Silver subject to price manipulation, Chilton says

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investorzzo's picture
investorzzo
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Silver subject to price manipulation, Chilton says

As an investigation of the silver market by the top U.S. commodity regulator entered a third year, a member of the Commodity Futures Trading Commission said today there have been “repeated attempts” to influence prices.

“There have been fraudulent efforts to persuade and deviously control that price,” said Commissioner Bart Chilton at a hearing today in Washington, alleging there have been violations of the Commodity Exchange Act. “Any such violation of the law in this regard should be prosecuted,” he said.

http://www.bloomberg.com/news/2010-10-26/silver-market-faced-fraudulent-...

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Re: Silver subject to price manipulation, Chilton says

Jim Rogers said silver, like rice, is one of those commodities that is still relatively undervalued. So relative to gold, its still a better deal. I assume the price manipulation is to keep the price DOWN, another reason to try and load up on silver right??

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Re: Silver subject to price manipulation, Chilton says

Remembering the Hunt Brothers and silver.  I still have some of that expensive metal.  Hard lessons learned.

From Wikipedia      http://en.wikipedia.org/wiki/Nelson_Bunker_Hunt

"Nelson Bunker Hunt ... is best known as a former billionaire whose fortune collapsed after he and his brother William Herbert Hunt tried but failed to corner the world market in silver.

"Beginning in the early 1970s, Hunt and his brother William Herbert Hunt began accumulating large amounts of silver. By 1979, they had nearly cornered the global market.   In the last nine months of 1979, the brothers profited by an estimated $2 billion to $4 billion in silver speculation, with estimated silver holdings of 100 million ounces.

"During the Hunt brothers' accumulation of the precious metal, prices of silver futures contracts and silver bullion during 1979 and 1980 rose from $11 an ounce in September 1979 to $50 an ounce in January 1980. Silver prices ultimately collapsed to below $11 an ounce two months later. The largest single day drop in the price of silver occurred on Silver Thursday.[1]"

Regards, Darrel

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Re: Silver subject to price manipulation, Chilton says

UPDATE 2-JPMorgan, HSBC sued for alleged silver conspiracy

http://www.reuters.com/article/idAFN2725907120101027?rpc=44

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Re: Silver subject to price manipulation, Chilton says

 

 nice find !

 Not sure if this has been mentioned on CM.. it surfaced a week ago..

http://www.roadtoroota.com/public/411.cfm

 

 

 

 

 

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Rule of law is dead unless ...

plato1965,

Nice find to you as well!  All I can say about this Judge Levin is holy s***!

This situation reminds me of a parallel situation we had in Michigan where the head of the insurance commission never ruled in favor of a complainant.  He was an insurance company CEO prior to his tenure as insurance commissioner and returned to that post afterwards (i.e. the fox was in charge of the hen house).  This situation occurred during the time our present governor was state attorney general and while she was governor as well.  I had the public record to back my findings and made dozens of phone and written inquiries but I could not find a single governmental agency or individual who was willing to investigate the matter, much less take any kind of legal or punitive action.

The rule of law is essentially dead in America unless it serves TPTB.     

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Re: Rule of law is dead unless ...
ao wrote:

Nice find to you as well!  All I can say about this Judge Levin is holy s***!

I say the same thing about Judge Painter. It only took him 20 years and pending retirement to blow the whistle.     

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ao
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Re: Rule of law is dead unless ...
SteveW wrote:
ao wrote:

Nice find to you as well!  All I can say about this Judge Levin is holy s***!

I say the same thing about Judge Painter. It only took him 20 years and pending retirement to blow the whistle.     

Really.  In one way, he's almost worse.

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compinthegroove
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Re: Silver subject to price manipulation, Chilton says

This is just noise as far as I'm concerned.  When Goldman Sachs got sued by the SEC, the final result was a wrist slap fine.  What makes you think this will end up any different?  Like Goldmans Sachs, JP Morgan is a shareholder of the Fed, so they'll just borrow the money for zero interest from Backstop Benny. 

In my mind, the likely scenario is that they'll announce a low QE number at the next Fed meeting, which will drive the dollar up and silver down.  This will enable the shorts to cover at a profit.  Of course, the mainstream media won't cover this.  The stock market will take a hit as well, which will be used to justify larger QE at a subsequent announcement by the Fed.

The only thing that's going to stop downward manipulation of silver prices is a default on the futures exchanges.

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Re: Silver subject to price manipulation, Chilton says
compinthegroove wrote:

In my mind, the likely scenario is that they'll announce a low QE number at the next Fed meeting, which will drive the dollar up and silver down.  This will enable the shorts to cover at a profit.  Of course, the mainstream media won't cover this.  The stock market will take a hit as well, which will be used to justify larger QE at a subsequent announcement by the Fed.

Sounds like a high probability scenario.

