CFTC Commissioner Bart Chilton Comments on the Silver Investigation

Over the weekend, London's Financial Times dispatched some stunning news to silver investors awaiting the conclusion of a four-year investigation into allegations of silver price manipulation.

The article, entitled "Four-Year Silver Probe Set to be Dropped," reported that the investigation "looks increasingly likely to be dropped after US regulators failed to find enough evidence to support a legal case." If the report were to prove correct, this would represent a crushing blow to commodity investors like myself that have become quite convinced after a thorough review of the facts that the markets for silver and gold have been subjected to highly effective campaigns of deliberate price manipulation.

On Monday morning, I reached out to Commissioner Bart Chilton of the U.S. Commodity Futures Trading Commission for comment. Addressing the report that his agency will likely drop the investigation with no charges filed, Chilton countered: "The Financial Times report related to silver is not only premature, but inaccurate in several respects."

Chilton continued: "Whenever the CFTC does take an action or actions related to our silver investigation, I am hopeful that we will do so in a fulsome and transparent manner. That will certainly be my quest in anything we do."

Indeed, one could say that Commissioner Chilton has been on something of a quest to champion the public interest on this issue, and in so doing he has openly broadcast his own conclusion that "there have been fraudulent efforts to persuade and deviously control" the price of silver. Incredibly, nearly two full years have passed since Chilton shared that conclusion and pressured his agency to bring the investigation to a timely conclusion by stating: "I think the public deserves some answers in the very near future." Whatever the official outcome of the investigation, I think the public already has some important answers to the questions regarding precious-metal price manipulation as corroborated by Commissioner Chilton's remarks.



CFTC Commissioner Bart Chilton

In his remarks to me on Monday morning, Chilton took the fascinating step of broadening the scope of his remarks to include gold this time around, and he also seemed to connect the more recent episodes of highly questionable market dynamics -- which market observers like the Gold Antitrust Action Committee and myself have publicly decried -- to the specific events considered within the four-year silver investigation: "I continue to believe, consistent with my previous statements and information from the public, that there have been devious efforts related to moving the price of silver. There have also been silver and gold market anomalies outside of the silver investigation window that have raised, and continue to raise, market concerns."

With those powerful remarks, Chilton suggests that he believes the particular events upon which the silver investigation has focused form part of a broader pattern concerning "market anomalies" that continue right through to the present day. Ultimately, I think the investing public will discover the hand of the Federal Reserve in these ongoing efforts to manipulate gold and silver prices as a form of damage control to mitigate the consequences of sustained easy monetary policy. I am certainly not alone in that assessment, as none other than Paul Craig Roberts -- former Assistant Secretary of the Treasury under President Reagan -- recently had this to say on the matter: "I suspect that the Federal Reserve is manipulating the gold and silver markets in order to prevent its low interest rate policy from undermining the value of the US dollar. It is easy to offset rising prices of bullion due to physical demand by selling shorts in the paper market."

Whether or not the CFTC files charges of price manipulation (or "attempted" manipulation) against one or more of the identified targets of the inquiry -- most notably the very same JPMorgan Chase (NYSE: JPM  ) that is also implicated in the LIBOR rigging scandal -- I believe that a determination has already been reached within the court of public opinion. With strong corroboration by noted economists like Paul Craig Roberts, financial journalists like The Telegraph's Thomas Pascoe, respected fund managers like First Eagle Funds' Jean-Marie Eveillard, and now even a sitting commissioner at the relevant commodity futures regulatory agency; the issue of gold and silver price manipulation has surged out of obscurity and straight into the world's public spotlight. Revelations from the still-breaking LIBOR scandal -- and not to mention the formerly explicit gold manipulation of the London Gold Pool -- provide a compelling set of precedents.

I have already stated that I expect gold will reach $2,250 per ounce solely on the basis of mining industry fundamentals that are setting the stage for a shortfall in physical supply. In my view, that would correspond to a silver price north of $50 per ounce. In the event that real transparency is ever cast upon this shadowy corner of the financial universe, frankly, gold and silver stand to record breathtaking gains as the actual physical supply of both metals gains predominance over leveraged paper contracts as the final determinant of price. In the event that an ongoing campaign to manipulate those prices is exposed, my preferred gold miners, Primero Mining (NYSE: PPP  ) and Eldorado Gold (NYSE: EGO  ) , stand to gain handsomely. Because the physical supply may be even more constrained in silver, I expect great things over the long haul from proven operators Endeavour Silver (NYSE: EXK  ) and First Majestic Silver (NYSE: AG  ) . To track my ongoing coverage of the manipulation issue as well as my analysis of promising mining stocks, please bookmark my article list or follow me on Twitter.

Fool contributor Christopher Barker can be found blogging actively and acting Foolishly within the CAPS community under the username TMFSinchiruna. He tweets. He owns shares of Endeavour Silver, Eldorado Gold, First Majestic Silver, and Primero Mining. The Motley Fool owns shares of JPMorgan Chase and Primero Mining. Motley Fool newsletter services formerly recommended JPMorgan Chase. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


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  • Report this Comment On August 06, 2012, at 7:05 PM, SilverSqueeze wrote:

    Chris - I think it is highly unlikely that any hint of Federal Reserve involvement will come from the CFTC when they finally get around to announcing their findings. In fact, when the findings do come out, I expect a lot of words but very little specificity.

