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XMFSinchiruna (27.35)

The Great Silver Bombshell

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58

October 26, 2010 – Comments (34) | RELATED TICKERS: SIL , SLW , GPRLF.PK.DL

CFTC Commissioner Bart Chilton dropped the long-awaited bombshell on the bullion markets today.

Mr. Chilton warned his fellow regulators a few weeks ago that if they didn't hurry the 2-year-old investigation of silver price manipulation to a timely conclusion, that he would speak out and give the public the information it deserves to have.

I am delighted to report that today, Mr. Chilton made good on his promise, and delivered a slam-dunk vindication of the rampant price manipulation in the silver market that observers like me have been decrying for years.

http://www.reuters.com/article/idUSWALQLE6QE20101026

"There have been fraudulent efforts to persuade and deviously control that price," Chilton said in prepared remarks before a Commodity Futures Trading Commission meeting.

Chilton said he could not pre-judge the outcome of the CFTC's ongoing investigation of the silver markets, but said public deserves some answers to their concerns.

....

To all the gold and silver skeptics who for years have written-off claims of rampant market manipulations as the delusional conspiracy rants of a mad demographic of the investment community, I hope today's revelations straight from the mouth of a CFTC commissioner will finally lay such baseless and predjudiced presumptions to rest.

To all who categorically ignored the information supplied by whistleblower Andrew Maguire, let that be a reminder that whistleblowers generally step up to the plate at great risk to their careers and credibility, and therefore generally lack the incentive to fabricate their claim. 

To all who categorically dismiss claims that select markets might be something other than transparent and free-market oases in a world demonstrably fraught with rampant fraud and malfeasance, I hope these revelations yield a more open-minded stance toward the likelihood that devious actions to manipulate asset prices are in fact rampant within our financial system.

To all who maintain trust in the banks designated as custodians for the gold and silver held in the bullion ETFs I have flagged as vehicles of concern, I hope these revelations trigger an objective reappraisal of that trust.

To all who think gold and silver have run to the end of the line with respect to this multi-year bull market, I offer this emerging truth as yet one more assurance that we remain far, far removed from the final stages of this re-pricing event.

 

 

 

34 Comments – Post Your Own

#1) On October 26, 2010 at 1:23 PM, SkepticalOx (99.42) wrote:

What your current opinion on SLW? Since you made your pitch several months ago, the stock sorta exploded. Still a good buy?

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#2) On October 26, 2010 at 1:44 PM, Valyooo (99.33) wrote:

I am between EXK calls, SLW stock, and GPRLF.PK stock. Should I wait for a short term correction, or jump on while its hot?

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#3) On October 26, 2010 at 2:49 PM, XMFSinchiruna (27.35) wrote:

SkepticalOx

My long-term target price for SLW is $100. Near-term volatility in either direction is possible at the moment, and it takes confidence in the longer-term trend to keep from getting bogged down in concern over the near-term. My money is still on silver continuing this run higher before the end of the year, but as we've just had confirmation from CFTC commissioner Bart Chilton that the market is/was manipulated, anything is possible in the near-term.

SLW remains my largest equity holding. Nonetheless, I have been stocking up (even more) on silver juniors lately to expose my account to greater upside potential as silver makes its run for $50 and likely much higher still.

Valyooo

Tempered actions are advisable during periods of strength. In other words, it wouldn't be my inclination to dive all-in with a fresh silver bet here, but rather seek to initiate positions with the prospect of pressing those positions into weakness. That weakness may well never come, however, and therein lies the unenviable position of chasing a breakout rally. At the very least, though, by building a starter position one has at least a miniature horse in the race.

As to your decision between the three tickers mentioned, it is clear I was unable to decide myself ... I own all three in spades. :)

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#4) On October 26, 2010 at 2:54 PM, BillyTG (29.16) wrote:

+1 Awesome.

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#5) On October 26, 2010 at 3:08 PM, kadosas (< 20) wrote:

TMFSinchiruna

Of the juniors you mentioned, I guess Brigus Gold is one of them, as you've picked it recently? I myself also own International Tower Hill Mines, do you have any opinions about that one?

