SILVER NEWS

CFTC says silver market investigation ongoing since 2008

In spite of 2004 and 2008 investigations determining no illegal activity in the silver futures market, the CFTC says it has been continuing to investigate the issue since late 2008.

RENO, NV - 

The Commodity Futures Trading Commission has recently issued a one-paragraph statement, announcing it is still pursuing an investigation into the possibility of unlawful acts in the silver market.

The investigation has been ongoing since September 2008. Since that time, the commission has received a number of comments and letters asking the government to investigate the COMEX silver futures market. Several complaints have asked the CFTC to limit the activities of large banks in the silver market.

"Since that time, the staff has analyzed over 100,000 documents and interviewed dozens of witnesses and obtained expert advice," the CFTC said in a Nov. 4, 2011, statement. "It has been a long, detailed, and thorough investigation, and it continues in an appropriate and considered manner."

On May 14, 2008, the CFTC said its investigation of trading activity in the silver futures market covering the period 2005-2007 determined there was no evidence of manipulation in the silver futures market for the period between 2005 and 2007. The investigation also found NYMEX silver prices tend to track closely the price of physical silver. Finally, the CFTC determined "no observable relationship between short-futures-trader concentration levels and silver prices."

However, in September 2008, the CFTC disclosed that another investigation of silver markets was underway.

For years, the CFTC has received complaints from silver investors claiming the price of silver futures traded on the NYMEX has been manipulated downward.

In 2004, the CFTC issued a 2004 Silver letter in response to a large number of metals analysts and commenters who expressed concern that the futures price of silver was reportedly being manipulated downward as a result of reported collusion by a handful of traders on the short end of the silver market.

The allegation was that, because the consumption of silver had exceeded supplies available from new production and recyling for many years, silver futures prices should have been much higher to reflect the ongoing production deficit.

The CFTC staff also examined the relationship between NYMEX silver futures prices and cash market silver prices to determine if NYMEX prices appeared to be unusually or significantly out of line with cash prices.

Staff analysis in 2004 found no evidence that a short-side manipulation was in progress. The staff also concluded the gap between silver production and consumption had been filled over the years by the drawdown of existing silver stocks. While a production deficit existed, the staff found no supply deficit.\

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