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Re: Silver subject to price manipulation, Chilton says
compinthegroove wrote:

This is just noise as far as I'm concerned.  When Goldman Sachs got sued by the SEC, the final result was a wrist slap fine.  What makes you think this will end up any different?  Like Goldmans Sachs, JP Morgan is a shareholder of the Fed, so they'll just borrow the money for zero interest from Backstop Benny. 

In my mind, the likely scenario is that they'll announce a low QE number at the next Fed meeting, which will drive the dollar up and silver down.  This will enable the shorts to cover at a profit.  Of course, the mainstream media won't cover this.  The stock market will take a hit as well, which will be used to justify larger QE at a subsequent announcement by the Fed.

The only thing that's going to stop downward manipulation of silver prices is a default on the futures exchanges.

While this might well happen there is still the problem that you infer by mentioning a default.

Quote:

As of October 19th, the commercial traders were still net short 58,150 contracts - roughly 290 million ounces of silver. There are currently only 52 million registered ounces and 59 million eligible ounces held in COMEX warehouses.

http://www.24hgold.com/english/news-gold-silver-will-the-cftc-actually-act-to-protect-silver-investors-.aspx?article=3174845468G10020&redirect=false&contributor=Chris+Mack&mk=1

So unless the shorts are able to settle for paper or by rolling forward there remains the question of where this silver will come from? Should deep pockets require settlement in physical silver then a monster short squeeze develops and the possibility of a default arises.

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compinthegroove
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Re: Silver subject to price manipulation, Chilton says
SteveW wrote:
compinthegroove wrote:

This is just noise as far as I'm concerned.  When Goldman Sachs got sued by the SEC, the final result was a wrist slap fine.  What makes you think this will end up any different?  Like Goldmans Sachs, JP Morgan is a shareholder of the Fed, so they'll just borrow the money for zero interest from Backstop Benny. 

In my mind, the likely scenario is that they'll announce a low QE number at the next Fed meeting, which will drive the dollar up and silver down.  This will enable the shorts to cover at a profit.  Of course, the mainstream media won't cover this.  The stock market will take a hit as well, which will be used to justify larger QE at a subsequent announcement by the Fed.

The only thing that's going to stop downward manipulation of silver prices is a default on the futures exchanges.

While this might well happen there is still the problem that you infer by mentioning a default.

Quote:

As of October 19th, the commercial traders were still net short 58,150 contracts - roughly 290 million ounces of silver. There are currently only 52 million registered ounces and 59 million eligible ounces held in COMEX warehouses.

http://www.24hgold.com/english/news-gold-silver-will-the-cftc-actually-act-to-protect-silver-investors-.aspx?article=3174845468G10020&redirect=false&contributor=Chris+Mack&mk=1

So unless the shorts are able to settle for paper or by rolling forward there remains the question of where this silver will come from? Should deep pockets require settlement in physical silver then a monster short squeeze develops and the possibility of a default arises.

Now you're getting to the heart of the matter.  The physical doesn't exist.  A debt that cannot be paid will not be paid.  Default will not be straighforward, nor will it be reported as such until it's too late.  Allow me to explain...

What gives a futures contract in silver it's value?  Quite simply, it's the belief that the holder of the contract will be able to redeem that contract in physical silver.   Kinda like the old silver certificates of bygone days.  Since the paper claims to silver vastly outnumber the actual silver available, this market is just another fractional reserve scheme.  This is the same crap the lead to the failure of the classical gold standard.  The gold bugs out there who yearn for the return of the gold standard fail to realize that the gold standard never went away- it just shifted to the futures market.  The only difference here is that it's now called something different and the fiat price of the precious metal now floats instead of being dictated at a set price by a government.

When the default on the physical silver finally occurs, will it be labeled as a default?  I hardly think so.  We need only to look at history for an example.  I'm sure you've heard about the price rise of silver in the 70's when the Hunt Brothers tried to corner the market.  The lesser known part of the story is that the end of the bull run was engineered by powerful forces on the opposite side of the trade.  High ranking people on the exchanges were shorting silver.  So what did they do?  They changed the rules!  The top of the silver bull came about because the exchange declared that the silver contracts would be settled in cash, not silver.  This in effect broke the convertibility of paper (the futures contracts) to silver, efectively rendering them worthless.  What value is a silver certificate when the other party won't honor it's commitment?  The convertibility was later reestablished, but not in time for the Hunts to remain solvent.  If the convertibility was not reestablished, the silver contracts would have plummeted all the way to zero.

Now just think about all the leverage holding the price of silver down.  What will happen to the price of silver when this leverage (or false supply) gets taken away?  The leverage that was holding the price down will now work in reverse, pushing the price up!  Paper silver bugs get wiped out, physical silver bugs walk away with the booty.  The real leverage is in the physical, not the paper!

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