In his latest market update, Ted Butler points to an important question that remained underexposed after the price crash in several commodities. Gold and silver experienced their largest one-day drop since the beginning of the current bull market in the metals (i.e. 2001). Other commodities (for instance copper) saw exceptional price drops. The key question here is where the regulators are. Shouldn’t they at least investigate this case for concentrated positions, market distortion or manipulation? We were granted permission from Ted Butler to make the following excerpt public.
This week we have witnessed some of the biggest price smashes in history, brought about by deliberately predatory trading practices set in place by the CME and this sick exchange has the nerve to issue a press releasetrumpeting the record trading volume caused by the intentional market dislocation. One would think that the designated self regulatory organization (as well as the federal commodity regulator) would have something more instructive to say about extreme disorderly trading conditions than look at how much (dirty) money they are making. That sums up the problem here, namely self regulators and regulators that won’t regulate.
In some ways, it may be the worst possible case if the COT report is correct as published, rather than in error. After all, if so many different CME markets could fall so sharply with little change in the market structure, what’s to prevent massive declines in any market? If the stock or bond market fell by 15% or 20% in a matter of days, you could be sure every regulatory official in and out of government would be taking every action necessary to find out why and prevent a recurrence while explaining things to the public in exquisite detail. Please contrast that to the total lack of any action by the CME or the CFTC to prevent or explain what the heck happened to so many CME markets this week. It is this continuing disrespect and contempt for the public welfare that more observers are noticing.
Nowhere is it noticed more than in silver. In fact, it’s a confirmation that the silver “disease” has now been transmitted to gold and copper and other NYMEX/COMEX markets. The trashing of the silver price is nothing new: what’s new is that it is occurring in other markets. A case in point – the silver investigation of September 2008 is now more than 4.5 years old and the CFTC still can’t address simple questions of market concentration. The two big silver price smashes of 2011 have been met with silence from the CME and the CFTC, when by all rights; those declines should have resulted in separate formal investigations of their own. Now it appears that the multi-market price smash of this past week is also destined to be intentionally ignored by both the CME and the CFTC, save for the braggadocios press release from the CME and some not so reassuring words from Commissioner Chilton that the agency is ”looking into it.”
I don’t know the cause of the regulatory failure, but I do know that the CME is corrupt and based upon the continuing failure of the CFTC in regards to silver on so many occasions, I have to conclude all the Commissioners of the CFTC are also corrupt. I’d love to be proven wrong.
Gold Silver Worlds | April 21, 2013