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Some questions to the CFTC about silver manipulation

Dear Sir or Madame,

I live in Germany and apologize for my english.
I'm trying since months now to get an answer from the CFTC to some questions, but I got none till now.

I wrote to the following recipients:
Silverinquiry@cftc.gov, Wlukken@cftc.gov, Mdunn@cftc.gov, BChilton@CFTC.gov, Jsommers@cftc.gov, Alavik@cftc.gov, Sobie@cftc.gov, Jamie.dimon@jpmchase.com, Dean.payton@cmegroup.com, hotline@oig.treas.gov.

Each question can be answered with a simple number.
I don't ask for an answer from a commissioner. It'd be enough from a member of their staff.

Mr. Chris Powell of GATA informed me, that the CFTC has answered many questions about this issue posed by US citizens.
Maybe the CFTC think that the manipulation of the silver prise is an US issue.
I think, not only US citizens have a right to know what is going on at the Comex.

That is the reason why I'm begging someone of you to pose these questions to the CFTC, and then, in the case of an answer, to be informed about it.

I thank you in advance for your help.
Best regards
Marco

Following my mail to the CFTC:

Dear Sir or Madame,

As of August 5, 2008, one or two U.S. banks were short 33,805 contracts.
33,805 contracts are the equivalent of 20-25% of the annual world mine production.
According to the February Bank Participation report, two or three U.S. banks held a record net short position equal to 15% of total world annual production of gold, a staggering and unprecedented number, exceeded only by the absurd percentage in silver (currently 20%).
a) How much gold or silver should one bank sell short (maybe naked short), for you to think about a manipulation of the market and begin spontaneously an investigation?

On December 2, as silver closed at $9.57, exactly 2 U.S. banks held a net short positioning of 24,555 contracts. The CFTC reports that as of the same date all traders classed as commercial held a net short positioning of 24,894 contracts. So, the 2 U.S. banks, with one particular Fed member bank probably holding almost all of it, held a sickening 98.64% of all the collective commercial net short positioning on the COMEX silver futures market.
According to the monthly CFTC Bank Participation in Futures and Options Market report released Friday, February 6, two large reporting U.S. banks held zero long and 27,189 short futures positions in COMEX silver futures as of February 3. All commercial traders as a group held a net short silver position of 33,173 contracts that same day; so just two banks held 81.96% of all the COMEX commercial net short positioning for silver.
b) Is this not a infringement against the CFTC’s anti-concentration rules?

As of the close of business Jan 20, a new multi-year record was set in the percentage of the silver futures market held by the 4 largest short traders, at 48%. And when all spreads are removed from both the non-commercial and commercial categories, as is proper, the true net short position of the 4 largest traders runs over 66% of the entire COMEX futures market, the largest silver market in the world. In other words, 4 traders hold two-thirds of all the true short positions on the COMEX.
c) How big should be the concentration on the short side of the Comex, for you to stop inquiring and intervene?

According to the monthly CFTC Bank Participation in Futures and Options Market report released Friday, February 6, just three U.S. banks held a collective net short position in the COMEX gold market of 111,190 contracts while all commercial traders as a group reported a net short positioning of 177,589 contracts. So, three U.S. banks represent a shockingly large 60.57% of all the commercial net short positioning on the COMEX for gold.
As the February BP report indicates, one or two U.S. banks held a 29% share of the COMEX silver market and two or three U.S banks held a 32.1% share of COMEX gold futures.
As large as the current gold and silver percentages of the market held by one, two or three U.S. banks may be, those percentages are grossly understated because spread positions are included in open interest totals. Remove all spread positions (non-commercial and commercial) and the share of the market held by one or two U.S. banks in silver rises to 41.5%, and not 29%. In gold, the share of the market held by two or three US banks is really 45%, not 32.1%.
d) How big should be the concentration in the net share of the short side of the Comex for you to suspect a manipulation and begin spontaneously, that means without the pressure of investors or of the Congress, an investigation?

Between January 6 and February 3, the COT indicates that the total commercial short position increased by 2253 contracts, with the big 4 category increasing by 2256 contracts, once again accounting for more than the entire increase in the commercial category. The Bank Participation Reports corresponding to January 6 and February 3 indicate that the two U.S. banks increased their net short position by 2500 contracts in that same time period. This proves, at least during this specific period of time, that one or two U.S. banks accounted for more than 100% of all the commercial short selling and all the selling in the big 4 category.
e) Why the fact that one or two banks accounting for more than 100% of all commercial short selling for at least a month, is not manipulation?

