Tag Archives: silver futures

Silver Refuses To Buckle – The News Doctors

Something interesting and unusual has been developing in the silver market for several months.  The Comex operators have been throwing a record amount  of Comex paper silver at the market in an attempt to control the price.   The last time the silver futures open interest was as high as it is now, silver was about to bust through $50.    Eric Dubin of The News Doctors published  a news brief today on the topic, reprinted below.

When we were laboring through the 2011-2015 bear market cycle, constant snap backs the likes of which silver is producing were never to be seen.

Last Thursday, I published, “Silver, Gold, Miners: Everyone, Back In The Pool.”  Mining shares witnessed a bit more pain than I had expected, but silver bottomed off the ~$19.20 level, as discussed. Even with Comex options expiration and central bank meetings this week, speculators taking on the bullion banks are buying every cartel smack-down, yesterday offering the latest example: Untitled

When we were laboring through the 2011-2015 bear market cycle, constant snap backs the likes of which silver is producing were never to be seen.

Today, the Japanese yen is appreciating relative to the US dollar as speculators – largely, algorithm-based trading – react to a Nikkei news report that fiscal stimulus plans will be smaller than expected.  The dollar fell as much as 1.4% in the early market session.  This is an ironic case where the short-term impact of the yen carry trade flow and long-term yen debasement from continued fiscal and monetary stimulus are Untitledboth positive catalysts for precious metals.

Taro Aso, Japan’s finance minister, talked down the report, saying that the government had not yet decided on the size of the package.  But the report was enough to send the FX algos into a frenzy, which spilled over into other markets.   Japanese policy makers flip-flop, ‘jawbone’ and massage the media just like the Federal Reserve.  The BOJ might announce smaller stimulus measures than expected, but Japan’s fate is sealed, and the helicopters are on the tarmac.

The FOMC’s Cirque du Merde

Silver continues to trade DIFFERENTLY, in a positive manner that it has not done in YEARS. The potential for the silver price to explode in the very near future is all there.  The shares continue to maintain their own positive tone and refuse to give up much ground on corrections. – Bill Murphy from GATA’s Midas report

Nearly the entire precious metals investing community looks at the Comex options expiration and the Fed’s FOMC meetings with trepidation, as historically those two events have triggered a massive Comex paper attack on the price of the metals.  Having both events back to back in the same week elicits even more fear.  Of course, Goldman Sachs commodities clown, Jeffrey Currie, was on CNBC again today calling for $1000 gold.  This guy has absolutely no shame about continuously making an idiot of himself with his price predictions for gold.

I exchanged emails with Bill Murphy on Tuesday morning because the precious metals, especially silver, were unexpectedly buoyant in the morning.  I wrote last week that the Comex bullion banks, based on the put/call open interest for May silver, were incentivized to make sure silver closed below $17 today for options expiry.

I emailed Bill asserting that “they” can’t keep the metals down.   Gold spiked at 9:00 EST Untitledon no news or event that would have triggered a spike The 5-minute graph indicates that it started to move up and then short-covering kicked in. Silver started to move and then there’s a red bar and then silver pops. That tells me that they tried to hit silver to keep it from popping but short-covering still kicked in. (click on image to enlarge)

The 60 minute bar chart of silver shows silver oscillating between $16.80 and $17.30 since Untitledlast Tues, with a move up that was slammed with a paper hit on Thursday. But silver refuses to go lower at the direction of the Fed/bullion banks. At this point silver could break either way. They are very desperate to keep it from breaking up, but they seem incapable, at least for now, of forcing it lower.  (click on image to enlarge)

The charts smell of serious desperation. Most gold commentators are pointing at the COT structure and sweating bullets. That side of the ship is too crowded in my opinion. We may well get another surprise move higher tomorrow after the FOMC’s Cirque du Merde show is over.  Gold and silver are definitely behaving differently than we’ve seen over the last 5 years.  The criminal bullion banks seem to be having trouble pushing them lower.

