A Trader Tells me there is no Manipulation.

(But I tell him a few things, too!)

Silver Stock Report

by Jason Hommel, May 18, 2008

I have been a futures trader for nearly 40 years, had many dealings (mostly unpleasant, of course) with the CFTC and the NFA after its inception too.   I know the smartest and best and biggest futures traders in the world and have traded side by side (and still  stay in regular touch with) some of the dozen fellows in the original "Market Wizards" book, and can tell you stories about them that never made it into publication for public consumption. 

It's an honor to hear from you.  Thank you for writing.  If a man of your intelligence and experience does not understand me, it's clearly my fault, and my lack of experience.  As it is, I've never traded a futures contract, and I try to avoid them, even though, in reality, I have often waited for deliveries for several months for other things.

I will try to clarify my philosophy below, to answer some of the things you say.

And my experience is limited to my 10 years of studying and trading the markets, and reading and answering tens of thousands of emails.  And I've read the Bible, and studied it diligently, and I try to apply its wisdom. 

Oh, and I've read that book by Jesse Livermore.  (Just trying to be funny.)  I don't think I ever read the "Market Wizards" book, I'll look it up.

Is this it?

   A fellow whom many regard as ALL history's most successful futures market trader has said that I understand the markets better than he does.

Thank you for the testimonial.

I worked at Commodities Corp in the '70s and '80s

I was born in 1970.

, which back then was regarded as THE premiere futures speculating firm in the world, and was the "nursery" for many of today's super traders.  I made fortunes in the silver market during the '70s, some on the short side in the early '80s, and have been raking in profits on the long side for the past 5 years.    I think I could probably make it into the Guinness record book if I tried, for the longest held futures position in history, and it happened to be in silver, for reasons similar to the ones that make you bullish on silver.   This past December (2007) I finally had to "roll forward" my last remaining longs in the Dec 07 silver futures contract (COMEX) because it was expiring and I wasn't planning to take delivery from the exchange.    I closed out longs bought in January of 2004, which meant the time from my purchase to my sale was just a month shy of 4 years.    You may know that most futures trades are offset within a day or two, and a couple weeks is considered intermediate to long term by many futures traders.    I think this trade is almost surely the longest held futures market transaction in the history of futures markets.


I don't have time to give you a lesson on futures, but your recent comments about manipulation of the silver market reveal your ignorance of futures markets.   I am EXTREMELY pro free markets and agree that position limits are a counter-productive mistake just as virtually all economic regulation is, but such position limits are applied to virtually all futures markets and do not result in downward manipulation.

How do you know that position limits do not result in downward manipulation?  I think they do.  Clearly, we have a philosophical disagreement here.

What's wrong with simply letting longs bid the price up to unrealistic levels?  Nobody forces a short to short, so why protect them with limits on the longs? 

Clearly, you are on my side that there should not be limits, and that limits are a barrier to free market forces.  So, if they are a barrier, what distortion do they create?  They can't create higher than normal market prices, hence, the opposite must be the result.  Therefore, how can you say, for sure, and prove, that they don't result in lower than normal prices?

   The existence of position limits does not bias a market in either direction.     Every intermediate move in silver for the past 5 years has been fully understandable and explainable without any need for a straw man to blame it on.    Silver is going to go much higher, you are right, OVER THE LONGER RUN, but the 4 "proofs" of manipulation you gave recently (in an attempt to explain -- wrongly as it turns out -- a price decline while there were reported shortages of certain forms of the material) would cause any experienced and knowledgeable futures trader to laugh.    You are embarrassing yourself before anyone who is intelligent and informed on this subject, even if you are gaining disciples from amongst those who are ignorant and/or who are looking for something to hate or something on which to blame their inability to make profits in the market, or their recent heavy losses.

I apologize.  My biggest mistake is in blaming a short term move on manipulation, which implies that there are times of no manipulation. 

