Silver Manipulation

Again, I think Butler has done a great job of reporting on the silver price manipulation. Following is my attempt to distill how this manipulation has been working, but this explanation is based mainly on Butler’s articles and if you want to dig deeper that is where you should go.

There are 2 groups of traders that do a large portion of the silver trading- the Commercial traders (large banks) and the Managed Money Traders (MMT) (consisting largely of Technical Traders). The Commercials for years have had a large silver futures short position. Typically, the top 4 and top 8 short positions are Commercial traders. The Technical traders buy and sell based on price signals. They are heavily influenced by the 50 and 200 day moving averages (MA). They buy when the price moves above the MAs and they sell when the price moves below the MAs. The Commercials are able to manipulate the price by using High Frequency Trading, spoofing and other tricks, so they can move the MMTs in and out of trades to the advantage of the Commercials. Butler states that the Commercials have never taken a loss on these trades in the last many years until lately. This would defy logic in an un-manipulated market.

I see much commentary out there where people are arguing about exactly who controls this manipulation or why it is happening. The same can be said about Butler’s claim that JPM acquired 1000 Moz. (a billion) of silver over the last 9 years. I think it would be nice to know exactly who is doing what and why, but I don’t think we are going to get that certainty at this point. The main focus needs to be ending the manipulation and then what follows from that will tell us much as to the “who & why”.

Butler’s contention has been that JPM has manipulated the silver market to make a profit. Another “reason” thrown out by some is that JPM has tried to manipulate PM prices to keep the USD strong. I think the profit motive is the stronger case, but the USD motive might be the reason the USG doesn’t try to stop this manipulation.

To me the CFTC’s* COT* report shows the silver manipulation. Butler and others report on the COT each week and it seems that there are more and more commentators talking about the precious metals market and silver in particular. I find it interesting how often I see articles raving about the upside potential of gold and then in their final paragraph they will say “and silver should do even better”.

Remember that both the Commercials and Managed Money Traders (MMTs) are speculators- very little if any legitimate hedging involved. Compared to the annual production of silver the top 8 silver shorts are currently (2/22/21) short about 4.8 months of world silver production. Even more egregious, they are over 18 months short compared to Available Silver Production for Investment (I’m calling this ASPI- see ASPI). This is no more than a high stakes gambling game and the commercials have always fleeced the MMTs up until about a year ago. For the last year the big 8 short traders seem to be “stuck” in their short position and haven’t been able or willing to buy their way out.