Last night Midas posted the letter by CFTC official Bart Chilton

that was a big smoke screen as to why the CFTC has done nothingin the past few months regarding the investigation of the silver options/futures manipulation by the big banks. Here is one of tonight's replies.

Dave from Denver then weighed in with

A Modest Proposal

(which was sent to Bart Chilton)

CFTC official Bart Chilton openly responded to the complaints of Ted Butler and GATA of silver manipulation on the Comex by explaining that Mr. Butler fabricated and exaggerated his data to fit his argument.

Before I lay out a modest proposal to Mr. Chilton, I would like to say that based on Mr. Butler's 20-plus years of devoting his entire career to studying every aspect of the silver markets, I will assert that Mr. Butler's data and conclusions are far more worthy of respect and believability than are the empty accusations of a Government regulator who hides behind secretive data and untruthful assertions. In fact, I will go as far to say that Mr. Butler knows more about the silver market than any market professional knows about any market that I have ever studied, including my professors at the University of Chicago. Now, Mr. Chilton has openly asserted that there is conclusively no evidence of price manipulation in the silver market going on at the Comex. Let's look at the facts, and purely facts, as determined by price, supply and demand in the market.

We know that there is a shortage of physiclal silver preventing U.S. Mint from producing enough silver eagles products to supply the demand of the market (the same set of facts apply to gold). How do we know this? You can go to the U.S. Mint's website where they explain that they had to suspend production of all gold and silver eagle minted products except 1 oz. coins due to a shortage of gold and silver bars.

We also know that for over a year now, that there have been substantial premiums observed in the transactional market globally for gold and silver fabricated products (bars, coins, etc), well in excess of the transactional prices taking place on the Comex. This is evidence of extreme backwardation in the marketplace, which means that there is a severe supply shortage and the futures prices are way too low. Premiums of this magnitude point a massive demand well in excess of supply.

Now, by decree of the simple LAWS of supply and demand economics, the shortage of supply and the price premiums for the supply that does exist, the market price for silver is too low. How do we know this? Because when there is a shortage, buyers bid up the price to a level that induces more supply and reduces demand until the price reaches a point at which supply and demand are balanced. Price is the ultimate allocator in any economic model. It is an undisputed LAW of economics.

If the price of silver were allowed to rise to it's natural economic level in which supply and demand are balanced, the U.S. Mint would not have to suspend production, premiums on coins and bars would disappear, and the market would achieve a high degree of price/supply/demand balance.

Absent the existence of this natural economic balance, we can ONLY conclude that the price is too low, and that the mountains of evidence produced by Mr. Butler and GATA can only point to the existence of extreme price manipulation on the Comex. There is no other explanation. Rather than throw out patently false accusations unsupported with proof, I openly challenge Mr. Chilton to dispute the evidence and proof of the TRANSACTIONAL MARKETPLACE with all the data he can openly produce under the Freedom of Information Act.

His failure to do would only add to the proof as outlined above.