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Limited Edition Silver Proof
by Ted Butler of silverseek.com
This is an excerpt from the Weekly Review for subscribers of January 7, 2012:
Commissioner Bart Chilton of the CFTC gave an interview this week with Jim Puplava that should interest you.
A number of subscribers asked me if I would comment on what Commissioner Chilton had to say. In commenting, I can’t help but try to be as objective as possible. For the record, I commend Chilton for the role he has taken on the important issues, like position limits, concentration and in addressing allegations of manipulation in silver. He is the only commissioner to have done so. I believe there would be no ongoing silver investigation were it not for him. I think he is one of the good guys and I started writing to him about these issues in 2007.
I agree with most of what Commissioner Chilton had to say, particularly about concentration and position limits and manipulation. I’m glad the interview was mostly about potential manipulation in the silver market. I’m going to skip over all the things I agree with Chilton on and confine my remarks to where I disagree with him. Agreement can be boring. Even though the disagreements are few, I believe they go to the heart of the matter.
Chilton pointed out that it is difficult to prove manipulation in a court of law. He indicated that there are three elements necessary to prove manipulation – the intent to manipulate, the ability to manipulate and the success in the manipulation. I accept his legal definition. Where I respectfully disagree with him is in the degree of difficulty in establishing all three elements in the silver manipulation.
Let’s go through the three elements.
Let’s forget for a moment that silver has been under investigation by the CFTC’s Enforcement Division for almost three and a half years and that countless civil lawsuits have been filed against JPMorgan for allegations of silver manipulation in 2008. Let’s just focus on the last year, when silver experienced two separate 35% price declines in a matter of days. Such a decline in a world commodity for no observable . Yet it happened twice in silver within months.
As I have written recently, as a result of the second silver price takedown in September, a tight-knit group of commercials traders bought the equivalent of 165 million ounces in net COMEX futures contracts on the price decline. This is equal to 22% of the world’s annual 740 million oz silver mine production. These same traders came close to buying the same amount in the big May silver price decline as well. This is an extraordinary amount of silver futures, much larger than any manipulative long position attributed to the Hunt Bros. in 1980. It is not possible to buy such a large amount of silver by accident. It had to be intentional. There is the element of intent that Commissioner Chilton speaks of.
The next element necessary to prove manipulation is the ability to manipulate by a concentrated position or otherwise (collusion among different traders). It would seem that the ability to manipulate is also self-evident, as it has been done on more than one occasion in silver. This also ties into Commissioner Chilton’s third element, namely, success being brought about by intent and the ability to manipulate. It couldn’t have been more successful for the COMEX commercial crooks than the results they achieved (at great cost to innocent investors and traders).
I think the problem that Commissioner Chilton and the agency are having is that they have convinced themselves they need proof by wire-taps and emails and other incriminating documentation (like actual confessions) before they can prove manipulation in silver. But the COMEX commercial crooks are not likely to accommodate them. The Commission has something better than that already in hand, namely, the very data that I rely on in analyzing the market. The Commission should stop wishing and waiting for evidence to drop out of the sky and just study the COT and Bank Participation statistics that they produce on a regular basis.
Because it appears so easy for the Commission to prove a silver manipulation on the basis of the three elements outlined by Commissioner Chilton, my guess is that there is something else holding the agency back from ending this scam. They just don’t want to end it. Perhaps there is a political motive or the knowledge that JPMorgan and the CME may be too big to sue. It’s hard to see how the three elements can’t be proved by the public data.
This is all very troubling. Every federal agency and department has a specific public mission. For example, the Federal Aviation Administration’s mission is to ensure aviation safety. Having come off the safest decade in aviation history, it would appear the FAA is achieving its primary mission. The Department of Defense would appear to be meeting its primary mission of defending the country from foreign military attack. I’m sure the Food & Drug Administration would quickly deal with an outbreak of tampered drugs harmful to public safety.
Try as I might, I don’t see the CFTC as coming close to meeting its primary mission of protecting the public and our markets from fraud, abuse and manipulation. Manipulation is the most serious market crime possible. There have been enough credible allegations of manipulation in silver, based upon data from the Commission itself, that the agency appears involved in a never ending silver investigation. But the investigation is never resolved. The critical point is that if there is a silver manipulation (as I and many believe), then it is an active crime in progress. It would be as if commercial passenger jets were dropping out of the sky every other day and the FAA refused to comment. Or if the US was invaded militarily and the Department of Defense went on vacation. Or if citizens were dying from tainted aspirin and the FDA couldn’t be bothered. That would be completely unacceptable and require immediate remedy of the strongest kind.
Because preventing manipulation is the CFTC’s number one mission, credible allegations of an active manipulation, particularly one in which the Commission has initiated a formal investigation, must be resolved immediately. The Commission must either terminate such a manipulation or explain why there is no manipulation forthwith. This business of explaining why it’s so difficult to prove manipulation is unacceptable, especially when all the elements of manipulation are present in the public record.
