Abnormal Silver & Crude Oil Price Moves Should Be Investigated By The SEC
Once again we find some strange activity occurring in these markets from a trading perspective, and it is time that the increased staff and resources of the CFTC enforcement division look into these two markets in particular.
Curious Crude Action After Pit Close
Let`s start with crude oil.
After the pit closes each day at 1:30 CST, the crude oil market is thinly traded and it is at this time within a relatively low volume trading environment, that crude oil is being dramatically manipulated up each day.
So price wouldn`t trade at these levels when you have the full complement of buyers and sellers and a competitive price market discovery process during each day. However, after the pit closes, and markets are relatively illiquid, all of the sudden price levels that would not typically hold are boosted upward by as much as .50 to .75 cents each day in late electronic trading from 1:30 to 4:15 CST.
This is how the Crude Oil market is being manipulated upward by a relatively few number of market participants, and this practice should be investigated by the SEC.
The Infamous Silver Market
The next market to look at is the infamous silver market which has had a long history of being manipulated by a few market participants in pursuit of outsized gains. Just recently two traders filed separate suits against JP Morgan (NYSE:JPM) and HSBC (NYSE:HBC) alleging that these two firms artificially manipulated the price of silver down with collaborating trading activities utilizing enormous short positions in futures and options contracts on Comex. For example, in August 2008 Silver moved from $14.86 to $12.23 in one day, an 18% drop.
This is nothing new. The Hunt brothers in the 1980`s tried to corner the Silver market, thinking inflation was a real concern, but they used anti-competitive practices by buying over $ 1 Billion worth of silver purchases through physical and futures contracts, and then taking delivery and storing the commodity of their futures contracts, thus artificially taking huge amounts of supply off the market, creating a bubble in the commodity which didn`t reflect the true fundamentals of the market.
Big Banks Move on Silver
Well, the big banks are at it again as silver on Thursday had a nearly 8% increase after already moving up considerably earlier in the week. Silver has gone from $23 an ounce to$26.75 an ounce in two weeks. The price action is obviously indicative of a one-sided market where the major market participants being the big banks are goosing the market up well beyond any underlying fundamental basis for this rise in prices.
In the silver market there are not a widely diversified set of market participants, and heavy collusion on behalf existing market participants, whether intentional or just of being of like mind, is creating major price distortions in the market.
The SEC needs to enforce position limits on these big banks with their exposure to the commodity as their presence is artificially creating another bubble market in Silver, with price reacting strictly to money inflows rather than market fundamentals of supply and demand of the commodity in the marketplace.
Dollar Not a Factor in Price
And to those that think these money inflows were directly correlated to the dollar weakness, the dollar was actually strong on Monday November 1st, and Friday November 5th. And yet these two commodities continued to rise due to speculative money inflows.
It is time the CFTC addresses some of these manipulative market practices on behalf of the investment banks and large institutions as price distortions and artificially inflated price movements that don`t match the underlying fundamentals of supply and demand cause real damage to the economy.
After all, crude oil inventories and their associated products are well above their 5 year averages based upon the true fundamentals of the marketplace, and yet some elderly person on a fixed income has to pay 15 cents more per gallon of gasoline in two weeks’ time just because Goldman Sachs (NYSE:GS) needs to hit their $20 Billion bonus pool target for 2010 and juices up the price of crude oil as a means to that end.
Best Credit Cards
Chase Freedom- Blue Cash
- Chase Sapphire
- American Express Platinum Card
- United Credit Card
- Southwest Credit Card
- Delta Credit Card
- British Airways Card - Get 100,000 Bonus Points
- Blue Cash Preferred
- Capital One Venture
- Discover Card
- Chase Ink Credit Card
- Discover More Card - 18 Month Promotional Balance Transfer
- Chase Sapphire Preferred
- Ritz-Carlton Rewards Credit Card
- Citi Diamond Preferred Card
- American Express Premier Rewards Gold Card
- Starwood Preferred Guest
- American Express Gold Card
- Citi Dividend
- Capital One Cash Rewards
- Discover Student
- Marriott Rewards Credit Card
- Marriott Rewards Premier Credit Card
- Capital One Secured Credit Card
- Hilton Rewards
- Credit Card Rewards
Broker Reviews
Yes I totally agree that the price of silver should be governed by supply and demand,and the best way to do this if you are speculating on the silver market is to buy the Physical silver on these manipulated pull backs. And then store it or hoard it,because all of the low hanging fruit, the easy to find silver is now gone. So if you think $26.00 silver is high, well just wait and see what supply and demand does to the price of silver..
Nothing to do with a monopoly money USD, because it gets a one day bump. The USD is toilet paper created out of thin air. Silver is a hedge. The only way the dollar gains is if the stock market crashes and there is a dollar short squeeze. Even that will be short lived. Compared to 1950 dollars, the dollar today is worth less than $.10.
You bet your ass that the Gold Men are taking that free Fed taxpayer money and using it to buy commodities. The understand the dollar end game, because they are part of it. What you are witnessing is an informal version of the Plaza Accord, where the US gets to pay back its debt at a big ass discount, while the American people suffer big time. Are the Gold Men pushing up the prices of sugar, corn, wheat and oats, too?
Let the Buyer Beware.
The crooks are still in office and the old ones were voted back in.
So much for wait till November.
Ok so what would you do? we all slam the political the old the new the next, but we all lack the resolve to work to FIX the problem. I like the deficit reduction comission that is making the suggestions. I also understand that Obama and the Democrats are neoliberals in full agreement with the Republicans on this issue and that they need this for top cover to save their butts in the next election. I understand they just need to pretend that they were forced into cutting social security so they don’t get blamed and they can sucker worthless “liberals” into voting for Democrats again.
But I dont care at this point who gets the credit. I want this madness tostop and I demand a balanced budget and a constitutional ammendment the prevents us from ever getting here again.