Best regards
MN



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Gold Price Manipulation More Blatant

From: http://www.numismaster.com/ta/numis/Article.jsp?ad=article&A...

"On Friday, March 6, gold lease rates turned negative for the day. What that means is that anyone who wanted to lease gold would actually be paid a fee in addition to getting a free gold loan.

No sane person would choose to lose money loaning physical gold, in addition to the risk of never getting the gold back from the other party. However, if someone (such as the U.S. government) wanted to suppress the price of gold, this is one tactic to try to accomplish that purpose.

I can come to no other conclusion than that a large quantity of physical gold surreptitiously appeared on the market on March 6 with the sole purpose to drive down the price of gold. The quantities were large enough that they almost certainly could not come from private parties. With most of the world's central banks now being net buyers of gold reserves, they would not be the source of this gold. By process of elimination, the suspicion falls upon the U.S. government as the ultimate party responsible for this blatant action to manipulate the price of gold.

Of course, the U.S. government would not want to be identified as the cause of this leasing anomaly. Instead, such manipulation was almost certainly conducted by multiple trading partners of the U.S. government.

[...]

The U.S. Mint is so far behind at meeting demand for bullion gold and silver American Eagle issues that it last week announced an indefinite suspension of plans to strike 2009-dated proof and uncirculated versions for collectors. Even further, the U.S. Mint also announced that it would not even accept orders from primary distributors for any gold or silver Eagles this week.

On the wholesale market, supplies of gold and silver American Eagles quickly disappeared. The premiums of these coins shot upward. Some retailers now have to decline orders as they don't know when they might be able to fill them or what premiums they will have to pay to acquire merchandise. My earlier prediction that by the end of April it would become almost impossible to find any physical gold or silver bullion-priced items for reasonable delivery is starting to come true."

U.S. banks dominate the COMEX

From:
http://www.stockhouse.com/Columnists...ot-Gold-Report

U.S. banks dominate the COMEX

"While those of us with a long bias can take some comfort in the larger reductions of net short positioning by the commercial traders (covered in the full Got Gold Report), we need to remember that as of right now the short side of the market is literally dominated by just two big U.S. banks. When the regulators, the Commodities Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC), consent to allow just two traders to take overly large positioning on either side of a particular market, it leads to mistrust and angst among the public and market commentators.

[..]

According to the latest Bank Participation in Futures and Options Markets report, as of March 3, 2009, two U.S. banks held zero long and 30,838 contracts short with silver then at $12.83 and with 93,051 COMEX 5,000-ounce contracts open. So, just two banks held net short positions equal to 33.14% of all the open contracts on the largest futures bourse in the world.

According to CFTC COT reports, during that 3/3 reporting week all COMEX commercial traders as a group – all of them - were collectively net short a total of 38,704 contracts, so just two very large U.S. banks held a shocking 79.68% of all the commercial net short positioning on the COMEX.

One potential problem with allowing overly-large positioning by just a few players is the potential for those elite traders to get into the position of having to trade in a particular direction in order to protect their position. The incentive for a trader running 1,000 contracts to try to move the market with the weight of his own trading would certainly be much less than a trader (or two traders in this case) with 30,000 contracts of one-way exposure.

[..]

With that in mind, in an era when regulators allowed the Bernard Madoff scam to go unchecked for many years, even though they were handed the scamster on a silver platter by others in the same business eight or nine years ago, a scam ruining hundreds or thousands of innocent investors; in a period when ANY silver product being sold on the street carries with it extremely high premiums due to overwhelming public demand; in a period when investors have had their confidence severely shaken in all markets; can the COMEX continue to allow such one-sided and concentrated trading action to continue? Perhaps more to the point, shouldn’t the COMEX explain publicly why it has allowed that very concentrated short positioning by just two U.S. banks?

Perhaps with more clarity would come more confidence."

