CFTC's Chilton Sees 'Fraudulent Efforts' to Control Silver Prices
YESTERDAY IN GOLD AND SILVER
Gold's high in the Far East was around 11:00 a.m. Hong Kong time… and from there began a long slide to its low of the day [$1,327.30 spot] which occurred around 9:45 a.m. Eastern time. From there, the gold price recovered to its New York high at $1,343.30 spot… which occurred at 12:15 p.m. Gold sold off a few dollars and then traded sideways for the rest of the day… closing unchanged from Monday.
Silver's price path was similar, although silver's low of the day [$23.16 spot] appeared to come moments after Comex trading began at 8:20 a.m. in New York. Silver's high [$23.97 spot] came at the same 12:15 p.m. Eastern time as gold's… then also traded sideways into the close.
Except for early trading in the Far East on Tuesday, the world's reserve currency was on the rise all day long… right up until 2:00 p.m. Eastern time. So the move in both silver and gold was not related to the dollar at all, as they were all rising together.
Even though gold spent the early part of New York trading in negative price territory, that didn't prevent the shares from climbing into positive territory shortly after the equity markets opened. It stands to reason that the shares topped out at gold's high at 12:15 p.m… and then slowly slid into the close… with the HUI finishing the day up a smallish 0.27%.
The CME's Delivery Report on Tuesday showed that 126 gold and 101 silver contracts were posted for delivery on Thursday. JPMorgan was at the center of activity again… and the link to the action is here. We're coming up hard on the end of the month… and those may be the last contracts delivered in October.
There were no changes reported by either GLD or SLV… and the U.S. Mint reported selling another 8,000 ounces of gold in their gold eagle program yesterday… and nothing in silver eagles. The Comex-approved depositories reported that a smallish 39,208 ounces of silver were received on Monday.
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¤ CRITICAL READS
I'm going to start my stories off with the big one of the day, week, month and year… and maybe even the decade. You read it in the headline of this column… and it was all over the Internet yesterday as well. I have several stories on this… and the first one is a Reuters piece that bears the GATA headline "Chilton lets loose: Fraudsters deviously rig silver prices". TheReuters headline reads "CFTC's Chilton raises alarm about silver market". This is, as are all the subsequent stories on this issue, a must read… and the link ishere.
A similar story appeared in yesterday's edition of The Wall Street Journal… bearing the headline "CFTC's Chilton Sees 'Fraudulent Efforts' to Control Silver Prices". There's also a Bloomberg story headlined "Silver Market Faced 'Fraudulent Efforts' to Control Prices, Chilton Says". Both are imbedded in the following GATA release which is linked here.
The story was also picked up in London's Financial Times. The headline there reads "CFTC puts spotlight on silver trades". The GATA release of this story is linked here.
Next comes this piece posted over at the CityWire.com website in London. Rob Mackinlay has followed up on CFTC Commissioner Bart Chilton's remarks, getting comments from silver market analyst Ted Butler and GATA's secretary treasurer, Chris Powell. The CityWire.com story is headlined "Price of Silver Has Been Subject to Attempted Manipulation" and you can find this must readarticle linked here.
Lastly comes Commissioner Chilton's actual statement on silver market rigging. It was posted yesterday over at the CFTC's website… and the headline reads "Statement at the CFTC Public Meeting on Anti-Manipulation and Disruptive Trading Practices". Needless to say, this is well worth your time… and the link is here.
In other news, I see that Japan is already complaining about the strong yen. We'll have to see if they intend on intervening in the currency markets again. Here's the story from yesterday's edition of The Wall Street Journal headlined "Japan Officials Step Up Rhetoric Against Strong Yen". It's contained in a GATA release headlined "So much for that G-20 pledge for free currency markets"… and the link is here.
The following is a Bloomberg story that was of great interest to all of us at GATA. The headline reads "Treasury Shields Citigroup as Deletions Undercut Disclosure". It appears that Bloomberg reporter Mark Pittman asked the U.S. Treasury in January 2009 to identify $301 billion of securities owned by Citigroup Inc. that the government had agreed to guarantee. He made the request on the grounds that taxpayers ought to know how their money was being used. Well, he got his answer. The provision of reams of irrelevant and unrequested documents while withholding all the requested documents, described in the Bloomberg News story below, is exactly how the Federal Reserve has responded to GATA's freedom-of-information request for information about U.S. gold reserves. The link to this must read story is here.
In a very related story comes another Bloomberg piece headline "Fed Won't Join Bank High Court Appeal on Crisis Loans". The bank group is appealing a federal judge's August 2009 ruling requiring the Fed to disclose records of its emergency lending. Bloomberg LP, the parent company of Bloomberg News, sued for the release of the documents under the Freedom of Information Act. The central bank has never disclosed the identities of borrowers since the creation in 1914 of its Discount Window lending program, which provides short-term funding to financial institutions, the Clearing House said in its petition. The link to the story is here.
