Political Metals

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Much has been written about how a handful of large commercial banks are suppressing the price of gold and silver though their massive short positions in the futures market. Both here and elsewhere in blogsphere, you read of frustrations being vented over the failure or refusal of the Commodities and Futures Trading Commission (CFTC) to act on these market manipulators.

Despite thousands of public comments calling for imposition of position limits following the public hearings in March 2010, nothing has been implemented to-date. It’s all quiet now, after the initial noise generated over the Dodd-Frank act. As an agency tasked with providing oversight, the CFTC appears to be closing both eyes and acting like a toothless tiger.

All these discussions, complaints and rants on the banksters and the CFTC featured here are highly focused on the gold & silver market. Readers may have the impression that it is an issue unique to this market, and some may even smell a conspiracy theory here.

I came across a recent interview by Paul Jay of the Real News Network discussing the same issues mentioned above with Michael Greenberger, professor of law at the University of Maryland - but from a different perspective. They talked about how big banks have been artificially inflating the price of food & fuel through the same manipulative mechanism in the futures market. Some key points include:

• The CFTC assisting selected big banks and people who just want to bet, who don’t touch the underlying commodities but want to bet on price direction.
• Stealth exemptions on position limits given to Goldman Sachs et al so that they can profitably run their “betting parlours”.
• Futures market for food & fuel comprises 20% real hedgers (for whom the futures market was originally designed) and 80% commercial speculators who have nothing to do with the physical commodities.

Sounds familiar? This video should help cast away any doubt that allegations of gold & silver price manipulation by the banksters, assisted by the CFTC, are for real. We’re not the only ones affected. The whole commodities market is similarly tainted - by the same culprits.

Related Articles:

• Commodity Futures Trading Commission (CFTC)
• The Silvery Silence of CFTC, CME, JPM & BlackRock
• Ted Butler’s 5 Questions for Gary Gensler, Chairman of the CFTC
• What Big Banks are doing in the commodities market
• Precious Metals Price Discovery about to Change

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by Theodore Butler - Butler Research | August 11th, 2011

Here’s an excerpt from an update sent to subscribers on August 10, 2011. For subscription information please go to www.butlerresearch.com

It is important to try to understand, as much as possible, what are the dynamics behind the large price moves recently. It is human nature to accept any plausible-sounding reason offered if it is in conformance with the price direction. In a big price move, we demand an immediate explanation and then we accept any explanation offered, even if it doesn’t stand the scrutiny of further analysis. For instance, big price declines in copper and crude oil are immediately explained and accepted as being due to weakness in the world economy. Yet we know that the world economy and copper and oil fundamentals can’t possibly change quickly enough to be the real explanation. Please allow me to offer what I think is the real cause behind all the crazy price volatility and then to suggest something constructive you might want to do about it.

What’s behind the volatility is unbridled speculation and computer-type HFT trading gone wild. Oil didn’t drop $20 a barrel or copper 25 cents a pound because there was a sudden fall-off in demand or increase in supplies. This was all about speculative trading gone haywire. Let me be more specific. The whole premise of the economic justification behind commodity futures trading has been bastardized. US law has sanctioned the trading of commodity futures for the express purpose of allowing legitimate producers and consumers to hedge or transfer their price risks to speculators. But the wild price swings we are witnessing are not related to legitimate hedging. The volatility is as a result of speculators battling speculators, with real hedgers largely on the sideline. This is relatively easy to demonstrate.

The big price moves are the result of moving averages and other technical signals being violated. Technical funds and other momentum type traders rush into and out of the markets, often on an intra-day basis, as a result of these price changes. Against those technical type traders are aligned the “commercials” that take the opposite side of these transactions. But these commercials are also speculators and are not the legitimate hedgers they purport to be. Real producers and consumers don’t hedge based upon changes in moving averages on a daily basis. Real hedgers don’t day trade. Real hedgers don’t engage in HFT. The fact is that the commercial traders are just trading against the tech fund speculators and this makes the commercial traders speculators as well. This is an important distinction. It is why the big commercials in COMEX gold may be in trouble, namely, they weren’t hedging in the first place and their short speculation may have been a serious miscalculation because it wasn’t a legitimate hedge originally.

