Strange CFTC Announcement About Silver Market Manipulation

By Patrick A. Heller
Commentary on Precious Metals Prepared for

Last Wednesday, the US Commodity Futures Trading Commission (CFTC) issued a news release titled “CFTC Closes  Investigation Concerning the Silver Market.

The last sentence of the first paragraph states, “Based upon the law and evidence as they exist at this time, there is not a viable basis to bring an enforcement action with respect to any firm or its employees related to our investigation of the silver markets.”

Most newspapers and the broadcast media picked up this story with the claim that the CFTC did not find any evidence of manipulation of the silver market.  That claim is absolutely false!

silver_manipulationGo ahead.  Read the CFTC news release at  The lengthy statement details the efforts taken to identify silver market manipulation.  But nowhere does it say the Enforcement Division of the CFTC found no evidence of manipulation!

Starting before this investigation began five years ago, there have been constant accusations that the US government and its trading partners and allies have been manipulating silver prices as part of an effort to suppress gold prices.  If the CFTC had, in fact, discovered no evidence of manipulation of the silver market, it could have quelled some of this clamor by explicitly stating in the news release that it had not found such activity.

But that is absolutely not what the CFTC stated!

Instead, the key words in the whole news release said, “there is not a viable basis to bring an enforcement action . . .”   That phrase could be interpreted a number of different ways.

In particular, one interpretation could be that the CFTC absolutely did find manipulation of the silver market, but that the parties engaging in such activities were exempt from prosecution!

Such an interpretation is not farfetched.  The Gold Reserve Act of January 30, 1934 established the US Exchange Stabilization Fund (ESF).  The ESF was funded with $2 billion of the $2.8 billion paper profit that the US government realized from revaluing the price of gold from $20.67 per ounce to $35.00 per ounce.

The ESF was explicitly charged with manipulating the gold and foreign exchange markets so as to stabilize the value of the US dollar.  An amendment adopted in 1970 allows the Secretary of the Treasury, with the approval of the President, to use ESF assets to “deal in gold, foreign exchange, and other instruments of credit and securities.”

The activities of the Exchange Stabilization Fund are closely kept secrets.  However, in order for the ESF to take action, it uses trading partners such as JPMorgan Chase, HSBC, Goldman Sachs, Bank of America, and others to place trades on behalf of the US government.  Some activities are also disguised through the cooperation of the Bank for International Settlements and other central banks.

As I already stated, manipulating silver market prices is one means of helping suppress the price of gold.  The main reason to hold down gold prices is to try to stabilize the value of the US dollar.

Therefore, it is entirely possible that the CFTC investigation may have uncovered manipulation of the silver market that was directed by the ESF.  To the degree this is true, it as a legal activity of the US government.  As such, the CFTC would have been required to state, “there is no viable basis to bring an enforcement action . . . .”

In sum, the CFTC news release didn’t really say anything about manipulation of the silver market, even though some reporters might get the mistaken impression that it does.  Instead, the CFTC really created more questions than answers about what is really going on in the silver market.


pat heller The Federal Reserve Is Trapped with  Inflation of the Money SupplyPatrick A. Heller was honored with the American Numismatic Association 2012 Harry J. Forman Numismatic Dealer of the Year Award.  He owns Liberty Coin Service in Lansing, Michigan and writes Liberty’s Outlook, a monthly newsletter on rare coins and precious metals subjects.  Past newsletter issues can be viewed at  Other commentaries are available at Numismaster ( under “News & Articles) and at CoinInfo.  His award-winning radio show “Things You ‘Know’ That Just Aren’t So, And Important News You Need To Know” can be heard at 8:45 AM Wednesday and Friday mornings on 1320-AM WILS in Lansing (which streams live and becomes part of the audio and text archives posted at  He is also the financier and executive producer of the forthcoming movie “Alongside Night” (trailer posted at

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  1. It is not acceptable to cite one statute only when it is in conflict with multiple other statutes. No one needed to have any proof about what the CFTC is about besides their own commissioners continuing to address the Silver Users Association year in and year out. Now I see the next CFTC chief proposed is someone from Cravath, Swaine & Moore law firm. In fact, this entity has been dirty longer than Goldman Sachs has existed and portends not one scintilla less ongoing corruption.


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