This week we are providing a question that came from one of our paid members.  Paid members on our  Premium Service do receive a response in almost every case!

Question: David, here is part of what Ted Butler posted recently; can you comment, please? 

"If the agency does the right thing and finds that the silver market had been manipulated, the silver market world would change overnight. Suddenly, the world would come to realize that silver had been a crooked market from no less of a source than the US Government itself. No more vague suspicions or arguments about far out conspiracy theories about people (me) who didn’t know what they were talking about. No more anything of that sort. The matter would be settled for all time. Yes, I will derive immense personal satisfaction from such an outcome, but there is a lot more to it than that.

“In the event that the CFTC does what is correct . . . and what is required of them to do by the rule of law, then you better own some silver. A sudden announcement that a US Government agency found silver to have been manipulated to the downside would likely trigger off reactions from world silver producers, consumers and investors that are impossible to fully comprehend. Miners would be angry for having been cheated by artificially low prices. Industrial users and investors would rush to buy before others did so. This event alone could quickly spiral into the silver bubble I wrote about recently. The legal repercussions are also hard to fathom for a manipulation that lasted for many years. But the bottom line is that it would likely set off a buying wave never seen before. Please remember this is a highly unique situation specific only to silver; as there is no gold, or corn, or crude oil investigation underway. Therefore, any price impact should be primarily confined to silver. This outcome is not the only reason to buy and hold silver, but it would be enough if it were the only one.

“Because the price stakes are so potentially explosive in the event the CFTC moves against the silver manipulators, I think that may go a long way to explaining the agency’s foot-dragging to this point and why they need to be pressured to do their job. I know that many, perhaps most of you, believe that the silver manipulation is run by the government (through JPM) to protect the dollar or maintain some semblance of normalcy in the financial markets. Given all the facts, that’s certainly a plausible explanation. My take is different - I think the agency knows full well that a crime is in progress but is afraid to set off what would likely be a major silver market reaction. But it’s time for the Commission to man (and woman) up . . . and uphold their most important responsibility of all concerning manipulation.”

Comment:  For clarification, all of the above is from Ted Butler except for the opening sentence asking my opinion. First, Ted, Franklin Sanders, and I were the only three people I know of writing about silver in any significant way, back around the year 2000. Franklin predates Ted, and Ted had more written publicly than I had when the Silver-Investor Web site was started.

I am not sure that an announcement of all that has taken place in the silver market would start a buying panic, although it could. My view has been that this will take place without any “help” from the authorities anyway, because once silver reaches the tipping point, both investors/industrial users will be buying. I do agree that massive amounts of lawsuits could enter the system if the CFTC were to announce findings of any wrongdoing in the silver market.

Remember there are lawsuits already filed at this time.

Would the miners would be upset? yes, some would be furious and most likely enter into a legal action, but many are cozy with the very bankers who manage silver prices for them and others. So here I agree partially, and this comes from my experience in having been to numerous shareholder meetings and speaking with so many silver mining com­pany CEOs over the years.

On balance I agree that making the announcement could definitely cause many unknowns and probably put the spotlight on silver by even the mainstream press, for several days if not weeks. And if I read this accurately, this would be a huge motiva­tion for the CFTC to not take any action.

Wishing you the best,
 

David Morgan