2011-05-05tavakolistructuredfinance.com

Some believe the recent general commodities pullback was triggered by the series of CME margin hikes on silver within the past week, after the recent exponential run-up in silver prices. Whether or not that is true, holders of leveraged long commodities positions should have warily watched the action in the silver market. Some silver speculators may not have seen the margin hike as a constraint on lending, but it should have been a red flag for any speculator with a leveraged long position. Moreover, after silver markets closed, silver prices were getting "banged" lower in what looked like suspicious market manipulation.

Speculators rushed in as prices recently soared and rumors swirled that there will be a delivery default at the CME including one of the TBTF banks with a huge short position that it cannot cover. Are the rumors true? I don't know since those in charge of investigating these matters haven't put evidence in the public domain, even after a senior member of the CFTC claimed there was blatant silver manipulation.

...

This isn't the first time there has been extreme price action and volatility in the silver futures markets, and it will not be the last. If anyone thinks that the Commodity Futures Trading Commission (CFTC) has the right stuff to regulate the commodities markets, look no further than its failure to check manipulation in the silver market.

Janet is a regular and highly insightful commentator on derivatives structure & regulation and cannot be brushed off as a wild-eyed precious metals "bug". This means Ted Butler's ~2 decades long running allegation of manipulation in the silver market is going mainstream. Will he end up begin recognized as a "Harry Markopolous" of the silver market?


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