Ted Speaks

http://www.silverseek.com/commentary/war-silver

Ted Butler is always an interesting read, and this information may be important to silver investors and the believers in manipulation. While I agee with Ted that the institutions that short silver futures do it for profit, the rest of his allegations must remain opinion for now.

 

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I've found I get better advice from this Ted:

 

Wow, I am disagreeing with Ted in a number of cases on this one. I have to wonder if somebody got to him since that has never happened before with me personally.

It doesn't make sense that the motivation for financial firms to hold the price of silver down is merely to profit from derivatives contracts. They can do that with any commodity. There's no reason silver has to be the go-to for this. For Ted to say that the motivation is not to support dollar dominance is mind boggling. That is and always has been the motive.

He must not have seen the recent article where Chilton said that they would have a ruling on the now 4 year old fraud investigation into JPM coming this September or October, since he is still harping on their lack of getting anything done, which I would normally have agreed with.

He even specifically called out the government in an article a couple weeks ago, so to backpedal and put it on the primarily on financial firms with the gov just piggybacking out of mutual convenience is another head scratcher. He has been around long enough that he should know these financial institutions are just doing the bidding of the Fed (JPM) or the BoE (Barclays / LIBOR).

I hope all is well for Mr. Butler. He seems to have been spooked.

 

The profit motive makes sense to me. And silver is a good choice because things like copper and wheat are too large to play games with. But I wouldn't assume that the goal is to support the dollar. Silver isn't a monetary metal anymore and isn't likely to become one. I keep an open mind about manipulation, but the 6X price rise makes me think it doesn't exist until someone presents the smoking gun.

 

If silver is not a monetary metal why does it follow gold? Why do numerous languages around the world use the same word for silver as they do for money? The only reason the silver market is so small is because the price is held down which also depletes the supply thus making it a self reinforcing process, and your logic is self fulfilling. I am not assuming the goal is to support the dollar. I know it is, because it is obvious to any thinking person that if silver was still used as money it would be in competition with the dollar. In fact, you have reinforced my point that that is the goal by falsely asserting that silver is not a monetary metal. You are the one assuming that just because it isn't used for monetary backing in this current failing fiat experiment that it isn't a monetary metal. Its status throughout history is clear. I don't understand why you are posting articles from Ted Butler if you are going to disagree with the things he's said prior to this particular article which goes against his grain, unless you are in cahoots with the same people who spooked him.

 

I don't know that silver is "following" gold. A lot of commodities are up over the past decade as the third world industrializes and consumes more. That doesn't mean there is a causal relationship among them. Silver isn't a monetary metal. It isn't used for money. I agree with you that silver has characteristics that make it good to use as money. It just isn't at the present time. Maybe someday someplace it will be money again. I have no visibility to that. A lot of things have been used as money, but that doesn't make them "monetary" commodities. I read Ted Butler because I try to read all I can about investments I hold whether I agree with the author or not. I also read a lot of pro/con articles about peak oil because I am a long time investor in the energy sector, but I don't have religiously strong feelings either way. I like silver as an investment, but not because I believe it is manipulated. It may turn out to be manipulated, and I will benefit from the price rise, but I don't expect this to happen.

 

I know for a fact silver follows gold. So does anybody who watches the daily charts.

Per dictionary.com -
sil·ver /ˈsɪlvər/ Show Spelled[sil-ver]
2. coin made of this metal; specie; money: a handful of silver.
3. this metal as a commodity or considered as a currency standard.

 

If this works for you, you should continue to follow the method.

 

Thanks for posting this Cloud. I have always thought multiple investment institutions have been playing dirty regarding silver. Look at how stagnant it was after the Hunt Bros. fiasco....then a huge increase in popularity a few years ago, only to get killed in May 2011.....shortly after it had surpassed JPMC`s stock. We have a whistleblower whom has exposed JPMC`s tactics, only to fall on the ever deaf ears of the CFTC. And regarding the ongoing lawsuits against JPMC....mark these words...THEY`RE GOING NOWHERE FAST. Nothing will become of it.

 

Just keep in mind that it isn't necessarily true just because you read it on the internet. I've read the wihistleblower's account and it is completely unimpressive to me, as it must have been to the regulators. The silver market is small compared to the size of the institutions investing in it, and volitility is to be expected. Maybe the regulators will change the rules regarding position size to address this, but that isn't proof of manipulation either. What none of the manipulation believers can explain is why the price is up 6X in a dozen years if institutions are working to keep the price down. This is a spectacular return by any standard, and hardly the result to be expected if manipulation by shorting has been occurring. The old excuse that it would be much much higher if not for manipulation just doesn't ring true.

I'm open to evidence to the contrary, but I just don't see it yet.

 

I would go as far as saying all markets are somewhat manipulated by the market makers. However, those market makers are given special rights in all markets in order to provide stability to the market. Nothing unusual about silver in that.

Inflexion, if you say silver follows gold, then why do silver chasers lament the "ratio" being down? If silver truly followed gold, wouldn't the ratio be the same as it historically had been? I believe if you plotted most commodities against OIL you would find a higher correlation. Yes, they will all have commodity specific stuff happeneing to them, but long term the cost of extraction is your base.

Sorry, but saying a man whose only claim to fame on this earth is his venomous attacks on silver market makers must have been "gotten to" if he isn't as venomous as you like really is starting to sound like most other conspiracy theories.

Just my opinion.

 

I don't know if it is so much to provide stability as to make sure the market clears.

