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Silver Soothsayer

By James R. Cook

Ted Butler’s continues with his campaign aimed at the Commodity Futures Trading Commission to end what he calls the manipulative silver short selling on the COMEX. On July 22 he sent the following letter to James Newsome, Chairman of the Commodity Futures Trading Commission.

“The manipulation of the silver market by the concentrated shorts on the Commodity Exchange. Inc. (COMEX) remains in force. While I am sure you have confronted these traders privately, given the current environment and despite the large number of complaints you have received, it is still business as usual for these silver manipulators. They do what they wish and ignore the law.

In the your most recent Commitments of Traders Report of July 19, 2002, for positions held, as of July 16, the 4 or less traders are still net short over 242 million ounces, and the 8 or less largest traders are net short roughly 340 million ounces. These are truly obscene and entirely uneconomic amounts. To make matters worse, recent COMEX delivery statistics indicate that these manipulators have had to deliver most of what limited physical inventories they held, thereby rendering their bloated short positions even more naked and unbacked. The situation is growing more extreme and alarming. These manipulators are doing everything they can to cap the price and drive it lower. You must protect the market and force them to cease and desist their illegal activities.

The financial world is demanding transparency and full disclosure from its institutions and regulators. It should be no different in our regulated commodity futures markets. I am encouraged that the Commission has been included in the Corporate Fraud Task Force, by executive order of President Bush. I assume your role in rooting out serious financial crimes and punishing the perpetrators would extend to the officers and directors of any company or exchange found guilty of participating in a manipulation. I just hope the recently proposed increased jail time guidelines for financial fraud is in place when the COMEX silver crooks are convicted.”

What stands out is the complete lack of disagreement or argument by the CFTC, or anyone else, to Butler’s specific allegations. Two weeks ago he wrote the following letter of explanation to a member of a congressional committee.

“If possible, would you enter this statement, for the record, for your Committee Meeting tomorrow. I have written Chairman James E. Newsome, at least ten (10) times since February 12, 2002, alleging a price manipulation in the silver contract on the Commodity Exchange, Inc. (COMEX). I base my allegations on weekly CFTC reports which show four or less traders on the COMEX holding a net short position in excess of any possible legitimate economic purpose. In fact, this net short position is much larger than all the known silver bullion in the world. This absurd condition has never occurred in any other traded commodity.

“The CFTC did respond to me on April 12, 2002, acknowledging that my allegations would represent a violation of CFTC and Exchange rules. But it has been almost three months since that acknowledgment, and I feel the CFTC is stalling. Inasmuch as Neal Wolkoff, Executive Vice President of the New York Mercantile Exchange, parent of the COMEX, is on your scheduled witness list, I ask that Chairman Newsome and Mr. Wolkoff respond to the allegation of an ongoing manipulation in the COMEX silver market. I have made sure that Mr. Wolkoff has personally received all correspondence that I have sent to the CFTC, so he should be aware of my allegation.”

Mr. Butler sees no possible way that the short sellers can extricate themselves from their huge short positions. “They’re trapped,” he states.

More and more these days we hear about the leasing of silver and gold. Mr. Butler wrote about leasing before anyone else. He figured it out. Until he focused attention on this complicated procedure, it took place in the dark. He concluded that the only reason silver failed to spike upward in price was an unexplained or unknown source of supply. Through extensive detective work and theorizing, he uncovered both gold and silver leasing. In fact, over five years ago, in early 1997, he wrote to Treasury Secretary Robert Rubin to warn him about the dangers of leasing. Try as you might, you won’t find anything written on the subject prior to that. Everything you hear about leasing today originated in the disclosures and revelations made by Ted Butler.

Importantly, he argues that the price of silver must rise dramatically. He says, “This is as close to a sure thing as you are likely to see in your lifetime. Sure and simple. We use more silver than we produce. That can’t continue. The only thing that can stop us using more silver than we produce is sharply higher prices. That will curtail demand and encourage more production. Figuring out how high silver prices must climb, and how long they must remain in force in order to balance supply and demand, might require a fair amount of skill and luck. In other words, when to sell. But that’s a separate question from what to do now. Right now it’s simple, silver is the buy of a lifetime.”

Mr. Butler is the world’s foremost expert on silver. The rest of the world’s precious metals analysts don’t hold a candle to him. He’s light years ahead of the commodity and industry experts. When he says that silver at today’s price levels carries little risk and high potential for gain, you should listen. If Albert Einstein told you to bet on a law of physics, you probably would take the gamble. When Ted Butler tells you to buy silver now before it rises, you should consider his superior knowledge on this subject and pay attention to his advice.

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