead is now endorsing the position limit plan. Per Reuters: "Under the system, if a trader's holdings in a commodity reaches a
certain threshold, it triggers a new level of heightened regulatory
scrutiny by the CFTC where commissioners could vote to require the
trader to reduce their positions." This means that JPM's accumulated holdings in various precious and industrial metals are not only about to likely become public, but that the CFTC will be mandated to very shortly enforce a break up on those positions which are deemed too concentrated. It is unclear how foreign entities, to whom the recent accumulation in various precious metals has been attributed, will be impacted by the proposal which now appears may be shortly enacted.
From Reuters:
A top official at the U.S. futures regulator said on Tuesday he was now in favor of a stalled position limit plan, a key turnaround that would allow the controversial rules to advance to the public comment stage.
The Commodity Futures Trading Commission introduced on December 16 its long-awaited plan to curb speculation in the metals, agriculture and energy markets but at the meeting, Chairman Gary Gensler abruptly postponed a vote on the proposal.
Commissioner Bart Chilton, the most vocal proponent of cracking down on speculators, was key to the postponement as he told Reuters he would have voted against the plan. It would have included a two-step approach to allow more time for the agency to gather information on the opaque swaps market.
"While I will now support publishing a position limit proposal for public comment, I will continue to make the case that we need to address excessive speculation in these markets immediately," Chilton said in a statement on Tuesday.
It is widely believed that by lifting his objection, the position limits plan will obtain the approval of at least three of the five CFTC commissioners needed to release the proposal. A separate vote will be needed to finalize the measure after the 60-day public comment period ends.
Chilton has emphatically said the CFTC needs to do more in the short term while it implements the position limit plan required by the Dodd-Frank legislation passed last July.
At the December 16 meeting, Gensler agreed to instruct CFTC staff to implement Chilton's suggested "position points" system until the CFTC puts its position limit plan in place.
Under the system, if a trader's holdings in a commodity reaches a certain threshold, it triggers a new level of heightened regulatory scrutiny by the CFTC where commissioners could vote to require the trader to reduce their positions.
A coalition of businesses dependent on buying commodities which has pushed for the limits said it supports Chilton's plan as an interim measure.
And once again we hear about this imaginary concept referred to as "market confidence." We hope the CFTC by now realizes that all those who actually participate in the commodities market understand full well that the entire market is dominated by one or two major players, and that any paper exposure in the market is seen by many as a guaranteed way to promptly transfer wealth over to the monopolists who continue to have full domain over several key commodities markets.
"In light of the existence of large speculative positions in today's energy and agricultural markets, it is imperative that the Commission to do something now, and without delay, in order to address these large positions and send a message of confidence and certainty to market participants," said Jim Collura, spokesman for the Commodity Market Oversight Coalition.
And if indeed this news was the catalyst for today's precious metal and other commodities sell off, it is woefully misinterpreted, as the only major institutional parties impacted will be those who hold outsized short positions in the precious metals space. As for JP Morgan's ongoing attempt to corner the copper market: we wish them godspeed.
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The more convoluted and codependent a complex system is, the more likely one small bug in the system will take it all down. If it isn't this "bug" it will be the next one.
The question should no longer be if the metals manipulation will be exposed and/or curbed? The question should be what will be the response from the powers that be when it occurs.
They will not just walk away, of this I am certain. This is war and they understand this. Do we?
It has always been war. It is between an article over which they have total control and one over which while they have a lot of control and maybe even most of the actual article, they have "less" control. (They can't "presto" it either. They would loose so much control. /shudder/ lol!)
And in their control scheme (and I not saying right or wrong here) the ceding of such an amount of power (even so slight) is a no go to date.
they basically want to limit the amount of silver and gold one could take a position in. they're afraid. very afraid.
What if, knowing that the limits will be a matter of time, supressed gold and silver while they can, so that they themselves go long also?
and...
What if, being large players can also determine and help establish a top where they can then unload?
Unless of course they are not folowing their own playbook but Bens.
Time will tell.
Yeah, going long...drives the price up...I doubt it. Crooks are dumb, there is no master plan usually.
sure, one night when nobody's looking they'll just jump over to the long side.
