it is possible (don't hold your breath just yet) that the cftc might actually do something. this story just came out about the silver market.

in addition, cftc commissioner bart chilton has agreed to meet with bill murphy of gata next week. i bet chilton's really looking forward to that. in any event, with all of this publicity it is getting a lot more difficult for any regulatory agency to claim it didn't know what was going on. plausible deniability is becoming harder to come by.

Although the CFTC has mentioned a very high number of complaints in relation to its new investigation – one CFTC commissioner told the Wall Steet Journal he had received 700 messages - these complaints were part of an organised email campaign and related to one specific event in August. This new evidence galvanised the silver investor community and appears to be the front-runner as the likely cause of the investigation.

The new allegation:

Ted Butler, a veteran silver analyst who has been in various disputes with the CFTC since 1984, spotted what he believed to be conclusive evidence of manipulation. In a piece called "The Smoking Gun" Butler said that CFTC figures showed that two US banks had increased their silver short positions from 6,199 contracts in July 2008 to 33,805 contracts in August 2008.

In effect the two banks had commitments to deliver 31m ounces of silver in July and, one month later, this had increased to 169m ounces of silver. Butler said that this increase represented 20 per cent of the annual global supply of silver and was "the largest such position by US banks I can find in the data, ever."

Then, on 2 September, Butler proposed a new theory to explain the large short positions. He said that the short position may not have been "new" but could have been an existing short position that had been transferred from one bank to another.

He said: "This coincides with JP Morgan’s takeover of Bear Stearns. In fact, it would not surprise me if the bailout was JP Morgan taking over Bear Stearns' short silver position, at the government's request." JP Morgan declined to comment.

http://www.investegate.co.uk/invarti...