 

 

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#6) On October 26, 2010 at 3:27 PM, XMFSinchiruna (27.35) wrote:

kadosas

I've owned Brigus predecessor Apollo off and on for several years, and with the merger I feel like the stock will finally get some traction soon. It's still a small hlding of mine by any measure.

I don't own Tower Hill myself, but I've been fairly impressed by the prospects at Livengood. But not enough to pull the trigger. 

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#7) On October 26, 2010 at 3:49 PM, XMFSinchiruna (27.35) wrote:

Chilton sees silver manipulation

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#8) On October 26, 2010 at 3:53 PM, XMFSinchiruna (27.35) wrote:

Here he cearly refers to the manipulation in the present tense:

The CFTC hasn’t provided any updates on the investigation, and Chilton said he thinks “the public deserves some answers to their concerns that silver markets are being, and have been, manipulated.”

(Same article as link from comment #7 above)

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#9) On October 26, 2010 at 3:55 PM, XMFSinchiruna (27.35) wrote:

“I believe there have been repeated attempts to influence prices in the silver markets,” he said.

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#10) On October 26, 2010 at 4:14 PM, workfor (< 20) wrote:

A major short squeeze may be immiment. For the banksters to try to continue to supress prices lower at this time with the heat on is probably not in their self interest. I got excited this morning when I read the news on Kitco silver, and bought SIL.

With this news, precious metals should still have the wind at their backs, while the mining stocks (for now) remain undervalued in relation to the bullion.

I also own EXK, GPRLF,  FVITF, and TGB.

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#11) On October 26, 2010 at 4:27 PM, loverandfighter8 (< 20) wrote:

Just more evidence of what we all know, the precious metal market is being artificially suppressed by paper gold and silver that doesn't exist.  JP Morgan and the rest of the criminal banking cartels won't be able to keep the naked short selling forever.  Buy physical gold and especially silver now since they are about to go through a major short squeeze.  I'm also extremely bullish on guns, ammo, medicine, water and food.  Just a thought.  

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#12) On October 26, 2010 at 4:40 PM, 100ozRound (29.38) wrote:

Prepare - don't fear

 

 

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#13) On October 26, 2010 at 4:41 PM, XMFSinchiruna (27.35) wrote:

Here is Trader Dan's reaction from JSMineset:

The silver market was abuzz with news today about CFTC Commissioner, Bart Chilton, concerns over price manipulation. The fact that he has come out so publicly took many, outside the camp of GATA and others, by surprise and lit a fire under that market which took it up into a resistance area near $24 on the charts. Strength in silver then worked to pull up gold which had been under pressure from the falling Euro and the subsequent bounce towards 78 in the Dollar.

You have to wonder about the many who have insulted GATA and its fine work over the years and ridiculed them in such a derogatory fashion whether they will now have the common decency to apologize for their shameless and contemptuous treatment of my friends Bill Murphy and Chris Powell and all the other dedicated members of the GATA board. The fact that Commissioner Chilton has come out so forcefully and chosen to use the words, “fraudulent” and “devious” in regards to the silver market is remarkable for its clarity and frankness. He was careful not to come to a conclusion about actual manipulation but as he pointed out, attempted manipulation is an entirely different matter. Based on his own words, it is evident that he strongly believes that attempted manipulation has been occurring regularly.

From here on, those who refer to GATA and its supporters as “the tin foil hat” crowd are only making fools out of themselves and revealing themselves to be mere hacks of the bullion bank crowd. GATA can no longer be dismissed as some sort of rogue band of disgruntled “gold bugs” but as the fine group of people that they are; people who share a genuine concern for the integrity of our financial markets and whose tireless research and efforts on the part of the precious metals markets deserves to be given the respect that is due to any organization which has produced work of the nature and quality that GATA has. I am not holding my breath however; very few are able to conquer their own pride and remain slaves to it all their lives. It takes a man of real character to admit he was wrong. Generally speaking, the most vocal opponents of GATA seem lacking in this department.

