Tuesday, 10 April 2012

JPM's Blythe Masters vs Ted Butler on silver (and gold)

"That's wrong and we don't do it" is what Blythe Masters told CNBC when she was asked about the bank's massive short position in the silver futures market and whether it was manipulative. Her argument was that all the short positions are part of a hedging mechanism for metal held by their clients.

The veteran silver analyst Ted Butler  - the main force behind four investigations into silver manipulation allegations by the US regulator (CFTC) -disagrees. He questions the need for the bank to hedge in the futures market when it is a big player in the OTC market.

His piece in Silver Seek said: "The allegations against JPMorgan for silver manipulation are centered on their concentrated short position on the COMEX. Nothing more, nothing less... If a single trader held a 25% share of any other major futures market, say in crude oil or corn, there would be emergency meetings and decrees to break that concentration before the sun went down. Farmers would be descending on Washington, DC in tractors if a New York big bank held a short position equal to 25% of the Chicago Board of Trade’s corn futures market. It wouldn’t matter one wit to the regulators what was behind the position."

For a gold ETF investor the story is of interest because similar allegations have been made about the gold market - by Butler himself - and as far more more people invest in gold than in silver more pressure could be bought to bear on regulators. Sites like Gold Anti Trust Action Committee or GATA (where I spotted this story) follow this story but few mainstream media outlets follow it.

Despite this, Ted Butler's allegations and his followers' email campaigns have forced the futures market regulator into four separate investigations of the silver market. Only the last one was considered serious and although it has yet to conclude CFTC Commissioner Bart Chilton has said that evidence has been found that the public needs to know about.

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