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CFTC: 6 Strikes and Yer Out!
Bix Weir
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Received via email on 5/16/08 from David Kass of the CFTC:

Dear Mr. Weir, you probably have already seen our new report on the silver market…

http://www.cftc.gov/ucm/groups/public/@newsroom/documents/file/silverfuturesmarketreport0508.pdf

The public may not always see the results, but we do put in a lot of time monitoring these markets to ensure that they are not being manipulated.

David Kass, Senior Economist Market Surveillance Section Division of Market Oversight Commodity Futures Trading Commission

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Attention: David Kass @ CFTC (dkass@cftc.gov)

Dear David:

This will be my final correspondence with officials at the CFTC as I have concluded that your organization is not competent enough to understand or conduct a proper investigation into the ongoing silver market manipulation. All further requests for information, enforcement and actions will be forwarded to A. Roy Lavic, Inspector General of the CFTC as well as Michael B Mukasey, Attorney General of the United States of America.

The following is my analysis of your investigative paper entitled "Report on Large Short Trader Activity in the Silver Futures Market". (http://www.cftc.gov/newsroom/index.htm). Although the report suggests that the CFTC is only looking at the short trader activity from 2005-2007 and not the entire silver futures market manipulation picture, your reference to the report on the CFTC website (New Study Finds Silver Futures Market is Functioning Properly), your email to me above and the CFTC press release announcing the report all promote the false impression that the CFTC has investigated the silver manipulation issue thoroughly in your conclusion that there is no silver market manipulation.

Release: 5499-08 For Release: May 14, 2008

New Study Finds Silver Futures Market is Functioning Properly

Study Finds No Evidence of Manipulation

Washington, DC--The Commodity Futures Trading Commission's (CFTC) Division of Market Oversight (DMO) today released a report that re-examines long-term and recent allegations of misconduct in the silver markets and finds that there is no evidence of manipulation in those markets for the trading period examined…

http://www.cftc.gov/newsroom/generalpressreleases/2008/pr5499-08.html

First of all I would like to state that the four most important questions I posed to you on March 26, 2008 have not been addressed and there is currently another "unsolved crime" in the COMEX silver manipulation story. The questions were concerning the downward price manipulation of silver from $21/oz to $17/oz in 4 trading days from March 17-20, 2008 where there was no physical silver available for purchase. These questions that I posed to you over 2 months ago remain unanswered:

1) The $4 drop in the price of silver was directly in contrast to the availability of physical silver for the majority of market participants. Please explain why the CFTC believes this is a normal market occurrence in line with the physical market dynamics.

2) The silver supply shortage that exists today clearly exposed the manipulative nature of the 310M+ oz short position. Why is it allowed exist and why is it allowed to grow?

3) The CFTC's 2004 letter concerning the manipulation of silver states as its main argument that the reason there is no manipulation by the few large silver shorts is that there is no supply deficit. Now that the silver shortage is very apparent around the world, what is being done to stop the manipulation of the price of silver due to the silver shortage?

4) With thousands of complaints filed with the CFTC regarding silver manipulation, why wasn't the CFTC able to preemptively stop the serious silver shortage that is now clearly deterring silver investors from obtaining physical metal at today's "below market" manipulated prices? What is being done to make sure that the majority of physical silver purchasers are not locked out of the market ever again?

I am still waiting for the CFTC to answer these questions ESPECIALLY in light of your recent declaration the silver markets are NOT being manipulated.

Now let's talk about your investigative techniques, methods and expertise used in your investigation of silver manipulation. According to your report and analysis you draw the following conclusion: "There is no evidence of manipulation in the silver futures market" based on these factors:

1) Silver cash and futures prices have risen dramatically between 2005 and 2007, with silver outperforming the gold, platinum and palladium markets, suggesting that silver futures prices are not depressed relative to other metals prices.

2) NYMEX silver futures prices tend to track closely the price of physical silver.

3) Concentration levels for the top four short futures traders in the silver futures market are comparable to those observed in the gold and copper futures markets, and generally are lower than the levels seen in the platinum and palladium futures markets.

4) The composition of the traders comprising the top four short futures traders, in terms of net positions, changes over time. These traders represent a diverse group, and their futures positions are driven by an even more diverse group of customers.

5) There is no observable relationship between short-futures-trader concentration levels and silver prices.

6) There is a slightly positive relationship between the total net position of the large short futures traders and silver prices; this suggests that larger short futures positions are associated with higher, not lower prices.

The CFTC feels that this report was a HOMERUN in your fight against proving the silver manipulation promoters wrong in their quest to prove silver market manipulation. Using this baseball analogy, I intend to show how many complete WIFFS were made in your attempt to hit the ball out of the park.

I will address your final conclusions one at a time:

1) Cash and futures prices have risen dramatically…

The fact that the prices have risen "dramatically" points more to the fact that the price of silver was and is significantly UNDERVALUED rather than fairly valued. Did you ever ask yourselves WHY silver is rising so dramatically? There shouldn't be "undervalued assets" in a freely traded market. Dramatically rising prices is more evidence of the many years of manipulative price suppression by market participants. (STRIKE 1) http://www.silverbearcafe.com/private/5.08/witch.html

2) NYMEX silver futures prices tend to track closely the price of physical silver…

WRONG. The CFTC uses the London Metal Exchange as a price gauge for the physical price of silver. David Morgan pointed out in a recent article entitled "Silver Price Manipulation" that the LME traded 30 BILLION oz of silver last year alone! http://www.silver-investor.com/davidmorgancommentary/articles/5-22-08_ibtimes13_silverpricemanipulation.html

That would equate to 120M oz of physical silver being transferred every trading day. To picture how far off of physical reality this is, imagine 1,250 three ton capacity armored cars being loaded and unloaded out of LME warehouses EVERY DAY! Impossible! The LME has NOTHING to do with the realities of the physical silver market. There are currently reports of silver shortages around the world including from your counterparts at the US Mint. The #1 proof of COMEX manipulation according to your 2004 letter is if the COMEX prices diverge with the physical market. The recent 20% COMEX silver price dive with no physical availability of silver is the smoking gun of silver price manipulation. (STRIKE 2)

3) Concentration levels for the top four short futures traders…

First of all, the Gold Anti Trust Action Committee (GATA) has already proven that the gold market is manipulated so if silver is tracking gold then silver, by definition, is manipulated also.

