Controversy. Manipulation. Conspiracy. Corruption. There are many words to describe the things we don't understand and things we can't control.
Republicans. Democrats. Bankers. Shadow Government. Illuminati. Free Masons. Call it what you want. Believe in what you want. It doesn`t matter.
What matters is that there are forces and powers beyond our control. So how can we use that knowledge to not only protect ourselves but to use it to our benefit?
In last week's issue of Equedia Weekly, we talked about the significant progress of the three silver companies featured in our Special Report Editions (see The Market Crushers).
Each of the companies had their own reasons for their success this year which led to strong gradual increases in share prices for all. But something happened last week, something that may lead to even higher prices - not just for the companies in our reports - but for all precious metals stocks.
Throughout the year, silver has been one of the biggest topics in our publication and one of our most favored investment sectors. And with good reason:
- Silver inventories are declining. Net silver supply from above-ground stocks dropped by 86 percent in 2009.
- China's demand for silver is increasing.
- Scrap silver supply dropped for the third consecutive year and hit a new 13-year low of 165.7 million ounces.
- Government silver stocks reached their lowest levels in over a decade.
- Silver used in industrial applications is rarely recovered.
There are many reasons why the price of silver, and gold, should continue to climb. Just take a look at some of our past issues and you can see why our predictions for silver have not only come true, but have already surpassed our expectations:
- The Breakout
- It`s Almost Over
- The Retail Advantage
- The One Exception
- The Human Metal
- The Tip of the Iceberg
- The Silver Conspiracy
Even with the strong increase in price, we`re still hot on silver. And what happened this past week may prove our theory on market manipulation (see The Silver Conspiracy) which could drive not only silver, but all commodities prices higher.
In the last 20 years, there have been two administrative judges presiding over investor complaints at the Commodity Futures Trading Commission (CFTC). The CFTC oversees trading of the nation's most important commodities such as oil, cotton, gold and silver. The agency's administrative law judges, George Painter and Bruce Levine, are the ones that handle cases when investors allege that trading professionals or financial firms are violating any regulations - such as market manipulation.
Last week, a notice was released by the CFTC that retiring judge George Painter said Judge Bruce Levine had a secret agreement with former Republican chairwoman of the agency, Wendy Gramm, to stand in the way of investors filing complaints with the agency.
On Judge Levine's first week on the job, nearly twenty years ago, he came into my office and stated that he had promised Wendy Gramm, then Chairwoman of the Commission, that we would never rule in a complainant's favor...A review of his rulings will confirm that he fulfilled his vow. - George Painter
Wendy Gramm, the woman Levine had promised, was head of the CFTC just before president Bill Clinton took office. She has been criticized by Democrats for helping firms such as Goldman Sachs (GS) and Enron gain influence over the commodity markets.
After a lobbying campaign from Enron, the CFTC exempted it from regulation in trading of energy derivatives under the power of Gramm. Gramm then resigned from the CFTC and took a seat on the Enron Board of Directors and served on its Audit Committee.
Wendy Gramm's husband, former senator Phil Gramm, was also part of the Enron debacle and known as a financial deregulator. Phil was also partially blamed for the "Enron Loophole," which exempted most over-the-counter energy trades and trading on electronic energy commodity markets from government regulation.
Painter requested that the CFTC not assign his pending cases to Levine because, he wrote, "Judge Levine, in the cynical guise of enforcing the rules, forces pro se (investors acting on their own behalf, without a lawyer) complainants to run a hostile procedural gauntlet until they lose hope, and either withdraw their complaint or settle for a pittance, regardless of the merits of the case."
In his notice about his coming retirement written mid-September, Painter said he could not "in good conscience" simply leave his seven reparation cases to Levine, and he recommended that the CFTC try to enlist another administrative judge from elsewhere in the federal government.
To make the story more interesting, Judge Levine was featured in a story by the Wall Street Journal from 10 years ago titled, "If You've Got a Beef With a Futures Broker, This Judge Isn't for You --- In Eight Years at the CFTC, Levine Has Never Ruled In Favor of an Investor."
In that article, the Wall Street Journal found that in nearly 180 cases, except for a small handful in which companies didn't show up to defend themselves, Levine had always ruled against the investor.
Just as Painter's story got out last week, the Wall Street Journal published a piece saying that the 83 year old Painter has been diagnosed with dementia, and, according to his wife, presided over cases while struggling with alcoholism and mental illness (see Case Sheds Light on Judge).
Painter's wife, from whom he is seeking a divorce, is seeking guardianship over him, citing his health and erratic behavior. But Painter's son, Douglas Painter, and a niece protested the guardianship claim in legal filings stating that the judge doesn't exhibit the mental problems described in court records by his wife.
We're not saying any of this is true. Nor or are we putting any blame on Wendy Gramm or Judge Levine. But our guess is that this story will more than likely get swept under the rug.
This isn't the first time scandals and accusations over the commodities market have surfaced. Anytime there is billions of dollars involved, conspiracies will live on.
We know that the CFTC has been under heavy fire from the Gold Anti-Trust Action (GATA) committee regarding the manipulation of silver on the futures markets by JP Morgan (JPM), and other institutions.
Every week, we are seeing more stories of corruption and manipulation. And as sad as it sounds, we don't stand a chance going head on with the people behind the scenes.
Eventually, more truths about commodity price fixing will come out. And as it does, it's going to show everyone just how little gold or silver is really out there. It's going to show that demand, especially in ETF contracts, is far outweighing supply.