Last week I was invited on a Denver-based radio show, Wake Up With Steve Curtis.  We discussed a lot of the factors that are underpinning this surprising strength in the precious metals. You can listen to the podcast here:

I will be publishing the latest issue of the Mining Stock Journal on Thursday. I’ll be featuring a relatively undiscovered junior mining company that has 5+ million proved ounces of gold and silver in the ground. You can access this report here:  Mining Stock Journal.  I am sending the back-issues to new subscribers but this won’t last much longer.

“Looking forward to the next mining recommendation.  I sold my TAHO Sep 12.50 for a nice profit and need  a place to put some of it.”  – Subscriber “Ed”

Silver Is Off To The Races Again

What we don’t know about the gold/silver price admissions is what it has stirred up behind the scenes … meaning how it might be, or will, affect the manipulation of the precious metals in the United States, where the real big issue resides. There is no telling what could be percolating at Gold Cartel headquarters … or what just might be TOLD to them.  –  Bill “Midas” Murphy from tonight’s Midas report (LeMetropolecafe.com)

There’s a lot of factors going on right now that could be pushing gold/silver higher over
Untitled1and above the inexorable headwind of Central/bullion bank market price manipulation.(click on graph to enlarge).

Today’s move up could be attributable commencement of the yuan/gold price fix rolled out by the Shanghai Gold Exchange.  But this was a known event well ahead of time and the market theoretically should have priced this in.  Same deal with the Deutsche Bank lawsuit settlement.  But that event hit the tape last Wednesday and gold/silver yawned.

Something a lot more profound seems to have developed behind the thick fog of Orwellian smoke billowing from the western Central Banks and Governments.  I believe the financial system is collapsing.   This explains the Fed’s frenetic attempt to keep the stock market propped up.  This effort has become about the only part of the Fed’s activities that is transparent.

Phillip Kennedy – Kennedy Financial – hosted me on his Youtube program to discuss some of the factors that are contributing to the surprisingly strong move higher in the precious metals sector.  Phil blends sharp insight with humor to produce an informative and entertaining show:

I recommended a silver stock in early January that has gone up over 600% since its January 10th close.  Shortly after that recommendation to subscribers of the Short Seller’s Journal, the Mining Stock Journal was introduced.  I’ve featured three other junior stocks which easily have the same upside potential as the silver stock.  “I got the email with the past reports. Thank you very much. This is an incredible value” – new subscriber comment.

Right now I’m offering all of the back-issues to subscribers (debut issue was March 4th). I’m already working on the next issue and the stock I’ll be featuring is not well known (for now anyway) and is irrationally undervalued. You can access these reports here: Mining Stock Journal.

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Rigged Jobs Report Triggers Extreme Backwardation In Gold

I really don’t like going too far “off the rails” in looking for explanations to occurrences that are completely dislocated from reality.  An example of an occurrence that is entirely disconnected from reality is the 300:1 paper gold to deliverable gold ratio on the Comex. The only explanation for that is that entities operating the Comex are implementing extreme measures to limit the upward movement of the price of gold.   How can there be any other explanation when there is no other futures market in the history of the world in which the ratio of the paper futures contracts outstanding were 300x greater than the amount of the underlying physical commodity available for delivery into those markets.

Try this exercise:  Imagine where the price of gold would be if gold futures trading were removed from the equation.   Too be sure, it would reduce the number of hedge funds involved in trading the gold market via futures.  But the market would be left to find a market clearing price based on the actual amount of physical gold available for delivery and the amount of gold being demanded by buyers for actual delivery.

Occasionally an event occurs in the gold market which points to the extreme degree of artificiality imposed on the market.  It’s a variable that occurs outside of the control of the banks and Central Banks who are highly motivated to keep a lid on the price of gold.

