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CFTC denies silver price manipulation

Releasing a second study in four years, the Commodities Futures Trading Commission (CFTC) denies that the major bullion houses are or have manipulated the price of silver. Basically, the CFTC study said that price of silver is not and has not been manipulated because the price of silver has risen substantially over the last few years.

The study found that “. . . silver cash and futures prices have risen dramatically between 2005 and 2007, with silver outperforming the gold, platinum and palladium markets, suggesting that silver future prices are not depressed relative to other metals prices.”

The study’s position is plausible. In early 2005, silver was trading below $10. In March this year, it topped $21. In 2003, silver was trading below $5. Still, in March 2008 it topped $21. So, how could there be a manipulation of the price of silver, the study asks.

Further, those that allege price manipulation also assert that the actions of the major bullion houses have depressed the price of silver. Here, the CFTC says that the facts simply prove otherwise, and the CFTC’s position seems reasonable.

I am not here going to enter the debate as to whether the large commercials (LCs) have manipulated or are manipulating the price of silver. Others have studied the situation extensively and readily make their opinions known.

What is will say is that in the end market forces will win out. When silver was $5, I believed that the large short positions in silver (and gold) depressed prices, but I was not concerned.

I firmly believed that in time market forces would win. The fundamentals were there for a bull market in silver. Actually, when silver was below $6, what I said was that the silver was a “gift,” thanks to the LCs large short positions. Now, investors at the $5 level have four fold price increases.

Now, regardless of what the LCs do, I believe that investing in silver would be a good move. Maybe the LCs, with their present large short positions, will see lower silver prices in the short-term, and therefore reap large profits, but in the long-run market forces will push the price of silver much higher.