The spectacular silver rally and current price is no bubble. HSBC and JPM stopped shorting the market so vigorously and began to actually cover some of their positions as a result of CFTC investigations.
Since the CFTC had previously investigated the market and done nothing, one might speculate that the publicity had provoked some behind the scenes discussions. JPM recently shut down its proprietary trading unit under Blythe Masters.
I will be absolutely stunned if anything except for a wristslap with no admission of wrongdoing is the result. However behind the scenes we might see a less oppressive domination of the silver market by these TBTF banks. But the profiteering will continue here and elsewhere. This is no reform administration and the Republicans were the primary authors of much of the crony capitalism so there is little relief to be found there.
What the masters of the universe seem to have not quite figured out yet is that you cannot keep skimming about 8 percent of M1 off each year as Wall Street bonuses, gimmicking and distorting the financial system to enable their control frauds, and maintain robust real economic activity. There were quiet coup d'etats in the UK and US, but the people do not yet realize it. At some point they will see the necessity of reform, and then we might have a sustained recovery. Until then, welcome to Zombieland.
CFTC scans JP Morgan's silver trading business
By Sakthi Prasad in Bangalore
Wed Oct 27, 2010 2:13am EDT
(Reuters) - The U.S. commodity futures regulator is looking into claims by a trader in London that JPMorgan Chase & Co (JPM.N) was involved in manipulative silver trading, the Wall Street Journal reported, citing a person close to the situation.
In recent months, U.S. Commodity Futures Trading Commission (CFTC) lawyers have interviewed employees of JPMorgan in its metals trading business, the newspaper said, citing a person familiar with the situation.
Along with JPMorgan, CFTC lawyers have also interviewed industry traders, commodity executives, experts and employees of other metals trading firms, WSJ said.
JPMorgan declined to comment to the Wall Street Journal on any aspect of the investigation. The firm could not immediately be reached for comment by Reuters outside regular U.S. business hours.
On Tuesday, Bart Chilton, a commissioner at the U.S. CFTC said there had been repeated attempts to influence prices in silver markets.
The Journal said JPMorgan and HSBC Holdings PLC (HSBA.L) have usually been the big players in the silver market.
However, in recent months the banks with large futures positions have sharply reduced the size of their holdings, the paper said.
(Reporting by Sakthi Prasad in Bangalore; Editing by Clarence Fernandez)