If my analysis is correct, then most of the volatility is due to one giant sick game of unbridled speculation. The speculators include not just the obvious and visible speculators, but also the commercials pretending to be hedgers. These commercial speculators in drag include the largest banks, like JPMorgan. How has it gotten to the point where our insured deposit taking institutions are among the biggest speculators? This speculative trading activity on the part of banks has greatly increased the current price volatility and increased the dangers of systemic risk. How is that good?

We’ve gotten to this point because our financial system structure has encouraged more and more speculation on the part of our important financial institutions. Leading us on the way to ruin is the criminal enterprise, also known as the CME Group, which has become dependent of encouraging more of the mindless daily speculative trading to fatten its bottom line. So harmful is the CME’s role in all of this that in order for the CME to be blessed, the public must be damned.

What can we do about this sorry state of affairs? Quite simply, what we have been doing, namely, to petition the regulators to enforce the laws governing manipulation and disruptive trading practices. I know that many are tired of petitioning the CFTC because there has been little visible response from them regarding the silver manipulation. Yet I am still convinced that this is the best and perhaps only constructive route. I’m not going to beg you to contact them if you feel it’s a waste of time. Likewise, I’m not going to promise you that the agency will do the right thing, as that’s up to them. All I do know is that silver is manipulated by virtue of a concentrated short position on the COMEX and that is against the law. You must always do what you feel is right, regardless of how it may turn out or how many times you tried in the past or whether someone else will also do the right thing.

I know I’m going to send this article to the CFTC (as well as to the CME and JPMorgan). I invite you to do likewise if you are so inclined or write in your own words and ask them to break up the concentrated short position in silver. I would ask that you remain respectful if you do write so as not to distort the intent of your message. I know most of us are sick and tired of the silver crime in progress and the regulators failure to deal with it, but you must rise above your emotions to be effective.

Theodore Butler
Butlerresearch.com

For subscription information to Ted Butler’s private newsletter, please go to www.butlerresearch.com

Theodore Butler is an independent Silver Analyst who has been publishing unique precious metals commentaries on the internet since 1996. He offers a subscription service with once or twice weekly commentaries including detailed analysis of the Commitment of Traders Report, regulatory developments, supply/demand considerations, and topics of interest to investors in precious metals, with an emphasis on silver. Always outside the box. You can subscribe to his service by clicking here.

Tyler Durden | Zero Hedge | June 19, 2011

One small step toward Executive Order 6102 part 2, and one giant leap for corruptcongressmankind.

From: FOREX.com <[email protected]>
Date: Fri, Jun 17, 2011 at 6:11 PM
Subject: Important Account Notice Re: Metals Trading
To: xxx

Important Account Notice Re: Metals Trading

We wanted to make you aware of some upcoming changes to FOREX.com’s product offering. As a result of the Dodd-Frank Act enacted by US Congress, a new regulation prohibiting US residents from trading over the counter precious metals, including gold and silver, will go into effect on Friday, July 15, 2011.

In conjunction with this new regulation, FOREX.com must discontinue metals trading for US residents on Friday, July 15, 2011 at the close of trading at 5pm ET. As a result, all open metals positions must be closed by July 15, 2011 at 5pm ET.

We encourage you to wind down your trading activity in these products over the next month in anticipation of the new rule, as any open XAU or XAG positions that remain open prior to July 15, 2011 at approximately 5:00 pm ET will be automatically liquidated.

We sincerely regret any inconvenience complying with the new U.S. regulation may cause you. Should you have any questions, please feel free to contact our customer service team.

Sincerely,
The Team at FOREX.com

So far we have only received this warning from Forex.com. We are waiting to see which other dealers inform their customers that trading gold and silver over the counter will soon be illegal.

It appears that Forex.com’s interpretation of the law stems primarily from Section 742(a) of theDodd-Frank act which “prohibits any person [which again includes companies]from entering into, or offering to enter into, a transaction in any commodity with a person that is not an eligible contract participant or an eligible commercial entity, on a leveraged or margined basis.”