Newsletter of Mr. Butler of March 10

Of course the newsletter of Mr. Butler is not the Bible, but nevertheless interesting:

<< The new weekly Commitment of Traders Report (COT) and the monthly Bank Participation Report (BPR) for March have been released, for positions as of March 3. There were some stunning new manipulative milestones recorded in both reports, in terms of concentration by the big short(s). Since there was a sharp sell-off in price for the week ending March 3, I was expecting the big shorts to have reduced their short position. That’s what they normally do. That they actually added to their short position was a shock to me. Clearly, their selling caused prices to drop. This is Manipulation 101.

In the COT, the reported net percent of the market held by the four largest shorts rose to the highest level (51.7%) since 2002. In "true-net" terms, with all spreads removed (as discussed last week), the big 4 were still over 70% short the entire market. The CFTC is on their third silver investigation within five years, while at the same time reporting that the short concentration has grown to the highest level in that time. This is akin to tripping over and not seeing the dead body in a murder investigation.

The March BPR recorded the largest percent (33%) of the market held short by one or two U.S. banks in silver ever. To my knowledge, this also may be the largest percent held by U.S. banks in any major market, long or short, ever. Please remember, this percent of the markets held by one or two U.S. banks is before removing spreads, and thus understates the true net percentage, which is more than 45%. The reported short position is equal to 154,190,000 oz of silver, or 23% of total annual world mine production.

The most disturbing aspect of the data just released is that almost all the short selling in COMEX silver over the past two months has come from the big short(s). From January 6, when silver closed around $11.10, to March 3, when silver closed around $12.85, the net increase in the total commercial short position was 7784 contracts. Of those 7784 net new contracts sold short, the big 4 accounted for 7490 contracts, or 96.2%. Of the 7490 contracts sold short by the big 4, the one or two U.S. banks accounted for 6149 contracts, or 82%.

The message of these data should be clear. The vast majority of the additional short selling over the past two months was concentrated new short selling by those already holding a large concentrated short position. The most plausible explanation for this new selling was to cap the price and limit damage caused by rising prices to an already existing large short position. This is manipulation, pure and simple. If the price of silver were at a fair and free level, there would be many different participants competing to sell contracts, not just one to four. As it stands, there are very many traders buying and looking to buy, while the sell side is populated primarily by one big U.S. bank.

As I write this article, the big short(s) is attempting to rig the silver and gold markets lower to trip off technical fund selling below the 50 day moving averages. Will that attempt succeed? I don’t know. What I do know is that this is market rigging of the highest order. I also know that the big short is becoming increasingly isolated and more learn of the manipulation daily. That’s good for us, bad for them.
[...]
In the case of silver, while the manipulation has been ongoing for many years, the criminality kicked into high gear when JP Morgan took over Bear Stearns, at the government’s request, last March. Bear Stearns was the holder of the large concentrated short silver position and it was inherited by Morgan. In JP Morgan’s defense, it does not appear they initiated the concentrated silver short position. It was excess baggage from the forced takeover of Bear. The Treasury Department and Federal Reserve backstopped Morgan and agreed to hold them harmless for financial losses and for criminal involvement in the silver manipulation. The financial system was weak enough at the time of Bear Stearns’ failure, that a blowup in silver had to be avoided. JP Morgan was given the go-ahead to "manage" and control Bear Stearns’ silver short position directly by the Treasury.

While it is understandable that JP Morgan would accept the Treasury Department’s request, and that the avoidance of a potential financial panic is always a good thing, panics are short-term events. A year has now passed, and the manipulation is still in force, stronger than ever. What started as a temporary remedy for a short-term emergency, has evolved into a continuance of the long-term silver manipulation. This is wrong on every level. The U.S. is a nation governed by the rule of law. No one is above the law. Not the Treasury Department, not JP Morgan, not the CFTC. If my findings are accurate, then the passage of time indicates that there is potential real criminality here.

