Four Proofs of Silver Manipulation!(Silver is the Achilles heel of world finance!)Silver Stock Reportby Jason Hommel, May 14, 2008Mr. Hommel: I’m looking for a silver expert to talk
with about a story I’m working on. Basically, the CFTC has been getting
complaints that the silver futures market has been unfairly skewed to the
downside. The commission says there’s no evidence for this, and
I’m hoping you can help me with some insight into what the other side
of this argument might be. If you have a second to chat about your
thoughts on this, please give me a call. Thanks, Matt Whittaker Commodities reporter, metals Dow Jones Newswires Mr. Whittaker: Thank you. I'm probably one of the few world
experts on silver, including Ted Butler of butlerresearch.com, David Morgan
of silver-investor.com, and Jeffrey Christian of CPM Group. Of all those men, I have a much larger
market reach than they do, as my newsletter goes out to about 80,000 email
readers now, and my readers keep me informed of many things. But the other experts are certain to
know more than me in some areas.
Jeff Christian is biased in favor of futures contracts, and I'm biased
against. So, the CFTC says that there is no evidence
that the silver futures market has moved silver prices to the downside? If you are willfully blind, or complicit in
the manipulation, you won't see anything, or you will say that. Here is my proof that there has been
manipulation, especially recently. 1.
First proof: Over nineteen major coin shops around the
world ran out of silver as the price fell from $21 to $16, as I documented
here: http://silverstockreport.com/ssrarchive.htm from March 19th to April 2, and there are many reports
even now that it will take a month or longer to get silver! Some of the big name shops included
the Canadian Mint, the U.S. Mint, the Perth Mint, Kitco,
Amark who is Johnson Matthey's
number one silver distributor to the public, and Johnson Matthey
is the largest silver refiner in the How can the price go down, when there is no
silver to buy? 2. Second proof: On May 14, 2004, the CFTC wrote a report to
deny allegations of manipulation in the futures market, see:
www.cftc.gov/files/opa/press04/opasilverletter.pdf They continue to refer to this letter
today. The author of the letter,
Michael Gorham, director of the CFTC, resigned from the CFTC 3 weeks after
writing the letter. Shockingly, this letter admits the existence
of fraud and manipulation in the silver futures market! How so?
They admit that no manipulation to the downside could exist as long as
investors have "unrestricted access" to buy silver, but they admit
that there are position limits that prevent that from taking place! On p. 5, they write: "Because there is unrestricted access to
the market, many knowledgeable and well-capitalized traders would readily buy
any silver offered at artificially low prices. The buying by these traders--buying
that the alleged manipulators would have no way of preventing--would quickly
cause the price to rise to its appropriate level." However, on p. 8, they contradict that by
stating: "The Commission's guidance on speculative
position limits focuses primarily on the spot month because, in our
experience, physical delivery futures markets, such as silver, are most
susceptible to threats of manipulation during the spot month." In other words, they admit on page 8 that
limits exist that prevent large investors from buying silver as they suggest
they could do on page 5! In other words, they are so twisted, that they
believe it is a manipulation to buy physical silver! 3.
Third proof: The actual position limits are 1500 contracts
per trader. However, these limits
do not apply to the traders on the short side, only the long side. The positions on the short side are
too large, and concentrated among too few traders. The 8 or less
traders have controlled up to 83% of the market, as recently exposed by Ted
Butler, in recent weeks; and this represents over 200 days of world silver
production, or over about 50,000 contracts. Concentration is the ultimate evidence
of manipulation, and it is ignored. 4.
Fourth proof: The very nature of silver itself is that it is
not a promise, it is payment in full.
All kinds of paper promises are by nature, a substitute for silver and
gold, and hence a manipulation, because their very existence creates a
substitute demand for something other than physical silver and gold. Thus, even paper money itself, and
T-Bills, Bonds, CD's, savings accounts, are all manipulations that suppress
the price of silver. Monetary
demand, or investment demand for silver, is as low as it could ever be, since
no nation on earth uses silver as money.
This reduced demand suppresses the price of silver. The size of the world paper money market and
bond markets probably exceeds $100 trillion, which is $100,000 billion. The size of the silver market is about 600
million ounces produced each year, and about 75 million ounces purchased by
investors each year. At $20/oz.,
this suggests that the investment demand for silver is only $1.5 billion per
year. Thus, the size of the silver market is about 1
dollar out of 100,000. In conclusion, I believe I,
and now you, have stumbled onto the Achilles’ heel of the world's
financial system. I'm somewhat
skeptical that dow jones
would let you expose this story to the world. I'd suspect that your story will get
buried. Sincerely, Jason Hommel |