You are here

James Turk: The week ends badly for the dollar

Section: Daily Dispatches

By Becky Kramer
Spokane Spokesman-Review, Washington
Wednesday, June 2, 2004

Mark J. Lundeen says he's not a believer in conspiracies,
but the Minneapolis investor does admit to suspicions
about the price of silver.

In 1994, the retired Navy man began buying up mining
stocks, expecting silver prices to rise.

"It was just common sense, Economics 101," Lundeen
said in a telephone interview last week. "They're using
up more silver than they're mining. You'd expect prices
to rise, based on the laws of supply and demand."

But silver prices have been stalled in the $4 to $6 range
for most of the past decade, a source of frustration to
silver producers and investors alike, and the genesis for
countless Internet chat room discussions about possible
manipulation in the market.

Lundeen joined more than 500 other small investors in
writing to the U.S. Commodity Futures Trading
Commission this year, asking for an investigation of their
suspicions. Last month, the CFTC took the unusual step
of posting a public reply.

In a nine-page letter, Commission Chairman Michael
Gorham dismissed allegations that commodity traders
were acting together to influence prices, a theory put
forth by some of the investors. He also said there's no
indication that silver is trading at artificially low prices.

"As I read these letters, I was touched by the
disappointment expressed by many small investors in
the behavior of the silver market and the heartfelt feeling
that lower-than-expected prices were the result of
collusion by a handful of big players," Gorham wrote.

But those allegations have no backing, he said.

The "collusion" theory runs something like this: World
demand for silver is outpacing the amount of silver
mined each year. That means that silver stockpiles
are diminishing, and prices should be rising sharply.
But the short-selling of large volumes of silver by
commodity traders is depressing on silver prices. Some
investors say it's a 20-year conspiracy to keep prices

"The CFTC has closely monitored the silver market,"
Gorham wrote in the letter. "We found no evidence of
manipulation, and those making the allegations have
provided no evidence of manipulation."

Even if the world's stockpiles of silver are declining, as
some data indicates, there's no shortage of silver,
Gorham said. And that, not market manipulation, is
keeping the prices at current levels, he said.

The rumors are familiar in North Idaho, where domestic
silver mines have struggled for years to stay open.

"It goes all the way back to the Hunt Brothers," said
Jack Lyman, executive director of the Idaho Mining
Association. "You hear these kinds of whispers. ...
I've never seen anything that documents any
substance to it."

In the late 1970s and early 1980s, a Texan named
Nelson Hunt and his two brothers attempted to corner
the world silver market. Silver briefly shot up to $50 per
ounce in 1980, but Hunt's scheme didn't pan out, and
prices fell rapidly.

The fears of market manipulation resurface from time
to time.

In 1989, the chairman of the now-defunct Sunshine
Mining Co. accused large silver users of a "complex
orchestration" to keep silver prices low. His remarks
led to a congressional hearing in Coeur d'Alene.

"We were trying to get the Silver Valley back into
production," recalled U.S. Sen. Larry Craig, R-Idaho,
who scheduled the hearing. "Of course, the price
was the dominant factor."

Craig also promised to launch a congressional
investigation into silver prices in 1989. Last week, he
said he couldn't recall the outcome. His staff members
said no evidence of wrongdoing or manipulation ever

At shareholders' urging, silver producer Hecla Mining
Co. has launched its own investigations of silver prices.

"We have twice obtained outside special counsel ... to
investigate whether there were any illegalities in the
commodity trading," said Vicki Veltkamp, Hecla's vice
president of investor and public affairs. "We were unable
to find any evidence that we could act on."

The last investigation occurred about six months ago.

"We decided the best place to put our energy is mining
the metals at low cost," Veltkamp said. "That way the
mines can make money even if the price of silver goes

Rumors have a way of intensifying when metals prices
are low, noted Laura Skaer, executive director of the
Northwest Mining Association in Spokane. When gold
slid below $300 per ounce between 1999 and 2002, the
Gold Anti-Trust Action Committee and an accompanying
Web site,, were born.

"There were really people who thought that central
banks were manipulating the price of gold," Skaer
said. "Obviously, it was a controversial view within
the industry."

With gold prices back near $400 per ounce, Skaer said
she hears fewer rumors. Mining companies are able to
attract the investors to raise money for new mine
development and exploration at that price.

"People are too busy working to worry about whether the
price of gold is being manipulated," Skaer said.

Lundeen, meanwhile, said he appreciates the CFTC's
letter, but isn't entirely convinced by Gorham's response.
He's written numerous letters to governors and
congressmen over the years about silver prices. He said
he's never received a satisfactory explanation.

"He's not looking very hard," Lundeen said of Gorham.
"He has all the information, but he's putting the burden
of proof in me. It's incumbent of them to make sure the
fair market is fair."


To subscribe to GATA's dispatches, send an e-mail to:

To unsubscribe, send an e-mail to:



Free sites:
(Korelin Business Report -- audio)
(In Spanish)
(In English)

Subscription site:

Eagle Ranch discussion site:

Ted Butler silver commentary archive:



Blanchard & Co. Inc.
909 Poydras St., Suite 1900
New Orleans, Louisiana 70112

Centennial Precious Metals
3033 East 1st Ave., Suite 403
Denver, Colorado 80206
Michael Kosares, Proprietor
US (800) 869-5115
Canada 1-800-294-9462
European Union 00-800-2760-2760
Australia 0011-800-2760-2760

Colorado Gold
222 South 5th St.
Montrose, Colorado 81401
Don Stott, Proprietor

El Dorado Discount Gold
Box 11296
Glendale, Arizona 85316
Harvey Gordin, President
Office: 623-434-3322
Mobile: 602-228-8203

Investment Rarities Inc.
7850 Metro Parkway
Minneapolis, Minnesota 55425
Greg Westgaard, Sales Manager
1-800-328-1860, Ext. 8889

178 West Service Road
Champlain, N.Y. 12919
Toll Free:1-877-775-4826
Fax: 518-298-3457
620 Cathcart, Suite 900
Montreal, Quebec H3B 1M1
Fax: 514-875-6484

Lee Certified Coins
P.O. Box 1045
454 Daniel Webster Highway
Merrimack, New Hampshire 03054
Ed Lee, Proprietor

Miles Franklin Ltd.
3015 Ottawa Ave. South
St. Louis Park, Minn. 55416
1-800-822-8080 / 952-929-1129
fax: 952-925-0143
Contacts: David Schectman,
Andy Schectman, and Bob Sichel

Missouri Coin Co.
11742 Manchester Road
St. Louis, MO 63131-4614

Resource Consultants Inc.
6139 South Rural Road
Suite 103
Tempe, Arizona 85283-2929
Pat Gorman, Proprietor
1-800-494-4149, 480-820-5877

Swiss America Trading Corp.
15018 North Tatum Blvd.
Phoenix, Arizona 85032
Dr. Fred I. Goldstein, Senior Broker



If you benefit from GATA's dispatches, please
consider making a financial contribution to
GATA. We welcome contributions as follows.

By check:

Gold Anti-Trust Action Committee Inc.
c/o Chris Powell, Secretary/Treasurer
7 Villa Louisa Road
Manchester, CT 06043-7541

By credit card (MasterCard, Visa, and
Discover) over the Internet:

By GoldMoney:
Gold Anti-Trust Action Committee Inc.
Holding number 50-08-58-L

Donors of $750 or more will, upon request,
be sent a print of Alain Despert's colorful
painting symbolizing our cause, titled "GATA."

GATA is a civil rights and educational
organization under the U.S. Internal Revenue
Code and contributions to it are tax-deductible
in the United States.