Hats off also to Commissioner Chilton for having the integrity to follow through on this even in the face of what no doubt must have been some very strong opposition. It is refreshing to see a man who actually takes what he does seriously and is working in the interests of the general public and not just a few favored special interests. If you have not done so, please take the time to send him an email encouraging him and thanking him for his efforts. So often men in his position only get emails or letters haranguing them.

Back to gold – it has reinforced its range trade after failing to take out $1,350 on the topside and moving lower back within its box that is defined by $1320 on the bottom and $1350 on the top. I still think it will work this range ahead of the next FOMC meeting in early November barring any drastic moves in the Dollar. Silver, even though it responded nicely to the Chilton news, has yet to break above $24 on the topside, which is the level it needs to best to give it a shot at $25 once again.

The HUI is up but below the strong chart level of 520 that needs to be vanquished before it can mount another assault on its recent peak. As long as it holds 490 on the downside it should be okay and continue consolidating.

The Dollar is also working in a range between 78 on the top and 77 on the bottom. The longer these markets range trade ahead of the FOMC, the more significance that meeting and what comes out of it is going to be.

There is some pressure in the bond market over the amount of supply coming. Until bond traders see the extent of any QE announcement, they are going to be bit worried whether demand will be sufficient to absorb it all.

We are all basically reduced to sitting around waiting for the Fed to act. A week is going to seem like an eternity.

 

 

 

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#14) On October 26, 2010 at 4:52 PM, XMFSinchiruna (27.35) wrote:

Typical back-peddling, apologist damage control from the Financial Times, which has expended so much energy ridiculing gold and silver investors over the years. Notice how they even took care to report his party affiliation, as if that were somehow relevant. With one simple tap of the keyboard, already they get half the readers wondering about ulterior motives. They also flubbed one of his quotes. Pathetic coverage, indeed.

"Mr Chilton, a Democrat appointed in 2007, has emerged as an outspoken advocate of limiting traders' commodity holdings. In his remarks he declined to identify traders engaged in silver shenanigans and did not cite evidence gathered by CFTC investigators. Through an aide, he declined an interview request."

 

 

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#15) On October 26, 2010 at 4:57 PM, XMFSinchiruna (27.35) wrote:

Here is Bart Chilton's full statement in raw form

Statement of Commissioner Bart Chilton
U.S. Commodity Futures Trading Commission
Public Hearing on Anti-Manipulation and Disruptive Trading Practices
Washington, D.C.
Tuesday, October 26, 2010

I take this opportunity to comment on the precious metals markets and in particular the silver markets.

More than two years ago the agency began an investigation into silver markets. I have been urging the agency to say something on the matter for months. The public deserves some answers to their concerns that silver markets are being, and have been, manipulated.

The legal definition of manipulation under the law is a high bar to prove. It is a much different test than what the average person might consider as manipulation. Under existing law, to prove manipulation, the government is required to demonstrate not only specific intent; we also need to prove that as a result of the intent and market control, that activity caused an artificial price -- a point that can certainly be debated by economists.

Attempted manipulation is less difficult to prove -- requiring an intent to manipulate and some overt act in furtherance of that intent. There are also other violations of law that could contort markets and distort prices.

I believe that there have been repeated attempts to influence prices in the silver markets. There have been fraudulent efforts to persuade and deviously control that price. Based on what I have been told by members of the public and reviewed in publicly available documents, I believe violations to the Commodity Exchange Act have taken place in silver markets and that any such violation of the law in this regard should be prosecuted.

In saying this, I am fully aware of the prohibition from divulging trader names or information about their positions I am extremely careful not to violate the law in this, or any, regard. I also cannot pre-judge anything the agency may do with regard to our silver investigation, or any other matter.

The Wall Street Reform and Consumer Protection Act, which I strongly supported, contains new manipulation provisions as well as anti-disruptive trading rules. These new authorities, along with the implementation of thoughtful position limits in metals, will go a long way toward ensuring more efficient and effective metals markets devoid of fraud, abuse, and manipulation.

