Putting The "Fraud" in "Fraudulent"

I just wanted to take a moment this evening to share with you an email I just sent to Commissioner Chilton. Here it is, in its entirety:

Dear Commissioner Chilton:

It is out of concern for our "markets" that I write you this evening.
I address this to you as you have been virtually alone at the CFTC in confronting JPM and HSBC regarding their concentrated short positions in silver. Though your persistence has been instrumental in causing these banks to cover some of these positions, I fear they have simply shifted their manipulative sales into the exchange-traded fund, SLV.

Ted Butler recently reported that SLV currently carries a short position that represents almost 12% of all outstanding shares. In fact, the total short position in SLV has grown from around 6,000,000 shares at the end of 2010 to nearly 37,000,000 shares today! Though the evidence is circumstantial, it appears safe to assume that, after covering Comex short positions to satisfy your commission, JPM et al simply shifted their shorts into the SLV.

As you know, one share of SLV is roughly equivalent to owning one ounce of physical silver. Additionally, by prospectus, the custodian of SLV is required to have in storage one ounce of silver for each share outstanding. Therefore, an entity that is short 5,000,000 shares of SLV has the same effective position as an entity that is short 1,000 Comex silver contracts. It would be very simple for banks such as JPM to shift their manipulative positions from the public and reportable Comex to the opaque SLV. Judging by the the rapid increase in the SLV short position and corresponding drop in the commercial short position as noted in the Commitment of Traders report, it is quite clear that the banks have done just that.

Additionally, short sales of SLV should be illegal and not allowed. As noted above, each share of the SLV is required by prospectus to be backed by an ounce of physical silver. When a short seller borrows shares and sells them to a new buyer, the short seller has created two beneficial owners of the same shares. Both longs cannot take delivery of the same silver so, by definition, the short seller has violated the prospectus, broken securities laws and performed a clearly fraudulent act. All short sales in any ETF that purports to back its shares with physical assets should be suspended immediately. I ask that you promptly refer this matter to the SEC and FINRA for their review.

Thank you for your prompt attention to this matter. 

"Turd Ferguson"
Editor and President
TFMetalsReport.com

I think you all know by now how I feel about the GLD and the SLV. If you are not up to speed and wish to educate yourself, the definitive piece on SLV was written last year by Jeff Nielson. Please take time to read it.

http://www.bullionbullscanada.com/index.php?option=com_content&view=article&id=10825:the-bogus-bullion-etfs&catid=42:rokstories

SLV was created and began trading of April 28, 2006. With that date in mind, please take a moment to consider this chart:

paper_low-silver-inventories.gif

Hmmm, well, isn't that interesting?

As noted in the email above, the short position in SLV has grown by 6X in just the last six months. Additionally, as Ted Butler has noted, the short position has grown regardless of price. It is abundantly clear that the Forces of Darkness are shifting their manipulative shorting activities away from the Comex and into SLV.

Also, shorting of SLV should not even be allowed!! By shorting shares, the seller has created two beneficial owners of the same shares. By prospectus, each share must be convertible into physical silver. How can that happen when a share has two owners?? This is outright fraud and must be stopped!

IF you feel as passionately about this as I do, please take time to compose your own letter to Commissioner Chilton. His email address is bchilton@cftc.gov. Please be respectful as he would seem to be the only commissioner intent on actually creating fair markets. If you're short on time, feel free to simply c&p the note I sent. You might also consider sending it to Ron Paul, Rand Paul, Spencer Bachus, Jeb Hensarling and/or your personal elected representative in Washington. It may seem futile but we must always try.

Thank you for your support. TF

59 Comments

Biochar's picture

in addition, read the BIS Silver Data article at Harvey's blog

http://harveyorgan.blogspot.com/ ~ BIS Changed Silver Data (From $203 to $93 Billion in Silver Liabilities?) By: Jason Hommel, Silver Stock Report

Look, every damn fundamental favors silver's eventual moonshot, and in my opinion, it will plateau there and slowly grind higher, simply because of scarcity. In 50 years 95% of the earth's mineable resources will be gone. Enough said.