Some prehistory from Hedge Fund Law Blog:

The Dodd-Frank Wall Street Reform and Consumer Protection Act (“Act”) has changed a number of laws in all of the securities acts including the Commodity Exchange Act.  Two specific changes deal with certain transactions in commodities on the spot market.  Specifically, Section 742 of the Act deals with retail commodity transactions.  In this section, the text of the Commodity Exchange Act is amended to include new Section 2(c)(2)(D) (dealing with retail commodity transactions) and new Section 2(c)(2)(E) (prohibiting trading in spot forex with retail investors unless the trader is subject to regulations by a Federal regulatory agency, i.e. CFTC, SEC, etc.).  According to a congressional rulemaking spreadsheet, these are effective 180 days from the date of enactment.
We provide an overview of the new sections and have reprinted them in full below.
New CEA Section 2(c)(2)(D) – Concerning Spot Commodities (Metals)
The central import of new CEA Section 2(c)(2)(D) is to broaden the CFTC’s power with respect to retail commodity transactions.  Essentially any spot commodities transaction (i.e. spot metals) will be subject to CFTC jurisdiction and rulemaking authority.  There is an exemption for commodities which are actually delivered within 28 days.  While the CFTC wanted an exemption in which commodities would need to be delivered within 2 days, various coin collectors were able to lobby congress for a longer delivery period (see here).
It is likely we will see the CFTC propose regulations under this new section and we will keep you updated on any regulatory pronouncements with respect to this new section.
New CEA Section 2(c)(2)(E) – Concerning Spot Forex
The central import of new CEA Section 2(c)(2)(E) is to regulate the spot forex markets.  While the section requires the CFTC to finalize regulations with respect to spot forex (which were proposed earlier in January), it also, interestingly, provides  oversight of the markets to other federal regulatory agencies such as the CFTC.  This means that in the future, different market participants may be subject to different regulatory regimes with respect to trading in same underlying instruments.  A Wall Street Journal article discusses the impact of this with respect to firms which engage in other activities in addition to retail forex transactions.  The CFTC’s proposed rules establish certain compliance parameters for retail forex transactions, requires registration of retail forex managers and requires such managers to pass a new regulatory exam called the Series 34 exam.  We do not yet know whether the other regulatory agencies will adopt rules similar to the CFTC or if they will write rules from scratch.

Next, from Henderson & Lyman:

The prohibition of Section 742(a) does not apply, however, if such a transaction results in actual delivery within 28 days, or creates an enforceable obligation to deliver between a seller and a buyer that have the ability to deliver, and accept delivery of, the commodity in connection with their lines of business. This may be problematic as in most spot metals trading virtually all contracts fail to meet these requirements. As a result, although the courts’ interpretation of Section 742(a) is unknown, Section 742(a) is likely to have a significantly negative impact on the OTC cash precious metals industry. Here too, it is essential that those who offer to be a counterparty to OTC metals transactions seek professional help to discuss possible operational and regulatory contingency plans.

The actual rule language exempts a transaction if it “results in actual delivery within 28 days or such other period as the Commission may determine by rule or regulation based upon the longer period as the Commission may determine by rule or regulation based upon the typical commercial practice in cash or spot markets for the commodity involved;” Alas, the commission has decided not to intervene and keep the exemption status window so small as to affect virtually all exchanges which transact in the gold and silver spot market.

More here:

Elimination of OTC Forex

Effective 90 days from its inception, the Dodd-Frank Act bans most retail OTC forex transactions. Section 742(c) of the Act states as follows:

…A person [which includes companies] shall not offer to, or enter into with, a person that is not an eligible contract participant, any agreement, contract, or transaction in foreign currency except pursuant to a rule or regulation of a Federal regulatory agency allowing the agreement, contract, or transaction under such terms and conditions as the Federal regulatory agency shall prescribe…

This provision will not come into effect, however, if the CFTC or another eligible federal body issues guidelines relating to the regulation of foreign currency within 90 days of its enactment. Registrants and the public are currently being encouraged by the CFTC to provide insight into how the Act should be enforced. See CFTC Rulemakings regarding OTC Derivatives located at the following website address, under Section XX – Foreign Currency (Retail Off Exchange). It is essential that OTC forex participants seek professional help to discuss possible operational and regulatory contingency plans.