    It is kind of funny that Commissioner Chilton is lauded for doing his job. As the CFTC is leading from behind on most of these investigations and scandals, Chilton in comparison to his colleagues at the agency looks like a giant..

  • Report this Comment On August 06, 2012, at 11:34 PM, zzlangerhans wrote:

    That's Dobber!

  • Report this Comment On August 07, 2012, at 12:12 AM, awallejr wrote:

    This guy isn't going to do squat. My eyes are still rolling from the CFTC apologizing about the Libor scandal.

  • Report this Comment On August 07, 2012, at 8:03 AM, Noneleft01 wrote:

    Paul Craig Roberts: "I suspect that the Federal Reserve is manipulating the gold and silver markets in order to prevent its low interest rate policy from undermining the value of the US dollar. It is easy to offset rising prices of bullion due to physical demand by selling shorts in the paper market."

    This makes no sense to me. My understanding is that the FEDs low interest rate policy and easing programs deliberately aim to undermine the value of the US dollar (to reduce the real value of their debt).

    Why then would they be trying to prevent it at the same time by manipulating PM prices? On the one hand they are trying to achieve one thing and at the same time trying to prevent it? This would be like turning up the heating in your house to max, in order to counteract the fact that all your windows are open. Better to just to shut the windows to keep the heat in.

    In anycase, how does manipulating PM prices stop the value of the $ being undermined? As long as you have negative real rates and easing programs, you are still devalueing the currency – manipulation of the metal prices does not change that, all it does is make the devaluation of the currency less obvious by disguising it’s effect on the prices, preventing gold acting like a canary in the mine.

  • Report this Comment On August 07, 2012, at 9:37 AM, MoneyWorksforMe wrote:

    @Noneleft01

    "This makes no sense to me. My understanding is that the FEDs low interest rate policy and easing programs deliberately aim to undermine the value of the US dollar (to reduce the real value of their debt)."

    True. But the aim is a controlled and slow, devaluation--think of the Fed's mandate, as stated by Bernanke. He is aiming for 2% inflation. We are already above that level, but the fed purposely underestimates inflation to give the illusion of price stability, while they attempt to covertly devalue the debt. Rapidly rising precious metal prices would likely cause them to lose control.

  • Report this Comment On August 07, 2012, at 9:43 AM, XMFSinchiruna wrote:

    Noneleft,

    At least to a substantial degree, you may have answered your own question:

    "As long as you have negative real rates and easing programs, you are still devalueing the currency – manipulation of the metal prices does not change that, all it does is make the devaluation of the currency less obvious by disguising it’s effect on the prices, preventing gold acting like a canary in the mine."

    Because several major powers and currency centers face similar pressures to devalue their respective currencies, the monetary metals provide the measuring post from which to discern the impact of wholesale competitive devaluation among fiat currencies. By slowing the advance of gold and silver, one relieves some of the inflationary pressures that result from sustained easy monetary policy, and simultaneously dulls the public's perception that a currency devaluation has taken place at all.

    Manipulating gold and silver may also slow the rate at which the dollar loses its pre-eminence as the world's dominant reserve currency, and it most certainly slows the pace at which the world's de facto safe haven asset transitions away from US Treasuries and into precious metals. Neither of those are minor considerations.

    Finally, when interpreting the actions and motives of the Federal Reserve in its emergency responses to the ongoing financial crisis, let's not begin with the presumption that those responses will be founded either in logic or in wisdom. In many respects, the Federal Reserve looks to be in desperation mode, scurrying to jury-rig reactive measures to a crisis that is ultimately far beyond its capacity to resolve or control.

  • Report this Comment On August 07, 2012, at 3:16 PM, SilverSqueeze wrote:

    Check out "bnn.ca" videos today with Jeffrey Christian of the CPM Group. He is tearing out a page of the Obama team's playbook by attempting to discredit the "silver suppression conspiracy theorists". He also ignores Commissioner Chilton's assertions that the Financial Times article was premature and inaccurate.

    The people that are actively suppressing the price of precious metals are not going away and are in deny, deny, deny mode. The regulators are politically appointed and they have many masters, although ostensibly they are there to protect the "public".

    One can only hope that the physical market overwhelms the heavily manipulated paper market. Mining companies can assist by keeping a good portion of their "cash" in gold and silver. Retail investors can help by purchasing and taking possession of physical gold and silver or by investing in the reputable ETF's - Central Fund of Canada (CEF) and Sprott's two ETF's - for gold (PHYS) and for silver (PSLV).

    Everybody should buckle up because the ride ahead is going to be extremely turbulent.

  • Report this Comment On August 07, 2012, at 9:27 PM, maxbentley wrote:

    The monetary metals have always been usurped by fiat since the beginning of barter.

    The Fed /Brits et al have recently ran this segment.

    History is your guide,become aware of it.

    If there is any 'awakening' it is choreographed and allowed to happen.

    Bart is a nobody.If he is allowed to make significant changes then the decision has been made to throw this version of reserve currency.

    They are positioned,so should we be.

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