When the stock market experienced its infamous flash crash in May 2010, all the regulators, including the CFTC, rushed to make sure it would never happen again. That’s good. What’s not good is that silver has experienced a continuous and more severe series of flash crashes all along and the same CFTC hasn’t lifted a finger to intervene. The laws against manipulation apply to all markets, not just to those randomly selected and deemed by the agency to be important. The rule of law applies to all. That includes silver investors who have been savaged by the COMEX commercial crooks.
The CFTC has many important matters to deal with in Dodd-Frank and in helping to sort out the MF Global mess. But nothing comes closer in importance than resolving allegations of an active manipulation in silver, as this is truly a crime in progress. I call on the Commission to immediately end the silver manipulation or explain why there is no manipulation. So should you.
~TB
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Patience.
2011 was all about Cartel covering of long-held short positions. This process is nearly complete.
2012 is going to be a year of extraordinary, fiat-based price growth, particularly in silver.
I wouldn't bet on it. There won't be any increase in the paper price this year, I don't expect. What I DO expect is that by the end of the year, an ounce of physical silver will buy several times as much as it does now, even if one must go to the grey and black markets to get it.
I'm not so sure about no price increase in the paper price this year. I think you'll see modest increase. (Modest compared to many silver bugs hopes, but still outperforming most things other than gold). But yes, in real 'purchasing power', silver will become stronger.
Manipulation brings lower prices...always be happy to continue stacking at the masses expense.
I say the masses because we are all paying for it but some of us will benefit in the end...most of us will not.
Which group do you belong to?
Sorry to down arrow you but I have a problem with this. I can't agree with the part of your philosophy or strategy of taking advantage of the masses or at someone else's expence. Yes I am happy to stack but only out of a pursuit of liberty from these crooks and their fiat con game. It is a purist's stance I know but I have to make a moral stand in these times.
I don't mean to imply that we should not take to advantage of lower prices, that's a commercial reaction but taking advantage of them to screw over others is a bit off.
Hasn't there been enough of that kind of behaviour already?
These aren't markets, they're crime scenes.
It stands to reason that if a regulatory agency does nothing to prevent manipulation, then the only logical purpose for them to be a regulatory agency is to enable the manipulation.
I think you have constructed a near perfect syllogism whoose logic would also apply to the SEC, CME, and perhaps Treasury, the FRS....and countless other alphabet agencies.
What is corruption, Alex?
It always mystifies me why Ted Butler, of ALL people, continues to put any faith in this fundamentally corrupt agency to root out the criminals, when they themselves are part of the crime.
This reminds me of the cartoon I saw, years ago in the LTCM days, of two officious looking gentleman (regulators), stepping over the body of a mugged and comotose victim, with one disingenuously commenting to the other; " Looks like this poor fellow needs help.", as they walk on by.
Chilton, as an appointed CFTC Regulator, is just as disingenuous. His claims of genuine concern are insulting and if he was for real, he'd be doing a Bill Black (Regan era regulator) all over these crooks and we'd be seeing perp walks and behavioural change in a blink. Perhaps I'm being harsh and they are under-resoursed and politically hamstrung, but if that is the case then he should go public and/or resign. We live in times where we need the people whom we hired to protect us, to step up and be counted. We all know where this is heading. Those sweepings that have been continuously hidden under the carpet are starting to be pushed out the other side, exposed to the public awareness arena, and when she blows, you will want to be standing on the right side, with the respondents. They'll be pissed.
Bart's only redemption is that his position may be marginally similar to Ron Paul's, (Paul being the lone voice in a howling storm of corruption and ignorance) but the difference lies in Pauls unwavering, public commitment to justice, openness and duty to his oath, whereas Chilton pays lip-service to his.
Shame, as he could really open up a large can of whup-ass on these crooks, especially if his duty to his "oath of office" resposibilities rated higher than all other considerations.
His career spans 25 years in government service
From 1995 to 2001, Mr. Chilton was a Schedule C political appointee of President Clinton.
From 2001 to 2005, Mr. Chilton was a Senior Advisor to Senator Tom Daschle.
http://www.cftc.gov/About/Commissioners/BartChilton/index.htm
'nuff said.
Oh. Scratch my above theory then. Another harsh lesson in the school of hope.
Which has always been, and will always be the case.
You'd have to be on the manipulators' side or just a plain retard to not see the obvious manipulation at work. Maybe they're both. I'm just a dude who goes on vacation and tries to get laid all the time and even I can see it, clear as Britney Spears' gut.
http://www.singledudetravel.com/2011/08/silver-and-the-single-dude/
Or both in one.
CharlieSDT, please allow me to introduce you to Jon Nadler.