Saturday, December 11, 2010

CFTC Commissioner Chilton Opens His Big Mouth

On December 8, CFTC Commissioner Bart Chilton spoke before the High Frequency Trading World USA 2010 Conference in New York. During the speech he made this comment:
We saw very large concentrations of trader positions in 2008. That has continued. Since then, we saw one trader hold more than 20 percent of the crude oil market. Even earlier this year, one trader held over 40 percent of the silver market.

Of course, what he means is that certain traders held huge positions in the futures markets in these commodities rather than huge positions in the entire humongous oil market or the entire silver market.
Given the leverage in these markets, it is, as can be seen, very doable to gain huge positions in these futures markets.  And anyone accumulating such huge positions wants the market to go in a certain way, and is someone who already has a tremendous amount of capital. That said, things don't always go as planned with these positions, just ask the Hunt Brothers.

If these are long positions, they usually work best when the Fed is printing a lot of money (which they currently are).

If the positions are a short positions in this market, with the Fed printing money, good luck with that--call the ambulances and bring out the stretchers.

Zero Hedge, seems to think the silver position is a JPMorgan Chase short position and couches it in terms of "manipulation". In truth, all though JPM can play around the edges of manipulation, by say getting margin requirements changed, the total market behind the futures market will ultimately have the biggest impact.  If  JPM is short (and I have no idea if they are), and with the Fed printing money the way they are, JPM is going to get crushed in a silver short, especially given Chilton's remarks.

I have no sympathy for JPM, at all, they are part of the bankster elite.  However, for CFTC Commissioner Chilton to discuss the size of a given position, it is way out of bounds. Now that his comment is out in the open, it will put a huge bullseye on silver shorts, because of the prevailing belief that the 40% futures position is on the short side. Thus, Chilton has given the longs "privileged information", or he will at a minimum drive the market as though that is the correct interpretation of the information, and it will create major problems for silver shorts, big and small.

Chilton's disclosures, given that he is a CFTC commissioner, and he received this privileged information because he is a commissioner, are way out of bounds. He should resign immediately.

IMPORTANT UPDATE: In an email,Commissioner Chilton has responded to the above post . As a result of his email, I have rescinded my call for his immediate resignation. His email and my reponse are here.


  1. Oh the nerve of Chilton to do something that might impact the poor, poor silver shorts, who've been nothing but pampered by an exchange that refuses to act on position limits. Yes we should feel so sorry for the poor widdle coddled silver shorts, who've used this unfair advantage to shake out the pockets of the market. Awwwww!

  2. No, what is "out of bounds" is the allowing of ONE trader to control about HALF of an entire market. That is what we should be outraged about. Chilton should receive a medal for exposing this whole sham -- the rest of the CFTC and the CME should be the ones "resigning" right away.

    Remember, the exchange raised margin a few weeks ago citing the usual "orderly markets" excuse -- did you have sympathy for the longs who got creamed that day? And if they were so concerned about order, they wouldn't have dragged their feet on the subject of position limits (you are aware of this situation, which has dragged on for years, right?)

    Thank you Commissioner Chilton for having the fortitude to finally point out this injustice.

  3. Rather than berate Commissioner Chilton, perhaps we should applaud his courage in exposing this gross market imbalance. It should be the other CFTC officials who should "resign" for allowing this injustic to go on for so long.

    Likewise I am puzzled by your concern for the shorts being "targeted," as they have profited apparently for years at the expense of participants who believe they were trading in a fair and open market. This is simply a case of a wrong being righted.

  4. Exactly half the positions are on the short side. Chilton wasn't making any news here.

    Maybe you missed the full-page GATA ad in the journal back in early 08. See it was the longs who were screaming at the CFTC for years, and Chilton is the first commissioner to investigate it. Bravo to Chilton.

    You may want to research and adjust your historical perspective.