CFTC talks about position limits in metals futures

"Little did we know at the time, but at about then Andrew Maguire’s car, in which his wife and he were riding, was struck by a hit-and-run driver. Both Maguire and his wife were briefly hospitalized. The police eventually arrested the other driver. The Maguires may be considered more than lucky. There are other past would-be whistle blowers about the manipulation in gold and silver markets that died in unusual accidents before they were able to bring forth their evidence."

Shocking!!!

 

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Well, the April contracts expiration came and went with a whimper...when is the sky supposed to fall?

 

Thanks sun !!

 

You mean you missed the ones in 2006, 2008, and 2009?!:rolling: Here is a list of past expected nuclear events in the silver market thanks to Lilvern1:

http://tickerforum.org/cgi-ticker/akcs-www?post=129234

 

[FONT=Arial, Verdana, Helvetica, sans-serif]From the CFTC meeting....

Christian: Says "Look at their gold book; it's gold from miners, jewlers, producers sell immediately before smelting & refining, so they, the bullion banks, short it to "cover" the long purchase. Fund longs are hedged with a short! "

Uhhhh, doesn't that prove manipulation?
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It's an interesting discussion, but I haven't seen anything resembling PROOF of gold price manipulation. If someone is paper trading gold with no intent to acquire physical, this can be considered pretty standard behavior and would be legal unless it exceeds legal position limits.

Just to be clear, I believe that gold and especially silver prices are artificially low because the amount of paper trading exceeds physical trading. I've been saying this for years on CoinTalk. For the most part, this message has not been well received until the recent CFTC hearings. But MANIPULATION remains to be proven. It looks more like a systemic problem to me.

 

From dictionary.com

Investopedia Commentary

One way people can deflate prices is by placing hundreds of small orders at a significantly lower price than what it has been trading. This gives investors the impression that there is something wrong with the company, so they sell, pushing the prices even lower. Another example of manipulation would be to place simultaneous buy and sell orders through different brokers that cancel each other out, but give the perception that because of the higher volume there is increased interest in the security.

 

I once actually mistakenly did this with a book I wanted: I was naïve and stupid at the time, and called a number of rare booksellers to request they look for a book I wanted, and didn't realize this left the impression of scores of people searching for this book, as they all called each other back and forth trying to locate it for me. By the time it was over, I'd priced myself right out of my own market . It doesn't take much...

But seriously, gold is up what? 500%? in the last decade?

What else can you say that about? Housing? Still down. Stocks? Are we back to our 1996 levels yet? How about the US dollar? Down 20% to 40% off its highs depending on how you're counting.

For a commodity that everyone complains is being "manipulated downward" I would say it is doing pretty well. Not well enough for GATA? Really? Can you say greedy?

 

GATA is a nonprofit organization, so greed would not be a reason. They are the real deal and truly are trying to clean up what they view as market abuse and manipulation. The paper trading has no doubt affected the price, but manipulation hasn't been demonstrated in my opinion. What they need to demonstrate is that the largest market players don't have the bullion to meet delivery demands, and I haven't seen evidence of that yet.

 

GATA may be non-profit, but their members are heavily invested on the long side. What better way to get their message across? They are traders with an agenda, and they flood the Internet with everything from videos, to rumors, to misinformation. I believe that mostly what they trade in is fear.

I don't see any pure players here. Not on either side. You are right, they never provide any evidence for their allegations. And if this is the same Bill Murphy who is president of GATA, he was banned by the CFTC from trading for 10 years and fined for his manipulation of copper futures. See page 245

http://www.cftc.gov/ucm/groups/publ...ry/documents/file/pbproceedingsbulletin04.pdf

So gold goes to $5000 an ounce, $10,000 an ounce, $50,000 an ounce. Just great. A few of us make out like bandits, but every old person on a fixed income is wiped out. Can you say Weimar? Is that what they're playing at?

I am just a little person, and there are big people playing games on all sides. So I buy my gold and my silver, just like people always have, for "protection", and maybe a little profit, but hopefullly not too much .

 

From the CFTC meeting.....