Elimination of OTC Metals

As for OTC precious metals such as gold or silver, Section 742(a) of the Act prohibits any person [which again includes companies]from entering into, or offering to enter into, a transaction in any commodity with a person that is not an eligible contract participant or an eligible commercial entity, on a leveraged or margined basis. This provision intends to expand the narrow so called “Zelener fix” in the Farm Bill previously ratified by congress in 2008. The Farm Bill empowered the CFTC to pursue anti-fraud actions involving rolling spot transactions and/or other leveraged forex transactions without the need to prove that they are futures contracts. The Dodd-Frank Act now expands this authority to include virtually all retail cash commodity market products that involve leverage or margin – in other words OTC precious metals.

The prohibition of Section 742(a) does not apply, however, if such a transaction results in actual delivery within 28 days, or creates an enforceable obligation to deliver between a seller and a buyer that have the ability to deliver, and accept delivery of, the commodity in connection with their lines of business. This may be problematic as in most spot metals trading virtually all contracts fail to meet these requirements. As a result, although the courts’ interpretation of Section 742(a) is unknown, Section 742(a) is likely to have a significantly negative impact on the OTC cash precious metals industry. Here too, it is essential that those who offer to be a counterparty to OTC metals transactions seek professional help to discuss possible operational and regulatory contingency plans.

Small Pool Exemption Eliminated

Pursuant to Section 403 of Act, the “privateadviser” exemption, namelySection 203(b)(3) of the Investment Advisers Act of 1940 (“Advisers Act”), will be eliminated within one year of the Act’s effective date (July 21, 2011). Historically, many unregistered U.S. fund managers had relied on this exemption to avoid registration where they:

(1) had fewer than 15 clients in the past 12 months;

(2) do not hold themselves out generally to the public as investment advisers; and

(3) do not act as investment advisers to a registered investment company or business development company.

At present, advisers can treat the unregistered funds that they advise, rather than the investors in those funds, as their clients for purposes of this exemption. A common practice has thus evolved whereby certain advisers manage up to 14 unregistered funds without having to register under the Advisers Act. Accordingly, the removal of this exemption represents a significant shift in the regulatory landscape, as this practice will no longer be allowable in approximately one year.

Also an important consideration, the Dodd-Frank Act mandates new federal registration and regulation thresholds based on the amount of assets a manager has under management (“AUM”). Although not yet underway, it is possible that various states may enact legislation designed to create a similar registration framework for managers whose AUM fall beneath the new federal levels.

Accredited Investor Qualifications

Section 413(a) of the Act alters the financial qualifications of who can be considered an accredited investor, and thus a qualified as eligible participant (“QEP”). Specifically, the revised accredited investor standard includes only the following types of individuals:

1) A natural person whose individual net worth, or joint net worth with spouse, is at least $1,000,000, excluding the value of such investor’s primary residence;

2) A natural person who had individual income in excess of $200,000 in each of the two most recent years or joint income with spouse in excess of $300,000 in each of those years and a reasonable expectation of reaching the same income level in the current year; or

3) A director, executive officer, or general partner of the issuer of the securities being offered or sold, or a director, executive officer, or general partner of a general partner of that issuer.

Based on this language, it is important to note that the revised accredited investor standard only applies to new investors and does not cover existing investors. However, additional subscriptions from existing investors are generally treated as requiring confirmation of continuing investor eligibility.

On July 27th, 2010, the SEC provided additional clarity regarding the valuation of an individual’s primary residence when calculating net worth. In particular, the SEC has interpreted this provision as follows:

Section 413(a) of the Dodd-Frank Act does not define the term “value,” nor does it address the treatment of mortgage and other indebtedness secured by the residence for purposes of the net worth calculation…Pending implementation of the changes to the Commission’s rules required by the Act, the related amount of indebtedness secured by the primary residence up to its fair market value may also be excluded. Indebtedness secured by the residence in excess of the value of the home should be considered a liability and deducted from the investor’s net worth.

h/t Ryan

On April 26, three trading days before the “drive-by-shooting of silver” resulting in the $6 takedown in 12 minutes, the CME group announced that it had reached record volume the previous day in its COMEX Silver futures, as well as in open interest of its Silver options.

