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CFTC: "1st Silver Manipulation Investigation since the Hunt Brothers Case in 1979"

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Wed, 03/24/2010 - 14:30 | 274692 earnulf
earnulf's picture

There is no question that there are naked shorts in the metal markets, exceptions to existing limits are handed out like candy for the asking and no one checks to make sure that the entity actually has metal, as long as they have cash.    As has been indicated, if you don't have metal, you shouldn't be able to short it.    It's like the guy who shorts half the corn harvest and when it fails, offers to cover the short with the "cash equivelent".   It's not a failure if you can pay for it, right?

 

Of course, you can't own precious metals in your 401K unless they are held by someone else and are "collectable", i.e. their value is determined by condition and scarcity.   I'd much rather just have the value determined by scarcity.   But of course you can't delete physical gold like you can binary bits that indicate savings....

Wed, 03/24/2010 - 13:32 | 274611 Chopshop
Chopshop's picture

Release: 5798-10
For Release: March 23, 2010

CFTC Announces Participants for Public Meeting to Examine Futures and Options Trading in the Metals Markets

Washington, DC – The Commodity Futures Trading Commission (CFTC) today announced the participants for its public meeting to examine the trading of futures and options in the precious and base metals markets. The meeting is scheduled to begin at 9:00 a.m. EDT on Thursday, March 25, 2010, CFTC Hearing Room, 1155 21st Street, NW, Washington, DC.

Reminder: Advanced Registration Requested. The Commission is requesting all individuals interested in attending the metals meeting to register in advance. Please transmit full name and organization represented to metalsmeetingregistration@cftc.gov.

The questions and issues to be addressed during the meeting include the following:

1.

How does price discovery occur in the metal markets, considering both the cash and derivative markets as well as domestic and international markets?

2.

What is the role of passive, long-only positions such as those associated with index funds or exchange-traded funds in the metals markets and how might their trading activities and potential market impact roles relate to the consideration of position limits?

3.

Could and should speculative position limits be applied consistently across all metals derivatives markets and participants, including index traders and managers of Exchange Traded Funds?

4.

Would such limits enhance market integrity and efficiency?

5.

If the Commission were to establish position limits for metals markets,

 

a) What formulation should be used to determine position limit levels for each market?

b) What quantitative measures should be used in setting limits on the size of an individual trader’s position?

c) Should limits be established by percentage or proportion of the market or by fixed number of allowed contracts?

d) Should limits apply in all months combined, in individual months, and in the delivery month?

e) Should spread trades be incorporated into a position limit regime?

f) Should the Commission limit the aggregate amount of positions held by one trader across different markets?

g) What metal commodities should be covered?

h) Would speculative position limits be effective in metals markets where the preponderance of trading activity and positions may involve cash market activity or trading overseas?

6.

If the Commission were to establish position limits for metals derivatives markets, what types of exemptions from such limits should be permitted?

 

a) The statute states exemptions should only be granted to bona fide hedgers.  What should be the qualifying factors for an entity to be determined to be a bona fide hedger?

b) In granting exemptions, should the Commission consider the nature of an intermediary’s counterparties (e.g., should the Commission consider “looking through” a swap dealer’s or index trader’s position to its counterparties)?

Panel One:

Dan Berkovitz, General Counsel, CFTC
Steve Sherrod, Division of Market Oversight, CFTC

Panel Two:

Jeff Burghardt, Luvata
Jeremy Charles, HSBC Bank USA, NA
Tom LaSala, CME Group
Diarmuid O’Hegarty, London Metal Exchange
Mark Epstein, Individual Trader

Panel Three:

Tom Callahan, NYSE Euronext
Dr. Henry G. Jarecki, Gresham Investment Management
Bill Murphy, Gold Antitrust Action Committee
Kevin Norrish, Barclays Capital
John Lothian, John Lothian & Co.

Panel Four:

Richard Strait, Triland USA, a Division of Mitsubishi Corporation
Mike Masters, Masters Capital
Harvey Organ, Individual Investor
Jeffrey Christian, CPM Group

The meeting will be open to the public and will be webcast via the internet. In addition, audio of the meeting will be available via a listen-only conference call.

Viewing/Listening Information:

1.

Watch a live broadcast of the meeting via webcast on www.cftc.gov.

2.