Thoughtful investigations take time. The CFTC staff has worked extremely hard on the silver investigation. That said, there is a point at which it is our responsibility to say something. Within the law, I have done so. I am hopeful that the agency will speak publicly about the investigation in the very near future and when they do so that it will be in a more granular fashion than I am permitted from doing at this time.

 

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#16) On October 26, 2010 at 5:01 PM, XMFSinchiruna (27.35) wrote:

Follow-up coverage from CityWire, where Chilton first aired his intention to bring his findings to the public of the CFTC dragged its feet.

Veteran silver commentator, Ted Butler, whose email campaigns have forced numerous CFTC investigations into silver manipulation allegations, told Citywire: 'I'm very impressed with Chilton's comments, as it goes a long way towards restoring integrity in the CFTC. He said previously he would speak out on silver and he has held true to his word. He did so clearly and forcefully. Coming from such a high official of the primary regulator, any statement about possible or probable manipulation must be taken seriously.

'Manipulation is the most serious crime possible in the markets. That Chilton is dealing with the matter head-on is commendable. That he is raising issues that I have petitioned the agency about for more than two decades is, of course, re-assuring to me that the CFTC intends to deal with an obvious ongoing price suppression and manipulation in Comex silver market. This manipulation can be traced to the extreme concentration on the short side of Comex silver.'

Chris Powell, secretary of Gold Anti-Trust Action committee (Gata), said: 'Gata salutes commissioner Chilton for his courage and conscientiousness and hopes that the CFTC will follow his lead in laying before the public all the available evidence of manipulation of the precious metals markets, much of which Gata itself has collected over many years.'

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#17) On October 26, 2010 at 5:06 PM, XMFSinchiruna (27.35) wrote:

Bloomberg's coverage:

“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. 

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#18) On October 26, 2010 at 5:11 PM, rofgile (99.37) wrote:

TMFsinchiruna:

 If silver's price was "manipulated" lower than market value - shouldn't there have been runs on silver over the past twenty years and silver shortages across the world?  I.e., when Russia artificially set the price of bread to be cheaper than it should be, people would just buy (and feed it to their livestock!) it all up causing constant shortages.

 Its always pretty easy to buy silver for casting, science, art over this time period.  This seems to suggest that the price of silver is from an equilibrium between supply and demand.

 -Rof 

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#19) On October 26, 2010 at 5:36 PM, XMFSinchiruna (27.35) wrote:

rofgile

Who said anything about the last 20 years? Who said there haven't been shortages of physical silver over recent years, often even coinciding with deep drops in price? Industrial buyers generally get access to supply before investment buyers ... if you examine the investment market for silver, there indeed have been noteworthy shortages along the way ... including the tightness of supply that sent silver shooting upward from $18 to $24 in just a few months' time ... abruptly closing the gold:silver ratio gap.

Also, if you're wondering why investors haven't moved in to corner the market and force the squeeze to end the manipulation , consider that investors have the Hunt Brothers disaster to consider before mulling such a strategy. That being said, removing physical supply from the market gradually to make manipulation a more difficult policy to pursue ... is precisely what the investment community at large has been doing for the past several years. Not all short squeezes are formed overnight.

Anyway ... suspend the disbelief. Chilton didn't come out with this statement for his health. Maguire didn't blow the whistle to further his career as a metals trader. Silver is a market frought with "devious" attempts to manipulate price. Accept it, and move on.

 

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#20) On October 27, 2010 at 6:09 AM, JakilaTheHun (99.93) wrote:

The thing about this --- it's not really all that bullish of a sign for silver.  So people are using shady tactics --- it's great that the CFTC would stomp out the practices, but it's not going to cause a bull run, which is your implied thesis based on the news.

Actually, in the past, most silver price manipulation has kept prices artificially higher, not lower.

Need I even mention the famous Hunt Brothers' manipulation in the late '70s? That didn't end pretty, btw.

