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About the regulators issue
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Thread: About the regulators issue

  1. #1
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    Default About the regulators issue

    I posed this question to some members:

    "At first there was the public hearing in march at the cftc about position limits. The word manipulation was not made, but the issue floated in the air.
    Then these 2 enforcement actions of the cftc, both of which touch issues very near to the silver issue:

    April 29, 2010
    Morgan Stanley Capital Group, Inc. to Pay a $14 Million Civil Penalty to Settle CFTC Charges that the Company Concealed a Large Block Crude Oil Trade

    04/29/2010
    Hedge Fund Moore Capital Management, LP, and Its Affiliates Moore Capital Advisors, LLC and Moore Advisors, Ltd., Ordered to Pay a $25 Million Penalty to Settle CFTC Charges of Attempted Manipulation of Platinum and Palladium Futures Settlement Prices

    14 million and 25 million penalty are no peanuts.

    Then the scoop:
    DOJ Antitrust Division Considering Launching Investigation Into Silver Market Manipulation By JPM

    It seems that the government "guardians" are getting serious. But I'm not sure about it. The silver investigation of the cftc is running since september 2008 without results till now. I don't want to seem too cynical, but it could be that this manipulation is no longer avoidable, given an incoming shortage, so that the guardians stepping in at the end ended something which was in any way going to end.

    What are your feelings about?"


    I'd like to share with you the replies I got, which were very appreciated by me.

  2. #2
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    Default

    Dear Goldsilber,

    As for the recent DOJ and DFTC actions, I too am tempted to look at all of that with a cynic's eye, and suspect that there is a good chance that it will end up as "much ado about nothing." I realize, of course, that our federal government is not a monolithic entity with one mind and one purpose, but it still seems rather a dubious proposition to me that it may have been working with JPM for years to actively suppress the prices of gold and silver, only to suddenly turn on them now and attack them.
    Stranger things have happened in the past, certainly, but for now I take the attitude that nothing meaningful is going to come of these investigations and charges until I see much more evidence to the contrary.

  3. #3
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    Default Reply II

    My thoughts about this issue, also trend towards the cynical...as I expect that much thought has been devoted to the possible ramifications of a public outcry, regarding these crimes. I am hopeful that there are enough "un-tainted" individuals within this circle, so that defending the status quo will become highly suspect. I look forward to your efforts with making this issue understandable for us. Without doubt, I will contribute my thoughts to this line of reasoning, as they occur.

    Enjoy your day, as well, GS.

  4. #4
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    Default Reply III

    It would seem the USG "watchdogs" are awakening. Perhaps they are just "starting to do their jobs" instead of encouraging an ongoing fraud.
    The later seems more likely.....with the CFTC being able to say, "Yeah us. We fixed the manipulation!".
    Whatever ends the fraud

  5. #5
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    Default Reply IV

    I don't think these government watchdogs do anything until there hand is forced politically. So that is the big question: Is it being forced politically?
    Even so, they might only do the minimum job required. For instance, you mentioned these fines of 14 million and 25 million which, contrary to your opinion, are indeed peanuts to these financial giants in comparison to the monies they've already extracted from dubiuos and outright fraudulent activities. Its like me getting caught after robbing a bank for $100 million, but I end up only having to pay a $10 million fine. And that doesn't even count all the other robberies I committed beforehand of am still committing. Get it!

    I believe in the end, it will take extreme external forces outside of America's control to make anything really happen, and that day is coming much sooner then everyone might think, as in months, not years.

  6. #6
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    Default Reply V

    HI sorry I never saw your message,
    well interesting so now you have some answers on the manipulation of PM's. Anyhow the way PM's are doing now has to do with the manipulators(shorting) and the economy going downhill. Gerald celentes trends research has been right all along the crash of 2010 is already underway most don't want to recognize it. I hope it doesnt get any worse but I have a bad feeling about the current market trends.

  7. #7
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    Default

    ... pause ...
    but meanwhile you can comment these remarks of course

  8. #8
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    Default Reply VI

    Well, this has been swirling around the metals market for a couple of decades, and if it were really the case then the 'manipulators would have taken an astounding hit on a short position with that long of a duration.
    There are metals market bugs who have made names for themselves by publicly and loudly decrying these 'evil' shorts, but every time the regulators investigate (every few years or so) they find the same thing, specifically that the so called 'massive' shorts are shown to be bonafide hedges which have a corresponding long position and are therefore not speculative positions.
    There is always the claim that the regulators are in cahoots with the big banks and that the investigations are a sham, but given that the regulators and the exchanges don't tend to see eye on a lot of things I tend to believe that it wouldn't be too easy to get them to agree on a sham of this magnitude.

    I agree wholeheartedly that there should be speculative position limits in the futures markets in raw numbers as well as percentages of participation to avoid single player disruptions that could skew the markets. However, I also think that if players were to intend to control a market with fully funded ownership it would be and should be out of these particulators regulators hands.
    In this case, I think direct top level governmental control is the only real answer, even though the thought of that in the markets makes me want to spit up.

    Although it's been bandied about quite often, I don't think there is really a shortage issue as shortages and oversupplies in any market are almost always tempered by price movements and switches to cheaper alternatives if they are available. And in the case of Silver particularly, the only thing I have to say to the shortage mongers is 'Digital Photography'.
    This took away the single largest consumptive use of Silver there was, and it's not coming back, so if anything, unless we find some big new uses, relative to ten and twenty years ago oversupply looks more likely to me.
    I think that the catalytic uses should be gaining more ground these days as the other catalytic metals, particularly the big gun Platinum, are quite fat in price in comparison. But it will take some time for that to flow through the markets as the switchovers aren't necessarily quick and neat.

  9. #9
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    Default Reply VII

    GS....
    I dont know about the hedgefund, but $14 million dollars IS PEANUTS to JPMorgan. You can be assured that all present and future civil charges against JPM will be settled out of court and in peanut dollar penalties.
    JPM is willing to do this because the penalties are peanuts compared to the money they make trading/manipulating the markets. Among commercial lenders, JPMorgan dominates OTC derivatives trading, according to data compiled by the Office of the Comptroller of the Currency.
    The bank held $78 trillion worth of outstanding OTC contracts as of Dec 30. http://www.occ.gov/ftp/release/2010-33a.pdf

    This link http://www.bis.org/statistics/otcder/dt21c22a.pdf shows the holdings of derivatives in gold and silver (other precious metals category). $423 billion in gold and $127 billion in silver.
    The entire world's annual production of silver, at about 600 million oz., at $17/oz., is barely $10 billion, which is a mere 1/20th of the amount owed in these bullion accounts, which are dominated by JP Morgan. But the $203 billion of mostly silver, is 12 billion ounces of silver, which is 24 times world annual production, and perhaps 100 to 160 times the actual supply of physical silver held in London for delivery against such accounts, which may be as little as 75 million ounces or less.

    Now the DOJ investigation is another matter. This may be, maybe, the opening of a pandora's box. These would be criminal charges and cant be bought off.

    Best wishes

  10. #10
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    Default

    To be continued...

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