Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Who is Spreading the Virus? UK Coronavirus 2nd Wave Analysis - 30th Sep 20
Gold And Silver Follow Up & Future Predictions For 2020 & 2021 – Part II - 30th Sep 20
The Only Thing Systematic Is The Destruction Of America - 29th Sep 20
Fractional-Reserve Banking Is The Elephant In The Room - 29th Sep 20
Gold And Silver Follow Up & Future Predictions For 2020 & 2021 – Part I - 29th Sep 20
Stock Market Short-term Reversal - 29th Sep 20
How Trump co-opted the religious right and stacked the courts with conservatives - 29th Sep 20
Which RTX 3080 GPU to BUY and AVOID! Nvidia, Asus, MSI , Palit, Gigabyte, Zotac, MLCC vs POSCAPS - 29th Sep 20
Gold, Silver & HUI Stocks Big Pictures - 28th Sep 20
It’s Time to Dump Argentina’s Peso - 28th Sep 20
Gold Stocks Seasonal Plunge - 28th Sep 20
Why Did Precious Metals Get Clobbered Last Week? - 28th Sep 20
Is The Stock Market Dow Transportation Index Setting up a Topping Pattern? - 28th Sep 20
Gold Price Setting Up Just Like Before COVID-19 Breakdown – Get Ready! - 27th Sep 20
UK Coronavirus 2nd Wave SuperMarkets Panic Buying 2.0 Toilet Paper , Hand Sanitisers, Wipes... - 27th Sep 20
Gold, Dollar and Rates: A Correlated Story - 27th Sep 20
WARNING RTX 3080 AIB FLAWED Card's, Cheap Capacitor Arrays Prone to Failing Under Load! - 27th Sep 20
Boris Johnson Hits Coronavirus Panic Button Again, UK Accelerting Covid-19 Second Wave - 25th Sep 20
Precious Metals Trading Range Doing It’s Job to Confound Bulls and Bears Alike - 25th Sep 20
Gold and Silver Are Still Locked and Loaded… Don't be Out of Ammo - 25th Sep 20
Throwing the golden baby out with the covid bath water - Gold Wins - 25th Sep 20
A Look at the Perilous Psychology of Financial Market Bubbles - 25th Sep 20
Corona Strikes Back In Europe. Will It Boost Gold? - 25th Sep 20
How to Boost the Value of Your Home - 25th Sep 20
Key Time For Stock Markets: Bears Step Up or V-Shaped Bounce - 24th Sep 20
Five ways to recover the day after a good workout - 24th Sep 20
Global Stock Markets Break Hard To The Downside – Watch Support Levels - 23rd Sep 20
Beware of These Faulty “Inflation Protected” Investments - 23rd Sep 20
What’s Behind Dollar USDX Breakout? - 23rd Sep 20
Still More Room To Stock Market Downside In The Coming Weeks - 23rd Sep 20
Platinum And Palladium Set To Surge As Gold Breaks Higher - 23rd Sep 20
Key Gold Ratios to Other Markets - 23rd Sep 20
Watch Before Upgrading / Buying RTX 3000, RDNA2 - CPU vs GPU Bottlenecks - 23rd Sep 20
Online Elliott Wave Markets Trading Course Worth $129 for FREE! - 22nd Sep 20
Gold Price Overboughtness Risk - 22nd Sep 20
Central Banking Cartel Promises ZIRP Until at Least 2023 - 22nd Sep 20
Stock Market Correction Approaching Initial Objective - 22nd Sep 20
Silver Bulls Will Be Handsomely Rewarded - 21st Sep 20
Fed Will Not Hike Rates For Years. Gold Should Like It - 21st Sep 20
US Financial Market Forecasts and Elliott Wave Analysis Resources - 21st Sep 20
How to Avoid Currency Exchange Risk during COVID - 21st Sep 20
Crude Oil – A Slight Move Higher Has Not Reversed The Bearish Trend - 20th Sep 20
Do This Instead Of Trying To Find The “Next Amazon” - 20th Sep 20
5 Significant Benefits of the MT4 Trading Platform for Forex Traders - 20th Sep 20
A Warning of Economic Collapse - 20th Sep 20
The Connection Between Stocks and the Economy is not What Most Investors Think - 19th Sep 20
A Virus So Deadly, The Government Has to Test You to See If You Have It - 19th Sep 20
Will Lagarde and Mnuchin Push Gold Higher? - 19th Sep 20
RTX 3080 Mania, Ebay Scalpers Crazy Prices £62,000 Trollers Insane Bids for a £649 GPU! - 19th Sep 20
A Greater Economic Depression For The 21st Century - 19th Sep 20
The United Floor in Stocks - 19th Sep 20
Mobile Gaming Market Trends And The Expected Future Developments - 19th Sep 20
The S&P 500 appears ready to correct, and that is a good thing - 18th Sep 20
It’s Go Time for Gold Price! Next Stop $2,250 - 18th Sep 20
Forget AMD RDNA2 and Buy Nvidia RTX 3080 FE GPU's NOW Before Price - 18th Sep 20
Best Back to School / University Black Face Masks Quick and Easy from Amazon - 18th Sep 20
3 Types of Loans to Buy an Existing Business - 18th Sep 20
How to tell Budgie Gender, Male or Female Sex for Young and Mature Parakeets - 18th Sep 20
Fasten Your Seatbelts Stock Market Make Or Break – Big Trends Ahead - 17th Sep 20
Peak Financialism And Post-Capitalist Economics - 17th Sep 20
Challenges of Working from Home - 17th Sep 20
Sheffield Heading for Coronavirus Lockdown as Covid Deaths Pass 432 - 17th Sep 20
What Does this Valuable Gold Miners Indicator Say Now? - 16th Sep 20
President Trump and Crimes Against Humanity - 16th Sep 20
Slow Economic Recovery from CoronaVirus Unlikely to Impede Strong Demand for Metals - 16th Sep 20
Why the Knives Are Out for Trump’s Fed Critic Judy Shelton - 16th Sep 20
Operation Moonshot: Get Ready for Millions of New COVAIDS Positives in the UK! - 16th Sep 20
Stock Market Approaching Correction Objective - 15th Sep 20
Look at This Big Reminder of Stock Market Mania - 15th Sep 20
Three Key Principles for Successful Disruption Investors - 15th Sep 20
Billionaire Hedge Fund Manager Warns of 10% Inflation - 15th Sep 20
Gold Price Reaches $2,000 Amid Dollar Depreciation - 15th Sep 20
GLD, IAU Big Gold ETF Buying MIA - 14th Sep 20
Why Bill Gates Is Betting Millions on Synthetic Biology - 14th Sep 20
Stock Market SPY Expectations For The Rest Of September - 14th Sep 20
Gold Price Gann Angle Update - 14th Sep 20
Stock Market Recovery from the Sharp Correction Goes On - 14th Sep 20
Is this the End of Capitalism? - 13th Sep 20
The Silver Big Prize - 13th Sep 20
U.S. Shares Plunged. Is Gold Next? - 13th Sep 20
Why Are 7,500 Oil Barrels Floating on this London Lake? - 13th Sep 20
Sheffield 432 Covid-19 Deaths, Last City Centre Shop Before Next Lockdown - 13th Sep 20
Biden or Trump Will Keep The Money Spigots Open - 13th Sep 20
Gold And Silver Up, Down, Sideways, Up - 13th Sep 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

