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The CFTC’s Response

The long-awaited response from the CFTC to my congressman’s office about my concerns of the possible double-counting of publicly reported silver inventories, originally sent to the agency in mid-November was received by me Friday morning, March 1. To refresh you with the issue, I asked the CFTC (along with the S.E.C.) to make clear whether the 103 million oz reported in the I-Shares Silver Trust, SLV, and being held in New York by JPMorgan on behalf of the trust, was also being reported in the JPMorgan COMEX warehouse or whether these were two separate silver inventories. Here’s an article I made public at the time, which included my original letter, as well as some commentary.

The S.E.C. responded within two weeks, but avoided answering whether the silver inventories in question were being double-counted. The CFTC has taken more than three and half months to respond and also has avoided answering what was a very simple question on my part, after telling my congressman’s office on several occasions that it was “working on” a response. As is my custom, here is the agency’s response in its entirety for you to review, before I share my thoughts.

Click here to view the CFTC response

The CFTC’s response included a literal word-salad of unrelated information describing the functioning of the agency not all related to my question and designed to put as many words in the response to make it sound like much deep thought went into the response.  It did declare that the agency had no direct control of the reporting of silver inventories, but in declaring that, avoided its responsibility to deal with the dissemination of false market data that could mislead market participants. There have been numerous actions taken by the agency in the past related to false data and price signals being disseminated in other markets, so the implication that the sending of false price signals related to the misreporting of recorded silver inventories is disingenuous, at best.

Besides, I am sick and tired of those (particularly bureaucrats) who’s standard knee-jerk response to any question is an automatic “it’s not my job”. WTF? If it is not the federal commodities regulator’s job to answer a direct and simple question about the potential sending of information creating false price signals – then who the heck’s job is it?

Let’s face it, if the silver inventories in question are being double-counted, as now appears obvious as a result of this response, that amounts to the sending of false price signals, period. There is not the slightest hint in the daily publishing of these two silver inventories, one covering the holdings in SLV and under the control of BlackRock, and the other reported by the CME Group, that the two inventories may be one and the same and, in effect, are being double-counted to the vast majority of market observers (including by me in my weekly reviews). Seeking clarity on the matter was why I asked the CFTC in the first place and now its response virtually guarantees the two inventories are double-counted.

Then there is the tantalizing boiler plate language (apparently added as an afterthought, as evidenced by the different type or font settings on each page) which promises that if this were to amount to the sending of false price signals, then the agency is more than capable to deal with it – except, of course, it can’t disclose that. Having heard this line from the CFTC in the past, you’ll forgive me if I don’t take the agency at its word. What I do know is this – the CFTC took the better part of three and a half months to offer a non-response, all the while that the silver price suppression remained firmly in place. It’s hard not to conclude that the agency is up to its eyeballs in prolonging a manipulation that has existed for 40 years.

A number of weeks back, I did raise the ugly possibility that the CFTC was delaying its response to my question, in order to give the crooked and collusive COMEX commercials the time to arrange their affairs as best as possible before it would respond. Considering the week’s results in the silver and gold COT reports, as well as the uneventful passage of the key first delivery days this week, I’d be lying if I said those ugly thoughts of mine had departed.

What to do? Unfortunately, I can’t act in the CFTC’s place, because if I could, then this silver price manipulation would have ended long ago. So that leaves me with trying to work around the agency. Specifically, I have continued to complain to the Department of Justice, as recently as again on Friday. My allegations not only involve the sending of false price signals (now confirmed) by JPMorgan for silver inventories under its direct control (and in direct violation of JPM’s recently-expired deferred criminal prosecution agreement), but also my more recent allegation against JPM for the uneconomic and manipulative dumping of physical silver via SLV.  I can’t decide which is worse – the continued sending of false price signals by JPMorgan or its dumping of physical silver.

I do know that both are clearly against commodity law and must come to an immediate halt. As things turned out, I believe the CFTC may have done us all a big favor (quite unintentionally) in its long-delay in responding to the inventory double-counting question, by elevating the matter to a higher level than if it had responded much sooner. This extreme delay allowed me to peruse the data in the interim in SLV, which uncovered my allegation of dumping. I guess what I’m saying is that this response from the CFTC clearly confirms my allegation of double-counting, and thereby elevates my additional complaint about dumping. I’d ask the CFTC about the dumping of physical silver by JPM in the SLV, but Lord knows how long it would take for it to offer a non-response, so I’ll stick to the Justice Department on this matter.

Further, I can’t help but believe that the fairest and most effective manner of dealing with JPMorgan’s continued serious violations in the silver and gold markets is to simply disallow this crooked bank from dealing in these markets. In no uncertain terms, the world would be a better place if JPMorgan and silver and gold were mutually exclusive.

Ted Butler

March 4, 2024

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