CFTC Investigating Silver Market


Chart: 2008 London Fix Silver AveragesThe Wall Street Journal reported the Commodity Futures Trading Commission (CFTC) confirmed Wednesday that there’s a new investigation into the silver market. Apparently, the CFTC has received numerous complaints that silver was in short supply — verified by reported visits to various coin shops, yet prices were manipulated lower by large investors. WSJ writes:


Silver investors have argued that a handful of U.S. banks have been controlling a large portion of silver’s short positions — or bets that prices will decline — on Comex division of the New York Mercantile Exchange. Official data from the CFTC showed that two U.S. banks had increased short positions in the silver futures market between July and August by 450% and controlled 25% of the total open interest.


On May 14, 2008, the CFTC released the results of a similar investigation and reported no evidence of manipulation. Then, the Division of Market Oversight concluded:

  • There is no evidence of manipulation in the silver futures market for the trading period examined.

  • Silver cash and futures prices have risen dramatically between 2005 and 2007, with silver outperforming the gold, platinum and palladium markets, suggesting that silver futures prices are not depressed relative to other metals prices.

  • NYMEX silver futures prices tend to track closely the price of physical silver.

  • There is no observable relationship between short-futures-trader concentration levels and silver prices.

A CFTC statement noted they have received complaints for the past 25 years from "silver investors alleging that the price of silver futures traded on the NYMEX has been manipulated downward." And had concluded in 2004, which the May study builds on, that the "existence of a long-term manipulation was not plausible."

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