No Smoking Gun on Silver Price Supression Conspiracy

Commodities / Gold & Silver Aug 29, 2008 - 12:15 AM GMT

By: Mike_Shedlock

Commodities Best Financial Markets Analysis ArticleThe amount of hate email I have been receiving in response to The Great Gold, Silver Conspiracy Explained is large but not unsurprising. People simply want to blame others for their own trading mistakes. I will have more on that in a separate post.

Most of the emails I received are unprintable because of the profanity. However I will print one of them anyway with slight edits. I will voluntarily withhold the name of the person writing although no such request was asked.

Name Withheld Writes:

Man, he skims right over the below, as if it is a quirk or coincidental.

Well @$$hole, why else would "someone" want to pay you to borrow their gold/silver????

Conclusion: *&%@You!!!

The above rant was in response to lease rates where I wrote:

"It does not make sense to me for lease rates to be negative, assuming they are indeed negative, as stated. However, just because something does not seemingly make any sense, is not proof of manipulation in and of itself."

Rest assured I received many more similar emails, about many other points. Every such email was a ridiculous ill-informed rant about something.

The Mystery Of Lease Rates Explained

I can now explain lease rates, gladly, in fact. Amidst all the hate email, there was one jewel. It was from Jon Nadler, Senior Analyst, Kitco Bullion Dealers Montreal.

Jon Nadler, Senior Analyst, Kitco Writes

Dear Mike,

I read with great interest your rebuttal of the "smoking gun" article by Butler. You are 100% correct in your comments.

One mystery I can lay to rest for you and your readers is the anomaly of 'negative' interest rates. Simple. It never happened.