Yesterday, trading of Silver futures reached 319,204 contracts, surpassing the prior record of 201,216 contracts set on November 9, 2010. At the same time, open interest in Silver options reached a new record of 240,344 contracts. The prior record of 235,992 contracts was set on April 21, 2011.

This record volume for Comex Silver futures in April was almost six times the average monthly volume of the last decade. Many attributed this high volume preceding the May 1 silver take-down and the speed & depth of the “crash” itself to High Frequency Trading (HFT) - the robotic execution of trades by powerful computers “capable of buying and selling thousands of different securities in the time it takes you to blink an eye“.

This CBSNews video The Speed Traders gives a rare behind-the-scene insight into the lightning fast but dark world of HFT.

Consider these stunning facts:

• Over 70% of stocks traded in the US are done through HFT robots. No humans are behind these trades because “humans are way too slow to trade on the kinds of opportunities that we’re trying to capture. We’re trying to capture opportunities that exist for only fractions of a second.”
• Their supercomputers are programmed to place and then cancel thousands of orders a second, trying to sniff out which way a market is moving in order to jump in ahead of big rallies and sell off before big declines
• High frequency traders typically tell their computers to make a profit of a penny or less, 40 million times day.
• Speed in accessing raw data from the stock exchange is so critical that these traders rent expensive data center space so that their machines can be physically close to the exchange’s computers.
• Gaining a few milliseconds may make them millions, if not billions a year
• High frequency trading raises no capital for companies, if anything it’s distracting from the capital raising process
• Proponents of HFT say that they benefit the market by providing liquidity, so that when humans or natural traders want to buy or sell, there’s always a counter-party to the trade.
• Others, like William Silver, disagrees…  ”the volume in most issues is vastly inflated by HFT activity, and many computer models being used to acquire and liquidate large positions are built on false liquidity assumptions. This is no problem when markets remain calm. However, once there is a rush for the exits, institutional holders will find that their assumptions on liquidity were incorrect, and we will then experience another mini crash.”
• There are a lot of people out there who think that the stock market is rigged
• “Since we first aired this story, the Securities and Exchange Commission has proposed further reforms, and high frequency traders are now moving into currency and commodity markets“. - CBS News.

And this was exactly what Ted Butler said in his commentary after the May 1 silver price take down.

the record high trading volume and 30% price smash indicate there was little true liquidity present. This is due to a disproportionate share of trading being performed by HFT computer bots. Why are these traders allowed to exist and control so much a share of silver trading?

The ball is in CFTC’s court.

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Related Reads on HFT in commodities, particularly gold & silver

• Ted Butler’s 5 Questions for Gary Gensler, Chairman of the CFTC.
• “Speed” - Speech by Commissioner Bart Chilton before the High Frequency Trading World, USA 2010 Conference, New York, NY
• Silver Might Crash?

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In the aftermath of the May 1 “Drive-By-Shooting” of silver, as Rob Kirby puts it, several analysts have poured over the Commitment of Traders (COT) report and other data and have come up with some interesting analysis. Here’s a summary of 3 opinions of what happened, and what we can do about it.

1. GotGoldReport

Large Commercial Net Short (LCNS) nominal position for silver futures is at its lowest level since July 21, 2009. The bullion banks, large dealers and swap dealers have drastically reduced their short positions after the “drive-by-shooting” incident.

Combined with the fact that their net short position relative to open interest (LCNS:TO) is also at it’s lowest since April 2009, it means that “the largest hedgers and short sellers are not motivated to press the short side and have instead seen fit to greatly reduce their net short exposure. It means that there is now a much larger amount of bullish “horsepower” that could come back into the market at any moment.  It usually means that we are getting close to an upside reversal.  Finally, a very low LCNS:TO (below 33%) is almost always associated with silver lows or near silver lows.”  Read full article at GotGoldReport.

Action: Get ready to take a position if you’ve been waiting to pick a low.

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2. Ted Butler

“By remaining quiet on the matter, the CFTC is aiding and abetting the manipulation and the dissemination of false market information”.