Instead, I blame the big 100 year dip in silver prices due to the existence of paper money, which is a much bigger manipulation, and much more important.

Now, if paper money is a manipulation, then futures contracts (which are simply another form of "silver certificate") are also a manipulation, by their nature and very existence, in my philosophical opinion.

I argue that the futures market itself, by it's nature, is manipulative.  Every single contract, is therefore manipulative, in my philosophical opinion. 

Tell me truthfully.  If futures market did not exist, would you buy real silver, or would you go to some smaller outfit like MONEX and pay 25% down, and pay 15% interest on the borrowed money for the rest, to get leverage?

I assume you would avoid places like Monex, and buy physical.

Since you did not buy physical, then potential demand for physical is less than it would have been.  Since demand for physical is less than it would have been, prices for physical silver are lower than it would have been.

Please prove me wrong here, if you can.

You are, furthermore, wrong that position limits are not symmetrical.     They may not be at a specific given time, because there are no limits on bona fide hedge trades.   These can occur on either the long or short side, but most often occur on the short side.  This is the natural situation in almost every futures market and it is economically NECESSARY and NOT a bias despite the seeming asymmetry.   It is a natural and proper consequence of the very economic function and "raison d'etre" for futures markets in the first place. 

OK, you are assuming that the shorts have over the counter long positions from buying products from refineries, or miners, then?  But no silver miner today has leveraged any of their silver.  Sorry. 

I suspect that the CFTC is lying about any bona fide hedge trades.  Or the "bona fide" necessity is to "keep the dollar alive", not to balance any silver long positions.

 The economic JOB of speculators is to buy in order to take on the risk of holding an inventory of a fluctuating item, while those in the actual business wish to transfer that price-fluctuation risk to speculators by hedging their inventories with short sales in futures markets, enabling them to concentrate more fully on production with less fear of being bankrupted by an adverse price fluctuation.

Oh, I fully understand that "justification" for futures, but I don't believe it is a rational justification, I think it's an irrational justification.  Not all risks in business can be offset, and they shouldn't be.  One way to offset risk is to not engage in the business activity, and that is also a legitimate free market outcome! 

IE, if miners don't want the risk of declining prices, they should not begin the business in the first place, and instead, do something else!  Because offsetting the risk will just bankrupt the speculator on the other side of the trade, as well as bankrupting other producers, and no good comes of it.

IE, the NATURAL role of hedgers in the narrow area of the futures market is to be SHORT and the natural role of speculators is to be LONG, and your recent letters show that you wish to fight this natural and highly desirable situation because it is somehow evil or unfair, which it most certainly is not in the slightest. 

I have no desire to fight anything.  I only wish to bring understanding to the area, and to point out the risks involved.

In the full context, there can only be "heavy" shorting or buying in futures by hedgers IF there is, has been, or soon will be correspondingly heavy trading by them in the opposite direction elsewhere.

That's your theory.  My theory is that they are naked short, and that they are short to prop up the dollar, and that the players are bullion banks that will one day implode like Bear Stearns.

In truth, neither you nor I know who the shorts are, nor do we know if their positions are offset, despite the claims of the CFTC.

  Position limits being imposed or not have NO effect on a futures market's  price.

(needless repetition, and no proof here.)

   Nevertheless, if you understand markets, even if there were "extra" selling on one side in futures, it couldn't have more than a fleeting effect on price.

No, it has a permanent effect, until the positions are unwound.   Until the positions are unwound, it has an effect. 

Also, as long as the futures market exists, it diverts investment demand away from physical silver, and into the futures contracts, and people such as yourself will be led to avoid buying physical, which is also manipulative, and results in a lower price for silver.

  But in fact, there can be no such imbalance since futures in and of themselves are a contract market, always requiring exactly the same number of short sales and long purchases.  Exactly.   Always.

This is so elementary as to be ridiculous for you to assume that this needs to be said. 

