Silver Wildcats - And The Day Futures Died - Part 1

From Legends to Bankers

Yes, there has always been price manipulation.
There will always be price manipulation.
From the time of Caesar, through the American Civil War and into the 20th and 21st centuries.
Equities, interest rates, bonds, currencies, and futures.
From wheat to silver, the Maine potato default, and the onion debacle, futures trading has been subject
to all manner of interference.
The technology has changed over time. From carrier pigeons, the telegraph, the telephone, or todays
laser-assisted high frequency trading algorithms - the strategies and tactics remain.
No commodity has been spared.
A long list of colorful characters litter the landscape.
Legends like Jesse Livermore, Jay Gould, King Jack Sturges, Ed Parker and The Chicago Bear Ring, or The
Wheat Kings of Chicago to name a few.
From J. Pierponts Goldroom Manipulation at the turn of the 20th century, to the modern day
equivalent of the massive commercial bank silver short.
It wasnt always easy
"To commit murder is very simple. The trouble is to bury the corpse".
So said famed industrialist and manipulator P.D. Armour, in reply to a the question of why he did not
corner the delivery when such massive speculative short interest appeared in December Pork.
The corpse is the sequestered supply that always makes it way back into to the market, therefore
diminishing profits of the squeeze.
(Something tells us that when JPM Chase decides to corner the LONG side of silver - they will have no
problem covering the cost of burying the corpse.
Especially if much of the silver they control has yet to be melted made ready for delivery).
The Hunts Must Be Green With Envy

The Hunts experienced the impotence of the CFTC first hand in soy beans. Then they moved on to the
silver market, foreseeing the great accident Bunker would come to characterize.
In their forced liquidation, all who remained to fill the vacuum were the market makers - a few deep
pockets who eventually morphed into the big concentrated short sellers that exist in COMEX silver
futures today.
This profit center hot-potato has been passed along the line from J. Aron to Drexel to AIG, onto Bear
Sterns, and finally to JPM and the Bank of Nova Scotia.
In fact, the big eight commercial banks maintain a concentrated short, yet ultimately temporary (paper)
promise to deliver of more than 200 days of world mine production.
Unprecedented by any measure or comparison. An elephant so big and dangerous that few see it - many
still refuse to consider it.
The Eternally Absent Regulator
The history of futures market manipulation and enforcement is a testimony to the difficulty of imposing
equilibrium from the outside.
To enable is to cause. To cause the dislocation of supply and demand from price is a harmful and in this
case, a potentially devastating agenda.
Much like todays financialization-driven fiat-fiasco, regulatory impotence formed its roots in parallel
many decades ago.
Financial market enforcement has deep and rich history of failure.
In 1921, Commerce Secretary Herbert Hoover testified that large volumes of (futures) short-selling
deliberately intended to suppress the price had caused injury and worked a great injustice on the
public
The Hatch Act was early attempt to rein in the wild cat speculators. And the Sherman Anti-Trust Act
failed to incorporate futures regulation as well.
Regulation fails because it is reactionary and corrupted by power and special interests.
Of course, simple solutions could be adopted - by the exchanges themselves - to maintain order and
stability.
Positions limits would be the easiest place to start.
But sadly, that ship sailed long as the exchange (hint: Chicago Mercantile Exchange (CME)) morphed
from facilitator into one of the largest of the systemically important, publicly owned institutions.

Today the self-regulated, for-profit behemoth enables the mechanisms and tactics of price
manipulation across the market landcape: spoofing, layering, front-running, banging the close, to name
but a few of the most visible.
Because the largest sellers of COMEX (owned by the CME) Silver are essentially, the only sellers of silver
on the exchange, their departure will undoubtedly come with systemically felt disorder as price readjusts.
(For now, world silver price discovery begins with COMEX).
As Bunker Hunt stated (for reasons of physical supply and demand) more than 40 years ago - silver is an
accident waiting to happen.
Today, instead of the colorful wild cat legends we have the multi-national JPM Chase as part of the big
4- a death star such grand import that its existence must perpetuate, and cannot possibly continue.
In part 2.well discuss
The natural developing corner (and congestion) that may ultimately separate the paper tail from the
physical dog
And more on the burying corpses.
Stay tuned

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*Note Special thanks and credit. Many of the historical references above
were sourced from excellent work of Professor Jerry Markham, former CFTC
enforcement attorney.
Intimate knowledge of the inner workings of price formation and manipulation
would not be possible with the work of Ted Butler.