This event is known as backwardation.  Backwardation occurs in a futures market when the spot price of the commodity – in this case gold – exceeds the futures price.  For a lot of technical reasons, futures markets should almost never experience backwardation except in extreme circumstances.   If you can sell your gold at the spot price and buy a futures contract to “guarantee” the delivery of the gold you sold in the future at a lower price than what you get paid today to sell at spot, you’ll do that trade all day long until you run our of gold to sell.  It’s free money – also known as arbitrage.  Arbitrage opportunities should quickly remove backwardation from any futures market.

Only in the gold market it’s not free money.  When gold goes into backwardation it’s because investors who have gold are not willing to engage in “free money” arbitrage because are unwilling to risk the possibility that their futures counterparty will be unable to deliver gold in the future.  In other words they don’t trust the future availability of physical gold.  The risk of delivery default by the counterparty removes the “free” aspect of arbitrage from gold market backwardation.

Today when the phony employment report hit the tape – at the exact moment – 10,800 UntitledDecember futures hit the Comex in the first minute.  This drove the futures price down nearly $20.   (click on image to enlarge).  This is 1.8 million ounces of paper gold. Yesterday’s Comex vault report shows that there were only 151.3k ozs of gold reported to be available to deliver into the December contract.  This is manipulation in the extreme.

Of course, the unintended consequence of this is that this artificial market activity cause extreme backwardation in the gold market.  This is best illustrated with this graphic posted on Twitter by Sandeep Jaitly (@bullionbasis), who is a fund manager:

Untitled1Without getting into the “gory” details of futures trading terminology, this graph shows what happened between the spot price of gold and the futures price of gold. The red line represents the backwardation in the market that occurred when the futures prices were slammed at 8:30 EST. It represents the annualized rate of return you would earn if you sold your gold in the spot market and bought December futures to replace the gold you sold. This of course assumes that you actually receive delivery of the gold.

Another way to think about the backwardation that occurred today in the futures market is that the spot market did not “believe” that the big hit in the futures market when the employment report hit the tape had any basis reality other than that it was a massive paper manipulation operation.  We know this because the spot market price did not adjust accordingly when the futures price was smashed.

The graph above reflects the backwardation that occurred in the Comex futures market. Backwardation in the London LMBA “physical bullion” market has been persistent since 2013.   Prior to 2013, backwardation was an extremely rare occurrence in the gold market.  It happened briefly in 2000/2001 – when the 20 year bear market in gold ended – and it occurred briefly in 2008, just before gold began a run from $700 to $1900.

The fact backwardation in London has been occurring with persistent frequency and lingering for extended periods of time reflects the extreme “disconnect” between the paper gold and physical gold markets.   It reflects a gold market in which the price is being kept artificially low with paper gold because backwardation would only occur when demand for physical gold now is greater than the promised supply of that gold in the future.

Several market indicators are now signalling the amount of intensity being exerted by the elitists to keep the entire global financial system from collapsing.  Negative rates in the European sovereign yield curves which extend out several years now;  the high volatility in the stock markets;  the growing divergence between high yield bond prices – which are quasi-equit –  and the S&P 500;  the negative 10-yr interest rate swap spread;  the very large and very frequent Fed reverse repos; and, of course, the backwardation in the gold futures market, which directly reflects the amount of manipulation required to keep the price capped.

There’s no telling how long this fraud can last, but there will be a lot of people who wished that they had loaded on the Wall Street Journal’s “Pet Rock” when the price was low because at some point acquiring possession of physical gold and going to be extremely difficult and expensive.

The Fuse Has Been Lit

FuseLit

Yesterday the US Mint runs out of silver eagles. Of course, the US Mint/Govt was the last one to announce the news. Everyone in the alternative media/blogosphere heard about it through silver eagle dealers who heard about it from their US mint approved participant supplies (A-mark, etc).

Then today the news hits that all trading on the NYSE is “suspended” due to a “technical glitch.” Just overlook the fact that the trading halt occurred just as the the entire stock market was about do an “elevator shaft” plunge. Funny that – the market never seems to “break” or incur a “technical glitch” when the stock market is spiking higher in inexorable parabolic fashion on some bogus economic report.

