Normal
The Comex has around a 1% delivery rate, so that is 100:1 and there is available inventory in excess of that. You also have no way of knowing how much paper is held as a legitimate industry hedge as that metal never hits the Comex but it is real, most users of silver in any quantity will hedge exposure simply because of the volatility in the metals price. The apparent ratio of physical silver to paper obligations is difficult to gauge as the figures are not really transparent across the industry. Regardless that is no indicator of a certain manipulation, you really need to consider market control issues such as the concentration of market power in a small number of players hands. Proving manipulation would rest on proving an unjustifiable concentration of contracts that have been traded in a predatory fashion. The numbers to do that are simply not available outside of the exchange and the CFTC... Butler is estimating by subtraction, he is not privy to the detail. The reality is likely to be that JPM has been trading a smaller position for it's own account BUT it did so with the advantage of knowing how its customers where positioned. You only need to control the margin if you have that sort of data and you can time things very well. That by no means give you total control like some seem to believe but it would give you huge opportunity to profit. If the latter is the case it would be very hard to prove manipulative activity in a court of law however likely it looked. Personally I don't think they should be able to trade against their customers at all, the Volcker Rule makes sense to me, but I can also see that it could be end run quite easily.Bart Chilton seems to be convinced all is not right... but proof beyond reasonable doubt will never likely happen IMO.
The Comex has around a 1% delivery rate, so that is 100:1 and there is available inventory in excess of that. You also have no way of knowing how much paper is held as a legitimate industry hedge as that metal never hits the Comex but it is real, most users of silver in any quantity will hedge exposure simply because of the volatility in the metals price. The apparent ratio of physical silver to paper obligations is difficult to gauge as the figures are not really transparent across the industry. Regardless that is no indicator of a certain manipulation, you really need to consider market control issues such as the concentration of market power in a small number of players hands. Proving manipulation would rest on proving an unjustifiable concentration of contracts that have been traded in a predatory fashion. The numbers to do that are simply not available outside of the exchange and the CFTC... Butler is estimating by subtraction, he is not privy to the detail. The reality is likely to be that JPM has been trading a smaller position for it's own account BUT it did so with the advantage of knowing how its customers where positioned. You only need to control the margin if you have that sort of data and you can time things very well. That by no means give you total control like some seem to believe but it would give you huge opportunity to profit. If the latter is the case it would be very hard to prove manipulative activity in a court of law however likely it looked. Personally I don't think they should be able to trade against their customers at all, the Volcker Rule makes sense to me, but I can also see that it could be end run quite easily.
Bart Chilton seems to be convinced all is not right... but proof beyond reasonable doubt will never likely happen IMO.
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