I will say that this is exactly why futures are manipulative.  For example, let's say you are totally convinced by my philosophy, and all your trader buddies, and you all stop buying on the long side, and instead, buy physical silver.  What would happen?

If there were fewer people ready to buy on the long side, the futures contract prices would drop, and spot silver would rise, and the markets would go into backwardation.  Then, it would be profitable for others to sell physical spot, and trust the contracts, and profit from the difference, as long as there were not defaults.

Hence, the manipulative nature of the contracts is obvious; as it results in a draw down of physical inventory, as people trust the promises instead.

   And would-be manipulators merely dig themselves into deeper holes -- they cannot keep a market down if there is genuine demand for the actual item, except for EXTREMELY short periods, rarely more than just several days at most.

And why should there be genuine demand, when traders such as yourself are more willing to hold futures contracts, instead of physical silver?

And of course the manipulators are digging themselves into deeper holes.  But if they are setting up entities to take the fall, then they don't care.  We've seen outfits like JP Morgan help outfits like Enron set up offshore outfits designed to hide losses and go bankrupt.  Since the shorts are anonymous, you have no idea if they are setting up dummy corporations who are plannned to go bankrupt at certain prices.  Or even worse, they could be setting up major corporations to go bankrupt, you have no idea.

  Unless the actual or "cash" market complies, a "manipulation" in futures alone can accomplish nothing but harm for the manipulators

(and it also harms the holders of physical silver who have been trusting in it for their life savings, and who now must sell to make ends meet)

and result eventually in an exaggeratedly volatile move in the direction OPPOSITE to the one the manipulators briefly are able to make happen.

YES!  That's exactly why I'm happy that the manipulation exists!  I intend to profit when it ends!  The time to sell silver will be when the majority of the people of the earth are using it for money!  And when there are very few paper markets for silver.  At that point, I can spend my silver for whatever I like, and whatever other investment that I like, there will be ultimate liquidity, since silver will be the definition of liquidity.

  Short squeezes (which ARE sometimes do-able -- I accomplished one briefly in the palladium market and would have accomplished one briefly in cotton except that I decided to take my huge profits and walk away rather than place them at risk by attempting to carry the squeeze to its full completion) push the price up by cornering the supply of the deliverable commodity - ie, by owning all or most of the  ACTUAL   item itself.    IE a GENUINE shortage of the material must be present in the real world in order for a short squeeze to be possible.

Yes, and don't we see silver shortages increasingly today, more than at any other time in silver?  Major dealers report having no silver, and not knowing when they can get silver.  Amazing set up for the short squeeze.

   Owning futures is the means to that end, but the futures would not be manipulable upwards if the real situation in the cash market did not permit it.   As for manipulating downward, that is an almost impossible task even if you came up with a plausible scenario purportedly enabling it.   The scenario you describe is laughable.    You don't understand the cause and effect relationships, you apply the laws of supply/demand wrongly to  futures markets because you don't fully understand their nature.

I'm sorry, you are not being specific in your charges.

    Your argument for manipulation as the cause of the recent price decline are as valid as that of the child who blames the sunrise on the fact that Daddy set the alarm clock. 
I lived thru the Bunker Hunt squeeze and the awful things that were done at the time.  I understand what happened and deplore much of what happened. 
I have a reputation for being a good forecaster of the future.

What is your net worth?  I'll tell you if you can get that much physical silver, and how hard it would be.

   BARRON'S  Magazine called me "the thinking man's trader," and their top market reporter at the time told me I understood the stock market -- which is NOT my main milieu -- better  than any of the big "gurus" on Wall St, and he knew them all because most of them curried his favor in the hopes of good PR from BARRON'S Magazine. 

Yes, but how well do you understand the nature of money itself?  Do you know what money, actually is?  That it is only silver and gold, and that everything else is a debt, or a promise to pay money?

