Free Market Forces Will Do What the CFTC Will Not!

gold & silver sold outThe CFTC IS the watchdog for abuse in the options and futures markets and Friday April 12-Monday April 15 were beyond obvious as to what was done.  Reportedly 1,000+ tons of paper Gold were sold in less than 8 hours of trading.  This is 32 million ounces.  This is 40% or more of ALL Gold produced on the planet in 1 ENTIRE YEAR!  “Who” in their right mind would sell in this fashion?  Who in the world even holds this amount of Gold?  The answer in case you are wondering is NO ONE (other than central banks and THIS may not even be true any longer)!
Forget completely the nuts and bolts, look at this through the eyes of an 8 year old.  The price of the physical metal is different than the futures prices.  ONE of these two must be wrong by definition as they cannot both be correct.  The “price” is and has been “set” by the paper markets.  The “tail is wagging the dog”, this is more than obvious.  The futures markets were set up originally to create liquidity and facilitate suppliers hedging and speculators speculating.  This has gone on for years now (at least since 1996).  Obviously “something” isn’t right when one market has one price and the other another price so …what to do?  Just sit back and wait…for the inventories to be wiped bare.

 

Submitted By Bill Holter, Miles Franklin Ltd,:

I wrote yesterday about how the CFTC would look into Bitcoin yet nearly 5 years after the Silver investigation we have heard nothing.  In a roundabout way I saw a reply from Bart Chilton this morning to several writings yesterday (I suppose my own also), he states:

Subject: RE: as per bix..care to commentSorry for the delay. If the evidence was clear, we will act. We’ve looked at the huge drop in precious metals and are still doing so. At this point all I can say is that a lot of large institutional investors that have a fairly long only strategy got out of the market over the last few months. We also saw a lot of high frequency cheetah trading around the volatility. Often times we see markets that are disconnected from supply and demand. We all know that speculation plays a role and that supply and demand do[‘t rule markets with an iron fist. At the same time, there certainly needs to be some correlation. When there is not, that raises our antennas and we look deeply.

Over the years, I have been particularly concerned about precious metals. Even though I can’t say anything based upon confidential information, I can say that at times over the years I believe—based upon public information—that there have been efforts to manipulate the markets (silver and gold).

That is about all I can tell you now. Hope it was somewhat useful. We will keep at it and hopefully catch he bad guys when we find them.
 
Best,

B

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The above reply was part of a long back and forth string in which Mr. Chilton said he would “forward” to their “oversight folks”.  What exactly is there to forward?  The CFTC IS the watchdog for abuse in the options and futures markets and Friday April 12-Monday April 15 were beyond obvious as to what was done.  Reportedly 1,000+ tons of paper Gold were sold in less than 8 hours of trading.  This is 32 million ounces.  This is 40% or more of ALL Gold produced on the planet in 1 ENTIRE YEAR!  “Who” in their right mind would sell in this fashion?  Who in the world even holds this amount of Gold.  The answer in case you are wondering is NO ONE (other than central banks and THIS may not even be true any longer)!
Bart says that “a lot of large institutional investors that have a long only strategy got out of the market over the last few months”.  Really?  And they ALL decided to sell at one time on a Friday morning?  An absolute MASS of sales?  AS in over 100 tons in 10 minutes?  It is said that the ETF “GLD” has bled tonnage this year (of course matched by the Chinese and Indian buys…and then some), did you know that if GLD shares are sold short that this will also cause the trust to let go metal?  So a naked short (or legal short) can initiate their trade and the trust will correspondingly release metal into the market (if they really have it).
Forget completely the nuts and bolts, look at this through the eyes of an 8 year old.  The price of the physical metal is different than the futures prices.  ONE of these two must be wrong by definition as they cannot both be correct.  The “price” is and has been “set” by the paper markets.  The “tail is wagging the dog”, this is more than obvious.  The futures markets were set up originally to create liquidity and facilitate suppliers hedging and speculators speculating.  This has gone on for years now (at least since 1996).  Obviously “something” isn’t right when one market has one price and the other another price so …what to do?  Just sit back and wait…for the inventories to be wiped bare.
This is even more simple than reciting the alphabet for this 3rd grader.  All you need to do is pull the “time and sales” report.  Pull the report and see “who” it was that did all of the selling in the first 10 minutes on Friday and Monday.  Look to see “who” sold the most and did it in concentrated fashion…mystery solved and then indict the bastards.  There is no difficulty whatsoever here, the compliance officer of any midsize single retail brokerage branch could figure this out and have all the facts within a week’s time.  Seriously, with freedom to obtain the time and sales information, the culprit(s) would be discovered with concrete proof and shutdown if a true investigation were undertaken.
As I have said many times before, no real investigation can ever take place because the findings would 100% completely destroy, bankrupt and close the entire financial system.  My guess is that all markets would close withing 72 hours and your positions frozen in time until a “reset” and anew market opening with “new” values.  Pure and simple the Gold and Silver futures markets are a fraud.  I can say this with the paper prices being the proof positive since they are supposed to be representative of the physical products themselves.  Were an investigation to truly occur the findings would undermine our “beliefs” and an even bigger run than is now occurring in the metals would be immediate.  An admission by a regulatory agency that the paper prices are a fraud and naming a big or “the biggest” financial institution in the country as the perpetrator would create a panic that could not be stopped and would spread into every trade able market on the planet.
The 1st and 2nd “investigations” into Silver found that no manipulation or price rigging occurred because the paper and physical prices were relatively close to each other.  If that was the reasoning then how exactly do you explain $9 Silver in 2008 that could not be purchased anywhere on the planet for under $15?  You cannot…which is exactly why we have gotten no report on their “findings” since 2008.  The current experience where Silver trades at $23 on the COMEX yet cannot be had anywhere under $26-30 (depending on product) is the same thing.  How can it be explained that MASSIVE amounts of Gold and Silver were sold if there is very little to be had and is trading at a premium to the “price” we are told?  What happened to all of this metal that was supposedly regurgitated in a panic fashion?  Tons and tons just “magically disappeared”?  Poof…up in smoke?  Gone?  …Or…never was???
In his e-mail, Bart Chilton says he cannot comment any further because of “confidential information”.  Really?  Is this like “double secret probation” information?  The scam is obvious to investors all over the world which is why the “unintended consequence” of a run on metal inventories is happening all over the world.  We I suspect will only hear from the CFTC after the fact and after the inventories are wiped out…”who coulda’ seen it coming?”.  The supply chain in Silver particularly is very fragile, what will happen when an Apple computer or other end user cannot source metal?  Will the CFTC blame the “shortage” on “too much use”?
So we sit and wait…for the inevitable.  We wait for the obvious.  What we won’t wait for is any report coming from the CFTC as the physical market is “reporting” to us right now.  We will have a “verdict” ajudged by the physical markets long before long before we hear from the CFTC apparently.  Regards,  Bill H.

 

P.S.  maybe they will tell us that the physical markets are tight because the largest open pit mine in North America collapsed which obviously has no effect on the paper price…only the real supply!

 

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Comments

  1. I hope the comex shiits the bed as he suggested a few weeks ago. Again, the rule of law is out the window, and sadly, a collapse is needed to set us free.

  2. Reportedly 1,000+ tons of paper Gold were sold in less than 8 hours of trading.  This is 32 million ounces.  This is 40% or more of ALL Gold produced on the planet in 1 ENTIRE YEAR! 
     
    I know these aren’t COMEX numbers, but in Silver, we had  more than has ever been mined sold in one day. That’s something?
     
     

  3. Another great article by Bill Holter and the only one I enjoy reading. Keep it up Bill and Keep Stacking.

  4. All we can do is hang on for the ride at this point, keep taking every ounce of physical we can off the market in the meantime.

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