Four Year Long CFTC Silver Probe Will Soon Be Dropped

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In A Setback For Silver, the Four Year Long CFTC Silver Probe Will Soon Be Dropped, Euro Pull Back and Soft Chinese Trade Data Push Down Silver Prices, Food Inflation Fears Boost Silver Prices.

All eyes that follow silver were watching to see if the white metal could clear that first $27.80 resistance hurdle that it had closed at the week that ended August 3rd. After all, silver had failed at that point the week before when it plunged as low as just under $27 per ounce.

Despite a mixed week for political-economic news and important events that impact silver, the metal did manage to power through this resistance to reach as high as $28.26 towards the end of the week on Friday. Silver finally closed out the week of August 10th at $28.12.

In A Setback For Silver, the Four Year Long CFTC Silver Probe Will Soon Be Dropped

Silver started out Sunday night and Monday with a story that could have been bearish for the precious metal. At the very beginning of the week, the news broke that the four year long probe into major banks manipulating the silver prices that the Commodity Futures Trading Commission started back in 2008 will soon be dropped. The reasons behind this center on the American regulators being unable to come up with sufficient evidence to come up with a legal case to prove major banks such as JP Morgan deliberately manipulated silver prices.

When the case was first announced back in 2008 it proved to be bullish for silver prices. The precious metal then subsequently got an enormous boost in 2010 when one of the CFTC Commissioners Bart Chilton announced that he was convinced that certain parties had performed deceptive, willful actions so that they could deviously control silver prices. There was a rush from the mega bullion banks to exit any silver short trades that they held at the time, and this pushed silver prices to levels not seen in decades as they bought silver to close out their positions.

Although the CFTC will not formally rule on the investigation until September or October of this year, people close to the case have stated that the regulator is about to close the case. They leaked this after two external consultants and the regulator reviewed over 100,000 pages of documents and interviewed dozens of witnesses.

The first consultant discovered irregular silver trades on some dates that it believed should receive additional analysis, but the CFTC feel they lack enough evidence to support the case. There is still a class action lawsuit brought by silver investors against JP Morgan in the courts. Without the regulator ruling that the banks engaged in such wanton manipulation, it will not have a great chance of success.

Groups manipulating silver prices had been briefly investigated before in 2004 and 2008. There had never been such a serious and lengthy probe into such actions, along with a CFTC commissioner who came out to support the likelihood of such manipulation. Despite this news that made the rounds Monday, August 6th, silver managed to creep steadily higher and convincingly break through the $27.80 resistance level all week long.

Euro Pull Back and Soft Chinese Trade Data Push Down Silver Prices

Silver prices held above the previous resistance that became new support at $27.80 all week long until Thursday and Friday when some new softer July Chinese trade data emerged to scare investors. This data showed that Chinese exports barely improved and grew a disappointing only 1% against the previous year.

The Euro pulled back on the news along with gold and silver prices, with silver briefly touching a week low of $27.74. Fortunately for silver’s steady upward progress at this point, physical buying of the metal emerged from the Far East at these price levels.

Food Inflation Fears Boost Silver Prices

Friday saw silver prices gain additional support with new fears that food inflation is on the rise. Friday August 10th, the U.S. Department of Agriculture issued its corn crop report against a backdrop of severe drought in the key regions that produce the nation’s corn.

Since mid June, corn has rallied from about $5 per bushel to Friday’s high mark of $8.47. Corn prices have risen over sixty percent and this set off investor fears again that inflation is rising at a dangerous level. As inflation rises, so do silver prices that protect investors against inflation.

Take Away On Silver Market Prices

Silver weathered a body blow on Monday as the negative news emerged about the four year long investigation into banks manipulating silver prices. Later in the week, soft Chinese trade data scared world economy watchers into fearing that maybe the so called global economic recovery is off track. Despite this news that might have forced silver significantly lower on the week, it managed to power higher.

Talk of renewed food and general inflation fears later Friday helped silver to finish off a strong week despite obstacles all through the week. For silver to continue to rise long term, it will need to conquer the July high that is now resistance at $28.445. The week of August 13th starts off with silver finally in striking distance of this level.

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