I've posted this before at ZH, here's an industrial-side pump of silver, which is in fact the superman of metals...

Silver has the highest electrical and thermal conductivity of all metals. Every computer, server, monitor, cell phone and switch must have silver. Lasers, satellites, solar panels, high-tech weaponry (tomahawk cruise missiles use 500 oz) and robotics, all require silver. Digital technology and telecommunications need silver. There's silver in every TV, washing machine, wall switch and refrigerator. Conductors, switches, contacts and fuses use silver because it does not corrode or cause overheating and fires. Silver is used heavily in photography and in prints. Batteries are now manufactured with silver alloys. Lead-free silver solder is used heavily for joining materials and producing leak-tight joints. Silver is also widely used in silk-screened circuit paths, membrane switches, electrically heated automobile windows, and adhesives.

Silver achieves the most brilliant polish of any metal and has the highest reflectivity of light of all the metals, allowing it to be used in mirrors and in coatings for glass, cellophane or metals. Double layers of silver on glass reflects away 95% of the hot rays of the sun. Silver has a variety of uses in pharmaceuticals as silver kills bacteria. Hospitals use silver coated devices in surgery to eliminate contamination and infection. Skin care products now use colloidal silver as it has been found to be a healing agent and disinfectant. Silver sulfadiazine is the most powerful compound for burn treatment. Catheters impregnated with silver eliminate bacteria. Silver is increasingly being tapped for water purification, silver ions used in pools and spas. To prevent growth of germs and fungus on surfaces silver ions are used in paints and coatings.

In the face of all these industrial uses there will be less silver available, plus, the unique properties of silver restrict its substitution in most applications. More silver will be used than can be produced. Mining and recycling are falling short of providing the necessary silver and it will get more problematic.

flaunt's picture

Hey Turd, Does the CFTC even

Hey Turd,

Does the CFTC even have jurisdiction over an ETF?  Sounds like something that the SEC would have to look into.  I wouldn't hold my breath, as they seem to be even less interested in ensuring the markets are fair than the CFTC.

Warren Peace's picture

Thanks Turd

Thanks Turd, many people do not understand how shorting shares creates new 'virtual shares' and in the case of SLV, more shares than oz to back them. We all seem to be coming to the same conclusions about the EE. We now look for how they are finding new ways to cheat.... no, they will never be able to come clean. We just had a thread here last week discussing how the comex may be using SLV shares to deliver into standing contracts.

http://www.tfmetalsreport.com/forum/934/comex-silver-alert-lowest-ever-98690833-oz

Round and round they are sowing the paper wind..... they will eventually reap the physical whirlwind.

¤'s picture

Well put, TF!

I can't wait for the day that the market and the general populace finally realizes that there is very little, if any physical silver or gold available. At some point that will happen.

I hope I'm online, watching financial TV or hopefully on this website when the  news comes down. It will be a day to remember.  Just picture the craziest upwards chart you've ever seen and that's probably whats going to happen at some point.

I have to ask this....does anyone else ever go back and look at the price movements of gold and silver back in the late 70's and 1980? I do occasionally after I read or listen to Jim Sinclair speak so passionately about what he has already experienced and what he knows is  coming this time around.

The gold charts 30+ years ago are pretty amazing to look at and to think how this might unfold, although I know the circumstances and parameters of this crisis are different then that one.

The next phase of this debt crisis and resulting spike in the PM's once they are released from their "short" bondage might make us audibly gasp when it happens. I can picture just a plain old "OMG!" or "HOLY SHIT!" when it does happen.

If you were on this website when we cheered $40 silver over the hump at midnight on the Asian market then I can't even imagine what it will feel like when we see gold or silver (both!) spike vertically for minutes/hours/days on end when the moment happens.

Hope I'm right here on TF's when it happens.

Warren Peace's picture

@ flaunt

Turd asks the commissioner to forward these matters to the SEC. I think of all the govm't officials, Bart Chilton is the only one likely to do anything for the good. He is the one who personally responded to hundreds, maybe thousands of emails we sent to all the CFTC commissioners two years ago. He also was the one who said publicly that the banks indeed were in violation in the silver market. 