   To me, the bullish case, long term, for silver is not very difficult to see.    Many people do see it and have seen it coming for a long time, myself included and yourself included.    I consider it to  be a mundane and simple analysis, which happens to be correct, for very obvious reasons.

Congratulations.  However, if you are blinded to the manipulative nature of futures markets, I think you only understand about 1/3 of the story in silver, and you miss the other 2/3rds of the story, which is the monetary problem, and the futures contract problem.

And of those other 2/3rds of the story, the monetary side is probably 95% of it, and the futures manipulation is the other 5% of the manipulation, in my opinion.

   But if you understand markets, you also understand the recent sell offs without needing to resort to some kind of conspiracy theory of market manipulation.  You understand why they HAVE to happen, and why the MOST LIKELY TIME for them to happen is precisely when the then-current "fundamental" factors appear to dictate most strongly the exact opposite.

I understand there will be volatility, sure, especially in silver, because the market is so small.  When silver is money, and the market is large, then it is more stable, sure.

I also understand contrarian analysis, sure.  But the biggest contrary analysis in silver is the fact that less than 1 person in 1000 is interested in silver today, despite the fact that 90% of people are concerned about inflation.

  This is exactly what has happened, and instead of seeing it as the to-be-expected routine event that any professional trader would see it as, you are perplexed by this perfectly routine event and flail about to come up with a  theory of manipulation to explain the "mystery" which is not at all a mystery but in fact precisely what a seasoned trader would have anticipated and possibly even timed correctly if he were particularly experienced and alert.

No, you are totally wrong about me.  I do not scream "manipulation" because there is a dip.  I write about it primarily because of the current shortage of physical silver that coincided with the drop in prices, and because the CFTC wrote their ridiculous "no manipulation" report that needed to be refuted.

I have claimed since 2003 that paper money and futures markets, by their very existence, are manipulative.  I'm sorry you misunderstood my philosophy about that, I'll try to be more clear in the future.

  Furthermore:  whatever definition of manipulation you are using has to be so loose or so broad (in order to encompass the phenomena you cite as evidence for manipulation), that a great many factors on the bullish side -- just as powerful as the allegedly bearish ones you cite -- would also have to qualify as "manipulation" under such a broad, loose definition.    But it would be just as big an error of thinking to that, as to do what you have done.   The "manipulation" on the short side is every bit as fictional as the "manipulation" I could easily demonstrate on the long side.
I might also add that I trade individual managed accounts in the futures markets and my clients are largely OTHER profession futures traders who ask me to trade some of their personal monies -- some with names you might recognize, assuming you are familiar with the legendary names in this industry (NOT the names famous to the public, but the names recognized by their peers in the industry as the top traders in the industry).

I don't really know them, nor have much reason to.  I'm 38, and I don't trade futures.  I'm a loner, with a big email list.  I keep my phone number private.  But I'm happy to have met you.

    My track record the past 5 or 6 years is so far ahead of the #1 ranked "public"  futures trading individuals and/or Managed Funds that I won't cite it, because you probably won't believe it if I tell you. 

I could see that you could have made over 1500% or more during that time with your trade in silver.

And if you are as successful as you claim to be, then I think you will have an extremely difficult time getting actual real physical silver, and that it would probably be too much for you to lift if you are as old as you appear to be with 40 years of experience, and so even if I were to convince you, you probably could not find the silver, nor lift it, so you have many problems ahead of you.

  One of my clients is in the business of raising money for successful futures traders, and he raises money in the hundreds of millions.

I have a gift for your clients:

How to Get Into Silver, for Billionaires February 27, 2008


Feel free to re-write any or all of it to suit your needs, and no need to give me any credit; I don't care.  Just get the information out there to them.

  He puts his own money with others like me, and he knows almost all the top futures traders in the world.      He tells me that my performance in the account I manage for him -- which is representative of all my managed accounts -- is far and away ahead of #2, and he has his money allocated amongst numerous of the world's top futures traders.    
I have a liking for silver as you do, a sort of bias in favor of it, but I try not to let it blur my objectivity.