It still amazes me that so few seem to be outraged by what transpired in the silver market starting on Sunday, May 1. That night, silver plunged sharply, by $6 an ounce (or 13%) in minutes, setting the stage for a one-week price decline of 30%. Simply stated, a 30% decline in one week in any commodity market is a very big deal, especially when there was no supply/demand news to account for it. More outrageous is that the primary regulators of the silver market, the CFTC and the CME group, have not publicly commented on the big market plunge in silver.

Let me see if I can put this plunge and the lack of comment by the primary regulators into some perspective. Try to imagine a tragic commercial plane crash with no comment from the Federal Aviation Administration or the National Transportation Safety Board for three weeks. Or a case of tampering with a common cold remedy (Tylenol) that resulted in public harm that the Federal Drug Administration refused to comment on. Or a stock market crash of 30% in a week that drew no comment from the Securities & Exchange Commission or the New York Stock Exchange. Such occurrences and no comment from the primary regulators would be unimaginable. Yet this just occurred in the silver market.

The Commodity Futures Trading Commission (CFTC) holds that its primary mission is to protect the public from fraud, abuse and manipulation. Yet the public has just been subjected to fraud, abuse and manipulation in silver by virtue of the one-week 30% intentional price plunge and the Commission has not lifted a finger to protect the public. Or even to comment on it. How deep of a silver market plunge would it take for the agency to comment – 50% or 90%?

I realize that silver had climbed in price sharply before its sudden plunge, rising by more than $20 per ounce from the end of January to a high of $49 by the end of April. That climb took three months. Almost $15 of that gain was wiped out in one week. I know that the popular version of what caused the price surge was irrational speculative buying which created a bubble in price that burst. But I also know that the actual data directly contradicts the popular version. CFTC data in the Commitment of Traders Report (COT) indicate speculative selling into the price peak, accompanied by commercial buying (short-covering). Granted, the intentional price smash generated further speculative selling, but that doesn’t change the fact that speculative buying did not cause the silver run up.

By remaining quiet on the matter, the CFTC is aiding and abetting the manipulation and the dissemination of false market information. This is as contrary to commodity law as is possible. In light of the highly unusual circumstances that surrounded the sudden decline in silver (on no fundamental developments) the Commission’s silence creates the impression among many that it may be complicit in the decline. No good purpose is served by the impression that the CFTC is ineffective, or worse, in its most basic mission of protecting the public. Unfortunately, this impression has been nurtured by a regular pattern of apparent neglect of the public’s interest by the Commission.

The public has notified the Commission on numerous occasions and in great numbers concerning some very specific issues in the silver market, namely, position limits and the concentration on the short side in COMEX futures. The only reaction from the Commission comes in personal comments by Commissioner Bart Chilton. While Chilton is to be commended for his acknowledgement of the importance of these matters, it is not right that the Commission stays silent on an official basis. I certainly admit to my own role in pressing the Commission for answers to straightforward questions and in suggesting solutions for consideration. And that role included encouraging others to press the Commission as well. Those that have contacted the CFTC know that these are serious issues that deserved to be fully aired. Yet, with the exception of Commissioner Chilton, the agency has avoided responding to the public on all matters related to silver. This is not the correct way to serve the public.

Away from the Commission, the silence on the part of the CME Group, owner of the COMEX, is equally outrageous. The latest intentional silver takedown began with the blatant early Sunday evening assassination of the price. The killing took place on the CME-run Globex electronic trading system, executed by exchange insiders. It was this electronic system that provided the means and opportunity and documented trading trail of the crime. The motive has always been the buying back of an uneconomic short position after first creating distress selling through manipulative dirty tricks. The well-timed margin increases by the CME amounted to piling on and adding icing to the crooked cake.

Between the CFTC (which I still consider incompetent, rather than duplicitous) and the CME (which I have always considered an ongoing criminal enterprise), you would think there would be enough silver silence to go around. But there’s more. It has been two and a half years since I publicly indentified and accused JPMorgan as being the big concentrated silver short and chief manipulator. JPM has managed to close out much of its short position (at great loss) but still while bullying the market. Yet, in all that time JPMorgan has never uttered a word about being accused of the most serious market crime possible. This despite countless law suits alleging the same silver manipulation some six months ago. I know that allegations and legal findings can be two very different things, but I never thought an entity like JPMorgan (or the CME) would ever remain silent in the face of repetitive and specific allegations.

