Yesterday we discussed the recent announcement that it turns out was released by the Financial Times Sunday evening. According to Jack Farchy and Gregory Meyer:
A four-year investigation into the possible manipulation of the the silver market looks increasingly likely to be dropped after US regulators failed to find enough evidence to support a legal case, according to three people familiar with the situation.
There’s a huge lesson for us to learn here, and it’s not about silver manipulation. As far as we’re concerned, metals are manipulated just like every major market sector, if not more so. This is about responsible reporting and what happens when one party states what another party supposedly said.
You remember the exercise you did as a kid, where the teacher would whisper something into the ear of the first student, who then would whisper to the next one, and so on, until the last student shared with the class what she heard from the second-to-last student. Somehow “Fred Flintstone loves Mary” turns into “Let’s lumber to the movie” by the time it gets around the class.
Take out the innocence of youth and replace it with the bias and prejudices of the media and financial reporting and you end up with what’s before us. First, we need to cut the Financial Times some slack. They did not say what they’re accused of saying. Here’s what MarketWatch reported:
FRANKFURT (MarketWatch) — The U.S. Commodity Futures Trading Commission is expected to drop a four-year probe into possible manipulation of silver prices after failing to find sufficient evidence to back a case, the Financial Times reported Monday, citing three unnamed people familiar with the situation.
But that wasn’t the end of their quote. Some read this first sentence and ran with the ball, as though it was the whole article. To be fair, the title of the article offered little doubt, “Four-year silver probe set to be dropped.” However, the following statements offered a great deal of doubt where the title and first one seemed more authoritative.
The CFTC announced the investigation in September 2008, citing complaints of misconduct. The agency’s five commissioners haven’t formally weighed in on the status of the probe, leaving the possibility they could ask staff to dig deeper, the report said. The CFTC told the newspaper that the investigation “has not reached its conclusion” and declined further comment.
Fair enough. That’s basically what the FT.com article states. Picking up on it, Skyler Greene offered the following title to his article, “Silver Manipulation: CFT Drops Probe.” Any reader scanning headlines would see this and conclude that the investigation was dropped. Somehow this was the result of his perusal the MarketWatch article, which was entitled, “U.S. expected to drop silver price probe: report” Somehow “expectations” became “certainties” from one article title to another. Of course, this is part of journalism – posting titles that grab attention regardless of whether or not they accurately depict the content. Skyler goes on to comment on Seeking Alpha, “… today, the investigation that began in September 2008 will likely be dropped.” This is followed by a quote of the first sentence of the MarketWatch article. He then goes on to conclude:
Those hoping for a “short squeeze” or market run up after the CFTC’s report will obviously be disappointed by the news, because it appears no such event will occur. Previous CFTC investigations in 2004 and 2008 found no wrongdoing; on a four year repeating pattern, the 2012 investgation looks to be the same.
While not entirely inaccurate, his bias is clearly misleading. Of course, such bias cuts both ways. The manipulation theme will not die out, whether the CFTC concludes wrongdoing or not. As Ted Butler stated,
Just as with the two prior investigations by the Division of Market Oversight, the current investigation is a phony investigation. I say this because there has been no attempt by the Enforcement Division to contact me or anyone claiming that silver has been manipulated. It’s clear that the agency does not want to get to the truth. The agency keeps initiating investigations which involve time and taxpayer money, but they never check with the person who has caused them to investigate in the first place. (May 25th, 2012).
Zero Hedge frequently offers excellent commentary and insights into both world markets and news in general. But they too fanned the flames with their headline, “Libor May Be Manipulated, But Silver Is Not, CFTC To Conclude.” While we recommend the ZH article for the case it builds, we also caution readers to be discerning regarding the content. As you can see, the claim made my FT.com was softened with doubt. The ZH article tackles the implications of the claim, without really giving credit to the doubt.
Even the Silver Doctors excellent rebuttal of the allegations that the investigation is ceasing attacks the FT.com claims as though they were absolute. But, as far as we know, they were the first to offer Commissioner Chilton’s very helpful response.
And of course there’s the GATA articles that help readers see the verity of manipulation with their ongoing pursuit to expose those involved. And, while we appreciate and agree with GATA’s perspective on manipulation, for the most part, we also are wary of the absolute position they take on all aspects of this investigation. Their title pretty much says it all, “What a surprise: FT says CFTC to drop silver investigation.” This is followed by the rebuttal, “CFTC’s Chilton contradicts Financial Times report on silver probe.” Both articles are well worth reading and quite informative though. One has to wonder how much different the metals’ markets would be without their continued diligence.
This isn’t to say that all (or any) of these reports are irresponsible. Perhaps some are simply over-sensational in an effort to garner readership. It’s certainly a tempting target to hit, as it’s apparent that the more inflammatory the headline, the more people will read the article. But responsibility should come before attention grabbing. And, on this note, we were very pleased to find an article with the quite simple title, “CFTC Commissioner Bart Chilton Comments on the Silver Investigation” by Christopher Barker on Motley Fool.
Not only is Christopher’s title simply responsible, so is his reporting of the account. Rather than sensationalism, he simply relays the facts for readers to consume. He offers his own conclusions and predictions, some of which we agree with. But the reader isn’t trapped into joining his conclusions. And, for this, we thank him for his very helpful reporting of this particular incident.
We know that today’s article is a little different than what our readers are accustomed to. But, central to our efforts here is the education of our readers. As a dear friend once told me when I was looking for a post-grad school to attend, “Find one that doesn’t teach you what to think, but how to think.” Such training equips us to make informed decisions. It helps us own our own choices. And it helps us more accurately evaluate our mistakes, rather than passing the buck on to whoever is convenient. This is how we learn, grow and, hopefully, excel.
For your prosperity,
J. Keith Johnson
The Gold Informant