Prepare for a wild week coming up...

Stunning things are happening this weekend and next week could be wild for Silver and Gold.

First off the Commodities and Futures Trading Commission (CFTC) has released this vague statement regarding their enforcement investigation of the Silver markets:

• “In September of 2008, the Commission announced the existence of an enforcement investigation into the possibility of unlawful acts in silver markets. Since that time, the staff has analyzed over 100,000 documents and interviewed dozens of witnesses and obtained expert advice. It has been a long, detailed, and thorough investigation, and it continues in an appropriate and considered manner.”

Shortly afterward, on the blog King World News, CFTC member Bart Chilton gave a bombshell interview in which he has confirmed there is manipulation in the silver market and that there have been "violations of the Commodity Exchange Act". Chilton states that the manipulation should be "prosecuted to the full extent of the law."

Following this, and once the markets had closed, the CME issued a memo stating that on Monday they will be raising maintenance margins to initial margins on all products.

Because maintenance margins are 20-30% below initial margins, this is effectively a 20% + margin hike for holders of ANY maintenance position. This means that by close of business Monday, millions of options and futures holders will be forced to deposit billions in additional capital to the CME just so they are not found to be margin deficient, and thus receive a margin call.

Naturally, since it is very unlikely that this incremental amount of liquidity can be easily procured in one business day, it is anticipated that this will lead to the issuance of hundreds of thousands of margin calls Monday, followed by forced liquidations of margin accounts across America... and the world.

Have the pending charges against JPM for silver manipulation hit a nerve with the banking cabal? Will the massive forced liquidation dramatically drive down Silver/Gold prices so that JPM can quickly exit their remaining short position?

Regardless, Monday should be the start of a wild and rocky ride in the precious metals.

More as the weekend progresses.

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Email: village_whisperer@live.ca
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Carney-Speak and Silver-Gate

Yesterday was an interesting day and I would be remiss not to touch on a couple of significant real estate developments.

First off there was a survey by the well respected Economist magazine which shows Canadian real estate overpriced by 23.9%. If that's the national average, how overpriced do you think real estate is in this town? To say at least 50% wouldn't be far off the mark.

Meanwhile, in Ottawa, Bank of Canada Governor Mark Carney was appearing before the Commons finance committee and was asked the following question:

"Do you think the housing market could collapse here, as it did in the States?"

Replied Carney:

"I am not predicting a significant drop in prices, but given how far prices have risen and the high level of Canadians’ household debt, an abrupt drop in the housing market cannot be ruled out."

An abrupt drop in the housing market cannot be ruled out!

Now... if you know anything about the Governor of the Bank of Canada, you know that markets can rise and fall on what this man says. Speeches and statements are very, very carefully worded for just that reason.

This was no slip of the tongue by Carney. It's significant and telling.

A few words on Silver

As you know, one of the topics I speak about regularly on this blog is Quantitative Easing, aka money printing.

I have stated in the past that, with all the money printing and currency devaluing going on, it is a no-brainer that the price of Gold and Silver is going to rise significantly in the years ahead. How far it will rise is a matter of debate.

And within that debate there is a sub debate that rages about price fixing that goes on in the paper Gold and Silver markets.

Now, I'm not going to delve into that debate, but an interesting development surfaced yesterday.

As reported by Reuters, a commissioner of the Commodity Futures Trading Commission made a stunning accusation.

Giving credence to the claims of critics, CFTC Commissioner Bart Chilton said, "there have been fraudulent efforts to persuade and deviously control that price (of silver)." Chilton's prepared remarks were made before a Commodity Futures Trading Commission meeting on Tuesday as events heat up for a full scale investigation into manipulation in the silver markets.

Critics has longed maintained the the metal has been suppressed. Historically silver has always floated at a 16:1 ratio with Gold.

Currently Silver fluctuates between $23 and $24 an ounce (US$). If the historic 16:1 ratio were at play, critics argue Silver should be at $82 an ounce today.

Many claim the dramatic gains Silver has made recently are due, in part, to the heightened scrutiny the manipulation claims have been getting.

Last month Garth Turner suggested Gold could go to $3,000 an ounce. If Silver were to float back to it's 16:1 ratio with Gold, at that level Silver would sit at almost $190 an ounce.

I know I'll be watching the investigation by the CFTC with keen interest.

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Email: village_whisperer@live.ca

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