Not much as changed since First Majestic Keith Neumeyer's complained to the CFTC. Silver prices are still firmly locked paper limbo.
In our recent interview with silver analyst, Ted Butler, given that his call to the miners was the prime catalyst, one of our attendees asked Mr. Butler whether he thought the miners would do anything like that again, or would they perhaps hold back supply from the market.
With regard to First Majestic’s complained to the CFTC...
1. What do you think the probability of them complaining or witholding production again?
2. Why are mines not backing down on sales at prices set by this whole game?
3. Why are the mines cooperating as if, the rest of them, as if nothing is going on?
Ted: All good questions, but there are also good answers.. mainly centering on the fact that they can't afford to.
Their sole income comes from a production, a processing of ore and a delivering of concentrate to refiners. That's how they get paid.
No one miner, especially a smaller miner with less than say twenty million ounces production a year, has the luxury of turning off their income. Especially if the goal is to get higher prices.
No one miner makes that much difference. To do it on your their is counterproductive. You would just be hurting yourself. I think it was good that they took my advice and they followed the format. Much to First Majestic Keith Neumeyer's credit, he send the letter I suggested to the CFTC and didn’t improvise too much. There has not been a result yet, but to make an open complaint of manipulation is a legitimate and reasonable way of going about it.
One of the things that the miners have been guilty of over the last decade or longer is that they don't speak up. You got people like me, analysts or speculators complaining about the manipulation. But the regulators can come back and say, "Look, if there was a real problem the producers would be complaining, so we're not inclined to listen to a speculator with a vested interest in seeing higher silver prices complaining about the price discovery process. Give us miner who will say that."
So far, perhaps they aren’t big enough and vocal enough. No one joined in with them.
Of course, CFTC is not going to do anything - even if you gave them everything they requested. They're still not going to do anything. But you got to play the game the right way.
Withholding silver individually is like spitting in the wind, it's going to come back at you. If these miners were to band together and align themselves with other miners and do it, that's anti-trust. You'll get the Justice Department coming even though they won't go after the manipulators on the short side, they sure as hell will go after any banding of producers that would be withholding supply from the market with the intent and expressed purpose of influencing prices higher.
That's prime anti-trust material for the Justice Department, so the miners really can't do that.
The only way you really can get out this whole thing, is as a producer, you must speak up. You must point to the problem. Coming from a producer, it should be taken more seriously than coming from an analyst or an individual commentator.
The problem is these miners seem to be content to watch their fortunes just drizzle away without saying anything. That to me is crazy because why not do anything that is legitimate and low cost? That's what I presented to the miners.
To listen to this excerpt, forward to 39 minutes.