THE GOOD, THE BAD AND THE UGLY / BUTLERRESEARCH.COM

The Good, Bad and Ugly

Theodore Butler
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March 25, 2013 - 9:28am

















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I’ll save the good for a moment, but the bad and the ugly seem to permeate the silver and gold and other markets. On Wednesday, I mentioned that one reason gold and silver failed to move higher after the Cyprus news was such a rally would have interfered with a planned takedown in copper, platinum and palladium, which was evident on Monday and Tuesday. For the record, there was the expected substantial commercial buying in copper and platinum, a bit less in palladium. My point is that commercial positioning on the NYMEX/COMEX is the strongest short term price influence, way ahead of anything else, including actual news and developments in the real world of supply and demand. This is so contrary to commodity law that I believe the regulators must be thought of as corrupt.


Even worse is that silver (and gold) investors seem to be confronted on a daily basis with the proposition that the US Government is working against the interests of silver investors. While every conceivable effort is undertaken by the USG to help push bond, equity and real estate markets higher, there appears to be an effort to depress silver prices that goes beyond ugly. It’s not that silver investors are asking for or expecting any of the special favors and incentives doled out to investors in other markets; it’s more a case of silver investors being discriminated against by the US Government. This discrimination gets old and I sense that is what many must feel. I know I do.
 

The prime discrimination is the failure of the federal regulator to address credible allegations of wrongdoing by JPMorgan in the COMEX silver market. No one has asked the CFTC for any special favors or that is outside their direct jurisdiction. Market concentration is not something I invented or suggested be included in COT and Bank Participation Report data; it is the main safeguard of the CFTC against manipulation. For anyone to raise legitimate questions about existing bedrock regulatory matters shouldn’t result in silence behind a phony 4.5 year investigation. By the CFTC not speaking up or ending a continued silver price manipulation brought about by JPMorgan’s controlling market share, the agency is discriminating against silver investors and undermining trust in the institution. It further undermines everything good that America used to stand for.


Every day, silver (and gold) investors are subject to whatever daily pricing the big COMEX paper hangers decide to dictate, irrespective of what the real supply/demand fundamentals would suggest. HFT and computer-driven algorithms have come to dominate COMEX silver pricing to an absurd and uneconomic level. The reason we are witnessing unprecedented silver investment demand and unusual movements in COMEX silver warehouses and the SLV is because corrupt COMEX pricing has set the price of silver too low. If the price of silver was not set too low by JPMorgan’s outsized short position and the daily computers gone mad games, I doubt we would be seeing all the unprecedented developments in silver that I write of constantly.


To experience these unnatural forces of JPM and the computer trading madness on a daily basis over many months and years, all while other investment markets are buoyed by government actions, is debilitating; it wears you down, as it should if you are human and alert. So my first offering is one of empathy and to tell you that I feel it as well. More importantly, an objective analysis of the discrimination by the CFTC and their failure to rein in and terminate an increasingly obvious price manipulation is good beyond measure. In simple terms, the bad and the ugly add up to an overpowering good. The bad and ugly are why silver prices will soar. If silver prices weren’t set so low and if the CFTC had cracked down on JPMorgan, there would likely be little reason or urgency to buy silver.


Certainly, I know I wouldn’t be pounding on the table to buy silver if the manipulation didn’t exist or if the regulators hadn’t gone off the rails and into a ditch. I don’t think I ever suggested buying silver for reasons unrelated to the manipulation or actual supply and demand. I’m not saying that all the other reasons, like currencies, economic conditions, other markets and money printing, etc, don’t have a bearing on silver prices; but I am saying those reasons are not specific enough to silver for me to write about them. As debilitating and painful as the ongoing silver price manipulation has been, if the manipulation didn’t exist, neither would the prime reason for buying silver. No pain, no gain and all that jazz.


Therefore, I can’t rule out further silver price stabs to the downside before a dramatic and final resolution to the upside because both stem from the same cause – the manipulation. What I can say is that while those stabs at new price lows may occur, it is mandatory that silver prices will explode at some unknown point. Considering how far along we are in the silver manipulation in terms of time and considering the emerging signs of physical tightness and developing shortage, I think it’s best to concentrate on the certainty of the coming price explosion and not the uncertainty of near term pricing. Don’t let the crooks at JPMorgan or the negligent and discriminatory regulators convince you otherwise.