They have been going long on gold since at least the mid-90s, because they know, at least as well as we do, that a worldwide fiat monetary system cannot be maintained indefinitely. These people are not common "crooks", and they are not dumb. They have fought a war against American democracy and won.
They've been emptying the world's treasuries of gold in their public capacities so that they themselves could "buy" it -- with money that they printed -- in their private capacities.
They have pulled off the biggest heist in the history of humanity.
"They" are not people like Bernanke, Brown, or Masters. Those are their employees.
When the global fiat system collapses, they will own a large percentage of the Earth's gold.
agreed.
I don't buy it. It's like a James Bond novel or something...fiction, not reality. I mean think about this, they have no idea when things will collapse, what will replace it and how or if they would be prosecuted. So, come on...why all the attempts to keep the system going? There is no vast conspiracy to do this.
Excellent comment.
Someone linked to a pdf of the J. Livermore autobiography in the new years thread. It fascinated me. I read the whole thing (took all day).
I think you are correct on a short term horizon.
Long term, well I am not sure history has an example of a shit show this big leaving town on no notice.
Best of luck to all.
Cooter
War it 'tis...Bitch'tis.
I do not think we know the full story. They are taking us down slowly.
Alot of people think we are doomed, but there are still great ways to make money.
I subscribe to the guy from australia and his FFT economic newsletter at http://www.forecastfortomorrow.com that guy has called many big events before they have happend, including the stock market crash in 2008 and the current financial collapse of the US. (currently happening) I found him from a friend last year, and he has some important work.
His oil calls are insane, and I have been making good money with them. He is well worth a look, if you want to keep two steps ahead of the sheeple out there.
I am worried about my financial future. I am sure others are nervous out there?
The only way to "make money" is to mine it - or to have free market capitalism deflation. Those ways are the ONLY ways.
Shameless spam but I'm just trying to help:
http://tfmetalsreport.blogspot.com/2011/01/sick-and-tired.html
everything is now explained....
I hope this doesn't portend a mysterious single car "accident" for the intrepid Mr. Chilton.
Richard Head;
I believe the western term is "suicided"
A "heart attack' in one's hot tub in Maine, perhaps.
Or found hanging from a pipe next to the roon where one's son is sleeping peacefully?
AKA defenstrated
Silver sale!! Thanks Barty boy. Just got back from my coin shop with jingling pockets ;)
Yeah, me too at the coin shop. Bought both Au and Ag.
I join you in thanking Chilton and JPM for yet another opportunity to have gotten some more physical while it is still around.
Me three. If Blythe can manage a beatdown below $29 tomorrow I'm buying more Ag.
APMEX sold 20,000 ounces of American Silver Eagles today.
Bought more today myself! YIPEE
"...where commissioners could vote to require the trader to reduce their positions"
What about this? Seems to me that they could just as easily (a) agree not to vote or (b) vote that no scrutiny is needed. This looks like a band-aid to me, it's not the same as actual position limits, which would be a carved-in-stone rule that applies to everyone, rather this seems more like they can review things on a case-by-case basis. Call me cynical but what's to stop them from exempting their friends, ie people who undue influence over commission members?
+29.81
But the position is then public, no?
Transparency at least?
Cooter
"Hi, we're from the government and we're here to help force the market to be free."
In the New Years thread, one of my predictions was a rise in distrust of government but at the same time more calls for more government controls and takeovers of everything.
You fools.
I don't get it. This matters?
Bwaney Frank has a hemi, so?
http://www.youtube.com/watch?v=_1E_y4g-3mM&feature=branded
I'm sure Bart's change in opinion has nothing to do with rumored failures in the COMEX/LBMA deliveries last week...
Are those rumors online anywhere, Dagny, or did you hear them from John Galt? I would love to read the details.
I was already thinking that something significant must be happening, or about to happen. ( Like Carlos Slim, position limits, or Something Else.) This feels like an expend-all-the-ammunition, blaze-of-glory, grand finale kind of attack.
Oh, and... Fed delenda est.
