In Ted Butler's Archive


Silver analyst Theodore Butler sent his most recent newsletter to CFTC regulators with this comment, “How can you people continue to ignore incontrovertible evidence of concentration and manipulation? What do you do all day to avoid the obvious?”

Recipients of the letter were Vincent McGonagle, head of the Market Oversight division at the Commodity Futures Trading Commission (CFTC), Aitan Goelman, Director of Division of Enforcement at the CFTC, Gretchen Lowe, Deputy Chief, Enforcement Division, CFTC, Thomas Lasala Head Chief regulatory officer, CME group.

We’ve condensed Mr. Butler’s letter as follows:

Excessive short selling heavily impacts the price of a traded asset. This happens to be the prime mechanism for the decades-old manipulation in silver. It is the prime reason that silver manipulation has persisted as long as it has.

Recently, I explained how just eight traders were short the equivalent of more than 420 million ounces or 50% of world annual silver mine production and 60% of all silver positions on the COMEX. Since concentration is the number one indicator of manipulation, and because a manipulation can’t possibly exist without a concentrated position, one would think that the regulators at the CFTC and the CME Group would be jumping all over this. I didn’t invent or dream up the concept of concentration and manipulation; this concept is embedded and spelled out in commodity and antitrust law. I didn’t implement the reporting of concentration in the long form COT report; this is something the CFTC and the exchanges did on their own. I’m just reporting on the concentration data that the CFTC and the CME publish and asking out loud – don’t these clowns and crooks know what they are reporting?

Silver investors have come to expect nothing but continued malfeasance by the regulators in this very important issue and nothing but continued coddling by the regulators of the eight biggest silver shorts, led by JPMorgan. We know that the COMEX silver short position is concentrated from CFTC data. In fact, if it weren’t for the eight big shorts in COMEX silver, there would be no commercial short position at all. The 8 largest shorts hold the entire commercial net short position.

The manipulation has been extended for longer than I ever imagined, but an artificially low price for a physical industrial commodity must always end in a shortage. In silver, that is unavoidable at some point. At what point, no one can know. The crooked commercial shorts are holding record large concentrated short positions in COMEX silver futures. Silver is so underpriced no economic justification exists for being this heavily short. The excessively concentrated short position is manipulative on its face. This is why I can assert that these traders, JPMorgan, the CME (COMEX) and the CFTC are crooks without fear of retribution. I’ve made this accusation for years and they have never came back at me with either a warning or an explanation.

Unfortunately, it suggests that current prices will likely be rigged lower to induce managed money mechanical selling which the commercial crooks will use to buy back recently shorted positions. Should this occur, you can be sure that JPMorgan will have its cake and eat it too. They will buy back paper COMEX short positions at a profit while buying more physical silver a low price adding to its historic physical hoard of silver.

In his October 24th article continued his criticism of the regulators:

The sad truth is that the level of concentration on the short side of COMEX silver would never be tolerated should it occur on the long side. The chance of the CFTC and CME tolerating a concentrated long position by eight traders of more than 50% of world mine production or more than 60% of the total net COMEX open interest is so low as to be non-existent. The CFTC is biased when it comes to adjudicating what determines manipulation. All long concentrations are dealt with swiftly; short manipulations? Not so much.

In fact, it’s gotten so obvious that the CFTC can’t be concerned with a short concentration or downside price manipulation that the agency has gone on lockdown and won’t even respond to questions about its own data. For years I’ve sent all my articles to the agency’s commissioners and the top bureaucrats, in addition to the heads of JPMorgan, and the CME.

I get no response because no legitimate response can be made. What can anyone at the agency or the exchange say? That their numbers and my conclusions are wrong? No legitimate explanation can justify the short concentration. That’s why the agency has been reduced to pretending nothing is wrong. These spineless regulators are ignoring the market’s most serious crime. Yet they are paid by taxpayers and have sworn an oath to uphold the law.

When the commercials have sold this heavily in the past as they have now, prices usually turn lower so that the commercials can buy at lower prices and make huge profits. That’s the essence of the manipulation and it suggests lower prices for a short time. As always, the prospects for much higher prices in the end are still as solid as ever. The fact that those manipulators have suppressed the law of supply and demand for 25 years means that enough steam has built up in the boiler to ultimately create an explosion that will never be forgotten. Silver has seldom been cheaper and it represents what I believe to be the buy of the century.

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