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By Gene Arensberg

The most recent pullback in precious metals was harsh, it seemed lightening fast and it covered a lot of chart real estate. The action certainly is consistent with yet another hot money fund profit taking exit rush. However, it is not consistent with what some analysts say was a deliberate massacre by very large, well funded and powerful players that the Commodities Futures Trading Commission (CFTC) class as commercial traders on the COMEX division of NYMEX.

Why isn t it consistent with an engineered sell down? Well, one would think that if clandestine and sinister interests intent on profiting from an engineered move were going to pull off such a monster three day plunge in a market, they would really get into position for it at least a little ahead of time.

Think about it. Say you are in the formerly smoke filled room where such alleged collusion among sinister (and mythical) market manipulators is hatched when The Plan is settled on.

That s it, boys, we ll take her down starting Monday, March 17, just ahead of futures and options expiration! The hot money guys will scream fire in a theater and rush the exits. It ll be great! You guys have three weeks to get ready.

It s an absurd notion that such things go on in today s global market, but go along with it for just a minute. Even if you agree that it s highly improbable, assume for the sake of illustration that there actually could be a group of heavies out there with the muscle to manipulate entire global markets (for any length of time) routinely by trading on one bourse in New York.

For those who may not be aware of them, there are analysts and market watchers that are so convinced that the markets are routinely manipulated, they end up seeing virtually all significant market action as evidence of manipulation. This report contends that while there may very well be some manipulation in all markets from time to time for extremely limited periods, nothing can overwhelm the supply/demand/liquidity equilibrium in any global market over time.

Now, if someone knew, in advance, that a big time plunge was within a short timeframe ahead, don t you think they would pull out all the stops and get strongly into position for it? If you knew with a high degree of probability that a muncher selling raid was in the works, would you be reducing your net short exposure, for example? No, of course not. You would be willing to accept even more net short exposure, to take the short side of any and all comers on the long side, wouldn t you? It would be like printing money.

Wouldn t it make sense that if the markets were rigged, as some analysts continue to suggest (even after silver moved nearly 94% higher and gold moved up nearly 59% in seven months) that as the big plunge were finally about to happen these sinister operatives would increase their short side exposure and take full advantage of it? If you are going to have a big sell down, why not really cash in?

Is that what just happened? Just before this latest harsh price move down did the large, well funded and presumably well informed traders classed by the CFTC as commercial strongly increase their collective net short positioning?

No, they didn t. To the contrary, in the four reporting periods just ahead of the most recent cascade lower for gold and silver those much maligned trading interests were reducing (that s right, reducing) their net short positioning nominally. Unless one believes that the figures are intentionally miss reported (for which the penalties are very harsh) data reported by the CFTC shows that if the commercials knew in advance that a silver and gold sell down was in the works they didn t improve their positioning for it very much. For the details, please read on, but please do so without the blinders of conspiracy affixed to your reading glasses.