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Madman Across The Water?

Madman Across The Water?

By: Theodore Butler

-- Posted 26 January, 2009 | Digg This Article | Discuss This Article - Comments: 5

An investigative reporter from the United Kingdom, Rob Mackinlay, has written what I believe is an important story on the current silver investigation by the CFTC. http://www.investegate.co.uk/invarticle.aspx?id=66609 As source data, he interviewed two former Directors of the Division of Enforcement.

In doing so, Mackinlay has raised some pertinent issues, confirming that the CFTC has never broken up a manipulation in progress in its history. That would suggest they are somewhat tentative about how to deal with an unfamiliar situation. The Commission’s reluctance to initiate any action that would rile the markets would only increase that tentativeness. Make no mistake - forcing the big shorts to stop manipulating the price of silver would have an explosive impact on price.

In addition, the two former Enforcement Division Directors confirmed there must be substantive and credible evidence of wrongdoing for an investigation to have been initiated. At the risk of stating the obvious, how could one or two U.S. banks holding a net short position equal to 25% of the annual world production of any commodity not be a substantive manipulative issue? Especially when the Commission itself is the source of the data.

I agree that the CFTC is between a rock and a hard place. There is a crime in progress which they wish they didn’t have to confront. But the law states that they must. Besides, this is a dilemma of their own making. By ignoring the clear facts of manipulation for so many years, they have created a monster that will not be resolved easily or without disorderly pricing. They can stall and delay. They can obfuscate and dance around the issue. They can twist and try to evade simple questions. They can run, but they cannot hide. The physical market shortage will do what the CFTC has refused to do - end the silver manipulation.

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