Are you sure you are not letting your familiarity and bias in favor of futures markets, blur your objectivity?

I think you cannot see the forest, because the tree of the futures market is getting in your way.

Look at the big picture.

  It is the reason I spent time reading some of your missives, despite the fact that I trade many different markets and never have enough time to keep up with them all in the detail I wish I could.    That is also why I am spending so much of my precious time writing this -- because it bothers me to see what appeared to be correct and intelligent and informed turn into something incorrect and ignorant on the subject of manipulation.   I can assure you that people as smart as anyone you've ever known would, if they read your recent stuff, dismiss you out of hand, and for GOOD, SOUND REASONS

I appreciate and understand that and know that.  But you have not given me any sound reasons.  They may sound sound to you, but not to me.  Communication of ideas is like that.

, if all they'd seen was your most recent issues.    Because your previous issues were fine, I am taking the time to tell you this so you perhaps won't continue on this tack and undermine your own credibility amongst the more sophisticated of your readers. 

See, you assume futures traders are "sophisticated".   I think futures traders are deceived. 

I think people who buy physical silver are much more sophisticated, wise, smart, intelligent, understanding, etc.

But I do want to appeal to those people who trade futures, and I hope your letter will help with that.

  Of course, it may be that you are so blinded by your own bias in favor of silver, that you are willing to let the minority of intelligent people downgrade their opinion of you so long as you can convince a majority of your less-well-informed readers to act in a way that you think will further your hoped-for direction of silver prices. 

Yeah, something like that. 

   Silver is going to go higher, and it will do so at a more rapid pace than the average price increases caused by monetary inflation, and this will go on for several more years at least before a major  bear market can develop from much higher prices.   But your attempts to accelerate that process are almost surely going  to backfire at times if you are not honest with yourself and if you continue to go off half-cocked without a real grounded understanding of your subject.

You tell me that this is not well-grounded:

Gold is money, because of its fundamental nature.

Gold is the perfect commodity for exchange for the following reasons:

  • Gold is liquid and easily traded, with a narrow spread between the prices to buy and sell (about 1%).
  • Gold is easily transportable, because it has a high value for its weight.
  • Gold is money because it is divisible, you can divide it into coins, or re-melt it into bars, without destroying it.
  • Also, gold is interchangeable. It can be substituted for another piece of gold with no hassle.
  • Gold is also nearly impossible to counterfeit, as genuine gold is easily recognizable.
  • When measured by weight, gold is easily countable, and verifiable.
  • Gold is money because it is a great store of value. It is not subject to decay, rot, or rust.
  • Gold has an intrinsic value, because it is rare, highly desired by the world over, and is a luxury item.

There is not a single other commodity with those attributes, except, perhaps, for silver. Since gold is too valuable to be used for small transactions, there is potentially more monetary demand for silver. When gold becomes money again, silver will be desperately needed to make change.

  You have a lot of information about silver, but you have a gravely flawed understanding of how its price and the futures market are related.

I don't think so, and you have not shown so.

Silver is not being manipulated down.   It is easy to pinpoint those who WANT it cheaper, just as is the case for any economic good that's widely traded, and if you look strictly at the actions of those people in isolation, you can claim silver prices were manipulated down becasue their actions tend -- in isolation -- to weigh on price.  But the behaviors you cite regarding short sellers only are in fact routine and apply on both sides, long and short, actually, and they also apply all the time in many other markets where prices rise AND/OR fall under very similar conditions and circumstances.   You have taken a spring shower and labelled it the hurricane of the century.

I'm sorry if you are all wet.  I'm not, I'm not in futures. 

Futures are the spring shower, paper money is the hurricane.  I think I have my labels right.

Look, I don't blame the shorts for the manipulation; the longs are equally to blame, in my opinion.

