Gold Daily and Silver Weekly Charts - Silver Turns It Around - Gold Options Expiration - Ted Butler

As noted in the intraday commentary this is a week with a few key events on the Comex for gold, and so we continued to see the metals under pressure, although silver turned it around quite impressively and reached back up for the 34 handle.

Let's see how we go into gold option expiration and first notice.

Sept. 26 Comex October miNY gold futures last trading day
Sept. 26 Comex September silver futures last trading day
Sept. 27 Comex October gold options expiry
Sept. 28 Comex September gold futures last trading day
Sept. 28 Comex October E-mini gold futures last trading day
Sept. 28 Comex October gold futures first notice day

Ted Butler on J.P.Morgan and silver:

"My allegations in silver are incredibly specific. I believe that JPMorgan, by virtue of a massive concentrated short position in COMEX silver futures, is manipulating the price of silver lower than it would be otherwise. If JPMorgan’s concentrated short position did not exist, the price of silver would be substantially higher. It does not matter if the bank is hedging or engaged in market-making; the mere existence of such an unprecedented large and concentrated short position proves manipulation. That’s a key feature of commodity law and is why the CFTC monitors concentration closely.

For some reason, however, the Commission treats silver differently than other commodities. In addition to ignoring the concentrated short position, it glosses over the results of the concentration on price. Silver witnessed, among other large and uneconomic sell-offs, two distinct sell-offs in 2011, in which the price fell 30% and 35% within a few days. Not one word was heard from the Commission on the two most pronounced sell-offs in modern commodity history. Yet, this week Commissioner O’Malia promised that the Commission was looking into the 4% price decline in oil. A decline in oil of 4% gets same day comment; 35% down in silver is not worthy of any comment. This amounts to a level of discrimination that is not tolerated in society or in regulatory matters.

In addition to being specific, my allegations around JPMorgan manipulating the silver market are consistent and continuous. Four years ago, instead of responding directly to public complaints about JPMorgan’s concentrated short position, the Commission chose to investigate as a way of kicking the can down the road. After four years, the issue remains because JPMorgan’s concentrated short position remains. No one in authority wants to make the issues around this short concentration more transparent; not the CFTC, not the CME, not JPMorgan itself. Transparency is good in principle and for the other guy; but when it comes to silver, not so much..."

Ted Butler, 25 September 2012

As you know I think the CFTC may be caught in a credibility trap with respect to the silver and gold markets. And if so, at some point this is going to break, as a scandal of major proportions.

All the CFTC has to do is to release its findings, and satisfy analysts like Ted Butler with proof that the big short in silver is a genuine hedge. That is their responsibility as the representatives of the public in overseeing the markets.

That they will not do so, that they will not even speak to the issue but continue to be evasive, makes one wonder just what sort of people these are, and what they have to hide.

I read with some cheerfulness today that Europe is using the US markets as a model of what NOT to do, in crafting their new regulations about high frequency trading. The types of 'Dr. Evil' market manipulation practiced in the states is already illegal in Europe, and more importantly, enforced on occasion.

And for New York and London and their contempt for the people, shame.

Open Letter From Ted Butler to Custodian of SLV Silver ETF

Ted Butler raises an interesting point about the large short interest in SLV.

I think his faith in the custodians, the ETF, and in the past, the CFTC and SEC, to do the right thing is probably misplaced. So far they have done nothing but extend and pretend.

The shorts are impaled, and their schemes are unraveling across a broad set of dollar denominated assets. This is not the time when I would expect honest disclosures, but even more coverups, deceptions, market manipulation, propaganda, distractions, intervention, and misdirection.

The highly leveraged scheme that is the US financial system is going down in a spiral like manner, slowly but surely. It will find its level, but where that is, no one can say. It's downfall will come not with disclosure and reform, but with hysteria and disbelief, and denial to the very end.

And then the difficult task of rebuilding can begin.

April 28, 2011

Mr. Laurence D. Fink
Chairman and CEO
BlackRock
55 East 52nd Street
New York, NY 10055


Dear Mr. Fink,

I am writing to alert you to a possible circumstance of fraud and manipulation in your popular ETF, SLV, due to the excessive short-selling of its shares. Current reports indicate the most recent level of total short sales now exceed 36 million shares. This is an increase of more than 14 million shares from the previous reported amount.  ShortSqueeze.com

Each share of SLV requires that one ounce of silver be held at the Trust's custodian (minus accumulated ed management fees), according to the prospectus. Since short sellers of SLV shares do not deposit metal with the Trust's custodian, this means that the buyers of the more than 36 million shorted shares of SLV do not have metal backing, as required by the prospectus. It is my belief that many of the shares shorted have been shorted precisely because no physical silver was available to deposit. If I am correct, this may constitute fraud and manipulation, possibly on the part of Authorized Participants (APAs) who make deposits and redemptions of metal in the Trust.

I am a silver analyst and a fan of SLV. I had raised this issue with the previous owner and sponsor of the trust, Barclays Global Investors (BGI). I never did receive a satisfactory answer from BGI about the shorted shares issue, although they did agree to list and publish the bar serial number and weights held in the Trust after I publicly urged them to do so. I am hopeful that BlackRock might be more responsive to this issue.

Publicly-traded ETFs that have specific metal backing are highly unique securities. Perhaps a small short position may be overlooked on a temporary basis until the metal is deposited in the Trust due to logistical considerations. But a short position that represents more than 10% of the outstanding shares issued means that many buyers of the shares have no metal backing. This is clearly not in keeping with the spirit of the prospectus that each share issued be backed by one ounce of silver on deposit with the custodian.

I trust you will look into and rectify this circumstance.

Sincerely,


Ted Butler

Butler Research, LLC
www.butlerresearch.com

Weekly Metals WrapUp with Ted Butler on King World News

Ted Butler April 16 Metals Review mp3

• The weekly change all occurred on Friday, related to the Goldman Sachs fraud scandal.
  
  
• GLD holdings are high or near the highs. But there are continuing noticeable withdrawals in SLV making a sharp decline in the metal claimed to back the silver exchange-traded fund SLV. This may signify that the metal is needed somewhere else amid a worsening shortage of metal that is at worst neutral and most likely bullish.
  
  
• Market analyst Jim Rickards' interview last week with King World News was important for citing the lack of transparency of the London Bullion Market Association and confirmed Ted's judgement. It's as "far away from transparency as you can get without being completely opaque." "You can't depend on anything the LBMA says," Butler complains, adding that the LBMA discloses "nothing verifiable" and "I wouldn't trust anything from the LBMA."
  
  
• Having sued Goldman Sachs for fraud on Friday, the U.S. Securities and Exchange Commission may give some backbone to the U.S. Commodity Futures Trading Commission to act against Goldman and J. P. Morgan and other banks in their manipulation of the precious metals and commodities markets. The SEC action is a real 'cage rattler' in the financial reform discussions in Washington.
  
  
• The only question is that maybe the 'commercial crooks' can work the metals market lower in the short term, but silver looks well set up to take off in the not too distant future.