gene arensberg comments on the cftc hearing:

The CFTC Open Hearing – It’s a start

Finally, this week was the open meeting held by the CFTC to consider Federal position limits for gold and silver futures on the exchanges regulated by the Commission. For those with the time and an interest in such things we strongly urge anyone to take the time to view the archived webcast of the event, which is available at this link.

Our readers already know where we come down on this topic, as it is now a matter of public record in our comment letter to the CFTC Chairman, Gary Gensler and the CFTC Commissioners, delivered to them and published prior to the historic meeting. That comment letter is available at this link.

We were pleasantly surprised that at least one focus of the meeting seemed, at least to us, to be in the “right” direction, which is to say that it seemed that the issue of the ability of a very few large actors to abuse exemptions to current position limits to intimidate and manhandle all the other traders in gold and silver received considerable attention. We were grateful that there were other, important and influential participants sounding the same or similar themes and we hope everyone has the chance to see the hearings for themselves at the link above.

In particular, we would highlight the testimony of fast-computer trader and futures market maker Mark Epstein, who pointed out that the largest single position short silver is held by a “a bank on the short side” (Ed. Probably JP Morgan Chase) and that one bank holds a short position equal to “150 million ounces, which is about 120 million ounces larger than the current accountability limit.” Epstein echoes our own comments, when he said, “Presumably, they (the bank) must have been granted an exemption to the position limits, but this seems wrong to me. Exemptions should only be granted to bona fide hedgers.”

Yes, Mr. Epstein, that is the crux of the issue. And now that the bright light of day has been shone on the problem, perhaps, maybe, the commission will revisit how the Commission defines the so-called “bona fide hedgers.” We’ll see.

Perhaps in another, subtle signal to the hedge abusers, we understand that Commission staff met with long-time CFTC critic and popular silver writer Ted Butler in a private meeting the day before the hearing. We understand that Butler gave a summary of that meeting to Eric King of King World News, according to others, however we have not yet had the time to catch his remarks, which should be at this link.

Of course there were representatives there determined to preserve the status quo and to maintain the U.S. futures markets as a playground for a few large bullion banks. Their well-rehearsed, professional and probably expensive testimony is all at the CFTC link above.

Conspicuously absent was any exec from the biggest of the big, JP Morgan Chase, but then they needed no representative at the hearings, being on a first name basis with anyone of import at the CFTC.

Lastly, the absolute show-stealing moment of the hearings has to be GATA Chairman Bill Murphy’s answer to CFTC Commissioner Bart Chilton’s question along the lines of if there was proof of manipulative behavior on the COMEX.

For those who have not yet seen it, stop right here and view the explosive spectacle as it unfolded courtesy of Youtube.com. Video of Bill Murphy. We won’t give away the whole plot, but Murphy announced there was a whistle blower that alerted the CFTC in advance of a JP Morgan raid or take-down of the gold market – in advance of it. It’s powerful, dramatic and riveting stuff. Just the kind of thing a super investigative reporter for the New York Times, or perhaps the Wall Street Journal, or maybe even one of the commercial T.V. media hubs would love to jump on, right?

Well, apparently it was either just too “hot,” was quickly un-confirmable or perhaps ruffled the wrong feathers, because as of Saturday, March 27, we’re still waiting for the U.S. Big News to pick up on it.

Having said that, the information is now in the public domain and we know now the CFTC Commissioners are focused on it. Can we call that a start?