As far as the CFTC, it is a weak agency, incapable of over-ruling a directive from the Treasury Department. They had no choice but to allow the silver market to continue to be manipulated by allowing the transfer of the concentrated short position from Bear Stearns to JP Morgan. Besides, the CFTC already dropped the ball by allowing the concentrated short position to come into existence at Bear Stearns in the first place and denying for years that the silver manipulation existed. They had no choice but to go along. They couldn’t stand up to Treasury if they wanted to. >>

Im not sold

The paper and derivative markets are very often misunderstood. The way the CFTC reports net positions doesn't show the entire story. There is no "good" evidence that pure manipulation is actually occurring and the CFTC has audited the silver accounts. Ive read all the data on the manipulation that I can find and while it is true that there are a few large players in the silver game, fewer than gold for instance the numbers don't add up for manipulation. With out going into detail the manipulation theorist don't account for option and future contract net positions vs actual silver or how option vs future positions net out in time.
While the derivative markets can be something to fear, in this case i think the fear is over done. Please post data on the manipulation if you have it, so far everything I have read doesn't hold up. This doesn't mean silver isnt too cheap; I am a big silver investor but you need to be honest about your reasons for liking silver and I think the manipulation argument is one of the weakest.
Im open to see new evidence, so if you have some Id love to read it!

you are missing something..

you are missing something.. let me ask you a question... when the hunt brothers tried to corner the silver market in 79-80 they only controlled 10% of the market. Why is the CFTC turning their head when 2 or just 1 Large Us Bank controls well over 50% of the silver short contracts?

"When governments fear the people there is liberty. When the people fear the government there is tyranny."
-Thomas Jefferson

I am more concerned about the return of my money than the return on my money. --Mark Twain

RogueCaspian

"...but you need to be honest about your reasons for liking silver..."

If you tell someone he is dishonest, you have to explain why.

"Im open to see new evidence..."

After explaining why I am dishonest, can you explain what kind of evidence you are asking for? Make examples, please.

remember... all

remember... all manipulations end. and end badly for the manipulators..
the best way to end this is to purchase physical silver and take posession. that is how we end this.

"When governments fear the people there is liberty. When the people fear the government there is tyranny."
-Thomas Jefferson

I am more concerned about the return of my money than the return on my money. --Mark Twain

Join up

In his latest newsletter (http://news.silverseek.com/TedButler/1236702001.php) Mr. Butler suggest to write to the following recipients too:

hotline@oig.treas.gov
Dean.payton@cmegroup.com
Jamie.dimon@jpmchase.com

I hope many will follow his advice.

Explanation in layman's

Hy Troy,

a) There is a market for apples. On the one side there are 2.000 buyers, on the other side 4 sellers. That means, the four sellers are able to decide the price of the apples.

b) The governement regulators have rules which should prevent such concentration.

c) There is a US bank which has promised to deliver 20 % of all the silver which was produced last year in the world. (By the way, obviously they don't own such an amount of silver stocks.)

d) The sellers who promise to deliver in the future the apples have an interest to keep the price of the apples low. They can keep the price of the apples low, short-selling apples (= selling apples with postponed delivery);

e) the government regulators are "enquirying"; this ist the third enquiry within the last five years;

f) Expand the example: there are not 4, but 30 sellers. But the most important 4 sellers sell 90 % of all silver sales. Between January 6 and February 3, all silver sales occured through one of these 4 big sellers. That mean, this seller could and has decided the price of the silver for a month.

g) Since a year the silver stocks of the New York Mercantile Exchange (Nymex) are decreasing and there is a shortage in the market for silver coins. Nevertheless the silver price is decreased from 20 $ (march 2008) to 13 $ (today).

h) To manipulate the precious metals price, these institutions need huge amount of money. The US government and Congress and the Fed are bestowing the biggest US banks with huge amounts of taxpayers money.

Why do this?

Seems like they'd stand to lose a lot of money by manipulating the market.

Update

I have added a further question to the CFTC:

Between January 6 and February 3, the COT indicates that the total commercial short position increased by 2253 contracts, with the big 4 category increasing by 2256 contracts, once again accounting for more than the entire increase in the commercial category. The Bank Participation Reports corresponding to January 6 and February 3 indicate that the two U.S. banks increased their net short position by 2500 contracts in that same time period. This proves, at least during this specific period of time, that one or two U.S. banks accounted for more than 100% of all the commercial short selling and all the selling in the big 4 category.

e) Why the fact that one or two entities accounting for more than 100% of all total short selling for more than a month, is not manipulation?

Hello from Munich!

Would you like to write something about your experiences on bavaria-for-ron-paul.blogspot.com?

I think I`ll mail the CFTC as well. I had already thought of that, but was not sure what to ask them.

Danke für die Mühe!

