The main arguments that I hear by silver manipulation deniers are:
Supply and demand sets the price of silver, not the futures market. The futures market is just used for hedging of commodities to layoff risks.
That might be true in some commodity markets, but definitely not in silver.
In silver (and gold) the market has been manipulated down by a concentrated group of commercial investors with an out sized short position, which in silver at least is probably a “naked short” meaning they don’t have the metal that they have already sold.
The miners aren’t using futures for hedging as they would have to report that and they aren’t. They are about the only ones that could (legitimately) sell silver short to lock in a price as a hedge.
In future contracts for every buyer there is a seller.
This is true. But, in silver the majority of the contracts are bought and sold by entities that are pure speculators, not hedgers. It is a big rigged gambling game. This is all laid out and explained weekly by Butler, Steer and others. The weekly CFTC COT reports show that the traders classified as commercials basically lead the traders classified as managed money around by their collective nose. How? The managed money traders are dominated by technical funds. These technical funds trade on price signals and moving averages. The problem is they trade as a herd, buying and selling at certain price signals. The commercials use trading tricks (HFT, spoofing, etc.) to move the technical funds in and out of trades to the advantage of the commercials. Butler claims per his observations that at least JPM (and the commercials in general) have never had an overall loss as they buy when the managed money is selling and selling when they are buying. This kind of track record is not possible in a non-manipulated market.
The CFTC has investigated these manipulation allegations at least twice and has not found any problems.
This is true, but it doesn’t mean that the silver price is not manipulated. It MAY mean that the trading tactics of the manipulators are not illegal. If that is the case then the laws/regulations need to be changed because silver is being manipulated and the CFTC’s own data proves that. The price of silver in effect is determined by COMEX future contract trading. As I have said, most of the trading is done by speculators who are manipulating the silver price.
What the lack of CFTC findings and actions says to me is that the CFTC is incompetent, corrupt and/or not strong enough to battle JPM and the other large commercials. I would guess that the CFTC is underfunded to actually carry out their mandate. Politically it might not be feasible to rein the large commercials in as they are large political donors.
