U.S. Commodity Futures Trading Commission to Investigate Silver

According to the Gold Anti-Trust Action Committee (GATA), Andrew Maguire, a metals trader in London, contacted the U.S. Commodity Futures Trading Commission (CFTC) in November 2009, claiming inside information about the manipulation of the precious metals market, including silver. According to Maguire, workers for JPMorgan Chase bragged to him about the manipulation of the market and the profits earned from the process. On February 3, 2010, Maguire contacted the CFCT regarding a manipulation set to occur on February 5. When the manipulation occurred as reported, the CFTC decided to launch an investigation.

While some silver investors may worry about the results of the investigation on the investment value for silver, Dr. Jeffrey Lewis, who is an editor for online newsletters pertaining to investments in precious metals, said the investigation should lead to a payout. According to Lewis, the current price of silver remains well below the value it should have given the historic value and the rate of inflation. Based on those criteria, the price of silver should skyrocket if the CFTC discovers market manipulation. If it doesn't discover manipulation, the price should at the least remain on a similar path, allowing investors to make the gains they anticipated at the time of purchase.

Individuals who are considering silver as an investment should know this wasn't the first time the CFTC investigated the market. In 2008, the CFTC fielded similar complaints accusing leading US banks of manipulation. At that time, the commission determined the banks acted in an appropriate manner, and the investigation didn't impact the market. Silver investors should also note that publications like the Wall Street Journal refer to silver as a volatile market—in 2008, the value for silver dropped almost 50% before remaining down by 9.5% for the duration of the year.