The CFTC Says 'NO' to Silver Analyst Ted Butler

After not doing much of anything during most of the Far East trading session on Wednesday, gold spiked up to around $1,032 spot at 4:00 p.m. in Hong Kong… just 30 minutes before London opened for their Wednesday trading day.  The price pretty much stayed at that level for the next four hours… and then began a gentle decline starting at 12:30 p.m. in London… shortly before New York opened.  This decline lasted until 4:00 p.m. Eastern time… which was its absolute low of the day… recorded as $1,117.50 spot.  From there, gold recovered almost back to its close on Tuesday.  But, all in all, it was basically a nothing sort of day.

Silver gained about a percent during Far East and early trading in London.  The peak price for silver [around $17.61 spot] was at the London silver fix around noon local time.  During the next couple of hours, silver fell to its low of the day in early New York trading… with the low price tick of $17.34 coming shortly after 9:00 a.m. Eastern time.  Silver managed to close the day with a smallish gain.

The dollar, which was basically flat yesterday, played no part in the precious metals' price movement for the second day running.

The HUI couldn't hold onto its slim gains… and got sold off for a small loss as the general equity markets softened as the trading day came to an end.  The HUI closed down 0.07%.

Well, the open interest numbers for Wednesday were not what I wanted to see.  It was not a short covering rally in either metal.  It was a new buyer… and the bullion banks were there in force to stop the budding precious metals rallies in their tracks.  Gold open interest jumped a large 9,778 contracts… although volume wasn't overly heavy at 166,414 contracts traded.  Silver's open interest was up a steep 2,882 contracts on volume of 31,331.  Ted wasn't a happy camper about these numbers either.  But they should be in tomorrow's Commitment of Traders report.  It will be interesting to see if this was JPMorgan and the '4 or less' traders taking the short side… or was it the '5 through 8' traders in their stead.  Hopefully his report will tell us that.

The CME's Daily Delivery report showed that zero gold and 46 silver contracts were put up for delivery on Monday.  Once again there were no changes in GLD, SLV, or the U.S. Mint's sales figures.  The Comex-approved depositories showed that another 525,521 ounces of silver were added to their collective inventories on Tuesday.

On Tuesday I posted an interview between Eric King of King World News and Jim Rickards of the McLean, Virginia-based consulting firm Omnis Inc.  Well, Jim was in the news again yesterday… this time over at Bloomberg.  The headline reads "China in Midst of 'Greatest Bubble in History,' Rickards Says"… "Rickards joins hedge fund manager Jim Chanos, Gloom, Boom & Doom publisher Marc Faber and Harvard University professor Kenneth Rogoff in warning of a potential crash in China’s economy."  I must admit, dear reader, that even I'm having problems justifying China's run-away economy… as I think something has to give as well.  The story [courtesy of California reader Joseph Weiler] is worth reading… and the link is here.

Here's an AP story about Detroit schools in The Seattle Times of all places.  "Doors are expected to shut on more than a quarter of Detroit's 172 public schools in June as the district fights through steadily declining enrollment and a budget deficit of more than $219 million, an emergency financial manager said Wednesday."  The headline reads "44 or 172 Detroit schools slated to close in June".  I thank reader Scott Pluschau for sending it along… and the link is here.

Well, dear reader, I know you're not going to believe the following story… but I want you to stretch your imagination for a moment and ponder the following possibility.  In a Bloomberg story filed yesterday… Deutsche Bank, JPMorgan and UBS have been charged with fraud linked to the sale of derivatives to the City of Milan.  Three of the biggest gold and silver shorts on the Comex up to their eyebrows in a fraud of this size?   See… I knew you wouldn't believe it!  It's another story courtesy of Joseph Weiler… and you can read all about it here.

Joseph Weiler was a busy guy yesterday… as here is his third excellent story in my column today.  It's a story from the Los Angeles Times headlined "More homeowners are opting for 'strategic defaults'"… "Underwater on their mortgages and angry at banks, more borrowers are choosing to hand over the keys, even if they can afford the payments."  This development is no surprise to me… and this situation will get much worse in the years ahead.  The link to this must read story is here.

My last story of the day was a GATA dispatch from Monday.  Jon Matonis, who describes himself as an economist of the Austrian school living in Gibraltar, has written at his blog, The Monetary Future, a fascinating account of the infamous attempt of the Hunt Brothers to get hold of a lot of silver in 1979-80.

The biggest lesson of the story may be that, then as now, position limits in the U.S. commodity markets are to be applied against longs but not against shorts. Of course that's the big issue underlying the U.S. Commodity Futures Trading Commission's hearing on the precious metals futures markets on March 25, and GATA will try to raise it.

I ran this story past Ted Butler to see what he thought… and these were the comments that I got back… "It's an interesting and subjective read, that's partially factual and one-sided. It conveniently overlooks the main undisputed fact, namely, that the Hunts did manipulate the price of silver."

Matonis' essay is headlined "Hunt Brothers Demanded Physical Delivery Too"… and the link is here.

War does not determine who is right… only who is left. – Bertrand Russell

I was disappointed with yesterday's price activity, as there was no follow-through from the nice [but capped] rally that we had on Tuesday.  I was sort of hoping that these were short covering rallies… but that was not the case.  Nothing has changed.  It's the same old, same old.  Unless something comes along out of the blue, I don't see much happening [or being allowed to happen] for the next little while, as it's obvious that the bullion banks are blocking all advances.  The CFTC hearings on March 25th may change that… but, so far, there's no sign of it.  We'll just have to wait and see.

You will note from the headline to this column that Ted Butler was not asked to participate in the CFTC's hearings on the precious metals.  In commentary to his paying subscribers late last night, Ted laid it all out.  I've already read it… and I'm expecting it to go up in the public domain before the weekend… and I'll comment on it further when I post it in this column.  Needless to say, I'm not happy about it… and neither should anyone else be.  He's the star witness to a 25-year crime in progress… and the police aren't going to ask him any questions… at least not when the TV cameras are on.  Go figure!

Both gold and silver are down a bit in Far East and early London trading at 4:31 a.m. Eastern time.  But the dollar is up over 50 basis points from its low last night… so the metals are doing quite well, all things considered.

Gold volume is a smallish 11,800 contracts in the April contract…minus the spread trades… and silver's volume is just under 1,900 contracts traded in May.  This will all change when New York opens, of course… but, for the moment, it's very quiet out there.

The CME's preliminary volume figures for Thursday's trading show that gold traded 156,982 contracts… and silver's volume was 25,905 contracts.

As I said before, yesterday's action was a bit of a yawner… and we'll find out soon enough if the same is in store for us today.

See you on Friday.