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.
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 firstname.lastname@example.org. 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