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A Secret and Illegal Agreement – Ted Butler

by Ted Butler, Silver Seek:

There certainly doesn’t seem to be a shortage of outrageous behavior recently, when looking at reports of an older Asian-American doctor being dragged off a plane. But where visual images cap a sense of outrage that has crept into the flying experience, sometimes bad behavior is not always captured on phone cameras. Sometimes you have to step back and think about things by reading and considering all the facts.

Last week, I asked you to consider writing to the CFTC and your elected representatives yet again in regard to a letter I sent to the two key appointees who are primarily responsible for guarding against market manipulation. In the letter, I highlighted the case for a silver manipulation. Today, I would like to point out just how upside down this whole thing has become.

The CFTC’s main purpose or primary mission is to prevent manipulation and ensure market integrity. Neither you nor I chose this as the agency’s prime mission, it was assigned by congress and commodity law. While not large by government standards, the CFTC is allocated more than $250 million annually and employs around 700 full time employees to fulfill its mission against manipulation and fraud in the regulated commodity markets.

To advance its prime mission, the agency actively solicits tips from the public in its quest to uncover wrongdoing and has instituted a formal whistleblower program designed to reward those who step forward to report wrongdoing. Sounds like a fairly formidable effort against market manipulation and fraud – a quarter of a billion taxpayer dollars annually, 700 full time employees and programs designed to generate tips and complaints from the public. One might think with resources like that, market manipulation wouldn’t stand a chance. Think again.

Those raising the allegations of a silver manipulation, like myself and others, have, basically, zero funds and zero employees budgeted towards raising the allegations of a silver manipulation. The allegations are driven simply by observing price action and COMEX positioning changes, as reported in the COT reports. Despite the programs designed to encourage and generate tips from the public, the record indicates that the CFTC has become downright hostile and unwilling to openly discuss any allegations of a COMEX silver manipulation, even though the allegations are based upon Commission data. Talk about upside down.

The easiest and most practical course of action for the CFTC is simply to address the issues in an open and forthright manner. No muss, no fuss and no great expenditure of taxpayer resources. Explain why the agency’s own guidelines on concentration are ignored on the short side of COMEX silver futures. Explain how it is legitimate for large speculative traders to be setting the price and for real silver producers, consumers and investors to play little, if any role in the price discovery process. Explain how it could possibly be legal for the largest short seller, JPMorgan, to also be the largest physical stopper at the same time – not how it could be done (we know how), but how that could be legal. Explain how JPMorgan never taking a loss on a newly added short COMEX silver position for nine years didn’t raise agency suspicions.

There has to be a good reason why the CFTC won’t openly address the clear evidence of a COMEX silver manipulation, as well as why JPMorgan and the CME Group would turn away from direct accusations of wrongdoing that would constitute slander and libel if such allegations weren’t true. Something has to be holding the CFTC back from addressing that which should and must be addressed. Actually, I think there are two reasons.

One, as I’ve long held concerns the agency rejecting any thought of a COMEX silver manipulation early on, more than 30 years ago when I first alleged such a manipulation. Basically, it’s nothing more than a continued doubling down of manipulation denial because how does a government agency openly admit to failing in its prime mission for decades despite increasingly clear evidence of such failure? This denial doubling down is reflected in the unusual circumstance of the agency being forced to argue with every single point I ever raised about silver. But it’s simply not possible that everything I say about silver to be 100% incorrect. At a minimum, that would be insulting to those who find value in what I write. Besides, I rely, almost exclusively, on the agency’s own data to make the case and it almost ends up with the agency arguing against its own data.

But there’s an even more compelling reason for the CFTC to deny allegations of a silver manipulation that burst onto the scene nine years ago – the takeover of Bear Stearns by JPMorgan in March 2008. As the public record indicates, this was at the start of the financial crisis and came about with the US Treasury Dept. and the Federal Reserve requesting JPMorgan’s assistance in rescuing Bear Stearns. You can be sure that since JPMorgan was being asked by the US Government to, in effect, do it and the country a favor in taking over Bear that the bank would, in return, solicit and arrange for as many protections for JPM as possible. JPMorgan’s CEO, Jamie Dimon, has since lamented that he ever agreed to the takeover, but when it came to subsequent dealings in COMEX silver over the next nine years, it’s hard for me to see how it could have turned out any better than it did for the bank.

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