Comment Text:
10-005
COMMENT
CL-00233
From:
Sent:
To:
Subject:
Kerry Bates
Saturday, April 24, 2010 2:50 PM
Metals Hearing
COMEX Silver Position Limits
Dear Sirs;
Thank for the opportunity to comment on the issue of position limits for precious metals. Please
establish a speculative position limit in COMEX silver of no more than 1500 contracts. Please restrict
any hedging exemptions from those limits to legitimate hedgers. Please stop the levels of concentration
in COMEX silver futures that have been experienced over the past few years on the short side of the
market.
The true distortion of these markets is caused by certain large banks which claim to be hedgers (and
seek exemptions) so they don't have to abide by these limits. These institutions can overwhelm markets
with their outsized positions and move the price to whatever level generates a profit for them. In the
past, two banks have held 99% of the net short position in silver, a clear manipulation.
The LBMA members/dealers are using the US markets, the Comex and SLV (ETF), to manipulate and commit fraud
against its own customer.
HSBC and JPMorgan Chase are market makers on the LBMA. Together they own 95 percent of the over-the-counter
precious metals derivatives as reported to the U.S. Office of the Comptroller of the Currency, and, by comparison with
the CFTC Bank Participation Report, HSBC and JPMorgan Chase are the biggest short sellers on the Comex.
Since the LBMA is not really buying all the metal that investors are supposedly purchasing from it in unallocated
accounts, not only is the LBMA hurting those investors but it is also suppressing the exchange price of the bullion held
in allocated accounts for their customers.
Where is the warning to owners of allocated metal accounts that their bullion dealer is running a scheme that involves
deliberately and willfully selling naked short against their investment?
Goldman Sachs has just been charged with fraud for failing to advise customers to whom they were selling a particular
investment that the firm had been paid by the John Paulson Fund to engineer the investment in a way that made it
likely to go down in price.
There is an exact parallel in selling allocated gold as a safe haven investment and failing to disclose that activities of
the same bank will impede its price from rising or even make its price go down.
The banks/managers are trading against its own clients/investors without disclosure.
The CFTC hearing in Washington was about safeguards against, and limits on, naked short selling at the Comex. The
crux of the scandal is that the banks have been selling what they do not have in order to manipulate the price and cheat
investors (and actual miners).
Naked short selling in size is a cancer in the financial markets. And the way in which the Banks are obstinately
fighting against any and all reforms that attempt to limit naked short selling shows the objective observer that they are10-005
COMMENT
CL-00233
firmly commiaed to a status quothatis designed to diston themarkets and the realeconomyfortheirshortterm
advantage.
Let's be clear about this: naked short selling in size is not a trading strategy, it is a means to a fraud.
It is fascinating, the US Government is calling China a currency market manipulator. Why doesn't the US take the log
iams out of its own eyes before it asks other nations to remove the splinters from their?
Since the CFTC hearing on gold and silver in March, the "market" price action in gold and silver continues as if the
bullion banks, led by JPM and HSBC, are laughing at any potential CFTC actions to stop their massive concentration
and manipulation of the gold and silver market.
CFTC Commissioners: The facts are out there. Will anything be done about it? Will these few banks be allowed to
continue to make a mockery of the CFTC and US markets? The banks involved in this market manipulation are
financial terrorists. What is the CFTC going to do about it?
Sincerely,
Kerry Bates.
