Sunday, January 16, 2011

CFTC Caves to JP Morgan on Silver Exchange

JP Morgan has been manipulating the price of silver down by buying huge naked short positions on the metal. They are in effect promising to sell more silver than they could ever hope to have, in an effort to drive the price down.

They were caught red-handed in this market manipulation, and as a result the Commodity and Futures Trade Commission was under pressure to take action. To prevent people from offering to sell an unlimited amount of silver that they did not have, it was suggested that there be position limits connected to the actual amount of silver deliverable. There was a giant run-up in silver prices as JP Morgan started unwinding their short positions- likely with settlements that lost them billions.

Now it turns out that Government By the Banksters, For the Banksters, and Of The Banksters has not perished from the earth. The CFTC, run by a Goldman Sachs Guy, has let JP Morgan off the hook. Instead of being punished by the market for their bald-faced attempts to manipulate the price, Morgan is being rescued from the consequences of their bad bets by the government. It's a silver bailout.

I thought that with enough public spotlight on them, the government would do the right thing and stop people from fraudulently offering for sale millions of ounces of silver that they did not have. Clearly, even I have underestimated the extent to which our government at its highest levels is completely owned and controlled by Wall Street banking interests.

The only result of this is that the price of silver will be artificially pushed down- for a while. There will be an obscene divergence between the paper price of silver and the price we have to pay to actually get some physical silver in our hands. On paper, JP Morgan will offer to sell you tons of it cheap, its just that all you can buy from them is a paper promise to give you silver later, not actual silver. This pushes the silver moonshot off into the future, and insures that when it gets here, it will be even more sudden and dramatic. The commodities index will be like a fantasy world almost completely unconnected with supply and demand fundamentals in the real world.


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