Madman Across The Water?

[webmaster]

Subject:Madman Across The Water?
By: Theodore Butler

Overview: I agree that the CFTC is between a rock and a hard place. There is a crime in progress which they wish they didn’t have to confront. But the law states that they must. Besides, this is a dilemma of their own making. By ignoring the clear facts of manipulation for so many years, they have created a monster that will not be resolved easily or without disorderly pricing.

Link: http://news.silverseek.com/TedButler/1232994713.php

[Ancona]

Good article. I agree that the U.S. Government has to open this up immediately. If the shorts are told to cover and leave, the price of silver could easily acheive $45 - 55.

IMO, the Feds do not want the big boys to get a public spanking right now. Even so, they could easily force the situation behind the scenes.

But then that would entail actually doing the right thing, and when was the last time you saw the Government do THAT?

[strongman shelford]

Go Ted Go!

[duneyman]

Ted says that the physical shortage will force the situation. What physical shortage ? There seems to be plenty of silver out there. Otherwise, the explosion would have happened already despite the manipulation.

[valerb@bellsouth.net]

Even if the shorts were forced to actually buy physical silver and it drove the price sky high, wouldn't it just turn right back around and drop like a rock?

We are all sure it would be something higher than the current $12 an ounce, but where it would end up is anyone's guess.

There would still be the same amount of silver in the world and until the users are in short supply, what would justify sky high prices? Just curious.

[simonlee]

Ted,

Would it be possible that the top shorts are hedging OTC positions? I work on an equity derivatives trading desk and I know sometimes equity desks can own a big percentage of a company (longs though) to hedge written derivative contracts. I would imagine that a similar idea can exist for the commodities side.

One possibility is that these shorts have bought long positions from central banks and therefore are carrying the short futures as a hedge? If the central banks are behind these positions, I would imagine that they would not want to directly carry the short positions in their own name.

Just brainstorming....

Thanks,
Simon

[sliver]

Originally Posted by simonlee

Ted,

Would it be possible that the top shorts are hedging OTC positions? I work on an equity derivatives trading desk and I know sometimes equity desks can own a big percentage of a company (longs though) to hedge written derivative contracts. I would imagine that a similar idea can exist for the commodities side.

One possibility is that these shorts have bought long positions from central banks and therefore are carrying the short futures as a hedge? If the central banks are behind these positions, I would imagine that they would not want to directly carry the short positions in their own name.

Just brainstorming....

Thanks,
Simon

There was some discussion about the possibility of legitimate covering of long positions when this started to come to a head last fall. I think it appeared in GATA and Gold Seek. I'm not very knowledgeable about this stuff but the consensus seemed to be that wouldn't explain it all. It must not have because it is being investigated.
Sliver