 

The thing that really stuck out to me as foul about the drop in silver last year was when Comex adjusted their margins regarding it. Silver hit a high of $49, and did not stay there for even 3 days, but yet this justified Comex adjusting the margins? I wasn`t alone when I thought it was fishy.

I hear and get the volatility argument, as it`s true regarding the markets, but I refuse to believe that these investment firms are innocent. In my humble opinion I believe the wheels at Comex and the CFTC have been greased. I think it`s long overdue that We bring back Glass-Steagal.

 

BUt as I posted a month ago after I talked to CME reps, they told me the volatility calculation they use to determine margin percentages is published. As such, if you go through the work of tracking it and running the numbers, anyone can see when the CME will change margin requirements. I will bet you good money Soros, JPM, and other large investors in any market are well aware of when margin requirements will change.

Were you aware these margin requirements were knowable? Does that change your mind regarding whether it was "fishy" or not? Margin requirements are ONLY put there by the CME to ensure every day the CME has its money. Thats it, and they let everyone know WHEN they will change them, and WHY. The fact small investors do not track this and then are "surprised" by it does not lend support to a conspiracy theory in my mind.

Again, I will bet you Soros made a ton of money off of "surprised" small investors when margins changed. This is called educational profit, or making money because you know what you are doing versus other market participants.

Just my opinion.

 

I think that the so called leaked info regarding Soros selling played a factor in the drop too.

Allow me to take a qoute from an article regarding the CME adjusting their margins when they did......"Jamie Greenough, Futures Representative at Global Security Corporation, commented that, while margin adjustments are something usual, "it is extremely rare and aggressive" to adjust margins again only 2 days later. But the CME even increased margins even 4 times within one week, and very steeply by a total of 84 percent as well."

I guess I fall into the conspiracy nut group when it comes to investment firms like Wells Fargo, JPMC, etc. I believe JPMC did indeed call in a favor to CME when silver jumped ahead of their stock. But this is something that one can only speculate on and talk about on coin forums.

 

It can seem like a conspiracy at times because all of the players are trying to do the same thing - make money. And all of the big players have access to the same information. use similar computer models to execute trades, job hop between the same investment houses, go to the same schools, and they all chart commodities using the same techniques. The wonder of it is why there isn't more volitility as everyone pays attention to the same signals and jumps on the same side of the trade.

 

Conspiracy or not, the CME has apparently lost so many customers and investor confidence at their rather significant failures to regulate and run the markets in a fair manner, they sent out a letter in hopes of turning this around. Keep in mind that customer money was lost because it wasn't kept segregated, and there has yet to be anyone charged in the matter.

July 23, 2012

To our customers:

CME Group is appalled by the recent misuse of segregated funds by two firms, MF Global Inc. and PFG, particularly since there has never been anything like it in the history of the futures industry.

Clearly there were serious management transgressions at each firm. But while these firms may have been at fault, it's nevertheless our problem as an industry, and this problem needs a solution. Not protecting customer funds is such a fundamental breach of trust that, without question, the current system in which customer funds are held at the firm level must be re-evaluated. We are exploring the concept of having clearing houses or other depositories hold all customer segregated funds while returning any interest earned on that money back to the FCMs, increasing protections while preserving the operating model for the vast majority of firms who respect and comply by the rules.

The futures community has a strong history of working together to improve our industry. Congress, federal regulators, industry regulators, industry groups and CME are all working towards the same goal: to ensure that market users have confidence in all aspects of the industry, and that the appropriate protections are in place at every point in the system. Every link in the chain has to be as strong as the next. The businesses and individuals who rely on the futures markets to manage their risk rely on all of us to collectively manage their trust.

For CME Group, nothing is more important than the confidence customers have in our marketplace and the protection of our customers when using our markets. In conjunction with the NFA, CFTC and others, we have put in place and are in the process of implementing a number of new requirements designed to deter another firm from misusing customer funds. New requirements include:

Increased surprise reviews of customer segregated funds
Daily segregation reporting by all FCMs
Bi-monthly reporting on investment of segregated funds
Periodic electronic confirmation of customer segregation balances from the firms via e-confirm system
New rules providing direct online access to firm bank accounts to confirm segregation balances
CEO/CFO signoffs of customer segregated fund distributions (Corzine rule)

While these significant steps will provide further safeguards to the users of our markets, and continue to make the system even stronger. We want you to know that CME Group is committed to making whatever changes are necessary to strengthen customer protections, restore confidence in the futures industry and ensure the effectiveness of these critical markets.

Sincerely,

yada yada​

See original Here

Since they won't prosecute those breaking the law, Joe the Investor really has no choice but to consider any investing of this nature to be very high risk. Given the risk the returns and taxation on those returns are not high enough anymore.

 

The letter to me sounds like the CME is trying to do the right thing and make sure its participants behave properly to everyone's long term benefit. You are right, if end users believe they are at risk due to the behavior of market participants, then everyone loses. Those bad companies have really hurt investor confidence in these markets.

I simply see this letter, though, narrowly addressing those illegal actions of the brokerages, actions which I am sure will be prosecuted.

 

Silver is no longer a monetary metal because it is not practical. The world financial system has gotten too large.

As to all the conspiracy theories, I don't understand why so many people get so worked up over it. I guess they feel passionate about silver, which is fine.

 

To each his own.

Nobody has even been charged in the MF Global scandal which is amazing given that it happened a year ago. There are still people who have not gotten their money back. Eric Holder's justice department hasn't even made a statement about it. This sort of thing, and now there is Liborgate, is shaking confidence of investors and anyone considering investing money does themselves no favors to ignore it.