byLouis Cammarosano, SMAULGLD

First Majestic Silver Corp.

Mexican silver mining company, First Majestic puts the Commodities Futures Trading Commision (CFTC) on notice regarding silver manipulation.

Silver guru Ted Butler pens letter on behalf of First Majestic to the CFTC.

Letter suggests something is wrong with the price discovery process in the silver market.

It’s been a rough few years for silver. It’s been an even rougher time for silver miners, especially those in Mexico where a royalty tax was added to mining profits in 2014.

Mexico, the largest silver producer in the world, is home to such mining companies as First Majestic (AG), Endeavor Silver (EXK), Alexco Resources (AXU), Auricana (AUNFF), Great Panther (GPL), Pan American Silver Corp (PAAS) and Silver Standard Resources (SSRI).

First Majestic is a Mexican primary silver miner that produced 11.75 million ounces of silver in 2014 and 2.78 million ounces in the first quarter of 2015.

First Majestic has been an outspoken critic of suspected silver manipulation for over a year.

In October 2014, First Majestic announced that it had produced 3,500,000 ounces of silver and and noted that it was postponing the delivery of 934,000 ounces of that silver production because it believed that the silver prices had been manipulated artifically low by the bullion banks.

Later, in a widely circulated You Tube interview, First Majestic CEO Keith Neumeyer also called for other silver miners to band together and hold back production recommending that a to be formed cartel of silver miners should “pick a month in 2015″ during which the silver miners would put out a collective press release announcing that they were holding back silver production for thirty days.

The protest was short lived. On November 12, 2014, First Majestic reported its disappointing third quarter earnings. In their earnings release they noted:

Subsequent to quarter end, the Company sold all 934,000 ounces of silver that it held over from the third quarter for an average price of $17.29 per ounce increasing the cash balance by $16.1 million.

First Majestic’s decision to sell its held back production was not unexpected as they had noted in their October 14th announcement:

This suspension of sales will result in lower revenues and earnings for the third quarter, however, it is likely that these inventories of unsold ounces will instead be sold in the fourth quarter.

First Majestic’s call to other silver producers was essentially ignored as President and CEO of First Majestic Keith Neumeyer explained here in this interview with Jason Burak of Wall Street for Main Street.

Silver Miner Letter To CFTC

Yesterday, First Majestic sent a letter written with the help of silver guru Ted Butler noting the absensce of price discovery in the speculative Comex silver futures market. The letter noted the massive speculative silver short positions held by the eight largest traders as of May 19, 2015, that would require nearly 163 days of global silver mining production to cover if delivery was requested.

The letter notes that such massive speculation is not bonafide hedging and “may not be in keeping with the spirit and intent of the commodity law and may suggest that something is wrong with the price discovery process

Below is an updated chart as of May 26, 2015, showing the silver short positions held by the largest traders.

Silver short positions on COMEX as of May 26, 2015

Silver short positions of the eight largest traders as of May 26, 2015 would require over 180 days of global silver mining production to cover.

To read more about suspected silver and gold manipulation click here.
To read about actual proven gold and silver manipulation click here.

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