If you want to see what an elevator shaft plunge looks like when a “breakage” or “glitch” is not imposed on a market, look no further than what happened to silver yesterday:

silver

This is what selective capital controls look like. A colleague asked me just now if the NYSE had resumed trading yet (2:15 p.m. EST).  I replied: “Does it really matter? It’s irrelevant. The fuse has been lit. This is the start of capital controls. It’s no different from what China is doing. Just wait till they start lowering the gate on mutual funds…then banks….”

I warned last summer that it was time to get your money out of all fixed income mutual funds. I’m sure no one listened. Now it’s time to get your money out of ALL mutual funds. In fact, anyone with half a brain would get their money entirely out of the retirement fund system.

They are in the process of looting retirement funds, only they are using a method that did not occur to me until I applied the same methodology being used on Greece: impose an amount of leverage on the entity in a manner which enables the elitists to “gut” the entity from the inside out.

Most large pension funds – Public and Private – are severely to catastrophically underfunded. This means that the net worth of the fund is below 50%. What’s amusing is that many big pension funds are still throwing money hand over fist at Private Equity firms. These PE firms are paying retarded valuation multiples to invest in businesses, especially tech start-ups. When the stock market crashes despite attempts to “break” the market, PE investments will be wiped out and pension fund net worths will be wiped out. That’s how they are gutting the retirement system.

The Fuse has been lit – it’s only a matter of time before there’s a huge financial mushroom nuclear cloud – to be followed by nuclear mushroom clouds…

mushroomcloud

Don’t Panic, The Fed Is Control Of The Markets

There’s no such thing as markets anymore – only interventions.  –  Chris Powell, co-founder and Treasurer of GATA

If today’s market action does not convince the last skeptics that the U.S. financial markets are completely rigged, nothing will.

The action in the U.S. markets today after the Greece/EU situation hit a wall today demonstrates the degree of control the Fed and the U.S. Central Planners have over the markets now.    The S&P 500 futures opened down 30 points when global electronic trading opened Sunday evening.   Gold and silver spiked up.  Both markets began to reflect some degree of the risk to the global financial system posed by Greece’s potential financial collapse.

Of course, as has been the case since the 1987 stock market crash, the Fed/Treasury – collectively the plunge protection team (PPT) – went to work containing the damage to the paper markets.  This entailed methodically working the S&P 500 higher during the course of the night and methodically pushing gold/silver back down – click to enlarge:

SPX1Gold

The manipulation of the markets reflected by these overnight trading charts of the SPX and Gold futures epitomizes the extreme degree of market intervention by the PPT. Ever since 1987, and since Reagan signed the Executive Order which authorized the PPT to prop up the stock markets, there’s been market intervention “creep” in this country. Robert Rubin’s role as Secretary of Treasury was to transition the Working Group on Financial Markets (PPT) from its stock market propping function into a full-fledged, all-encompassing market intervention mechanism.

A colleague of mine this morning remarked that after today the market intervention going on should become blatant to everyone.  I scoffed at this notion.  Most people in this country are either not aware of what’s going on in DC and Wall Street or don’t care.  I was watching CNN this morning and the Greek Tragedy was not even reported.  If you only get your news from CNN you have no idea that the EU could fall apart.  Therefore, you have no reason to believe that the stock market should be falling off a cliff and gold should be going parabolic toward the sky.

The markets have become unimaginably imbalanced in the degree to which the paper derivative securities misrepresent the underlying financial, economic and political reality. Yes, stocks and bonds are nothing more than simple derivatives in that they are pieces of paper which are supposed to “derive” their value from underlying entities that issue them. But the underlying entities are nothing more than cesspools of accounting fraud, criminality and Ponzi schemes designed to suck wealth out the system.

The financial markets – and specifically the U.S. financial markets – have become collectively the biggest Ponzi scheme in the history of the universe.  This condition has been made even worse by the fact that the people running these markets and our Government have become completely immune from prosecution or even indictment. They are criminals who are above the law.