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#21) On October 27, 2010 at 6:17 AM, JakilaTheHun (99.93) wrote:

If silver's price was "manipulated" lower than market value - shouldn't there have been runs on silver over the past twenty years and silver shortages across the world?  I.e., when Russia artificially set the price of bread to be cheaper than it should be, people would just buy (and feed it to their livestock!) it all up causing constant shortages.

You're exactly right, rofgile.  This is why most of TMFSinch's articles are pretty bogus.  He finds bit of news and draws irrational conclusions; mostly as a way to not challenge his own thinking. 

Sinch mentions the Hunt Brothers' episode, but totally seems to miss the importance of it.  The Hunt Brothers failed even though they corned the entire market for silver.  They were pure monopolists, more or less, and theoretically should have been able to charge any price they wanted to. 

Only problem:  they manipulated the price of silver so high that people started melting down the silver in their households from items such as silverware, antique tea sets, etc.  Those people took the huge profits and the price of silver was beaten back down to its natural market equilibrium. 

The market is a powerful force.  Manipulating it manifests itself in various disastrous ways when it comes to industrial commodities like silver.  Artificially low price drives artificially high demand.  Artificially high price brings supply up till it beats down the price.  If the Hunt Brothers' cornering the entire market didn't deter these dynamics, then it seems really unlikely that someone could come in and artificially suppress silver prices in dramatic fashion (as Sinch naively believes.) 

And he wonders why people call him a conspiracy nut. 

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#22) On October 27, 2010 at 8:11 AM, XMFSinchiruna (27.35) wrote:

JakilaTheHun

Your comments are beyond ridiculous. Your currencies of choice are insults, innuendo, and uninformed bickering. 

Yeah, that's why Chilton spoke out ... he figured the public had an urgent right to know the price of silver was being manipulated higher.

As the evidence becomes ever more damning, the apologists grow ever more vitriolic.

 

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#23) On October 27, 2010 at 9:20 AM, XMFSinchiruna (27.35) wrote:

This was originally brought to my attention by a fellow Fool some days back, and I think it's worth keeping in mind in the context of Chilton's public statement in support of disseminating truth to the public that the CFTC is duty-bound to serve.

http://futuresmag.com/News/2010/10/Pages/CFTC-judge-claims-colleague-is-biased-.aspx

Here is the judge's retirement notice in full:

http://futuresmag.com/SiteCollectionDocuments/Guides_PDFs/Judge%20Painter%20Notice%20and%20Order.DCpdf.pdf

Fascinating.

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#24) On October 27, 2010 at 11:17 AM, XMFSinchiruna (27.35) wrote:

http://www.reuters.com/article/idUSTRE69Q0SE20101027

The U.S. commodity futures regulator is looking into claims by a trader in London that JPMorgan Chase & Co (JPM.N) was involved in manipulative silver trading, the Wall Street Journal reported, citing a person close to the situation.

In recent months, U.S. Commodity Futures Trading Commission (CFTC) lawyers have interviewed employees of JPMorgan in its metals trading business, the newspaper said, citing a person familiar with the situation.

Along with JPMorgan, CFTC lawyers have also interviewed industry traders, commodity executives, experts and employees of other metals trading firms, WSJ said.

JPMorgan declined to comment to the Wall Street Journal on any aspect of the investigation. The firm could not immediately be reached for comment by Reuters outside regular U.S. business hours.

On Tuesday, Bart Chilton, a commissioner at the U.S. CFTC said there had been repeated attempts to influence prices in silver markets.

The Journal said JPMorgan and HSBC Holdings PLC (HSBA.L) have usually been the big players in the silver market.

However, in recent months the banks with large futures positions have sharply reduced the size of their holdings, the paper said.

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#25) On October 27, 2010 at 12:45 PM, JakilaTheHun (99.93) wrote:

If silver is being manipulated 'upwards', then that means you should be warning people to sell silver.  You are going the opposite route --- you see a 'manipulated high' price as a reason to buy, for some inexplicable reason.

You lose no matter how you slice it. 

