A new report from the US Commodity Futures Trading Commission’s Division of Market Oversight examines allegations of misconduct in the silver markets, and finds that there is no evidence of manipulation in those markets.

For the report, the CFTC examined trading activity in the silver futures market from 2005 to 2007. Among other things, it analyzed the recent price movements in the silver market in relation to price movements for other metals; the relationship between the price of New York Mercantile Exchange silver futures and spot silver prices; and the relationship between the positions held by large short silver futures traders and silver futures prices.

It finds that there is no evidence of manipulation in the silver futures market for the trading period examined. It notes that silver cash and futures prices have risen dramatically between 2005 and 2007, with silver outperforming the gold, platinum and palladium markets, suggesting that silver futures prices are not depressed relative to
other metals prices. Also, the study found that NYMEX silver futures prices tend to track closely the price of physical silver; and, that there is no observable relationship between short-futures-trader concentration levels and silver prices.

The CFTC says that during the past 25 years it has received complaints from silver investors alleging that the price of silver futures traded on the NYMEX has been manipulated downward. In 2004, it responded to investors’ concerns in an open letter that concluded that the existence of a long-term manipulation was not plausible and that an analysis of activity in the silver futures market did not support the conclusion that the market was being manipulated. The current report summarizes and builds upon the analysis and conclusions of that letter.