Examples of this are becoming limitless, but consider that an open felon who, as Secretary of State, sold U.S. foreign policy to the highest bidders for her own personal gain is now the front-runner candidate to be the next President.  The only way that our system can become more distorted, debauched and depraved than that will be when the Government begins to herd malcontents and critics into “internment” camps.  Don’t think for moment that is not in the playbook…

…when you see that men get richer by graft and by pull than by work, and your laws don’t protect you against them, but protect them against you–when you see corruption being rewarded and honesty becoming a self-sacrifice–you may know that your society is doomed.   –  Ayn Rand, “Atlas Shrugged”

 

TPP, The Comex, Greece/EU, The Bond Market: The Final Solution Redux

The naked short interest in Comex silver is potentially building to the mother of all short squeezes and I think the fact that they are piling on more and more naked interest on the Comex tells us that they’re losing control of this.  – Investment Research Dynamics on The SGT Report

The TPP Agreement is going to be the final nail in the coffin of the middle class in the United States (and for the middle classes in all the signatory countries).  The TPP outright usurps the sovereignty of the signatory countries and hands rule of law over to the large transnational corporations.   This means that under this Agreement, the Constitution and all Federal/State laws can be nullified by “legal” decisions imposed under the TPP Agreement.

The Final Solution 2.0:  The Murder of the Middle Class

I was on the SGT Report this week to discuss the ways in which the wealthy and political elitists are implementing an end-game which involves completely destroying the United States and sweeping every last crumb of middle class wealth off the table and into their own pockets.  I actually predicted this would happen back in 2003, when people who saw this coming were considered to be extreme conspiracy theorists.

In fact, a very good friend of mine in NYC told me back then that I was “seeing black helicopters.”  He called me up one day in 2008 and said:  “I can’t believe how right you’ve been this whole time.”

If you think I’m exaggerating, consider this: Right now the leading Democratic front-runner for the Presidency is a woman who used the office of the Secretary of State to sell her influence to the highest bidders abroad for her own personal gain. Not only that, she openly committed felonies including abuse of power and destruction evidence.  The crimes against the people of the United States committed by Nixon look like petty theft from a lemonade stand compared to the crimes the elitist are committing openly now with no consequences.

Not only should be be under detainment and indictment for several crimes, she committed to treason. Instead, she’s gleefully running for President, secretly laughing at all the idiots who slavishly support here.

Try to enjoy what you can, as much as you can, while you still can. Sooner or later these criminals are going to pull the rug out from under you and there’s nothing you can do about it at this point.

SoT #39 – Market Update: Is The Comex End-Game In Sight?

The information in this report is take from sources believed to be reliable; however, the Commodity Exchange, Inc disclaims all liability whatsoever to its accuracy or completeness. This report is produced for information purposes only.  – Legal disclaimer at the bottom of the Comex daily gold and silver vault inventory reports

The legal disclaimer showed up one day a couple years ago at the bottom of the Comex vault reports. Every gold and silver – especially silver – analyst on the internet discusses the state of condition of the Comex using these reports as if they are bona fide.

Given the implications of the above legal disclaimer, this is quite disconcerting. Even gold/silver analysts who are critical of the rampant illegal manipulation of the gold and silver markets on the Comex take the data as reported as being legitimate.

CLEARLY, that disclaimer tells us not to take the Comex data reports seriously.  In fact, it suggests the distinct possibility that the reports might not be accurate or complete.  Why? Because the reports largely come from the three primary market making banks on the Comex:  JP Morgan, Scotia and HSBC.

The big banks have been successufully prosecuted and fined for fraud and criminal behavior in just about every business segment of their operations except their gold and silver trading. This includes criminal activity in other commodity markets. If these reports are in fact accurate and bona fide, it would be the ONLY business segment of any of these banks that is reported without any misrepresentation or outright fraud.  The probability of that being the case is 0% using a 100% confidence interval.   Sorry Ted.

The U.S. financial markets are the most corrupt markets in the history of the world.  – Shadow of Truth

We also discuss the TPP Agreement. The TPP Agreement completely incinerates what’s left of the Constitution. It completely usurps U.S. Federal and State laws and hands ultimate legal decision over to a tribunal international multinational corporations. It extends well beyond just trade issues. It completely nullifies the Constitution and States’ Rights. Any signatory to the Agreement agrees to waive its own sovereign laws and abide by the enforcement of laws set forth in the TPP Agreement on any matter involving TPP issues.

The TPP Agreement is the end of any country as it was founded and conceived.

Silver Price Suppression Intensifies As India Imports A Record Amount

Just three weeks ago the silver open interest was 174, 000. But, get this. The day when the Keith Neumeyer/First Majestic letter surfaced the open interest was 178,343. In just 6 trading days it has risen nearly 14,000 contracts, soaring into one all-time high after another…Is the OI soaring because JPM is letting First Majestic, and the silver investment world, know what they think of that letter? Or is it soaring because THEY are having trouble keeping the price down due to all the buying which is showing up in the futures market?  – Bill “Midas” Murphy,  Lemetropolecafe.com

The open interest in Comex silver futures hit an new all-time high as of the close of Thursday’s trading at 191,663 contracts.  This is 958 million ounces of paper silver – about 19% greater than the world’s annual production of silver.  To say this amount of open interest in silver is “absurd” is an insult to the word “absurd.”

This farcical degree of manipulation exceeds any market abuse I can recall in nearly 30 years of market experience.   The only explanation for the regulators – the CFTC and Justice Department – turning a blind eye to this is that the price suppression of gold and silver is being implemented on behalf of the Government.  This is not an original viewpoint, as the probability of this has been suggested by some well-followed analysts in the past.

The [Commitment of Traders] report indicated that 8 traders in COMEX silver futures held a net short position of 376 million equivalent ounces of silver, by far the most of any commodity in terms of world production (163 days)…It occurs to me that such massive speculation in COMEX silver futures may not be in keeping with the spirit and intent of commodity law and may suggest something is wrong with the price discovery process.  – excerpt from a letter written by Gregory Roberts, Chairman of First Mexico Gold Corp. to the Chairman of the CFTC (underlined emphasis is mine)

As Mr. Roberts asserts, something is wrong with the “price discovery process.”  As James Turk reported on Friday to an email group of which I’m a member, “Trading ended today here in London with July silver $0.06 under spot, and delivery is only 2-1/2 weeks away. Gold was almost as tight going into June delivery, and while the initial pressure has relaxed somewhat, gold remains very tight.”

Spot silver on Friday was 6 cents/oz above the price of a July forward contract for which delivery is required in 2 1/2 weeks.  This “backwardation” means that there’s an immediate shortage of physical silver.  Furthermore, investors would prefer hold on to their physical silver rather than sell at the spot price and buy a July forward which would enable them to replace at a lower the silver they sell.  On an annualized rate basis, the discount works out about 8%.  Backwardation in a commodities futures market is failure of the price discovery process, among other problems.

What this really means is that investors are not willing to take the risk that they might face problems getting their silver delivered and would prefer to hold on to what what they possess in hand rather than make a quick arbitrage profit.  In other words, the market does not trust paper silver.

In the face of the extreme degree of illegal naked short-selling paper silver futures on the Comex, India is on track to import – by a wide margin – a record amount of silver.  Steve St. Angelo of the SRSrocco Report (link to Steve’s article) writes:

If Indian silver demand remains strong for the rest of the year, total imports may reach 9,000 mt (300 Moz) in 2015. Total global silver mine supply was 877 Moz in 2014. Thus, Indian silver imports in 2015 could consume a third of world mine supply compared to 25% the previous year.

Steve will be a guest on the Shadow of Truth this Thursday.

As our latest guest, Jeff Brown, has reported from Beijing, China will be using 3,162 metric tonnes of silver per year just for its solar energy installation plan.  In other words, India and China combined, would be soaking up 50% of the world’s annual silver production in 2015. And China’s number only includes its silver usage for solar energy.   That does not take into account China’s demand for other industrial uses plus investment demand.

