Reading The Silver COT

Anonymous letter to Mr. James Newsome, CEO NYMEX/COMEX

Dear Sir,

I am quite concerned with a situation that has been going on for rather a long time on the COMEX. The situation is an extreme concentration of silver futures contracts (net short) being held by four or fewer traders. My concern comes from weekly examination of the COT report put out by the CFTC.

I am not attempting to in any way interpret any COT report. I am merely stating what the report itself says.

As an example, the 31 July 2007 COT for silver states that 4 or less traders are net short 265,552,000 troy ounces of silver.

This an enormous amount of silver and dwarfs the amount of concentration found in a COT report for any other commodity. This huge amount is equivalent to over 150 days of silver production for the entire planet. Whether one, two, three or four entities are short over 50,000 silver contracts, what possible commercial purpose could such a position have except to attempt to manipulate the price level of silver far below the price it would have in the absence of such a concentrated short position. This amount almost equals the entire silver inventories of the COMEX and silver ETF combined. I know of no other market where the net concentrated short position, held by four or less traders is greater than 150 days of global production of a commodity.

I’m sure if four or less traders attempted to accumulate over 50,000 contracts net long that the CFTC would have put a stop to it long ago as an obvious attempt to manipulate the price level of silver far above the price it would have in the absence of such a concentrated long position. If the Hunt brothers had tried their shenanigans on the short side rather than on the long side, would regulators have looked the other way? I don’t think so. Perhaps it is who the holders are rather than what they are holding or why. That would indicate that regulatory officials regard certain entities as above the law. I sincerely hope that is not the case. That is the sort of thinking that led to President Nixon having to resign in disgrace.

As a citizen, taxpayer and voter, I am asking for a reply from you specifically addressing the following questions:

1. Do you think it is proper that the identity or identities of the four or less traders should be withheld from public scrutiny when a prima facie case of market manipulation could be made based on the COT reports issued by the CFTC?

2. If you think that the net short position of over 50,000 contracts, equivalent to over 150 days of silver production for the entire planet, by four or less traders is not evidence of manipulation, how large a position would it take to indicate manipulation?

3. Are you aware of any markets where the net concentrated short position, held by four or less traders, is greater than 150 days of global production?

4. What possible commercial purpose could such an extremely concentrated short position have except to attempt to manipulate the price level of silver far below the price it would have in the absence of such a concentrated short position?

5. What do you, in your official position, having been made aware of this extreme concentration of silver futures contracts (net short) being held by four or fewer traders, based on official CFTC reports, going to do about it?

6. If you, in your official position, having been made aware of this extraordinary situation, feel it is unnecessary to take any sort of corrective action, are you willing to accept the publicity and consequences that may result if, in the future, a case for attempted manipulation is proven in a court of law?

I await you reply and thank you for your time and consideration.

Sincerely,

David


If it is true that in the week of August 16, many commercial dealers bought in collaborated order to force many speculators out of their positions, it is to our delight tin knowing that we bought on the week of August 16th.

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