Who is John Galt? Just google COMEX default history and sort it for the past year, then month (14,000+ results). Then for giggles, change it to past 24 hours.
Harvey has running totals of "non-deliveries" over on his blog. http://harveyorgan.blogspot.com/
John Galt, from the novel Atlas Shrugged - author Ayn Rand.
I just wasted a few minutes on your Google search. Nothing specific turned up. Give me a link, thanks.
From wiki: While economic conditions worsen and government agencies continue to enforce their control on successful businesses, the naive, yet weary mass of citizens are often heard reciting the new, popular street phrase, "Who is John Galt?" This sarcastic phrase is given in response to what tend to be sincere questions often imploring heavy subjects, wherein the individual can find no answer. It sarcastically means, "Don't ask important questions, because we don't have answers", or more broadly, "What's the point?" or "Why bother?"
So it was a rhetorical question. (Dagny Taggart ends up with John Galt.)
I am searching for where I heard COMEX had to settle in USD on the last trading day of 2010. I did say rumored.
We all read Harvey and saw that. He's been saying that on and off for months. That's an opinion though, not proof.
So this is just a rumor and there's no link? Why did you list a google search? I'm confused.
So this is just a rumor and there's no link?
Yes. It is a rumor as I said above... I'm sure Bart's change in opinion has nothing to do with rumored failures in the COMEX/LBMA deliveries last week...
http://www.youtube.com/watch?v=B-6-R9SPTLg&feature=player_embedded#! 40 seconds in, he talks about the rumors. I don't think rumors have "proof" or they would be just facts, right?
As to the google search, I try many combinations with and without "quotation marks," using words like comex default settlement delivery etc... Then I do the same at dogpile.com. Then youtube.com. And on... There are many blogs who are repeating that COMEX had to settle with large financial institutions in USD instead of physical.
I did this, and it seems to imply something was going on this month, but not now.
I did the average per day to underscore this:
I get
1 year: 53,100 (roughly 145 per day)
1 month: 14,100 (~470 per day)
1 week: 563 (~80 per day)
24 hours: 99 (99 per day)
I would imagine part of this is due to google's indexing lagging real time, at least for the 24 hours/1 week result. But the 1 month result is running 3X the annual average. That's a pretty big discrepancy in trend.
MARCH 11, 2011! Gonna be a spectacular day.
http://www.youtube.com/watch?v=PfCG5x0-WqM
+++ mick,
Fed delenda est. Our new motto here?
Always felt he was just the pretty, pin up boy for the media pack. Looks like he folded to pressure or was never going to overcome the old guard.
Lets set position limits now that its rumored that Calos Slim may want in on the Silver game. Time to Protect to big to fail... again...
Carlos wants to buy a miner ... isn't that and end run since he owns production? He simply chooses not to sell, so long as he can pay the operation costs.
It's bullish, if true, because that is a fair chunk of annual supply no? Don't have figures handy though.
Cooter
Fresnillo is expected to produce 42m oz (about 6% of current world AG production)
http://www.thisislondon.co.uk/standard-business/article-23909786-fresnil...
interesting point
Can the system collapse in a manner that can be controlled?
No.
So enjoy while you can:
http://www.youtube.com/watch?v=9F9q_k5TWqo
No word on position limits for long exposure to AAPL stock.
Position limits? Is that like 4 missionary to every 2 doggie. Why do I feel like I'm about to get screwed again. BOHICA.
I'm not sure how much this would even do.
Remember Chris Cox banning shorts on financials? That worked out pretty well.
I am Jacks swollen....cox.
Aint gonna happen. Maybe disclousure fillings but no position tear down. It'll all go overseas anyway like your jobs
Comments are on the ball tonight!
Cooter
I will believe it when it actually happens and evidence shows the rules are enforced.
My fist.
Your ass.
Is that evidence enough for you?
-Jamie D (not to be confused with Jimmy D, a popular breakfast sandwhich)
What would stop the CFTC from voting to require silver longs to reduce their positions while not requiring JPM to reduce their short position? Seems like the position limits are only at the descretion of the CFTC commissioners. I need to read the whole thing though.
Turbo Tax Timmmaayyy!!
Good point.
I fat fingered junk, hope I reversed it. Sorry!
Cooter
I agree. That's why they supposedly got the compromise.
More delays for public comment, then a final "vote". Congress already voted for it...
What a joke.
Overheard a secret convo today...
Blyth: Get the coffee on, its going to be a long night
Trader: WTF? I covered a shit ton of shorts today on that 5% pump!
Blyth: Get your shit together, you know the drill. Every 8:25 am we slam this fucking thing, we're FUCKED!
Trader: FML. You cant be serious. Did you not send Genz-the-shiz-nits his envelope yesterday?
Blyth: I was dancing with the bears at my girlfriends bachlorette, they are hung!
Trader: You realize position limits will be here within 6 months?
Blyth: I'm still boarderline wasted...
Trader: I need a new keyboard, the 'F1' short silver execution key is broken.
Blyth: Puke.
Too bad you didn't tape this one. +10
Dances with bears ... Blythe the size queen ...
This has potential!
Cooter
Amazing how they always present us another precious metals sale. Simply awesome.
Another fart in the wind by CFTC. Scum bags will just spread more out to unregulated banks.
Too funny!
Too funny!
The government by Mafia Cappos evolves unchecked. This is the same way Toni S. gets the job done in NJ.
http://www.guardian.co.uk/world/2011/jan/04/body-john-wheeler-delaware
We already have position limits. They could be better enforced by removing the "hedge exemption" granted to index funds and certain other "financial hedgers".
Well there is a societal benefit to limiting upward speculation in oil, wheat, or copper. These commodities and many like them are consumed daily all over the world for real things like driving a car, eating, or building homes.
Clearly, markets are needed for the producers of commodities and the direct consumers. The fact that large-money speculators have driven prices up dramatically is a tax on all people for the sake of mere speculative gain.
On the other hand, the shorting of commodities as is alleged to have occurred with silver, at least keeps the price down allowing more widespread usage and ownership.
So I say, limit long positions but don't limit the short positions. I'd rather JPM short oil into the 40s than have GS driving up oil to 100.
Price controls and central planning. Good grief, is there a deadlier combination to markets?
There is no benefit as price suppression increases demand and hampers supply, which in the long run will result in higher prices. This is, besides the fiat breakdown, the reason why we play the game.
Get out of silver before you lose even more of your hard-earned gains! Dont be greedy!
You assume a position in PMs is always for fiat gain.
What if it is a position taken just to have the stuff?
Just a pile of the stuff to sit there doing nothing.
Drives you mad doesn't it?
Maybe the great grand-kids will move the pile someday.
I got a bit of doubt lately. Kind of chewing the fat. This is a reasonably crazy environment. I am going to re-evaluate world Ag supply in industrial terms. I got a gut feel today the sqeeze is investment demand.
That said my favorite junk half dollar was dated 1876. The date gave me pause. Its slick (literal). J. Livermore could have traded it!
I think I am hitched to the right team. But it is wise to be objective.
Cooter
I got a bit of doubt lately. Kind of chewing the fat. This is a reasonably crazy environment. I am going to re-evaluate world Ag supply in industrial terms. I got a gut feel today the sqeeze is investment demand.
That said my favorite junk half dollar was dated 1876. The date gave me pause. Its slick (literal). J. Livermore could have traded it!
I think I am hitched to the right team. But it is wise to be objective.
Cooter
I am thinking the same way, it's $500 or the kids or grandkids will have some extra jingle
Spoken like a true stacker. :)
Given that amongst all the "agencies" set up for Connedsumer Rights (or what is lefts of them anyways), the CFTC has to be one of the most egregious and spineless and obviously manipulated ones. The FDA and CDCC would be a photo-finish 2-3.
Why would they suddenly get religion? If the new position limit plan is implemented (60 days is a life-time now-a-days anyways) you can bet the fraud has long left the house or will be untraceable.
Teflon coated perpetrators. Nothing sticks!
ORI
http://aadivaahan.wordpress.com
I'm no expert, but looking at the historical gold charts for 1 yr, 2 yr, 5 yr, 10 yr it appears that the current price is further aboove the 200 day average than it normally is. Whenever that happened historically there was a dip back towards the 200 day, then a rebound. Wouldn't this be what to expect here, or am I way out in left field here?