[FONT=Arial, Verdana, Helvetica, sans-serif]====[/FONT][FONT=Arial, Verdana, Helvetica, sans-serif]Lothian called us, GATA, and me, & long physical investors, who believe in conspiracy theories, and distrust the markets, "political parasites" and worse!? I was a bit outraged, of course.[/FONT]
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[FONT=Arial, Verdana, Helvetica, sans-serif]He said accountability should increase, perhaps hinting that we should be held accountable somehow.[/FONT]
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[FONT=Arial, Verdana, Helvetica, sans-serif](I personally had a chance to speak to him a bit at the break. I asked him about the huge gap between physical and the amount of paper sold, and was it not dangerous? He replied he thought "of course not". Then I asked him at what level would it be of a concern? Would it be ok to sell 100 times more silver on paper than the physical? A 1000? A million times as much? Where do you draw the line. At that point, he seemed confused and flustered, and it appeared time to get back to the event.)[/FONT]
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[FONT=Arial, Verdana, Helvetica, sans-serif]I noted at one point that CFTC Commissioner Dunn noted that he was a long time personal friend of Lothian.[/FONT]
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[FONT=Arial, Verdana, Helvetica, sans-serif]CFTC question: "Can the shorts deliver?"[/FONT]
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[FONT=Arial, Verdana, Helvetica, sans-serif]Jeff Christian attempts a 3 point answer:[/FONT]
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[FONT=Arial, Verdana, Helvetica, sans-serif]1. They have never defaulted in the past.[/FONT]
[FONT=Arial, Verdana, Helvetica, sans-serif]2. There is a cash delivery settlement option.[/FONT]
[FONT=Arial, Verdana, Helvetica, sans-serif]3. They hedge OTC longs.[/FONT]
[FONT=Arial, Verdana, Helvetica, sans-serif]=====[/FONT]
[FONT=Arial, Verdana, Helvetica, sans-serif]Harvey (GATA): Says there is huge risk! China and Russia can take and clean out COMEX! TheY, COMEX, WILL have a failure![/FONT]
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[FONT=Arial, Verdana, Helvetica, sans-serif]Adrian Douglas (supporter to Harvey) piped in, and was almost shut down by Gensler, as he was not slated to testify, but in the public audience, but had a microphone. Gensler said "No" a and then clarified with, "No, I don't know who you are."[/FONT]
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[FONT=Arial, Verdana, Helvetica, sans-serif]Adrian: $5.4 trillion in London Gold; that's NOT METAL; it's a fractional only system. The LBMA admits this is "unallocated" and that it's "unsecured". It's not physical, they can't hedge, it's paper hedging paper, nothing but a Ponzi scheme![/FONT]
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[FONT=Arial, Verdana, Helvetica, sans-serif](Big truthful testimony after a day of lies, half truths, and willful obfuscation.)[/FONT]
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[FONT=Arial, Verdana, Helvetica, sans-serif]Jeff Christian tried to retort, admitted that there is 100 times as much paper as physical, and seemed to get confused at one point.[/FONT]


[FONT=Arial, Verdana, Helvetica, sans-serif](I'd note that every trader is a "bona fide hedger" since it's perfectly fine to hedge away your risk of holding dollars, by being a long holder of physical silver and gold, or even futures contracts. But that's not what they mean by "bona fide hedger" which qualifies for the excemptions; they mean if you "have a long risk" that you can offset it with shorts in excess of the position limits. But I'll also note that nobody is forcing these banks to buy long gold and silver, and if they don't want that risk, they simply don't have to take it! But I also believe these banks are certainly NOT holding excessive amounts of gold and silver like they claim; they don't have enough to back all their client accounts; as can clearly be seen in the BIS reports where they have over $200 billion in "other precious metals" notional value of OTC derivatives, that's about 12 billion ounces of silver, or 24 years of mine supply that they owe, and cleary cannot have; that's their risk!)[/FONT]

[FONT=Arial, Verdana, Helvetica, sans-serif]What's ironic about Jeff's comments is that the gold books of the bullion banks are NOT public information; and probably not even the CFTC commissioners can get a good look at them. Furthermore, it's ludacrous to think that miners have hedged silver 24 years into the future, as an explanation for the $200 billion OTC market size in "other precious metals", as reported by the BIS, the Bank of International Settlements. If Jeff has even seen a gold book, that shows who he is the apologist for; those doing the manipulation: namely, JP Morgan.[/FONT]

