We now live in a nation where doctors destroy health, lawyers destroy justice, universities destroy knowledge, governments destroy freedom, the press destroys information, religion destroys morals and our banks destroy the economy - Chris Hedges, "Days of Destruction, Days of Revolt"Moment of silence for the end of the CFTC investigation into silver manipulation - or is it? In the back of my mind when I read last night's Financial Times article, behind the immediate swell of anger and frustration, I was wondering if the article was a "plant" by someone motivated to force the demise of the investigation. Apparently I'm not the only one who had that thought: LINK Certainly the big move higher in the silver market today indicates that the silver bulls aren't so sure about the validity of that news story either.
It doesn't take a high IQ to understand that the silver market (and the gold market) are heavily rigged by the big banks, likely fronting for a Government that is desperate to prevent a price run-up in precious metals from undermining the validity of its unbacked, paper fiat currency. But I was reminded last night of President Lyndon Johnson's remark back in 1965 when he signed The Coinage Act of 1965, which de-monitized silver and nullified the original Coinage Act signed by George Washington in 1792:
“If anybody has any idea of hoarding our silver coins, let me say this,” drawled the Texan “Treasury has a lot of silver on hand, and it can be, and it will be used to keep the price of silver in line with its value in our present silver coin.”Of course, the Treasury unloaded its silver in trying unsuccessfully trying to keep a lid on the price of silver, as it jumped from $1.29 to $49 within 15 years. Here's a good article describing the Johnson tragedy: LINK
Fast-forward to 2012, with silver having hit $50 briefly in April 2011 and the CFTC on its third round of investigation into the silver market manipulation. We've already had one insider come forward - Andrew Maguire - with proof that JP Morgan manipulates the silver market. It's getting to the point at which the Government will lose all credibility in its role as a regulator of the commodities markets if it cavalierly brushes aside its investigation, in the face of many years of proof painstakingly compiled by GATA, in addition to the testimony and information revealed by Mr. Maguire back in the spring of 2010.
The interesting question is, however, to what extent does JP Morgan manipulate the silver market on behalf of the Treasury and the Fed? Based on the degree to which JP Morgan is exposed to the silver market through its massive short position in silver on the Comex and its even more massive position in OTC gold/silver derivatives (per the quarterly BIS reports), JP Morgan is catastrophically exposed to one adverse move against its position in silver. Anyone who has been in charge of large trading/risk positions on Wall Street (e.g. me) knows that no one would take the kind of capital positions assumed by JP Morgan in silver without some kind of backstop guarantee - either inside information or deep pockets that don't care about magnitude of losses (the same analysis applies to a magnitude of many multiples with JP Morgan's interest rate swap derivatives positions, which are likely used to cap interest rates on behalf of the Fed/Treasury).
Anyone who dismisses the idea that JP Morgan would be involved in silver market or interest rate manipulation must have missed the news surrounding the LIBOR manipulation, which now dates back to at least 1991. It remains to be seen whether or not the CFTC will in fact do anything to prevent further blatant manipulation of the silver market. Many of us have our doubts and would be pleasantly surprised if it does decide to take action. At the end of the day, like all attempts to manipulate markets throughout history which fail miserably, the U.S. Government's endeavor in the silver market will ultimately end up with disastrous consequences for anyone short the silver market.