Lastly, the largest money manager in the world, BlackRock, has joined the silver soul mates of silence in not responding to allegations of negligence. In allowing the short position in shares of their big silver ETF, SLV, to balloon to the equivalent of more than 36 million ounces just before the price smash, BlackRock played a key role in enabling the 30% price plunge. BlackRock knew, or should have known, that there was no real metal backing up the shorted shares and that served as a key silver price depressant. As I do with JPMorgan and the CME, I make sure the highest officials at BlackRock are aware of my allegations.

At the very least, the CFTC, JPMorgan, the CME Group and now BlackRock, are at the very top of the regulatory and financial food chain. As such, they are not some 90-pound defenseless weaklings. By law, these entities must behave in an appropriate manner. I don’t believe that any of these entities have been behaving appropriately when it comes to protecting the public interest in matters related to silver. I know this is maddeningly frustrating to objective observers. What can you do about it?

Read full article at SilverSeek

Action: Write to your elected officials.

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3. Bix Weir and Sean (SGT)

The Road to Roota theory suggests that the CFTC was put in place in the mid 70s to run cover of all the markets in order to prolong the life of the fiat money system. The recent manipulations in the silver futures and SLV indicate that the “criminals” are trying to save themselves.

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Action: Buy silver at $35, $40, $50, $100 just as you’ve bought at $5, $10, $20

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Statement of Commissioner Bart Chilton Before the CFTC Agricultural Advisory Committee Meeting | CFTC

Bart Chilton, CFTC Commissioner

Miranda Lambert has a great country song out right now—“Time to Get a Gun.” Like a lot of great country songs, it tells a story—this one is somewhat tongue-in-cheek, but there’s a bit of truth in it—when people get so fed up, so pushed to the limit, they can be moved to drastic measures. In our case, that means the threat of more prescriptive rules from Congress, mandating specific position limits, because we’ve been unable (or unwilling) to do it ourselves.

Consumers are hurting, at the gas pump and at the grocery store, and if we don’t use all the authorities we have to ensure 100% that the prices they are paying are fair and accurate, I will not be at all surprised if there is an attempt in Congress to take a line from Miranda Lambert, pull out the big guns and simply impose set speculative limits. And there sure would be a lot of people out there singing a sad song about that.

At the risk of sounding like a broken record, let me say it yet one more time: Congress told us to impose limits. We haven’t done it, and we need to do something—NOW. I get it, I get it, I get it—there is a problem with not having swaps data—and that necessarily implicates some kind of delay. But again, as I’ve said numerous times, there are things we can, must, and should do now (indeed, should have done months ago) that are well within our power, authority, and capabilities.

Specifically, we can impose spot month limits on regulated exchanges and on swaps now, based on a percentage of deliverable supply. I also think we could impose deferred month and aggregate month overall position limits now, but I understand (although I’m not saying I agree) the case against doing those before we do over-the-counter limits. Last (but certainly not least) we can continue to monitor markets using the “position points” triggers that I proposed last December.

This is a pretty simple point, and I am surprised at the escalation of it to the level of DefCon One. I’m not talking about imposition of limits that harm markets, or harm legitimate business activity. I’ve made that clear from day one. And in our final rule, I want to make absolutely sure that whatever limits are imposed are conducive to ensuring that both legitimate hedging AND speculating continue, to make these markets work as they should. Let’s not turn this into another sad country song (or at least not any sadder than it already is). Let’s do our jobs and “git ‘er done.”

Bart Chilton, one of the more outspoken of the 5 CFTC Commissioners, has been an ardent advocate for swift and fair imposition of Position Limits.

Related Reads

• Providing Oversight With One Eye Closed
• CFTC Commissioner Bart Chilton Reveals “One Trader” Controls 40% Of Silver Market, As Silver Holdings Of SLV Hit All Time Record