Call in to a toll-free telephone line to connect to a live audio feed.

Call-in participants should be prepared to provide their first name, last name and affiliation. Conference call information is listed below:

Domestic/Canada Toll-Free: (888) 691-4252

International Toll: (404) 537-3379

Conference ID: 62232495

Call leader name: CFTC

Wed, 03/24/2010 - 13:29 | 274604 Mongo
Mongo's picture

Will this lead to anything? Most likely not.

Wed, 03/24/2010 - 13:17 | 274587 Socrates
Socrates's picture

When Shiela Blair was Chairman of the CFTC she was given chapter and verse on corruption in one of the NY pits. Nothing...I repeat...nothing was ever investigated.

 

When you have a guy being told something from a phone clerk like, "Hey Vinny, your wife is on the phone about the car" and its code for a big buy order that gets clocked in 3 minutes later after he and his buds get long, it's what RICO was created for. Government response? Nothing!

Wed, 03/24/2010 - 12:24 | 274514 uno
uno's picture

From Gata.org site:

 

Chilton's agenda is troublesome, so watch out for that truck Section:

7:55p ET Tuesday, March 23, 2010

Dear Friend of GATA and Gold (and Silver):

In his conference call today with investors, journalists, and generally interested parties, U.S. Commodity Futures Trading Commission member Bart Chilton proposed much more vigorous regulation of the futures and options markets in the precious metals.

Chilton advocated:

-- Trading position limits. He lamented that the CFTC has position limits in the metals only for the spot trading month and no restrictions at all on market concentration.

-- Giving the CFTC authority to regulate the over-the-counter markets in gold and silver futures.

-- Changing commission procedures to bring more transparency to the gold and silver futures markets, as by making public more commission data.

-- Better communication with and responsiveness to the public.

There were about 35 people on the conference call and most of those who asked questions showed great familiarity with the gold and silver price suppression schemes.

For months now Chilton has corresponded at length with people who have e-mailed him about these issues, including members of GATA's Board of Directors. He could not have been more conscientious -- nor more troublesome to the price suppression scheme.

In a related matter, last Friday at his Economic Policy Journal blog --

http://www.economicpolicyjournal.com/2010/03/fire-at-new-york-city-cftc-...

-- Robert Wenzel reported:

"A fire earlier this week in the basement of the building located at 140 Broadway in New York City has forced the temporary move of the New York office of the Commodity Futures Trading Commission, which was located in the building. The office has been reloacted on a temporary basis to 201 Varick St. Reports on the Internet state that gold and silver records of the CFTC were damaged in the fire, which would be interesting given it is just one week before the precious metals manipulation hearing. However, Steve Schneider, a CFTC spokesman at the CFTC's Washington headquarters, informs me that the damage was unrelated to the CFTC and that no CFTC documents were lost or damaged in the fire."

GATA didn't distribute anything about the fire at the CFTC's New York office. But it's easy to anticipate the next news-like rumor likely to sweep the gold and silver blogosphere: that the truck removing the ashes of the records burned in the fire at the CFTC's New York office ran over Chilton as he walked to an interview at The New York Times.

Of course nobody will believe the part about the Times being interested in a story on market manipulation.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

 

 

Wed, 03/24/2010 - 16:14 | 274851 Hephasteus
Hephasteus's picture

Yup fire is good way to cover the tracks.

http://911research.wtc7.net/wtc/evidence/gold.html

Wed, 03/24/2010 - 13:29 | 274605 Chopshop
Chopshop's picture

great catch GATA & uno, saw the single line on cftc.gov and didn't think twice bout it.

thanks for sharing that one.

Wed, 03/24/2010 - 11:51 | 274450 Internet Tough Guy
Internet Tough Guy's picture

Fox to investigate henhouse robbery. Film at 11.

Wed, 03/24/2010 - 11:21 | 274411 Missing_Link
Missing_Link's picture

So who is manipulating silver?  Goldman Sachs?

Wed, 03/24/2010 - 11:23 | 274413 Rick64
Rick64's picture

JPM

Wed, 03/24/2010 - 20:18 | 275133 delacroix
delacroix's picture

hsbc on gld

Wed, 03/24/2010 - 16:10 | 274848 Hephasteus
Hephasteus's picture

The ghost of bear stearns and lehman. LOL

Wed, 03/24/2010 - 11:19 | 274407 AR15AU
AR15AU's picture

Yeah, its hard to call it manipulation when the regulators clearly allow it to go on.

