Silver price manipulation? If it looks too bad to be true, it probably is - Eric Janszen

[ThePythonicCow]

Re: Silver price manipulation? If it looks too bad to be true, it probably is - Eric Janszen

First, the 100:1 "revelation"

Does anyone have the exact wording of this 100:1 revelation (in text, not audio)?

When I heard it, the one time I listened, it sounded like some mealy mouthed, technically correct but of no great substance statement that I'd expect from a well-trained bureaucrat. I dismissed it as not being worth the mental effort to "decode."

[gorkypark]

Re: Silver price manipulation? If it looks too bad to be true, it probably is - Eric Janszen

First, the 100:1 "revelation" relates to the LBMA, not Comex, according to the King World interview. As Spartacus said earlier, the LBMA is supposed to be unallocated physical, but physical nonetheless. Gata and Maguire clearly understand that Comex is generally paper.

Second, a major argument of Gata (and certainly Butler) is that the two big shorts are not hedging and therefore are in excess of existing position limits, and b) there is no way silver delivery could occur if required since the silver shorts are in excess of existing world inventories and/or (?) annual production.

BRAVO Pascal.....you have it...I'd like to see precisely those points rebutted..rest is just noise.....cheers

[Camtender]

Re: Silver price manipulation? If it looks too bad to be true, it probably is - Eric Janszen

I have to admit, at this point I am skeptical about some of the criticism(not all) that is being pointed at GATA right now.

If xPat and EJ are correct on the "no such thing as naked shorting in commodities", why didn't someone at the CFTC hearing simply say......... "there is no such thing as naked shorts in the commodities..............", "next person please..................."

After days of reading on commodities, Itulip is the one to break the big story days after the CFTC hearing that "naked short selling" is not in the commodities market?

Can anyone address the two comments I posted above that clearly indicates that the London Metal Exchange has physical delivery requirement on short positions, or is the London Metal Exchange full of crap too?

[metalman]

Re: Silver price manipulation? If it looks too bad to be true, it probably is - Eric Janszen

C'mon guys. It's not cool to set up straw men. Too easy to beat and nobody improves their knowledge base.

Does anyone have any facts to counter Gata's arguments?

I presume they're there but I do not know what they are.

how about the fact that gold is up 330% since 1999? where's the evidence of downward price manipulation? gata claims gold 'should' have been higher. why is it up to gata's detractors to prove that claim is baseless?

gravity is produced by giant magnets spinning in the center of the earth. prove me wrong.

[ThePythonicCow]

Re: Silver price manipulation? If it looks too bad to be true, it probably is - Eric Janszen

C'mon guys. It's not cool to set up straw men.

Which comments are you calling "straw men" and to which posters are you responding? Without knowing the context to which you respond, I get lost trying to figure out the meaning of your reply - sorry.

[Pascal]

Re: Silver price manipulation? If it looks too bad to be true, it probably is - Eric Janszen

C'mon guys. It's not cool to set up straw men. Too easy to beat and nobody improves their knowledge base.

Does anyone have any facts to counter Gata's arguments?

I presume they're there but I do not know what they are.

[ThePythonicCow]

Re: Silver price manipulation? If it looks too bad to be true, it probably is - Eric Janszen

So something is rotten in Denmark.

Not just Denmark.

Excellent post, xPat. Thanks.

My gut instinct on all this commotion is to reduce my precious metal positions a little, given that this seems like a (flawed/fraudulent/?) story to increase the precious metal holdings of goldbugs.

[Camtender]

Re: Silver price manipulation? If it looks too bad to be true, it probably is - Eric Janszen

Thanks xPat for a well thought out response. I have no background in commodities futures market or any real knowledge, just learning more day to day.

However, does the following statement from the London Metal Exchange on August 16, 2006 contradict or support the following two statements?

1)

So what if all those longs (buyers of gold and silver contracts) said "We want our gold! Give us delivery of physical metal!"? Well, the way they would do that would be to pay their broker the remaining 90% of the purchase price - money the vast majority of buyers just don't have! So this simply isn't a realistic scenario.

As per http://www.lme.com/4670.asp on August 16, 2006,

“Nickel stocks are at historically low levels and we now have a genuine material shortage. Our first priority is to ensure that trading remains orderly and to prevent the risk of settlement defaults.”

2)

Anyone who understands the futures market would immediately recognize this nonsense for what it is. "Illegal Naked Short Selling" is a real issue, but the phrase relates to the stock market, not the futures market. Futures are a derivative market, and the seller isn't expected to own the underlying. There is nothing illegal about that whatsoever, and it is most often the case in most commodities. So Kirby either has no clue what the futures market actually is or how it operates, or else he's engaged in an intentional disinformation campaign designed to put fear, uncertainty and doubt into the metals markets. I can't decide which, but either way I have zero respect for this character.

As per http://www.lme.com/4670.asp, on August 16, 2006,

"Backwardation limit
Those with short positions in nickel falling prompt on Friday 18 August 2006, and on subsequent prompt dates until further notice, who are unable to effect physical delivery and/or unable to borrow metal at a backwardation of no more than $300.00 per tonne per day, shall be able to defer delivery for a day at a penalty of $300.00 per tonne. Those with long positions for prompt on those days who are subject to deferred delivery shall be entitled to compensation of $300.00 per tonne per day."

[Pascal]

Re: Silver price manipulation? If it looks too bad to be true, it probably is - Eric Janszen

I do not know enough to have an opinion on whether the allegations are true or not, but Gata and Maguire's main arguments seem to be misstated here.

First, the 100:1 "revelation" relates to the LBMA, not Comex, according to the King World interview. As Spartacus said earlier, the LBMA is supposed to be unallocated physical, but physical nonetheless. Gata and Maguire clearly understand that Comex is generally paper.

Second, a major argument of Gata (and certainly Butler) is that the two big shorts are not hedging and therefore are in excess of existing position limits, and b) there is no way silver delivery could occur if required since the silver shorts are in excess of existing world inventories and/or (?) annual production.

I'm relatively new to this market, not a Gata member, and also relatively unburdened with the facts, so please correct me if I'm wrong on the above. If I'm not wrong, I would appreciate any counter arguments to Gata's allegations, particularly the allegation related to the LBMA.

Thanks.

[Spartacus]

Re: Silver price manipulation? If it looks too bad to be true, it probably is - Eric Janszen

What I meant to say pertains to the body of evidence assembled by Ted Butler alleging that Bear Sterns was engaged in a massive concentrated short position that was taken over by JP Morgan and was still being used to manipulate the market right up to just before the CFTC hearing. My choice of the words "very real downward manipulation" was unfortunate. What I should have said is that I find Butler's analysis of the COT reports revealing this highly concentrated short to be highly credible, hence "very real". Whether that very large short is truly being used to manipulate the market to the downside is something I can neither prove nor disprove, but I think the evidence Butler has assembled certainly warrants a closer look by regulators. Perhaps I should have said "GATA has very real evidence of a large concentrated short and a plausible allegation that it exists purely for downside market manipulation. Those claims certainly warrant thorough investigation."

This is the big problem I have with most of those who reply to Ted Butler: Ted
1. presents data collected and verified by the government - his opponents almost never do
2. consistently separates "this is the data" from "this is what I conclude", from which most of his opponents reply emotionally "conspiracy theorist idiot" .

The reason I was saying "very real" was to contrast this business of the JPM short with the utter nonsense being thrown around by GATA relative to the 100:1 "leverage" (sic) business. More on that below.

100:1 Leverage and Jeff Christian's "Admission":

This is the really important one, and it's the area where I think GATA is being outright incompetent. I'm afraid that for everyone to understand this will require a short tutorial on the futures market. I'll try to be as brief and concise as I can...

Yeah, it may be par for the course for COMEX, though I've been led to believe that historically, in the development of the commodity futures markets if you put on a large short, you're supposed to be "reasonably sure" you could deliver it if required (buy somewhere else or produce).

there is a reason for this:
http://www.cmegroup.com/market-regul...sition-limits/

How much leverage does anyone need before they reach their position limits?

But the industry seems to have come to see it as normal.

The leverage did seem to come as a shock to some - whether it was the fact that the leverage is on LBMA (not supposed to be leveraged at all), or just overall leverage I couldn't tell. In other words, it seems Christian claimed all the gold on LBMA has been sold 100 times over, when it's supposed to be that if everyone who can say " I have Gold in LBMA", went to get it, they could.

I don't know who's mis-understanding whom at this point - my understanding is that LBMA members have unallocated and allocated pools and if you buy unallocated you might never get your Gold. If a salesman sold you a receipt to unallocated Gold, guaranteed that you could go and get it, and when you went to collect it you were refused, you've been lied to, but that's not LBMA's fault.

[Spartacus]

Re: Silver price manipulation? If it looks too bad to be true, it probably is - Eric Janszen

Next McGuire asserts that he accurately predicted silver price movements on February 5, 2010, and that these price movements conclusively proved price manipulation, which proof a market regulator failed to fully appreciate.

Maguire's and GATA's claim is much stronger than this - they claim
1. he made multiple predictions that day, well in advance, of each significant move, both up and down
2. he made a before-the-fact prediction that "if the report is positive then overall it will go like this, if the report is negative it will go like this ..."
3. he told CFTC what to look for in actual market orders being placed
4. he emailed CFTC well in advance all the information, 1. 2. and 3. above.

Maguire/GATA have released some of the emails as well, plus at least one from CFTC in response, confirming they got his emails.

Time will tell if it's the complete, unvarnished truth.

[WDCRob]

Re: Silver price manipulation? If it looks too bad to be true, it probably is - Eric Janszen

xPat,

Thank you for the fantastic analysis. Lots to think about in your post.

Second that thought xPat. Having a thoughtful counterargument provided is helpful.

[metalman]

Re: Silver price manipulation? If it looks too bad to be true, it probably is - Eric Janszen

xPat,

Thank you for the fantastic analysis. Lots to think about in your post.

bravo! another case of gold bugger scare mongering cracked by the itulip analysis posse...

ej + jtabeb, xpat, grg. ash, jimmy, jk, medved, etc, etc, etc = itulip

[slippery]

Re: Silver price manipulation? If it looks too bad to be true, it probably is - Eric Janszen

xPat,

Thank you for the fantastic analysis. Lots to think about in your post.

[medved]

Re: Silver price manipulation? If it looks too bad to be true, it probably is - Eric Janszen

Eric: your quoted source contradicts you.
"very real downward manipulation of silver and gold markets by JP Morgan"

Rising silver and gold price is not a valid argument against price manipulation, since who knows what the price would be without the manipulation.

Also Gordon Brown's gold sale is a well-known case of gold price MANIPULATION.

Rather, it is a well-known case of arrogance and stupidity synonymous with so-called central banking. If it was a "big money" manipulation, it failed completely.

The whole system of fractional banking supported by money-printing central bank is the biggest "manipulation" of all, and everybody accepts it as legal. As long as gold is treated as a commodity, there is nothing wrong with trading it in the futures market just like interest rate futures.

The *real* crime is treating gold as a commodity and turning the banking system into the speculative futures market "regulated" by the lender of last resort to the biggest losers.