In a recent column, silver analyst Theodore Butler presented information that leaves him somewhat optimistic that the Government Accountability Office (GAO) is looking into the possibility that the silver markets might be rigged or manipulated.
In the column, Butler labels as “phony” a prior “investigation” conducted by The Commodity Futures Trading Commission (CFTC).
According to Butler and the CFTC itself, this “investigation” lasted five years and included “7,000” man hours of work on the part of CFTC employees doing the investigating.
I too believe this alleged exercise in fact-finding was either bogus or clearly not worthy of the label of “investigation.”
As it turns out, I even have evidence to support my skepticism. More about this shortly.
In a previous column, Mr. Butler had pointed out that he has never been questioned by any CFTC investigators. This in itself leads one to conclude that the investigation was a fraud.
How can an organization charged with regulating free and honest markets conduct an investigation for five years and not spend five minutes (or 50 hours) talking to the man who has done more research on the topic than probably any other person on earth?
It is probably not an overstatement to say that absent the research and commentaries of Theodore Butler there would be far fewer people reaching the conclusion that silver markets are manipulated.
Mr. Butler, it seems to me, has almost made it his life’s work to present his theories and expose what he - and now thanks to his efforts - many others have come to believe is a historic travesty of justice.
An “investigation” of silver markets which did not include any in-depth conversations and personal visits with Mr. Butler is puzzling in the extreme.
It would be like the Federal Safety Administration doing an investigation into a possible unsafe car and not interviewing the person or group who had devoted hundreds of hours to documenting the car is unsafe. Or the FDA not even bothering to consider the warnings of a prominent doctor who had compiled volumes of evidence showing a drug may have life-threatening side effects.
Or pick your own analogy (there must be hundreds better than mine) ... The Commissioner of Major League baseball not talking to those who knew a World Series had been rigged and how it was rigged. Cycling officials not talking to someone who claimed to know the winning cyclist was doping. IRS investigators not bothering to interview the man who alleges massive tax evasion in a company he works for. Prosecutors or defense attorneys who refuse to talk to a private investigator who has been working on the same case for years.
Maybe the imaginary people in these examples would, upon close scrutiny, turn out to be “full of it.” But maybe not. Maybe they would end up being viewed as cranks, but maybe not.
To me, Ted Butler, doesn’t seem like some conspiracy wacko; as someone who can’t impressively back-up and logically defend a strongly-held conviction. To me, he comes across as measured, thoughtful, smart, thorough.
In other words, if the CFTC was going to do a serious investigation on this very serious subject, he’s someone its investigators would want to talk to. In-depth.
Your investigators may or may not consider this person to be an “authority” on a topic, but many seemingly sane, normal people do. Seriously, what’s the harm in at least talking to him? And conducting any such question-and-answer session with an open mind?
But Ted Butler - THE SOURCE of much of the price-manipulation information hundreds of thousands of silver investors have been exposed to - was not questioned by anyone from the CFTC.
My emails with 2 big names in silver world
Or was he?
Butler himself says he wasn’t. He’s said this in his own columns and he said it to me in an email.
“I think I would know if I (talked to any investigators). And I did not,” he said to me in an email dated May 10, 2013.
However, Bart Chilton, a former CFTC commissioner, told me in an email that Butler had indeed been questioned.
Here is the email I sent Mr. Chilton on May 9, 2013 at 9:20 a.m.:
“One question: Have any investigators actually talked to Mr. Butler?”
Here is the one-word reply I received from Mr. Chilton:
From: "Chilton, Bart" <BChilton@CFTC.gov>
Date: May 10, 2013 11:27:19 AM CDT
To: 'bill@montgomeryindependent.com Subject: Re: Silver futures market ... one question
“Yes.”
I forwarded my email question and response to Mr. Butler, who replied: “He’s lying then.”
I’m just the managing editor at a small weekly paper (an editor who has also developed an interest in silver markets), but this exchange always stayed with me.
One person, Mr. Butler, who I knew was one of the leading figures in the silver commentary community, says one thing and another, Mr. Chilton, a commissioner from the organization in charge of regulating precious metals futures markets, says another.
Either Butler was interviewed or he was not. If not, Bart Chilton indeed lied in his email to me. Or: Butler is lying.
As our tiny paper doesn’t have the staff or resources to do investigative journalism involving silver and gold futures markets, I forwarded this email exchange to a paper that does, The Wall Street Journal.
I’d previously forwarded a few silver-related emails to one of the paper’s writers (Matt Hayes). On occasion, Mr. Hayes was kind enough to reply. He even interviewed me when the price of silver plummeted in April of 2011.
In my emails to Matt, I shared Ted Butler’s latest column (the one where he announced that the GAO might be looking into silver manipulation allegations).
I also shared my email thread wherein Ted Butler said he’d never been interviewed by the CFTC and Butler’s one-word answer that he had.
This, I thought, might constitute a real story. It would be a simple enough matter to ascertain if a formal (or informal) questioning of Mr. Butler had, in fact, occurred. If the CFTC’s investigators had not conducted any interview(s), the headline might be “official caught in lie.”
The bigger story, though - in my opinion anyway - would consider the possibility that the entire CFTC “investigation” had been a sham.
Did any “real” investigation actually take place? Could the CFTC prove this by giving names (plus times and places) of individuals who had been interviewed? Could they prove they actually performed a legitimate investigation?
While Matt seemed interested in the topic, or at least in learning more (He requested that I forward the actual emails, which I did), no subsequent story on the topic ever appeared in The Wall Street Journal.
Not that I was expecting such a story. As far as I can tell, the entire topic (PM markets may be rigged) is off limits to the mainstream financial press corps.
The above strikes me as strange, as a Pulitzer Prize (with accompanying wealth, fame and prestige) might realistically accrue to the reporter or news organization who actually did some serious digging on this topic. It’s also not like there’s an army of reporters competing against one another for such a potential “scoop.” If you launched a serious investigation, the entire playing field would essentially be yours alone.
So why am I disclosing my email replies today?
Because Mr. Butler has now gone on record calling the original CFTC investigation “phony.”
As i t happens, I might have received (in the form of an email from someone who should have been in the know) “evidence” that supports Mr. Butler’s characterization.
And also Mr. Butler is not giving up, a trait I admire.
True, he’s apparently given up on the credibility of the CFTC, but now he’s crossing his fingers that the GAO might actually do a real investigation.
Or, absent a thorough, independent investigation, this entity might at least look at the “work product” of the (alleged) regulators (alleged) investigation.
In fact, this is apparently why the GAO was created in the first place - To see if tax-payer funded regulators and investigators are doing honest, credible work.
When they say they’ve done something, can we, in fact, believe them?
Butler - like many of us - is not convinced anything meaningful will come out of the GAO’s (possible?) new investigation.
But he’s willing to give the GAO and its employees the benefit of the doubt. So am I. I’m also willing to share my emails, emails that might have relevance on the question of credibility - as in, who has it and who does not.
I know I’ve formed my own opinions. Opinions that may be (or may not be) shared by a lot more people if at least one government agency conducted a real and transparent investigation.
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Bill Rice, Jr. can be reached by email at bill@montgomeryindependent.com
Bill Rice, Jr.
Managing Editor
The Montgomery Independent
334.265.7323 (office)
334.315.2583 (cell)
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