By Melissa Pistilli—Exclusive to Silver Investing News

Silver in New York climbed to $16.77 an ounce Monday, its highest level in nearly a month before falling to close at $16.46.

However, Tuesday saw silver spot prices rallying to as much as $17.11 an ounce tracking gold, copper and oil higher despite dollar strength.

Copper and other base metals are reacting to market sentiments over possible supply disruptions after an 8.8-magnitude quake struck Chile, the world’s biggest copper producer. Because silver is an industrial metal and also as a by-product of copper mining, its price often correlates with movements in copper prices.

Gold is moving upwards despite the dollar’s advancements because the worsening financial situation in the EU is making the yellow metal much more attractive as a safe haven for European investors.

James Moore, an analyst at TheBullionDesk.com, “expect[s] the euro and broad risk sentiment to provide further direction for gold.”

“Anyone wanting out of pounds is not jumping into euros,” said Sterling Smith, commodity trading adviser and market analyst at Country Hedging. “Some of that money is finding its way into the dollar, and some is finding its way into gold.”

CFTC to Investigate Silver Market Manipulation

The US Commodity Futures Trading Commission (CFTC) says it will hold a public meeting March 25 to investigate claims of manipulation and discuss setting speculation limits in precious metals futures markets.

The public meeting “will be part of our ongoing look into how the commission regulates futures and options markets on commodities of finite supply” and will be similar to last summer’s energy market hearings, said CFTC Chairman Gary Gensler.

The CFTC says it has received countless letters over the past few years from concerned investors asking the agency to investigate possible manipulation in the gold and silver markets.

The concerned investors are mostly silver and gold bugs who believe a powerful bank cartel is manipulating the futures markets to artificially depress precious metal prices.

“I’m not suggesting they have a legitimate argument,” said CFTC commissioner Bart Chilton about why he is considering the matter. “I looked at it carefully and I became convinced that it’s something we should investigate.”

Many of those pushing the inquiry are avid followers of silver market analyst and newsletter publisher Ted Butler and of the Gold Anti-Trust Action Committee (GATA), which is headed by Bill Murphy with Casey Resarch analyst Ed Steer on its Board of Directors and GoldMoney.com’s founder James Turk as a consultant.

Speaking at the Silver Summit in 2008, Mr. Murphy explained how gold manipulation relates to the price of silver. Because precious metals investors are well aware of silver’s historic price correlation with gold, he explained, “whenever [silver] goes way up it’s bad for Wall Street as they perceive it. To keep it in line and not make it look too obvious, they make sure to go after the silver market in conjunction with gold as evidenced by Ted Butler’s report.”

Why is this so-called cartel intent on controlling the gold price? Because the yellow metal is the barometer of the US financial market’s health and managing the gold price helps contain fear, control interest rates, and maintain a semblance of strength in the US dollar and the economy, say proponents of the anti-manipulation crusade.

Gregory Meyer of the Financial Times points out that despite silver and gold prices “more than doubl[ing] in the past five years” and gold reaching a record high above $1200 an ounce in December, manipulation criers like GATA’s Murphy remain convinced prices are well below where they should be in terms of inflation.

Silver and gold bugs will be holding their collective breath to see what, if anything, the CFTC is likely to find. My guess is not much. In both 2004 and 2008, the CFTC issued statements saying it was looking into the issue, but in each case the agency maintained its findings didn’t support manipulation claims.

Questions about this article? Leave a comment below or contact our editorial team at editor@resourceinvestingnews.com.