Buy Silver Bullion Coins

In spite of 2004 and 2008 investigations determining no illegal activity in
the silver futures market, the CFTC says it has been continuing to investigate
the issue since late 2008.

 Dorothy Kosich
November 7, 2011
www.mineweb.com
RENO, NV

 The Commodity Futures Trading Commission has recently issued a one-paragraph  statement, announcing it is still pursuing an investigation into the possibility  of unlawful acts in the silver market.

 The investigation has been ongoing since September 2008. Since that time, the  commission has received a number of comments and letters asking the government  to investigate the COMEX silver futures market. Several complaints have asked  the CFTC to limit the activities of large banks in the silver market.

 "Since that time, the staff has analyzed over 100,000 documents and
interviewed dozens of witnesses and obtained expert advice," the CFTC said in a  Nov. 4, 2011, statement. "It has been a long, detailed, and thorough  investigation, and it continues in an appropriate and considered manner."

 On May 14, 2008, the CFTC said its investigation of trading activity in the  silver futures market covering the period 2005-2007 determined there was no  evidence of manipulation in the silver futures market for the period between  2005 and 2007. The investigation also found NYMEX silver prices tend to track  closely the price of physical silver. Finally, the CFTC determined "no  observable relationship between short-futures-trader concentration levels and  silver prices."

 However, in September 2008, the CFTC disclosed that another investigation of  silver markets was underway.

 For years, the CFTC has received complaints from silver investors claiming  the price of silver futures traded on the NYMEX has been manipulated  downward.

 In 2004, the CFTC issued a 2004 Silver letter in response to a large number  of metals analysts and commentators who expressed concern that the futures price  of silver was reportedly being manipulated downward as a result of reported  collusion by a handful of traders on the short end of the silver market.

 The allegation was that, because the consumption of silver had exceeded  supplies available from new production and recycling for many years, silver  futures prices should have been much higher to reflect the ongoing production  deficit.

 The CFTC staff also examined the relationship between NYMEX silver futures  prices and cash market silver prices to determine if NYMEX prices appeared to be  unusually or significantly out of line with cash prices.

 Staff analysis in 2004 found no evidence that a short-side manipulation was  in progress. The staff also concluded the gap between silver production and  consumption had been filled over the years by the drawdown of existing silver  stocks. While a production deficit existed, the staff found no supply  deficit.

 Note: "no evidence that a short-side manipulation," yet the investigation
continues.  Interesting.

Kevin McElroy
November 1, 2010
www.seekingaplpha.com
Legendary commodity investor and hedge fund manager Jim Rogers recently pointed out that silver prices are 50% below all time highs.
He's talking about the brief momentary highs of nearly $50 an ounce back in 1980. With silver currently selling for less than $24 an ounce, Mr. Rogers is technically correct. But priced in 2010 dollars, the inflation adjusted high for silver would be closer to $124.
So if you believe that silver prices will make new inflation adjusted highs, then you're expecting to see a five-fold increase in the price of silver.
Silver has already trounced just about every other asset so far this year - it's up 40% since January 1st.

I believe that silver is due for a correction. If you've read any of my articles this week, you've heard me talk about Ben Bernanke and the upcoming Federal Open Market Committee (FOMC) meeting where he will announce the next round of Quantitative Easing.
Ben's announcement could strengthen the dollar, which would be bearish for all commodities, not just silver. As I said, silver is due for a correction.
Bernanke's announcement could be a catalyst for silver prices to drop 5-10% in the short term.
That would create an excellent buying opportunity for people like me, who are long term bullish on silver.
I'll be bullish on silver as long as the Federal Government keeps interest rates absurdly low, and as long as huge amounts of government debt is the only realistic option to keep paying for all the bells and whistles that politicians promise voters and constituents.
But there's an additional wrinkle in the silver story that I think could give silver an additional, long-term boost...
For years and years, silver prognosticators and analysts have talked about silver price manipulation. In short, the long-running conspiracy theory is that a handful of global banks have placed massive short-side bets in order to manipulate the price of silver.
Well, it's not a conspiracy theory anymore.
According to a recent story in Bloomberg,
At a hearing in Washington on Oct. 27, CFTC Commissioner Bart Chilton said there have been ‘fraudulent efforts to persuade and deviously control' silver prices and that violators should be prosecuted.
If you're not familiar with the Commodity Futures Trade Commission, they're the Federal Government body in charge of regulating and monitoring all commodity futures transactions on exchanges in the United States.
They run a pretty tight ship, so it will be surprising if they let any of the offending parties in this manipulation scandal off the hook easily. So what's the upside for manipulating silver futures contracts?
It's a little complicated, but these banks were placing phantom or "spoof" orders on silver contracts with the intention of skewing prices of options contracts.
The effect, allegedly, is that these spoof orders made some options worthless while boosting the value of other options.
In any event, these "spoof" orders had the supposed consequence of keeping silver prices artificially low.
In light of the announcement from the CFTC that they believe the price has been manipulated, I think we can see an additional boost as short-side orders are either cancelled and/or filled by the offending parties.
When you take a short side bet and you're wrong, when the options contract expires, you have to buy the security at current prices. The additional volume usually spikes the price further to the upside.
Now that the CFTC is on the case, I'll expect silver to continue to make new highs.
It still has quite a bit further to go before it hits inflation adjusted highs - but as I've been saying: wait for Bernanke's announcement next week to add to or build a position in silver.