Investigation! Possible Silver Market Manipulation

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Although the agency remains skeptical about manipulations in the silver market, the Commodity Futures Trading Commission took the stage earlier this week and announced plans to investigate the market. As silver prices fell throughout the summer, investors insisted that foul play was behind the price drop. These complaints from investors and stalwarts, convinced that “the truth” is available in public data, moved the agency to take action. “We take the threat of manipulation in the futures and options markets very seriously and employ a number of measures to prevent, identify and prosecute it,” Stephen Obie, acting director of the agency’s division of enforcement, told the Wall Street Journal.

The Wall Street Journal explains: “Silver investors have argued that a handful of U.S. banks have been controlling a large portion of silver’s short positions — or bets that prices will decline — on the Comex division of the New York Mercantile Exchange. Official data from the CFTC showed that two U.S. banks had increased short positions in the silver futures market between July and August by 450% and controlled 25% of the total open interest.”

For years, investors have raised flags for possible conspiracies. However, analysts and regulators argue that there’s nothing shady about these price drops. “Just an ordinary crash,” one writer said last month. Further, they say, these large banks merely act as “market makers,” which the CFTC agreed was perfectly legal. Yet the volatile market and investor suspicions begat thousands of upset emails in August to members of the CFTC, far more than received in the past. Several firms also hired CPM Group to track market research. The group released a silver market study earlier this week, and recently shot a video: “WHAT Silver Price Conspiracy? An Educational Explanation.”

–Amy Edwards

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