[FONT=Arial, Verdana, Helvetica, sans-serif]Again, the BIS numbers say the "other precious metals" notional liability is $203 billion, which, in silver terms, is about 12 billion ounces. This means they lose $12 billion for every dollar that silver prices rise. This means they stand to lose $120 billion if silver prices rise $10. They stand to lose $203 billion if silver prices merely double, and if no new buyers enter the market, and that could result merely from their own short covering.[/FONT]

What proof more do you need????

 

Not at all. Gold and silver can go up simply because of the supply/demand situation even if there isn't any inflation. Gold is a good hedge against inflation, but doesn't cause inflation any more than increases in the stock market or real estate cause inflation. I agree that nobody is "pure" in this confrontation, but I don't think the GATA motive is to make money. If it is, they are going about it all wrong. Some of the folks riding their coattails no doubt motivated only by profits, but that is beyond their control.

 

There is no proof in what you wrote. There is a lot of opinion. GATA and others have hinted that JP Morgan and HSBC are most likely the two large shorts in the silver market. People presume they can't deliver the silver. How do they know since this is not public knowledge? They don't. What is public knowledge is that Russia has massive gold reserves and China massive silver reserves. There are other large private gold reserves someplace from the British gold sales in the early 2000's.

It is very possible that GATA is correct. It is equally possible that the paper positions are backed by Russian, Chinese and other's metal and that JPM and HSBC are just fronting for their clients to enable them to earn an income stream on their metal holdings. Time will tell if/when the CFTC forces the large traders to disclose their holdings and the holdings of their clients. This hasn't happened yet.

 

Interesting stuff. Okay, what proof would I like? I would like proof that this is any different from any other commodities exchange. What they're not saying here is that futures markets allow anyone to short much larger amounts of stocks, or oil, or cotton than actually exist in the world. And on margin too, so one does not even have to have the actual money much less the commodity to be short a certain index or commodity. And while these markets may be used by producers of cotton or oil or wheat, to hedge their risks, there are also just used for pure speculation.

But it doesn't necessarily mean we are going to run out of cotton or oil or wheat, just because people are trading much greater amounts of it than actually exist. If the shorts get squeezed, they don't have to "deliver" any of these commodities they supposedly "own" (actually just fictionally borrowed) because they are allowed to settle in cash.

If they want to argue that there really isn't any gold left in any of these banks, which they are always implying, or that all the banks are full of tungsten, they need to produce some evidence, which they have not been able to do.

 

Bump

 

Why are you trolling around digging up all these months old threads without adding anything new to the thread...?

 

Sorry, I like to dig up older threads because on forums that involve investing, people are always saying....."you say that now, but just wait." Or people say, "memories are poor, people don't back up what they say." Well, I'm posting these because I want people to realize what was said, and where we are going.

Where we are going is scary. I'll say this now, and we can repost it again in another 10 months or so.

Gold and silver will continue to climb, as long as real interest rates continue to be negative. Real interest rates are defined as the interest rate you receive from a bank for keeping your money there, minus the inflation rate.

I've said before that price inflation lags behind monetary inflation by 4-6 years. We haven't even gotten to 2012 yet, to allow the original QEing to take effect, and we are already printing another 600 billion dollars.

As this printing is happening in late 2010, it's effects wound be felt until 2014-2016. This just looks bad.

 

This explanation holds much more value than does the word 'bump'. Thanks for providing some context for why you felt it was important to return to the topic.


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Plus, this topic deals with the J.P Morgan scandal of silver price suppression. I hear they are being sued now with about 15 lawsuits, many of them class actions. What does this mean for silvers future? What does this mean for J.P. Morgans future? If this breaks J.P. Morgan, will taxpayers have to bail them out for manipulating the markets unlawfully?

 

It is assumed that JPM has a naked short position. This may or may not be true, and NOBODY outside of JPM and their silver client [if it exists].