Reader Jeff Richards provided the next story. It's a video clip from CNBC Europe featuring James Turk and some light-weight gold analyst named Charlie Morris over at HSBC Global Asset Management. It's embarrassing to listen to this guy prattle on. I sure wouldn't want this guy managing any money that I had. Where do they find people like this? The headline of the clip reads "Alternative Investments – Gold vs. Silver"… and the link to this 6-minute video is here.
Eric King over at King World News sent me the following short blog yesterday evening headlined "20 Million More Ounces of Silver Needed!". Eric is referring to what he thinks will be needed to fill an order for Sprott Asset Management's new Silver Trust. This is definitely a must read… and the link ishere.
It's slightly embarrassing when a reader [in this case 'David in California'] sends me a piece from Casey Research that I haven't seen yet. This is the case with the following report headlined "Inflation in the Real World" by editor Jake Weber. As is often the case, there's a big difference between what the government statistics are reporting and what's going on in the real world. This short read proves that point in spades… and the graph alone is worth your time… and the link is here.
Today's last offering is a piece from the Swiss website thedailybell.com… which Australian reader Wesley Legrand was kind enough to send me yesterday. I'll quote a pertinent paragraph from the essay… "Something much bigger is going on nowadays, however… bigger than the fiat currency trading this article (excerpted above) alludes to, bigger even than the idea of a single, global fiat currency. What is going on in our estimation is that the Western power elite itself is struggling and even failing. The Anglo-American axis has had the idea that it could soon, or fairly soon, create some sort of Western-based global governance, but that animating goal seems to be receding faster than a Eurozone recovery. It's not overly long, but definitely worth the read… and is headlined "Why the West is Losing"… and the link is here.
¤ THE FUNNIES
¤ THE WRAP
The whole aim of practical politics is to keep the populace alarmed [and hence clamorous to be led to safety] by menacing it with an endless series of hobgoblins, all of them imaginary. – H.L. Mencken
I wouldn't read a lot into yesterday's price action in either metal. The only thing of note was the fact that the price moves in silver and gold were not related to any move in the world's reserve currency. Volume was pretty chunky in both metals as well. All this data will be in Friday's Commitment of Traders report.
In Far East trading on Wednesday, both gold and silver peaked at 8:00 a.m. Hong Kong time… and were in decline right up until 8:30 a.m. in London. The U.S. dollar is rising… but the precious metals are declining much faster than the dollar is climbing. There's monstrous volume in silver already [as of 4:13 a.m. Eastern]… a whopping 13,000 contracts in December and March. I wonder if that number can be believed… and if true, what does it mean? For whatever reason, the CME's website is not showing the current volume numbers for gold.
In an essay to his private clients yesterday, silver analyst Ted Butler had the following to say about silver [and probably gold] prices going forward… "For silver investors, the advice is still the same. Hold tight and prepare for greater volatility. The big silver shorts will not roll over without a fight. They must be expected to fight back, using a variety of dirty tricks. The way to counter those tricks is to hold no margined positions and think long term."
I don't often get anything from 'the usual New York gold commentator' anymore… but a reader of mine [who shall remain anonymous] sent me this short comment about silver that's very much worth repeating… "Possibly, in a not unrelated development, the very well informed Gartman Letter early today bought silver hedged into the British pound. We do not recall TGL getting involved in silver before." If Dennis Gartman is putting on a silver position, dear reader… that should tell you a lot… especially after all the silver news that came out from the CFTC yesterday.
I noted in the Bloomberg story linked earlier that gold 'analyst' Leonard Kaplan maintains that: 1] there's no serious manipulation, but… 2] if the CFTC tries to crack down on it, the traders are smarter than the regulators and will find other ways to rig the market. Wow! I expect that other 'analysts' of his ilk will be out putting their spin on Chilton's comments in the days ahead. You must ignore these siren songs from the dark side of The Force.
Before I sign off today, Casey Research has clarified the situation on this subscription offer for BIG GOLD. As I mentioned yesterday, it's been selling for a huge discount [US$39] for the last couple of years, but that's about to change. This week [and this week, only… up until October 29th] they are honouring the current annual rate of $39 for the lifetime of your subscription. This applies to anyone who wishes to subscribe to this service… including new subscribers… and the link is here. The new price of BIG GOLD after October 29th will be $129/year. If you subscribe now, you're saving about 70% of the new subscription price. I urge you to give this serious thought. The usual Casey guarantees of satisfaction go with it.
Well, no matter what happens from hereon in, I'd say that the fuse to the silver price explosion has been lit. The only thing we don't know, is how long the fuse is… or how fast it's burning. It will also be interesting to see how JPMorgan et al… plus the CFTC and SEC plan to handle the end game when it does finally arrive. I would suggest that finalizing your investment plans in your silver investments should be at the top of your list of priorities. I'm still 'all in'… and not budging.
See you on Thursday.