I hope you do well with the leverage, I really do.  But one day, how can you say that you won't get burned?  How can you say the rules will not change against you?  How can you say you will be able to cash out and get physical silver before it's too late?  

Furthermore, you can't even validly point to heavy short selling as a bear factor except EXTREMELY briefly.

You said this already.  Again, until the positions are closed out, they have an effect.  Sorry.

Indeed, professional futures traders love to learn of heavy short selling in a market because that is BULLISH and interests them to buy the market for an imminent bull move (and NOT merely cuz the shorts will have to cover, but for other very important reasons that I'll bet you will have difficulty articulating even if you are aware of them).

Again, this is why I've been promoting this for years, and asking people to buy real silver.  You are making my case.

Indeed, I could make a case just as good or better than yours, if I were as ignorant of futures markets as you are, that YOU are manipulating the market by actively cultivating disciples to your bullish view on silver and feeding them frequently with information that urges them to take physical delivery, thereby enticing thousands of investors who otherwise would have no need or interest in owning silver to actually purchase some and thereby "create an artificial shortage."

Of course I'm trying to help the silver market go up.  It's called advertising.  And it's perfectly legal for people to buy what they want with their money.

It's also legal to short sell silver that does not exist, but that's not a free market process, according to my understanding of Biblical Capitalism; it's manipulative, deceptive, and wrong.  And it's very wrong when those who do that, put limits on the longs, and lie and claim that there are no limits!

A lie is a lie.  And if they use lies to justify what they do, then what does that say?

  Were I to argue this, you could easily argue against it.    It is not a very strong argument, though there is some small actual merit to it.  The point is, it could be made every bit as strongly if not more so than your argument that there is manipulation on the short side.   That is simply not the case, other than for all the usual types of activities people normally take all the time in these markets, including the base metals as well as the precious metals, and including lean hogs, live cattle, lumber, cotton, and frozen orange juice, as well as stock indexes.    Where your arguments are correct, they are not relevant to the downmove in price, and the arguments you give which are potentially relevant  to a downmove, are not correct because they misconstrue the nature of futures markets.

I think you misconstrue the nature of futures markets, because you play in them.  To my view, you are like a drug user, and I'm trying to tell you that smoking pot is harmful, and you are saying it's never harmed you yet, while you are still 60 years old and still living in your parents' basement.

I don't mean to be purposely disrespectful, but that's my view.  I have your best interests at heart, and I genuinely feel that a default in silver futures is virtually guaranteed at some point because I think the regulators are asleep at the switch.

Also, history bears out the point.  In 1934, gold certificates defaulted, as gold prices then rose from $20 to $35.  Then, in 1971, gold certificates defaulted on foreigners, and gold then went up from $35 to $850.

Don't you think that today's version of gold and silver certificates, in the futures markets, are guaranteed to default?  And if not, why not? 

Since the shorts are kept anonymous, and since there are position limits, isn't that evidence of shortages, and a problem?

Indeed, your own participation in the silver market probably did contribute a little to the recent decline.   It is a fluctuation, nothing more, and the huge number of your subscribers means there is bound to be a large number of people who bought and took actual delivery of silver in the forms you recommend, a larger number than otherwise would have been the case.

Well, I admit that, and even did the math to show that as a possibility.  With 80,000 readers, and only 75 million oz. of investment demand per year, that means my readers can only buy 937 ounces each year, or 18 ounces per week, to be the equivalent of current investment demand.

    This has undoubtedly contributed to the spot shortages of bars since we do have a potentially tight sit'n in silver overall, especially should investment demand increase even moderately.   Your own activity has probably "pushed" silver prices a tad "ahead of the schedule" they would have followed in your absence from the markets.

That's the whole point of writing my letter, in my opinion, to get people into silver!