--------------------------------------
europe4ronpaul.blogspot.com
Hasta la libertad, siempre ;-)

--------------------------------------
bavaria-for-ron-paul.blogspot.com
Hasta la libertad, siempre ;-)

Hy Fabio, I tried but

Hy Fabio,

I tried but without success. (In such matters I have "two left hands.")
If you want, you can post my questions to the CFTC on europe4ronpaul.blogspot.com.

About the newest rally in the precious metals praises

The newest raising of precious metals happened just after GATA invited the gold community to write to their representatives.

Couldn't it be that someone is leaving preises to go up in order to sweep away suspects of an on going manipulation?

Mr. Chilton: a serious commissioner

... Well, if there is a good commissioner at the CFTC, it is Mr. Chilton.

"WASHINGTON -- The U.S. Commodity Futures Trading Commission should have the authority to pursue criminal violations of rules in the markets it oversees, Commissioner Bart Chilton said.

Under current rules, the agency refers any criminal violations to the U.S. Justice Department. If Justice doesn't pursue charges, transgressors are subject to a fine from the market regulator, and not jail time, Chilton said.

"A third of our referrals to the Justice Department get rejected for one reason or another," Chilton, a Democrat who joined the five-member commission in 2007, said on a conference call today. Americans want market wrongdoers to go to jail, he said.

Chilton said he has spoken with House and Senate lawmakers about his idea and is "hopeful" Congress will consider it. "I'm optimistic this is something people now think needs to be done," he said."

Cf. http://www.gata.org/node/7157

PS "Americans want market wrongdoers to go to jail, he said."
Not only Americans...

Yeah

"Americans want market wrongdoers to go to jail, he said."
Not only Americans..."

The scams on Wall Street are hurting people all over the world, thanks to the global financial markets. And our german authorities deny any responsibility, because there is the SEC and the CFTC (who do NOTHING)!

Imagine that:

German investors have been hurt (100% losses) because european regulated (!!) investment trusts (UCITS III law) have given the money invested in them in custody to a british bank, who has given it in subcustody to Madoff Sec.. And now the british bank (HSCB) can say: we do not have to pay, we made no mistake, because we gave the money to a company surveiled by the SEC.
And the german parliament has answered in an inquiry: our control organs are not in charge, because the fund was in Luxemburg (EU!!!).
(so HSBC is actually telling the luxemburg-SEC, called CSSF, they did nothing wrong).

The authorities delegate liability across the borders and at the end, ordinary citizen have to pay (and the european investors I know are no Spielbergs, even if that should not matter among people who respect property rights).

The scams at COMEX, the Naked Short Sales and the toxic waste derivatives come from this US-financial-federal-complex, which robbs the American people AND the people of the rest of the world.

And our bloody media is telling us that Obama is bringing "Change"!

I think Obama won`t change a damn on the Wall-Street-Washington-Complex!

--------------------------------------
europe4ronpaul.blogspot.com
Hasta la libertad, siempre ;-)

--------------------------------------
bavaria-for-ron-paul.blogspot.com
Hasta la libertad, siempre ;-)

also remeber.. when the

also remember.. when the hunts had built there long position in silver in the late 70's their concentration was only 10%! so the private citizen at 10% gets skinned but the banks who own the idiots in DC get away with a huge concentration way over 50% and its all ok! man this pisses me off!

"When governments fear the people there is liberty. When the people fear the government there is tyranny."
-Thomas Jefferson

I am more concerned about the return of my money than the return on my money. --Mark Twain

now you know what these

now you know what these jerkoffs are doing with tarp money!

"When governments fear the people there is liberty. When the people fear the government there is tyranny."
-Thomas Jefferson

I am more concerned about the return of my money than the return on my money. --Mark Twain

unbelievable how the

unbelievable how the banksters and the cftc (fed gov.) can get away with this.. the facts are the facts.. the manipulation is taking place and the government turns a blind eye to let the banks who they are bailing out in the form of trillions dollars, rape and pillage small precious metals investers. When this becomes mainstream and the people find out what happened and get really mad, these folks will swing from the lamp posts!
I would not want to be a banker.. this has happened before in this country!

"When governments fear the people there is liberty. When the people fear the government there is tyranny."
-Thomas Jefferson

I am more concerned about the return of my money than the return on my money. --Mark Twain