“There have been fraudulent efforts to persuade and deviously control that price,” said Commissioner Bart Chilton at a hearing today in Washington, alleging there have been violations of the Commodity Exchange Act. “Any such violation of the law in this regard should be prosecuted,” he said.

http://www.bloomberg.com/news/2010-10-26/silver-market-faced-fraudulent-efforts-to-control-price-chilton-says.html

Monedas's picture

New math.... old saying !

An Eagle in your hand.....is worth 150 flying around in a fund ! Monedas 2011 Comedy Jihad World Tour

Warren Peace's picture

@ Monedas

LOL! That's just awesome... Just imagine what happens when the 149 others who thought they had silver try to source it with what's left of their fiat on the physical market.... And they have to compete with all the users, who have slightly deeper pockets....

Physical..... now more important than ever!

¤'s picture

Zero Physical Silver Availability...

...will be the only thing that gets their attention.  I believe that even the "good guys' hands are tied. They know full well what's going on and for how long and by whom and for how much etc.

Once your at a top position in anyone of these global market institutions that are tied in with the EE and the Fed and the global banker cartel you can't just demand an investigation or put and end to something that has been going on for decades, when you know full well what's at stake and who has that stake and what will happen if that stake collapses etc.

I don't think anything will change until it becomes obvious they are about to run out of physical PM's and the settlement of trade  in USD or whatever isn't acceptable anymore. When deliveries can't be met is when it all completely unravels and that chart I spoke of goes ..."BOING!"    

That will be a day to remember and a chart to print out.

silver_hunter's picture

why bother fruitless effect, Ted Butler has done that

and it fell into deaf ear.

Just let the Chinese do their part and eventually we will have two markets, one for paper one for physical. Paper is for gambler. Physical is for serious investors and  silver end user.

Sterling's picture

It has been brought to my

It has been brought to my attention that yahoo has shut down their SLV and AGQ message boards.  I checked it out and sure enough, they no longer exist.  Interesting...

Turdle GG's picture

Some see the SLV short as being OK. I disagree.

Turd,

thanks for addressing this important topic.  

Note that Gene Arensberg has also addressed this issue.  He sees it as bullish, as those shorts will eventually need to be covered.   But he also goes on to criticize the critics of the short position.  He doesn't mention Ted Butler, but clearly it's Ted's view that Gene is addressing.  Gene does not believe the short position is fraudulent.  Please read and judge for yourself:

http://www.gotgoldreport.com/2011/06/record-net-short-position-for-slv-rally-fuel-.html

(Our old friend Kid Dynamite even posted some comments)

Swampfox's picture

Playing with paper

is like playing in a rigged game where you lose every time. Fuck em. By Physical and hold until the Ponsi collapses. We/they/humanity can't avoid reality forever.

SilverTree's picture

happening fast

Its all hitting faster now, it won't be long until it all crumbles down.

Seacap81's picture

If you want to beat these pricks.....

If you want to beat these pricks once and for, just buy bullion.  Get out of any paper markets altogether.  Their little flim-flam-skim-scam ends abruptly when all physical is removed from dealers' stocks.  Just as importantly, remaining bullion needs to land in strong hands.  Also, it is extremely important to convert owners of paper, 401k's, seps, mutual funds, stocks, etc....into silver disciples one individual at a time.  Do not hold the fundamentals of silver as a closely guarded secret.  Share.  Get them in the boat!  No particular training is needed, just refer them to Turd's site or the myriad of other favorite silver web-sites we have all come to know and love.  It is all out there on the web.  C'mon let's finish this damn thing!!!

stoneeh's picture

"Look, every damn fundamental

"Look, every damn fundamental favors silver's eventual moonshot, and in my opinion, it will plateau there and slowly grind higher, simply because of scarcity. In 50 years 95% of the earth's mineable resources will be gone. Enough said."

And in case of silver, much sooner that than.

- Markus

Phantom's picture

SLV board link

Gil's picture

He was actually quite harsh

He (Gene Arensberg) was actually quite harsh toward the unnamed "anti-ETF" newsletter writer.

Bay of Pigs's picture

Gerald Celente interview

Good work Turd. Keep pressing ahead. You are making a difference my friend.

I just listened to this Gerald Celente interview at KWN Daily. It is sobering to say the least, but well worth a listen. Apologies if it has already been posted.

http://kingworldnews.com/kingworldnews/Broadcast/Entries/2011/7/7_Gerald_Celente.html

corbin's picture

Re-Valuation Event

DarkPurpleHaze wrote:

I can't wait for the day that the market and the general populace finally realizes that there is very little, if any physical silver or gold available. At some point that will happen.

I hope I'm online, watching financial TV or hopefully on this website when the  news comes down. It will be a day to remember.  Just picture the craziest upwards chart you've ever seen and that's probably whats going to happen at some point.

If it goes down like you describe, I hope to join you at Turd's.

However, FOFOA offers a different scenario for what the collapse and re-valuation might look like:

http://fofoa.blogspot.com/2010/09/shoeshine-boy.html

Bay of Pigs's picture

@Turdle GG

I like Gene Arensberg quite a bit. I think he's pretty sharp.

I openly admit I am biased against SLV and GLD because of their prospectus. I think it resembles Swiss Cheese. I also believe the Banksters are crooks. That is why I consider these vehicles fraudulent in nature, or at the very least manipulated. 

Gene says "consider that there are severe consequences for fraudulent prospectus info including a cell in a very unsavory place".

Oh really? How many people are in jail for all the crimes being committed on Wall St.? Sorry, but he loses me there.

Animal Sacrifice's picture

AGQ Board

@sterling

I have never been to Yahoo's AGQ board but if it IS gone I hope someone starts a Google group for AGQ. It's a good synthetic that has made me rich and made me poor.

I don't want to sound paranoid but if boards about entire ETFs just disappear, I think there is a reason why.

Ashé-O

Ogúnlaná

TheGoodDoctor's picture

@DPH Man I was online during

@DPH Man I was online during the flash crash on 5/6/10. Boy was that a doozy. On top of that I was listening to Alex Jones and then he started talking about it live. That was an interesting day. I too hope I am online when the rockets take off!

@Turd Nice letter and nothing like driving some traffic from the SEC, CFTC, FINRA etc. to the site! cheeky You should track some IP's and see who comes along for a visit! Heck maybe even HSBC and JPM will be giving you some page views!

@stoneeh Nice chart there bud!

Like I keep saying folks, "It's just a matter of time." And that window keeps getting smaller.

This one goes out to all you dedicated silver fans! laugh

Ruffian's picture

Ummm, Can someone please post

Ummm,

Can someone please post the address or the e-mail where a letter should be sent to?

Colonel Angus's picture

I think we're missing one salient point on SLV...

...people can buy SLV on margin...still. I actually have 100 shares from some time ago, and they are on an account that has a margin possibility. I know it is a sham, but it has made me some fiat that will eventually be converted to the real stuff, but back to my point. Many brokerages are interpreting FrankenDodd to mean that nobody can buy XAU or XAG on margin and to mean something about needing to take physical delivery within 28 days. Now, if SLV is actual ounces of silver (even though we all know better) then why is this synthetic version of buying silver or gold on margin allowed? Hmmmmmm

GS_PHYS's picture

@All, I do not see anyone

@All,

I do not see anyone posting Indian temple treasure find of about 1 Ton Gold and total

$ 22 Billion worth of Gold, Diamond and jewels.

http://www.csmonitor.com/World/Global-News/2011/0705/22-billion-in-gold-diamonds-jewels-found-in-Indian-temple-s-secret-vaults

Ruffian's picture

never mind, I found the

never mind, I found the address in the last part of TF's  post.

Thanks.

Endzeit's picture

Please, don't misunderstand

Please, don't misunderstand my post: i do not believe, that there were no manipulations in the PM-market. It would be stupid to think so, if it is common practice of central banks to intervene in currency or bond markets. But to be honest, i don't understand the logic behind the alleged creation of two owners because of shorting SLV in the above example:

Let's assume the following, for easy understanding:

SLV  = 10 ounces, 10 shares.

TURD: long holder of 10 shares; The silver stored in SLV's vault is Turd's.

JPM = shortseller

TURD: doesn't plan to sell his shares, because he believes in the rising price of silver. And he doesn't need the silver, too.

JPM asks Turd, if he needs the silver and he says: "No, not in the foreseeable future." JPM: "Would you lend me your silver, if i pay you a fee? You can generate additional income that way." So

TURD lends his 10 shares; still 10 ounces in the vault @SLV; but lent out from TURD to JPM.

JPM now sells the 10 shares from Turd and pays him a small fee for every day while lending

NEW LONGIE: he buys the 10 shares from JPM and therefore also the 10 Oz are transferred into his posession; still only 10 ounces around; It's important to know: TURD has lent them out!

Now, if TURD does want to sell the shares he bought, prior he must get the shares from JPM back;

It's like if someone lent his car: before he can sell it, the lender must give it back to the owner.

The problem could appear, if TURD wants to sell his lent out shares and the lender, JPM, cannot find a longie, who is willing to sell 10 SLV shares, JPM cannot buy ten shares and give it back to Turd, so he can sell them.

But following this mechanism (and that's the mechanism of shorting), there are not two owners of the same metal created, because the shortseller (JPM) leases his amount of shares (= silver) prior from a longie (= TURD) and sells it further.

For example, my broker is IB. I can short almost everything and i don't have to care about lending the position before i can shortsell. But i had to agree, that IB can lend out everything i have in my account. So every IB-customer holding long positions, adds to the pool of potentially shortable positions.

Regarding the example of SLV: that 12m shares are available for shorting, IMO has nothing to say, that those were naked shorts. If - for example - IB-customers bought 12 million shares of SLV long, then those 12 million shares are in the pool for potential shorting. If now a new IB-customer appears, who is willing to sell these 12m short, he lends them from IB's pool, and pays a fee to IB. Nothing was created.

The scam lies somewhere else, and this scam is covered by lawmakers:

Many people do not know, that their shares/positions they buy, are being lent out. So they think of their long positions, as if they they would own them at every moment.

The lawmaker supports that, because he doesn't force brokers to mention that aspect as loud and clrearly as possible: You long positions can be lent out. The problems that potentially could occur are:

1.

2.

3.

Therefore i do not agree, that the above article nails down the problem correctly.

And i also do not want to spread panic.

Think of the following:

IF people sell positions in panic, then it's no problem for shorters to cover!

IF people are buying like crazy, then it's getting expensive for the shorters, but the brokers are fine, since the pools for potential shorting are filled with every long position.

IF shortsellers are running out of cash, then they are receiving margin calls and the brokers liquidate their positions automatically. Therefore making sure, that every open short position they have, will be bought on the market and therefore will be brought back to the pool and therefore being acessible for the long-lenders.

So, if you didn't know about that and you have a broker you are satisfied with (like i am with IB), then there is no need to run away in panic. It's a very secure and self-stabalizing system.

Only in the case you buy shares for the coming financial armageddon, then you should think about transferring these positions either to a non-lending broker (and hope in the brakedown the servers are not damaged), or let the shares physically deliver into your personal posession and hope you are not being robbed or your house being burned down.

RTW2009's picture

Something borrowed...

Turd

When a short sale is made a share is borrowed to make good delivery to the buyer. This does not mean that there are two beneficial owners. If the lender of the share wishes to exercise his shareholder rights he has to request the counter party to the transaction to reclaim the borrowed share. In other words the short seller has to cover before the lender can exercise his rights.

Short selling does not change the number of shares in issue.

None of this alters the fact that as far as the silver market goes "there is something rotten in the state of Denmark" to quote the bard...

Regards

RTW

Goofy's picture

Good going Turd! May i add..

Short selling assets you don't own should be banned. Gold and silver is real money and must be separated from debt money. Only then can gold and silver work as real money for final settlement of debt . To say it another way; gold and silver must never be lent out only sold. Price discovery will then come from actual buys and sells and not bids and asks.

Endzeit's picture

Own?

Short-sold assets are always lent, not owned.

Pls read my post earlier, to understand short-selling. We are doing PMs no good, if we talk BS.

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