Commentary - 03/19/2008

Are They Trying To Cut The Strings?

This commentary title came from a 1910 story about one of the causes of the Panic of 1907. It involved A. F. Heinze who noticed there were more shorts than outstanding shares in his copper company. Here are some excerpts from that story, which seems almost like what's happening in the silver market today.

On May 1st, 1910, the New York Times ran this story:

I also liked the way that journalist wrote:

Theodore (Ted) Butler and Jame R. Cook have been writing for quite some time about how "outrageously large" the silver shorts position has become. From his latest essay, published 3/11/08:

Still a Great Trade

If we do get a sharp sell-off, it will only take place because the big shorts are finally able to rig it. It will not come as a result of any free market cause. This should be obvious to any alert market observer. The regulators at the NYMEX and the CFTC should be ashamed of themselves for allowing such market manipulation to exist.

Most importantly, the potential bullish impact of the resolution of the outrageously large silver short position remains intact. If anything, the short position has become even more extreme, given the growing concentrated nature of this short position. Therefore, in spite of the open losses the shorts are experiencing and the great profits accruing to silver investors, the price manipulation is still in place. It is the unusual concentrated aspect to the COMEX silver short position that assures, in my opinion, that it must still be resolved, and that the resolution will prove bullish beyond expectations.

As shown in the following recent articles, the CME Group is buying out NYMEX (COMEX) and then selling gold/silver markets to the New York Stock Exchange. So is this how they're going to resolve this "outrageously large silver short position?" Is this how they're going to "cut the strings" and provide some way for the precious-metal shorts to escape?

On 3/17/08, the CME Group announced that it was going to buy NYMEX.

CME Buys New York Merc

On Monday, CME Group agreed to buy Nymex Holdings for $9.5 billion in cash and stock. Surprisingly, the acquired company didn't get a boost from the deal and instead fell 10.5% to $85.33 cents in afternoon trading. CME fell 7.0%, or $33.95, to $452.97.
The Financial Times of London had this to say:

Relief follows CME-Nymex deal

"Nymex has capitulated," said one former CME senior official. "They're selling control over their destiny."
But then this story came out:

NYSE Euronext to Buy Gold, Silver Complex from CME

"The addition of CME Group's precious metals market gives NYSE Euronext a point of entry in the U.S. futures business," Duncan Niederauer, NYSE Euronext's chief executive, said in a statement.

A NYSE Euronext spokesman would not comment on whether the company would further expand into commodity trading.

NYSE Euronext said that trading of full and e-mini gold and silver futures and options on futures contracts will begin later this year on LIFFE CONNECT, the company's derivatives trading system, pending regulatory approvals.

You know, all of this wouldn't matter if the leading Major Holder of NYSE wasn't Atticus Capital LLC, which involves Nathaniel Philip Rothschild.

Maybe it wouldn't matter if General Atlantic LLC didn't involve the Council on Foreign Relations (CFR) member Steven Denning:

Steven A. Denning is the Chairman of General Atlantic LLC. He joined the firm in 1980 and has built the organization into one of the leading global equity investment firms focused exclusively on investing in growth companies. He is actively involved in a number of private and public information technology companies in the United States, Europe, and Asia, including Eclipsys Corporation (NASDAQ: ECLP), Hewitt Associates (NYSE: HEW), IHS, Inc. (NYSE: IHS), and Genpact (NYSE: G). He is also a director of The Thomson Corporation (NYSE: TOC; TSX: TOC).
Maybe this is why: Sometimes The Dragon Wins