Kitco received a BAD DATA FEED from Reuters. The error was corrected. End of story. We now have a system in place to 'ring' an alarm any time lease rates pop more than 1/4 percent. Solution will prevent such errors from reoccurring. Imagine how the conspiracy theorists will look when shown one of the pillars of their argument was based on a bad data feed.

Finally, just so you are aware, there is another rebuttal coming their way - soon. It will be on Kitco and it will be at the Silver Summit. In the interim, here is a quick 'mini-rebuttal'.

A major industry research firm was recently commissioned by a silver producer to find the alleged “smoking gun” of price suppression in the silver market, and all they have found is that the people promulgating the conspiracy/suppression/manipulation fairy tales were the only ones likely to be smoking (something). The results of the research may soon see the light of day, but it has already become rather clear that Ted Butler and his supporters are chasing silvery ghosts.

The accusation that manipulation is visible in the silver market is not only an unwarranted claim, it is in fact, a totally ill-informed and ignorant one. There are many levels on which such a claim is not only wrong, but demonstrates an almost total lack of knowledge about how the commodities markets, including the futures markets, work.

Consider, for starters, just the simplest and most straightforward facts.

1. Banks are market-makers. They stand to buy or sell the commodities in which they make markets, taking the other side of a trade from other people or institutions entering a market. When prices fell sharply a few weeks ago, it was because investors, particularly short-term, technically oriented funds, were selling. These funds often use over-the-counter forwards and options to execute their buy or sell transactions.

2. The funds came to market to sell their silver. Commodities were on the decline, the dollar was looking attractive, they had profits to lock in, etc. The reasons were varied but logical. They had to find someone (a counterparty) who was willing to buy what they were selling. Guess who bought? It was the market-makers.

3. So, the market-makers (the banks) were heavy BUYERS, not SELLERS, during the time when prices declined. Now, because market-makers do not take naked, one-sided positions, as they were BUYING the metal in a sharply declining price environment, they were immediately seeking to HEDGE their large and growing LONG positions. How do you think they did that? Yes, they SOLD in the futures market, hedging their LONG positions.

Now, if one knows anything about markets, one understands that. The question is why the people who write the drivel you frequently read do not understand even such an elementary concept as the basic flow of trades. Anyone learns this fact in their first year economics course in college. One would think that people who purport to know about these markets would know what freshmen in college know, yes? Apparently, they do not.

There are many other issues that came in to play during the period in question. For one thing, market liquidity dried up as rapidly as silver prices fell. All of those cavalier traders that had started trading gold disappeared. There was only selling. Those few banks that stood up and did their market-making jobs naturally represented a larger percentage of the trades, because the others fled as soon as someone yelled “Fire!” That does not make for, nor does it sound like a conspiracy.

If the funds are selling long positions, the banks on the other sides of those transactions are taking long positions, in the OTC markets. They hedge these long positions by shorting the Comex. Thus, they appear in the regulated and reported futures and exchange traded options markets as shorts.

One of the important points that the conspiracy quacks always miss is that the banks are usually the passive agents in markets. They make the markets, and take what is coming at them. “Longs and shorts always match” is something people who do not understand the markets say.

Yes, they match, but the important factor to know for price discovery is which side is initiating the trade. In recent weeks it was the short side: Funds selling. The longs and shorts matched, but the impetus for the trades was selling. Thus, prices fell. At other times, if the impetus is from heavy buying, the market makers will be going long, offsetting forward short commitments they are making.

So, no, you would not expect to see a big increase in the market makers' long positions on the Comex at a time when they primarily are buying long in the OTC markets. Another point to consider when deciding to ignore stupid comments about how ‘banks' have 35% of the shorts is to say: “So, who else would be shorting gold at these low levels?” The real question is not why the ‘banks' position is so high. The question is, why it is so low? Go to ETF Securities' website, by the way, and see their notice today about the massive increase in fund buying in recent days in commodities ETFs – reversing their selling of recent weeks.

Also, by the way, why not NAME the banks in question? Why not ask them right out as to the motives behind their positions (better yet, who their clients were) and whether or not they acted in a willfully nefarious manner? One can take any database and make it suits their argument.

A quick scan of all commodities in the reports in question reveals that in fact US bank participation was -on average- just 2.2 across the board. Or, one could isolate sugar and say that non-US banks appeared to “gang up” on wheat, corn, and sugar in a 'disturbing' way in August. Give me a break.

What you have here is the footprints of the hedge funds exiting the commodities' markets in a mass stampede. Nothing more than that.

