What the CFTC Reviewed |

If you’ve been around precious metals for any length of time, you’ve heard it:
“Silver is manipulated.”
Sometimes it’s said calmly. Sometimes it’s said with real frustration. And honestly, I understand why people feel that way. Silver can be a smaller, more volatile market than most investors expect. When price moves don’t match what someone thought should happen, it’s natural to look for an explanation.
This post is a little more technical than what I normally like to write.
But I’m publishing it anyway because there’s a lot of misinformation floating around, and I’d rather give you a clear, grounded framework than let internet rumors do the teaching.

First: what this post is (and isn’t)

This is not a promise that silver will go up or down. This is not a sales pitch. It’s a simple look at:

• What some of the long-running allegations have been.
• What the U.S. regulator (the CFTC) said after reviewing them.

I’m not asking you to take my word for it. I’m laying out “this is what’s been claimed” and “this is what the regulator said,” and you can decide what you think.

Why the “paper silver” story keeps coming back

A common version of the claim goes like this:

• There are huge short positions in silver futures.
• Those short positions are bigger than the amount of silver that exists “to deliver.”
• Therefore, the shorts must be “naked,” and the futures market must be setting an artificially low price for real, physical silver.
• Eventually, there will be a delivery failure and a dramatic price spike.

That story has been circulating for decades.

A historical example: Ted Butler’s 1989 letter

In April 1989, a market commentator named Theodore J. (Ted) Butler wrote a letter to U.S. Attorney General Dick Thornburgh alleging manipulation in COMEX silver.
One-sentence context: Butler was a long-time silver market commentator known for arguing that concentrated short positions on COMEX distorted silver prices.
Whether you agree with Butler’s conclusions or not, the letter is useful as a historical marker: it shows that the core themes of today’s online debate were already being argued in the 1980s.

What the CFTC said in 2004 (in plain English)

In May 2004, the U.S. Commodity Futures Trading Commission (CFTC) published an open letter addressed to “silver investors.” They took that unusual step because they had received a large volume of letters and emails raising the same concerns.

Here are the big takeaways:

1. “Production deficit” is not the same as “supply deficit.”
   The CFTC acknowledged that silver consumption can exceed new mine production and recycling.
   But they argued that this does not automatically mean there’s a shortage, because above-ground stocks can be sold into the market and fill the gap at prevailing prices.
2. Futures prices tracked physical prices closely.
   If futures trading were keeping prices artificially low, you’d expect to see futures prices diverge from physical benchmarks.
   The CFTC said they routinely compared prices and found that NYMEX/COMEX silver futures tracked closely with physical/cash prices, including the LBMA benchmark.
3. Big short positions are not automatically “naked.”
   This is one of the most misunderstood points. The CFTC explained that commercial traders can hedge many kinds of silver price exposure—inventory held outside exchange warehouses, forward commitments, derivatives, production flows, and more. In other words, comparing total short positions to one visible warehouse number can create a scary conclusion that doesn’t match how hedging markets actually work.
4. A long-term suppression theory struggles with basic market logic.

The CFTC also made a common-sense point: if silver were truly being held at artificially low prices for long periods, buyers would step in to take advantage of it.

What the CFTC said again in 2008

In May 2008, the CFTC’s Division of Market Oversight published a detailed report: Report on Large Short Trader Activity in the Silver Futures Market.
Their conclusions were consistent with the 2004 letter:

• They found no evidence of manipulation in the silver futures market.
• They found that futures prices generally tracked the physical market.
• They found that trader concentration in silver was not unusually high compared with other metals.
• They found that the identity of the “largest shorts” changed over time, which is hard to reconcile with the idea of a stable, long-running cartel.
• They found no meaningful relationship between short concentration and lower prices.

My takeaway

I’m not here to tell you markets are perfect. They’re not. I’m also not here to tell you that you should ignore every concern you’ve ever heard. What I am saying is this: This has been a long-running conversation. And it’s interesting that, across multiple reviews, the regulator’s finding stayed essentially the same. So while everyone should do their own homework, it’s reasonable to at least consider this possibility: some of the most popular “silver manipulation” claims may not have as much merit as they’re often given online.

Reasonable people can disagree here. Our goal is clarity, not winning an argument.
If your entire silver strategy depends on a single dramatic event—“the day the system breaks”—that’s a stressful way to invest, and it often leads people into oversized bets and bad timing.

A steadier approach is to own precious metals for reasons that don’t require a prophecy:

• Diversification
• Tangible ownership
• Long-term preservation
• An allocation that matches your time horizon and risk tolerance.

Join the Conversation: Questions, comments, and pushback are welcome. If you’ve got a question, a counterpoint, or a specific claim you want me to address, leave a comment below. I’ll do my best to respond to as many as I can, and I’ll keep it factual—in a safe, space open to civil debate. If you’d rather talk it through privately, call us at 800-528-1380. No pressure—just clarity.

Johnny on the Spot: Decoding the Precious Metals Market. A transparent article series by Johnny Estes, VP of CMI Gold & Silver.