We need transparency and position limits NOW.  The endless meetings and speeches make it look like stalling / collusion.

Wed, 03/24/2010 - 13:04 | 274575 tmosley
tmosley's picture

I don't think you really need position limits, so long as you have ACTUAL METAL to back up your short positions.  Naked shorting is fraud, and should be prosecuted as such.

Wed, 03/24/2010 - 11:15 | 274402 captain sunshine
captain sunshine's picture

The CFTC is for the little man.

They are much better than CATS, I am going to thank them again and again.

They are much better than CATS, I am going to thank them again and again.

Wed, 03/24/2010 - 11:10 | 274396 Trifecta Man
Trifecta Man's picture

Name one JPM banker who personally dug out some silver by working in a mine.  They are not hedgers.  They are speculators.  Banks should not be allowed to speculate in the metals futures markets.  Look at the mess they got themselves into elsewhere.  The only reason they have $1.2 trillion in reserves is because the government gave it all to them.

We know that many banks are insolvent.  We know they are engaging in government-complicit faulty accounting on their loans.  Can you say Lehman?  And the CFTC is allowing them to hold massive short position speculations in silver and gold?  Is the CFTC blind? 

Sorry. You do not fool us.

Wed, 03/24/2010 - 10:52 | 274369 bugs_
bugs_'s picture

And of course the exchange grand poohbahs are short already.

Great post Chopshop.

Wed, 03/24/2010 - 10:27 | 274323 Lionhead
Lionhead's picture

This is more "window dressing" from the CFTC. "We start on Thursday on position limits in metals." Yes, I see, we can also reduce the cost of the price suppression by limiting positions in the markets we (the gov't) wish to contain.

Over time, there will be a bifurcated market for precious metals; the suppressed, contained paper price, & the real price determined by supply/demand from parties negotiating the price between themselves. It has already started with the premium offered for physical gold & silver bullion.

The suppression will continue to try & hold down interest rates in the US & other developed countries. If paper gold prices get to high, it undermines the confidence in the currency & bonds of the developed country. The correlation between gold & interest rates has been long demonstrated, yet virtually ignored by most.

Wed, 03/24/2010 - 10:26 | 274321 Rick64
Rick64's picture

 Everybody knows the CFTC is just another impotent gov. agency just like the SEC, FDA, ect...

 Just look how they were controlled during the Clinton Admin. when Brooksley Born tried to regulate and introduce legislation to control derivitives.

Wed, 03/24/2010 - 10:01 | 274290 Cookie
Cookie's picture

The US financial/political system is infected with an equivalent of the Ebola virus.

 

 

Wed, 03/24/2010 - 09:53 | 274283 Madcow
Madcow's picture

The "regulators" are not about to blow up JPM.

These guys have sold what they do not have. 

The United States is now totally dependent upon accounting fraud. 

Anyone holding paper silver and gold is basically expecting the fraud to continue into perpetuity. 

They will get what they're looking for - in much higher doses than they want. A rocketing USD will torpedo the rents supporting the bond market beyond UST. The metals will come way down - which will allow foreign buyers to relieve the US of the burdens of stewardship. Corrupt politicians make for lousy asset custodians.

 

 

Wed, 03/24/2010 - 09:28 | 274264 Gordon_Gekko
Gordon_Gekko's picture

Anybody expecting the Bankster/Wall Street owned CFTC to do anything about anything is an - how do I put this? - AN IDIOT.

Wed, 03/24/2010 - 16:00 | 274825 Hephasteus
Hephasteus's picture

They are wanting to talk about it to test the waters and try to justify it all. I guess they have a plan they think will work or an alternate way to manipulate it.

Wed, 03/24/2010 - 09:44 | 274275 Cognitive Dissonance
Cognitive Dissonance's picture

GG,

Don't hold back, tell us how you really feel on the subject. :>)

Wed, 03/24/2010 - 09:25 | 274260 Gordon_Gekko
Gordon_Gekko's picture

I'm glad at least the Hunt brothers "case" was resolved honestly and fairly...wait...

Wed, 03/24/2010 - 11:27 | 274417 DOT
DOT's picture

One for one. Batting 1000 the CFTC is.

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