Symbol Name Of Corporation

CME Group, Inc. (As of 31-Dec-2007)
Top 10 Institutional HoldersShares2007Value2006
AXA (Paris, France)3,229,5186.07%$2,215,449,348-.--%
FMR LLC (Fidelity)1,697,2053.19%$1,164,282,630-.--%
State Street Corporation1,654,3093.11%$1,134,855,974-.--%
Barclays Global Investors UK Holdings Ltd1,614,3183.03%$1,107,422,148-.--%
Vanguard Group, Inc. (The)1,507,3262.83%$1,034,025,636-.--%
Sands Capital Management, Inc.1,377,6592.59%$945,074,074-.--%
Janus Capital Management, LLC1,020,0151.92%$699,730,290-.--%
Transamerica Investment Management LLC The Hague, Netherlands944,8781.77%$648,186,308-.--%
Kinetics Asset Management Inc.881,4861.66%$517,740,802-.--%
Delaware Management Business Trust853,4191.60%$585,445,434-.--%
% of Shares Held by All Insider and 5% Owners:0%-.--%
Top 10 [2.1%] of 471 Institutional Holders Control27.77%-.--%
Percentage of Barclays and "Associates" Control8.06%-.--%
NOTE: Vanguard manages three funds that control 2.06%.
Therefore, the TOP 10 Major Holders control 29.83% of CME Group.

Symbol Name Of Corporation

NYMEX Holdings Inc. (As of 31-Dec-2007)
Top 10 Institutional HoldersShares2007Value2006
General Atlantic LLC6,259,1006.74%$836,278,351-.--%
Vanguard Group, Inc. (The)2,408,1202.59%$321,748,913-.--%
Barclays Global Investors UK Holdings Ltd2,074,7922.23%$277,212,959-.--%
Alger (Fred) Management Inc1,838,0711.98%$245,584,666-.--%
Waddell & Reed Financial Inc.1,520,7621.64%$203,189,010-.--%
BNP Paribas Asset Management (Paris, France)1,411,8961.52%$188,643,424-.--%
Loomis Sayles & Co L P1,346,5721.45%$179,915,484-.--%
Turner Investment Partners, Inc.1,222,2211.32%$163,300,947-.--%
TIAA-CREF Investment Management, LLC1,196,6311.29%$159,881,867-.--%
Duquesne Capital Management, LLC1,073,5501.16%$143,437,015-.--%
% of Shares Held by All Insider and 5% Owners:0%-.--%
Top 10 [4.1%] of 242 Institutional Holders Control21.92%-.--%
Percentage of Barclays and "Associates" Control3.87%-.--%
NOTE: General Atlantic Partners 82, L.P. has 7,470,523 shares, or 8.04%.
Vanguard manages four funds that control 2.04%.
Therefore, the TOP 10 Major Holders control 32.00% of NYMEX.
General Atlantic controls 14.78%.
NOTE: COMEX is a subsidiary of NYMEX.

Symbol Name Of Corporation

NYSE Euronext, Inc. (As of 31-Dec-2007)
Top 10 Institutional HoldersShares2007Value2006
Atticus Capital LP *15,261,9115.76%$1,339,537,928-.--%
Horizon Asset Management, Inc./NY *11,992,2404.53%$1,052,558,904-.--%
AXA (Paris, France)9,433,5923.56%$827,986,369-.--%
Kinetics Asset Management Inc. *9,385,7203.54%$743,067,452-.--%
Barclays Global Investors UK Holdings Ltd7,680,6742.90%$674,132,756-.--%
State Street Corporation7,359,1702.78%$645,914,350-.--%
General Atlantic LLC *7,250,9732.74%$636,417,900-.--%
Vanguard Group, Inc. (The)6,005,6842.27%$527,118,884-.--%
Credit Suisse Switzerland4,965,4511.87%$435,817,634-.--%
Jennison Associates LLC4,699,9191.77%$412,511,890-.--%
% of Shares Held by All Insider and 5% Owners:0%-.--%
Top 10 [2.5%] of 399 Institutional Holders Control31.72%-.--%
Percentage of Barclays and "Associates" Control7.45%-.--%
NOTE: Horizon Asset Management and Kinetics Asset Management are sister companies, controlling 8.07% together.

2008 by Edward Ulysses Cate
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