   There are other similar but much larger factors operating in the market than yourself, but your recommendations have undoubtedly added some activity to the long side, created some increase in physical demand.     And one of the inherent characteristics of ALL markets -- to which you seem to give MUCH shorter shrift than reality demands -- is the fact that there is FEEDBACK in all market pricing.    The truism that "high prices are their own best cure" and "low prices are their own best cure" applies not only in the extremes, but everywhere in the middle too, over the short, long, intermediate, very short, and extremely long terms.

So then, my bringing attention to the real shortage at 19 major coin dealers might have helped limit silver prices from going lower than they otherwise would, perhaps?  Excellent!

  On any time level you choose to observe, these truisms operate, and a market's behavior over any period will be the sum of the effects of these principles over all the infinite time intervals you might arbitrarily set for your analysis of their variously timed effects.    All change occurs through time, and that includes prices.   No market goes straight up or straight down without some interim fluctuation, even if it's relatively small compared to the net direction over the entire time period being examined.  This is in the nature of markets themselves and will not change as long as there are markets which are even relatively freely traded. 

I've always taught that, I think, and never said the opposite.

   Markets are "ornery" by nature, and all the logic brought to bear on markets often frustrates very intelligent newcomers to trading because they don't fully understand the nature of the beast to which they are attempting to apply their "flawless" logic.  Being right about market direction is NOT merely a matter of getting your economic facts right -- you have to get them right BEFORE others do, or else the market's direction may very well be PRECISELY OPPOSITE to what is dictated by the application of logic to the economic facts.  Markets are known for surprising everyone by collapsing hard on the best news, or for exploding upward when all the known information appears to indicate an extremely bearish  situation.   Your complaint that the recent decline in silver is inexplicable because of the bullish facts you have cited is simply gross naivetee of the highest (lowest?) order, in the eyes of any experienced and knowledgable speculator.    I have seen far greater apparent paradoxes many,  many times in many, many markets, disparities between what the apparent facts "should" have caused to happen and what actually did happen.    

The recent silver decline in the face of shortages of silver bars, etc, is a banal, routine, ordinary event that would be

more surprising by its failure to occur on occasion than by its actual occurence.

Yes, I understand that crazy events are to be expected in this world of paper money excess which is more like "Alice in Wonderland" and "Wizard of Oz" than reality.  But I speak of how reality ought to be, not how things should be crazy.

My understanding is that you are so used to what is crazy, you have no perspective of what should be normal.  Sorry.

Your complaint and your arguments in support of it are sophomoric, and reveal your status as a tyro in the markets generally, or else as  one who is so biased in favor of his own position that he has lost his objectivity.     You should be WELCOMING the decline with joy

I do, and did.  Read again.  http://www.silverstockreport.com/2008/cftc.html

At the end, I have three statements showing how happy I am with how things are.

as one of those routine, apparently perplexing (to those whose straightforward analysis overlooks certain of the characteristics inherent to all markets) events, one which is like a gift from God that enables sophisticated traders to step in and take advantage of the opportunity to "buy low."    Such opportunities arise only BECAUSE a market does something which, according to the obvious facts, it  "shouldn't."    
In other words, even if you were 100% correct that the silver market is being manipulated downward (which you aren't),

Oh, I am 100% sure of myself.  It's you who remain unconvinced.

even if that were absolutely true, then the tone of a letter from a wise and experienced trader/investor would not be to stage a protest

I protest nothing. 

against those who are hurting your profits for the moment, but rather a wiser, experienced admonition to avoid being taken in by this event, to gird yourself against demoralization, and to realize that these "manipulators" are digging an even deeper hole for themselves with every act of downward manipulation they engage in,  that this is creating a golden (silvered?) opportunity to load the boat with cheap, artificially cheapened silver, thanks to the gift these manipulators are offering us in the attempt to bluff us out of our positions, and that we should WELCOME the event, and be happy that our sophisticated understanding of the nature of markets enables us to identify it as the welcome opportunity it truly is.