The 'smoking gun report' is completely in error. What we may have here is a bullion analyst grasping at straws, and trying to incite the retail public to buy physical silver in the hopes that it will reverse the growing tide of money exiting the commodities complex. The so-called “shortages of physical silver” are simply localized coin blank inventory problems (the US Mint) or manufacturers not operating on a 'let's stock it, whether we think we can sell it or not' basis.

While everyone is aware that physical demand can and did rise on the massive price break we've had since the highs of March, and those of July, such a reaction by the would-be buying public is quite normal. Surely, many would love to try to bring down a $20 (or higher) initial cost on their metal if they have a chance to buy more at $12 or $13 per ounce. As for silver supplies, there is quite an ample supply of the raw material from which to manufacture any small product. Let fabricators come back from their summer holidays and the situation might change soon.

There are no problems securing Austrian, Australian, or Canadian silver coins and (as of yesterday) and dealers feel confident that their current and pipeline US silver coin supplies will ensure the satisfaction of all of their commitments to their customers. The theory that the market is somehow sinisterly manipulated – (especially as it comes at a time when US regulators are keeping a keen eye on the goings-on in the commodities and financial markets for just such type of evidence), is simply ludicrous and totally out of touch with market reality. Caveat lector."


Jon Nadler
Senior Analyst Kitco Bullion Dealers Montreal

Jon, thanks much for clearing that up. Your email should put an end to this nonsense, but I am positive it won't. Conspiracy theorists have been ranting for 15 years and most likely will be ranting for another 15. They will continue to pour over COT data, inflows, foreign government sales and other such nonsense, not understanding what the data they are looking at even says.

Conspiracy theorists choose to believe 10 or more banks are all acting together over 15 years or more to suppress the price of gold, and in that time not a single person has stepped up to blow the whistle or expose the conspiracy in some fashion. Amazing!

One of the many baseless rants I received today was about foreign governments acting to suppress the price of gold. The real reason foreign governments are selling gold is because they are stupid. The height of stupidity was the Bank of England's sale marking the exact bottom in the market.

I am a big fan of Occam's Razor which states "All other things being equal, the simplest solution is the best." In other words, when multiple competing theories are equal in other respects, the principle recommends selecting the theory that introduces the fewest assumptions and postulates the fewest entities.

Competing Theories

Theory 1: The US government, foreign governments, central banks, various broker-dealers, and a consortium of 10 large US banks are all acting together in some massive conspiracy to suppress the price of precious metals, for 15 years running, and during that period not a single person has stepped up to expose the fraud even though CIA and other intelligence leaks have been running rampant.

Theory 2: There was massive selling by over-leveraged hedge funds in response to fundamental changes in regards to the US dollar vs. the Euro.

By Mike "Mish" Shedlock

Click Here To Scroll Thru My Recent Post List

Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management . Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.

Visit Sitka Pacific's Account Management Page to learn more about wealth management and capital preservation strategies of Sitka Pacific.

I do weekly podcasts every Thursday on HoweStreet and a brief 7 minute segment on Saturday on CKNW AM 980 in Vancouver.

When not writing about stocks or the economy I spends a great deal of time on photography and in the garden. I have over 80 magazine and book cover credits. Some of my Wisconsin and gardening images can be seen at .

© 2008 Mike Shedlock, All Rights Reserved

Mike Shedlock Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Marcus C. Rodriguez CFP(R)
30 Aug 08, 08:15
Jon Nadler - Shouldn't be employed in this industry

Nadler is unfit to work in this profession as Kitco will not even stand by him and the trash that he publishes.

"As such, Mr. Nadler's opinions on the markets reflect his own take on the trends, facts, and figures that he ascertains in the course of his research, and they do not necessarily represent the official position of Kitco Inc., or of its management. Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication."

Definitive evidence of manipulation has been provided to the CFTC and if they wish to restore integrity to the market place they will act on it.

Dr. Vincent Martin
31 Aug 08, 16:55
Nadler Fully Discredited

Does Nadler worship stone owls? Nadler says 2+2=5 but nobody really listens to him anymore. I am sure he receives lots of hate mail :-)

Patrick thr Painter
26 Nov 08, 15:45
Commodities Conspiracy _ July 4th weekend

Did anyone seem to notice that every single hard commodity sold off at exactly the same time? That would be the day after the 4th of July weekend! From that point to current the whole market is off over 50%. So much for China eating more and driving more. How is that for conspiracy. Who did the massive selling? Who raised the margin requirements, knowing it would set off the avalanch of selling? I think it was Goldman Sachs. After all, they were the ones who started the sell off in sub-prime indices (ABX Index) a year eariler.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules