Wall Street Manna

An irreverent look at Wall Street

Thursday, September 25, 2008

CFTC probing silver market manipulation

With silver prices falling this past summer, silver bugs world-wide set out to prove that their metal was in short supply and market manipulation was at work. They bombarded federal regulators with hundreds of emails crying foul play and demanded answers.

Though such pleas proved futile in the past, this time the rousing chorus grabbed regulators' attention. On Wednesday, the Commodity Futures Trading Commission confirmed that there's an investigation into the silver market....

Silver investors have argued that a handful of U.S. banks have been controlling a large portion of silver's short positions -- or bets that prices will decline -- on Comex division of the New York Mercantile Exchange. Official data from the CFTC showed that two U.S. banks had increased short positions in the silver futures market between July and August by 450% and controlled 25% of the total open interest.

"The proof that this selloff was criminal lies in public data," wrote Theodore Butler of Cape Elizabeth, Maine, in August in a silver newsletter. "The concentrated sale of such quantities in such a short time" caused silver's fall, wrote Mr. Butler, who for many years has been vocal about purported silver-market manipulation. In September he reiterated to readers that they should email the CFTC.
http://online.wsj.com/article/SB122231175151874367.html?mod=testMod

Here's the story on the manipulation.
http://aaronandmoses.blogspot.com/2008/09/gold-ramps-88-dollars.html

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