What if the big silver futures shorts are trading for the government?
What if the big silver futures shorts are trading for the government? by Chris Powell for Gata
Dear Friend of GATA and Gold:
In an essay posted today at GoldSeek’s companion site, SilverSeek., silver market analyst Ted Butler writes about the seeming inability of the major bullion banks to close their huge short positions in silver futures without exploding the price and costing them a lot of money.
Butler writes: “This is the big shorts’ last stand.”
Advocates of free markets may hope so, but there may be another possibility. What if the bullion banks are not trading for their own accounts but for the U.S. government or other governments as part of the longstanding international monetary metals price-suppression policy?
In 2012 both JPMorganChase CEO Jamie Dimon and the head of the bank’s commodities desk, Blythe Masters, declared that the bank had no proprietary position in the monetary metals and did its trading in those markets only for clients:
Unfortunately but predictably enough, no one purporting to be a financial journalist asked them if those clients included governments and the U.S. government in particular.
If the silver futures short position is as desperate and potentially expensive as Butler long has maintained, why would the bullion banks not have exited by now? Why have they long been acting as if they couldn’t care less about the supposed danger?
After all, from the Central Bank Incentive Program operated by CME Group, owner of the major U.S. futures exchanges, we know that governments and central banks are given discounts for their surreptitious trading of all CME Group futures contracts — not just the monetary metals but even agricultural futures.
We also know that to qualify for this program governments and central banks must trade through brokers authorized by the exchanges. It wouldn’t do for any futures contract to identify the buyer, seller, or broker as the U.S. Federal Reserve, the Treasury Department, the Exchange Stabilization Fund, or the Bank for International Settlements. That would give the game away:
If governments and central banks — creators of infinite money — are the real parties in interest behind the big short positions in gold and silver futures, money is no object. In that case the only threat to the price-control scheme is exhaustion of the metal that governments and central banks are prepared to lose — exhaustion that was reached when the United States prompted the closing of the London Gold Pool in 1968 and when the United States revoked the government-to-government convertibility of the dollar to gold in 1971.
What has happened before could happen again — indeed, seems overdue to happen again. But then it probably would not bother advocates of free markets if the bullion banks did blow up as Butler expects. The banks are usually committing one sort of criminality or another and their demise would leave the world a better place.
Butler’s analysis is headlined “The Silver Shorts’ Last Stand?” and it’s posted at SilverSeek here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
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Toast to a free gold market
with great GATA-label wine
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Here’s what the bottles look like: