For many years now, Butler has been among a vocal cadre of silver bulls who have argued that a select number of Wall Street banks were deliberately manipulating the silver market.

In September, the Commodities Futures Trading Commission confirmed it was formally investigating these accusations. It had previously examined the case, and in May, published a report suggesting that there was not manipulation in the market, and that banks taking short positions were simply acting as legitimate market makers. This summer, however, CFTC data showed that two U.S. banks boosted their short positions in silver futures by 450%, controlling 25% of the open interest, according to The Wall Street Journal. That led to new accusations from the silver bulls, and the SEC agreed to reopen the investigation.

Interestingly, the investigation has shifted from the oversight division to the enforcement division of the CFTC. According to the Journal: "The oversight division performs overall market surveillance. The enforcement division looks at activities in a specific time period."

Butler wrote about the CFTC investigation in late September; that analysis is printed below. He also spoke briefly with HardAssetsInvestor.com about the latest developments in the silver space.

The editors at HardAssetsInvestor.com don't necessarily agree with Butler's views. However, it's a real theme and discussion in the marketplace, and is worth airing publicly.

---Interview With Ted Butler---

HardAssetsInvestor.com (HAI): What does the CFTC's investigation mean for silver?

Ted Butler, Butler Research (Butler): That we'll only know in time. It should mean, at a minimum, that they think the allegations are credible enough to warrant them looking at it again. I suppose if they thought the allegations were baseless, they would say so and dismiss the subject.

HAI: What's the likelihood that they'll take real action in the market?

Butler: That's anyone's guess. But if my allegations are accurate, as I believe them to be, the question of them taking action becomes moot. That's because if the silver retail shortage keeps growing and morphs into a wholesale shortage, the market itself will do what the CFTC has refused to do. Any downward manipulation must, inevitably, end in a shortage. I think they may recognize this.

HAI: What exactly are they looking at?

Butler: That, you will have to ask them, but if they are not looking at the one or two U.S. banks that sold short the equivalent of 20% of the world's annual production of silver, they are not looking at the right thing.

HAI: Why do you think they finally decided to investigate this situation?

Butler: Because the evidence was clear in the August Bank Participation Report, which I disclosed in my "Smoking Gun" article, that it should be impossible not to see the manipulation.

HAI: What is your overall take on the silver market right now?

Butler: It is structured to explode in price, especially after the recent decline to $12 an ounce.

HAI: Should investors allocate to silver over the next year or two?

Butler: They should allocate now, without delay.

---Butler Research Article from 9/29/08, Reprinted With Permission---

It's hard to imagine now, but there were times when I worried about having anything fresh to write about silver. Lately it has been choosing from many different topics. This week, the choice was easy.