CFTC study denies manipulation in silver market


From the U.S. Commodities Futures Trading Commission
Wednesday, May 14, 2008

WASHINGTON -- The Commodity Futures Trading Commission's Division of Market Oversight (DMO) today released a report that re-examines long-term and recent allegations of misconduct in the silver markets and finds that there is no evidence of manipulation in those markets for the trading period examined.

For the report, DMO examined trading activity in the silver futures market covering the period 2005-2007. Among other things, DMO analyzed the recent price movements in the silver market in relation to price movements for other metals; the relationship between the price of New York Mercantile Exchange (NYMEX) silver futures and spot silver prices; and the relationship between the positions held by large short silver futures traders and silver futures prices.

DMO's new analysis includes the following conclusions:

-- There is no evidence of manipulation in the silver futures market for the trading period examined.

-- Silver cash and futures prices have risen dramatically between 2005 and 2007, with silver outperforming the gold, platinum and palladium markets, suggesting that silver futures prices are not depressed relative to other metals prices.

-- NYMEX silver futures prices tend to track closely the price of physical silver.

-- There is no observable relationship between short-futures-trader concentration levels and silver prices.

During the past 25 years, the CFTC has received complaints from silver investors alleging that the price of silver futures traded on the NYMEX has been manipulated downward. In 2004 DMO responded to investor concerns in an open letter (2004 Silver Letter) that concluded that the existence of a long-term manipulation was not plausible and that an analysis of activity in the silver futures market did not support the conclusion that the market was being manipulated. The current DMO report summarizes and builds upon the analysis and conclusions of the 2004 Silver Letter.

DMO staff continues its routine surveillance of the silver futures market, including daily evaluation of the positions of large traders, to detect and deter any illegal trading activity.

A full copy of the report is available here:

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