Putting The "Fraud" in "Fraudulent"

Wed, Jul 6, 2011 - 9:43pm

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

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.


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

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[at]cftc[dot]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

About the Author

turd [at] tfmetalsreport [dot] com ()


Jul 6, 2011 - 9:52pm

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

https://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.

Jul 6, 2011 - 10:03pm

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.

Jul 6, 2011 - 10:21pm

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 Monedas
Jul 6, 2011 - 10:32pm

@ 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!

Warren Peace flaunt
Jul 6, 2011 - 10:32pm

@ 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.


Warren Peace
Jul 6, 2011 - 10:34pm

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.


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

Jul 6, 2011 - 10:35pm

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.

Jul 6, 2011 - 10:37pm

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.

Jul 6, 2011 - 10:44pm

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.

Jul 6, 2011 - 10:44pm

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...

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