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The Commodity Futures Trading Commission
(CFTC) has been negligent in failing to terminate the obvious manipulation
ongoing in silver. Furthermore, the agency may be complicit in this
manipulation. Worse, it has lied to the public and elected officials. This
all goes back to the time when Bear Stearns was taken over by JPMorgan in
March of 2008. It is well known that Bear Stearns went under as a result of a
sudden loss of liquidity amidst a run by creditors and customers. What is not
well known is that those problems were greatly exacerbated by a $2 billion
margin call on silver and gold short positions from the end of December 2007
to March 2008. I believe the silver and gold margin calls were at the heart
of Bear Stearns’ failure.
We know now (from CFTC correspondence to
lawmakers in 2008) that JPMorgan took over Bear Stearns’ giant silver
and gold short positions on the COMEX. Up until that time, we did not know
that Bear Stearns was the concentrated silver and gold short. Using
Commitment of Traders Report (COT) data, Bear Stearns had a COMEX silver
short position of no less than 35,000 net contracts and a COMEX gold short
position of no less than 60,000 net contracts from the end of December 2007
to their takeover by JPMorgan two and a half months later. From December 31,
2007 to mid-March 2008, the price of silver rose by $6 (from $15 to $21) and
the price of gold rose from $850 to over $1000. Based upon the number of
contracts held short by Bear Stearns and the price movement at that time, that resulted in margin
calls of $2 billion. I would contend that was the real reason for Bear
Stearns’ demise.
So where do I get off claiming that the
CFTC is complicit in the silver manipulation and lied about it to the public
and to lawmakers? This is easy to prove. On May 13, 2008, the CFTC published
a 16 page public response to my allegations of an ongoing manipulation in
silver by means of a concentrated short position. The response was based upon
silver market activity through the end of 2007, thereby conveniently
sidestepping the drama that occurred through March 2008 when the biggest
silver short in the market, Bear Stearns, failed and needed to be rescued
with taxpayer assistance (Federal guarantees given to JPMorgan). The May 13,
2008 report from the CFTC went into great lengths in explaining there was
nothing amiss on the short side of silver, even though the Commission knew
that two months before the report was issued, the biggest concentrated short
had failed and needed to be rescued by taxpayers. A lie by omission is no
less of a lie.
Why am I bringing this up now? Because I’ve had enough of the CFTC’s lies and its
refusal to do its job. As a result of the transfer of Bear
Stearns’ concentrated short position becoming visible in the August
2008 Bank Participation Report the Commission initiated another formal
investigation of the silver market, this time by the Enforcement Division.
This investigation is now 3 years and 9 months old, the longest-running
investigation in U.S. Government history. It has lasted longer than most
wars. Just as with the two prior investigations by the Division of Market
Oversight, the current investigation is a phony investigation. I say this
because there has been no attempt by the Enforcement Division to contact me
or anyone claiming that silver has been manipulated. It’s clear that
the agency does not want to get to the truth. The agency keeps initiating
investigations which involve time and taxpayer money, but they never check
with the person who has caused them to investigate in the first place.
Only two of the five commissioners
currently serving at the agency were at the Commission when JPMorgan took
over Bear Stearns or when the Enforcement Division began its current
investigation. But all have received vastly more public complaints about
silver than for any other commodity. None of them can claim ignorance of the
issue. Chairman Gensler
preaches about the need for transparency in our markets. How about some
transparency for the Commission? The Commission lied in its May 13, 2008
report (by omission) and is lying now when it claims to be conscientiously
investigating silver. See my article from 2009.
http://www.investmentrarities.com/ted_butler_comentary12-21-09.shtml
The stalled investigation has only served
as cover for the crooks at JPMorgan and the CME to manipulate the price of
silver more egregiously than ever before. I think it’s time to press
for the removal of all current commissioners, including Gensler and Commissioner Chilton. Who wants to
hear platitudes when a serious crime is in progress? Clearly, the Division of
Market Oversight lied in its 2008 letter and the Enforcement Division is
lying now. Who needs public servants like these?
Please send this article to your
Congressman or Senator and ask them to investigate. Also please e-mail the
Commodity Futures Trading Commission with your comments.
ggensler@cftc.gov Chairman Gensler
bchilton@cftc.gov Commissioner Chilton
jsommers@cftc.gov Commissioner Sommers
Somalia@cftc.gov Commissioner O’Malia
mwetjen@cftc.gov Commissioner Wetjen
dmeister@cftc.gov Director Meister
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