Try graphing the last 10yrs of annual gold prices on a logrithmic chart. Stunning. You also might try graphing the price of gold in Dmarks in the Weimar inflation to see what might be possible. The USD "price" of gold is really the inverse gold price of USD. Actually these FRNs (Federal Reserve Notes) are not USD (which are defined in the Consitution as a certain quantity of precious metal).
Awsome. Thanks!
That's true. US Dollars today are actually FEDERAL RESERVE NOTES OF DEBT. To be exact, in all my working life, I have NEVER been PAID for any of my work. I have been a slave to paper FEDERAL RESERVE NOTES OF DEBT. Only in the past few years have I exercised my freedom to PAY MYSELF by exchanging these PAPER FEDERAL RESERVE NOTES OF DEBT into PAID IN FULL GOLD AND SILVER COIN.
sorry - dbl post
sorry - dbl post
"...it triggers a new level of heightened regulatory scrutiny"
Or as Winston Churchill said of preposition limits: "Ending a sentence with a preposition is something up with which I will no longer put."
CFTC is doing it's best not to bust these guys
I am shorting silver and oil.
If you can't beat em...join em
If you can't beat em...hold the bag for them.
Just remember: the lower the price goes, the less supply comes to market. This is a nifty feature of bullion when its in a bull market. It does not sit in ships offshore, it does not go stale in warehouses.
On some level I expect this is a scheme to limit the positions of longs in NY, while the manipulation can proceed elsewhere--such as in London, or perhaps Japan. However, that's not going to work either and here's why: the attempt to suppress bullion prices in the paper market will destroy the futures markets. In a way, this is simply a different route to the same place. If the resurrection of silver and gold are in the cards (and they are, from a structural standpoint) than not only can paper not stop it but paper will serve to hasten it.
Every bash, is just your opportunity to stash. I did, today.
GG
Another 4,000 ounces from APMEX GONE in the past 60 minutes.
It's so fucking over.... we have this winter to prepare for the NEW WORLD of gold backed currency. FOFOA!
Wish I could afford to visit the coin shop every other day, once a month is my limit for now, but I do walk away with a hefty stack of Ag. What struck me as perhaps even more essential is being armed and ready to defend myself. Purchased a nice Remington 870, they were out of shells at the store, so placed an order on the internet. Even there, of the 4 boxes I ordered, they told me 2 will have to be back-ordered! Is it just me, or are the screws tightening?
With the decline in gold, I thought they were going to break out singing the "Hallelujah Chorus" on CNBC's Fast Money today. Disgusting, shameful worthless whores.
I love it when you talk that way.
This CFTC announcement appears consistent with previous comments with a primary goal of dragging out the timeline, but now with the introduction of a "points" system as the measure of a limit. Such a points system will likely be designed to minimize the influence of the smaller players in the system thereby allowing large banks such as J. P. Morgan to reduce their vulnerability to other industry players. Would not the effect of such a plan be to increase the potential leverage of existing positions by the larger player(s) as their "points" value would be proportionally higher than other competitors.
Here's a link to background posts on Bart Chilton's role in the extended position limit narrative: http://tradewithdave.com/?p=4567
Well the market signal clearly is that the CFTC limits are good for shorts. So I guess we'll just have to sit back and wait a while longer and keep buying at bargain basement prices until supply/demand forces overwhelm this obvious and pernicious fraud. If as CM thinks there is only 12 yrs of silver left to be mined then at some point it will simply run out - how much an oz at that point? $10,000, $50,000 more??(that's in today's dollars not Zim$)
I can t understand how intelligent people on this blog can get all exited about position limits!
The manipulation has been obvious to a blind man whose lost his white stick , for freaking years! Yet no action has been taken.
Why the piggin hell do you think they will pay any attention to whatever new rules/limits they put in place???
It s obvious their JPM s puppets now. Yet it goes on.
It will be obvious after position limits.DOH!!
This will end when industry can t get hold of physical silver and not before