I do exactly that!  I've said that I'm happy about it for years, that I'm happy about the opportunity of the manipulation.  You don't know me, sir.

In 2003, I wrote about the manipultion: "it helps those who are younger and still working, and who are able to continue to buy gold and silver at today's liquidation-sale prices."

  Your choice however has been to take the tack of looking for a conspiracy behind the decline and describing it in pejorative terms, with "blame" deserved by the evil manipulators for their allegedly nefarious activities.

Well, look how the Bible puts it:  I'm rather nice by comparison:

James 5

Warning to Rich Oppressors

 1Now listen, you rich people, weep and wail because of the misery that is coming upon you. 2Your wealth has rotted, and moths have eaten your clothes. 3Your gold and silver are corroded. Their corrosion will testify against you and eat your flesh like fire. You have hoarded wealth in the last days. 4Look! The wages you failed to pay the workmen who mowed your fields are crying out against you. The cries of the harvesters have reached the ears of the Lord Almighty. 5You have lived on earth in luxury and self-indulgence. You have fattened yourselves in the day of slaughter.[a] 6You have condemned and murdered innocent men, who were not opposing you.

Revelation 18

 1After this I saw another angel coming down from heaven. He had great authority, and the earth was illuminated by his splendor. 2With a mighty voice he shouted:
   "Fallen! Fallen is Babylon the Great!
      She has become a home for demons
   and a haunt for every evil[a] spirit,
      a haunt for every unclean and detestable bird.
 3For all the nations have drunk
      the maddening wine of her adulteries.
   The kings of the earth committed adultery with her,
      and the merchants of the earth grew rich from her excessive luxuries."

 4Then I heard another voice from heaven say:
   "Come out of her, my people,
      so that you will not share in her sins,
      so that you will not receive any of her plagues;
 5for her sins are piled up to heaven,
      and God has remembered her crimes.

This is the choice of a bad loser who can't admit even a temporary error in his analysis, who was unprepared for the apparent paradox of a market moving counter to what the economic facts appear to indicate, and who is more interested in proving that he didn't err or in proving something else about himself than in actually making real profits for those he is advising.  

Oh, I'm fully prepared.  Not having used leverage, I've not lost an ounce, and cannot be traded or tricked out of my position.

I am giving you good advice, which I suspect you may neither appreciate nor fully understand.   I expect you instead to defend your position, even though at least certain major aspects of it are thoroughly indefensible, and provably so.
For a bottom line simple analogy, your arguments are about as meaningful and sophisticated as pointing to people who fill their automobiles' gas tanks to the brim and claiming they are responsible for manipulating gas prices higher;

I believe that's a false comparison.  I would be fully on the side of anyone who wished to do that, as people have a right to buy gas, and such people are a very small part of the overall market.

In contrast, when 4-8 people sell over 1/2 a year of mine supply of silver, and do it anonymously in the futures markets, selling silver that they might not have, that's manipulative.

or people who buy their milk by the gallon instead of by the pint as artificially manipulating the price of milk higher.    It's very disappointing to observe the kind of irrelevant, sophomoric, ignorance coming from your publication these last few issues, very disappointing indeed.   I hope your subscribers are not taken in by what I'm sure is not due to any dishonest motives on your part, but merely your obvious ignorance of certain traits inherent in markets by their very nature, futures markets in particular.

Thank you for airing your complaint in a most professional manner.  If your arguments are any indication of the level of understanding of the smartest and most well capitalized traders in silver futures, I think you have helped me to make my case that I'm exactly where I want to be, and that I'm doing exactly the right things.

In conclusion, if you would like to research what some other well capitalized former futures traders are saying about getting physical gold and silver, I suggest you read the writings of Bill Murphy at www.lemetropolecafe.com or Ted Butler at www.butlerresearch.com.  Bill at one time had the largest position in copper, and Ted at one time had the largest position in oranges.  They know their stuff.


    Jason Hommel

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