As far as your complaint about insults, that's a bit beyond hypocritical given your history.  You and the other goldbugs are about the most insulting people on the TMF boards.

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#26) On October 27, 2010 at 12:52 PM, JakilaTheHun (99.93) wrote:

I mean ... seriously, Sinch, have you ever read your own articles?  They are filled with insults, inneundo, and constant 'I told you sos' aimed at some imaginary ill-defined group of people who oppose you. 

I can't remember a single recent article that you've written that is not presented in this fashion.  Your writring has shown a dramatic deterioration over the years; your early TMF articles were filled with facts and more rational analysis; your current articles are all aimed at attacking some imginary group of people with an irrational hatred of your beloved investments. 

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#27) On October 27, 2010 at 1:33 PM, silverminer (30.93) wrote:

JakilaTheHun

If silver is being manipulated 'upwards', then that means you should be warning people to sell silver.  You are going the opposite route --- you see a 'manipulated high' price as a reason to buy, for some inexplicable reason.

I see my sarcasm was lost on you. :) Try reading comment #22 again.

I attack no one, and instead have only defended myself and others against unwarranted attacks of a continual and highly unpleasant nature.

My attempts to set the record straight with respect to anti-gold rhetoric that has been on the wrong side of this bull market for 10 years is a wholly rational attempt to help investors to discern which market observers have accrued credibility on the topic.

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#28) On October 27, 2010 at 4:22 PM, dragonLZ (99.59) wrote:

It seems to me, based on the posts and comments I read over the last few months, that TMFSinchiruna (silverminer) thinks he is the best thing since sliced bread because of his great / correct call on commodities.

He forgot there was artificial Christmas tree in between...

p.s.

I also think he thinks being right for 10 years means being right for another 10 years. Just my uninformed opinion...

I apologize if I'm wrong in my assumptions.

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#29) On October 27, 2010 at 4:52 PM, 100ozRound (29.38) wrote:

was that really necessary?

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#30) On October 27, 2010 at 6:43 PM, silverminer (30.93) wrote:

dragonLZ

I accept your apology for being wrong in your assumptions. :)

I'm just trying to help people hold onto some of their capital through what I perceive as the biggest financial $#@!-storm in modern history.

I'm sorry if my confidence in the outlook for gold and silver comes accross as some kind of self-satisfaction. I am not in this for an ego trip, but rather to help people. I am passionate about wanting to help people gain a measure of protection from what I think will be some difficult times ahead.

I have repeatedly stated that I would rather be wrong in my entire assessment of the macroeconomic picture than to watch things unfold as I consider them likely to do. I happen not to think I am wrong, but I sincerely wish that I were. That is not the mark of one who is tied up in egotistical BS.

If you've been reading my posts, then you'll well know the kind of negativity that I am forced to contend with in response to the ideas I espouse here. I am always open for respectful debate, but I am no longer tolerant of scornful attempts to insult or ridicule my macroeconomic worldview or the precious metals outlook derived therefrom.

P.S. Am I the only one who doesn't get the Christmas tree reference? :)

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#31) On October 28, 2010 at 12:51 AM, Valyooo (99.33) wrote:

I don't get the reference either.

Sinchi, two quick questions:  1) Why would JPM want to manipulate the price lower?  Is this to strengthen the dollar, keep interest rates low so the yield curve works in their favor?

2) Given the fact that we are incredibly, severely leveraged (like 14:1), then wont all of this "money printing" not even have a huge effect?  Even a double in the money supply is nothing compare dto the velocity of our leverage

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#32) On October 28, 2010 at 2:43 AM, dragonLZ (99.59) wrote:

Sinchi, I apologize once again.

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#33) On October 29, 2010 at 6:28 AM, jesusfreakinco (28.80) wrote:

Jakila

Grow up man.  I challenge you to find a post, ONE post where Chris was nasty.  I have been following his posts for several years and have found his posts and comments to be above board - bar none.

JFC

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#34) On November 01, 2010 at 8:51 PM, SN3165 (< 20) wrote:

Sinch is the man

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