I'm not an expert on the COT reports but Ted Butler is. He is known around the world as the #1 expert on your COMEX Commitment of Traders Report. This is undisputed. His conclusion is that the 80% short concentration by less than 8 traders when there are THOUSANDS of other market participants is 100% proof of short side manipulation no matter how much the CFTC wants to deny it. Read his research for yourself (http://www.investmentrarities.com/tb-archives.html). But the bigger question here is why doesn't the CFTC hire or consult with Ted Butler? And why don't they talk to David Morgan or Jason Hommell or Izzy Friedman all of which are world renowned experts on all aspects of silver. In the latest CFTC report the ONLY people consulted with were the 10 LARGEST SHORT TRADERS! Imagine a cop walking up to a gang of bank robbers and asking them, "Did you just rob that bank?" After the obvious "No sir" the cop walks away and tells the world "They said they didn't do it so the bank was never robbed!" Sickening display of improper investigative work. (STRIKE 3).

4) The composition of the traders comprising the top four short futures traders, in terms of net positions, changes over time. These traders represent a diverse group, and their futures positions are driven by an even more diverse group of customers…

Of course they do but they all have the same goal of suppressing the price of silver just like the members of the Silver Users Association. Since the mining companies have been pretty much silenced on the subject of silver price manipulation, the only group advocating a freely traded silver market are individual silver investors which only make up less than 10% of the annual physical silver demand (at the moment). The remaining 90% of silver is consumed in industrial, photography, jewelry and silverware applications ALL of which have a significant financial interest in keeping the price of silver as low as possible!

The charge of manipulation is this: YES, they are conspiring together to artificially suppress the price of silver for their own benefit. It is easy to do without CFTC intervention and is most likely coordinated by computer trading programs trading back and forth on high volumes to set the price where the manipulators want it to go. I can supply you with the name of the company who most likely orchestrates these trades if you are ever interested in performing a real investigation into silver market manipulation. (STRIKE 4)

5) There is no observable relationship between short-futures-trader concentration levels and silver prices.

I don't know why this is even mentioned as they do not necessarily have to correlate for there to be manipulation in the silver markets. The fact that 80% of all the silver shorts are controlled by only a handful of participants trading these positions back and forth like a hot potato should be enough evidence that they are in complete control of the short side of the market. It is also clear that if this huge short position was never allowed to happen then the price of silver would be much higher than it is today. Let's face facts: the short position is gigantic, it is controlled by a few traders and the price of silver is below where it should be had the position never been allowed. (STRIKE 5)

6) There is a slightly positive relationship between the total net position of the large short futures traders and silver prices; this suggests that larger short futures positions are associated with higher, not lower prices.

In March 2004 the net short position of the 4 or less traders on the COMEX was approximately 150M oz and the price of silver was around $6/oz. In March 2008 the net short position of the 4 or less traders had DOUBLED to over 300M oz and the price of silver had risen above $20/oz. My question for the CFTC is WHAT WOULD THE PRICE OF SILVER HAVE BEEN IF THE EXTRA 150M OZ SOLD BY 4 OR LESS TRADERS NOT BEEN ALLOWED????

Would the price of silver be $40/oz? How about $100/oz? An ounce of common sense will tell you that it would not have been lower. So now, because of these 4 or less short traders, the price of silver does not reflect its "fair market value". Prices are set on the margin so it's anybody's guess as to where silver should be trading today had the 150M oz of paper shorts not been added to the mix. Yes, there is a positive relationship between the total net position of the short futures traders and the silver prices BUT, given the fundamentals of silver, that relationship SHOULD have been exponentially higher in price and substantially lower in manipulative shorts by the 4 or less traders. (STRIKE 6)

I have just bothered to address your 6 main points of proof that there is no silver manipulation but there are many more statements littered throughout your latest letter that are either flat out false or meant to mislead the reader. Out of these top six homeruns all I see are six strikeouts.

In my opinion the CFTC made no attempt to investigate the potential that the commentators and investors claiming silver manipulation could actually be correct. There was no analysis of the silver market fundamentals, no investigation (or audits) into physical silver available for delivery against the short positions, no investigation of potential collusion between the 8 largest shorts, no analysis of silver leasing, swapping or lending, no interviews with market analysts or commentators, no analysis of silver market slam events and no attempt to explain the COMEX silver crime committed on March 17-20, 2008.

Mr. Kass, I had high hopes when we started our correspondence last year that you could somehow bring some truth and honesty to the COMEX trading floor. You have let me down.

They say you can't fight city hall but where would the United States of America be without our founding fathers who DID fight their corrupt government? They fought for our future and now I am fighting to preserve the truth, honesty and freedom that this country was founded upon. The market rigging operation you are facilitating is not only illegal but completely un-American and you should be ashamed of your participation in it.

I am going to continue the fight and given that the CFTC refuses to stop the long term manipulation of silver that fight will now have to be against the CFTC.

I wish you well in our upcoming battles.

Sincerely,

Bix Weir

Cc:

A. Roy Lavic, Inspector General of the CFTC

Michael B Mukasey, US Attorney General


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