Clearly the U.S. Government – via the Comex – is using paper silver to implement an unprecedented price manipulation operation in silver.  Part of the reason for this is because Constitution mandates silver as an official form of currency, along with gold.  If the price of silver were allowed to seek true price discovery, it would completely undermine the legitimacy of the U.S. dollar (Federal Reserve Notes), a fiat currency.  Like all market interventions, this going to end in disaster for this country.

While it’s not worth speculating on the timing for when the manipulation effort ultimately falls apart, Craig Hemke of the TF Metals Report outlines a compelling case for why another short-squeeze in silver is about to occur:   He We Go Again – Another Short Squeeze Looms.

JulySilverInvestors and speculators who understand what is happening right now have an opportunity to make enormous profits by going long silver. Other than the precious metals mining stocks, I have never seen a an asset that is as undervalued as silver right now relative to the underlying intrinsic fundamentals, including and especially the imbalance between the supply and demand for physically deliverable silver bullion.

JP Morgan’s Giant Silver Fraud

In order to figure out what the elitists are going to do next in order to loot wealth from our system, all you have to do is think like a criminal.  – Dave Kranzler, circa 2004

The Comex open interest for  May silver (the current “front month”  contract for Comex silver) is 535.6 million ounces.  The current amount of ‘registered” silver – silver that has been designated as available to be delivered – is 68.8 million ounces (LINK).   The amount of paper silver for just May is thus 7.78x greater than the amount of physical silver available for delivery.   In other words, for every ounce of physical silver held in Comex silver vaults that has been declared available for delivery, there are 7.78 ounces of paper silver issued. The paper short interest in May silver is 778% greater than the amount of physical silver available to be delivered, according to Comex records.

Never in the history of any commodity on any commodity futures exchange in the world has the ratio of paper to actual physical been even remotely close to this out of whack. Suffice it to say that silver is the most manipulated market in the history of the financial markets.  While most of us already know this based on observation, the actual data as reported by the Comex confirms the observation.

Interestingly, JP Morgan has taken delivery of 4.7 million ounces of silver for its “house” account (LINK).  This would be JP Morgan’s propriety in-house account (click to enlarge):

SilverDeliveries

The graphic above shows the month-to-date delivery notices for the Comex silver 5,000 oz. contract.  I highlighted the line entry for JPM.  The “H” means JP Morgan’s “House” account and the “S” means “Stopped.”  This line entry tells us that JPM has taken delivery of 936 contracts worth of silver, or 4.68 million ounces.  The “stopped” silver represents silver that JP Morgan is receiving based on the long position in its house account.  You see from the line just above that JP Morgan has not “Issued” any delivery notices from its house account.  Month to date, JP Morgan has taken down 54% of total silver deliveries for its own account.  Clearly JPM is accumulating physical silver.  The question is, “why?”

What makes this more interesting is the fact that JP Morgan also happens to be, by far, the largest portion of the short interest on the Comex.  Based on the most recent COT report (LINK),  the total “commercial” short interest is 89,361 contracts. Unfortunately, the Comex position reporting is prohibitively opaque in that it prevents us from seeing the breakdown of individual firm long/short positions.   However, using just “pro rata” analysis, I have estimated that JPM’s pro rata share of the commercial short position is around 24,000 contracts (JP Morgan’s silver vault has 39.2 million total ounces, which is 27% of the total amount of the 178 million ounces of silver reported in Comex vaults).

This “pro rata” attribution gives JP Morgan the benefit of assuming that its share of the trading is “pro rata.”  Most of us have reason to believe that JP Morgan’s share of trading and of the short interest is far higher than just “pro rata.”  But, having said that, based on the numbers we have, we can estimate that JP Morgan is short 120 million ounces of paper silver (24k contracts x 5,000 ozs per contract).  Against 8.5 million ounces of silver in its registered account,  this means that JP Morgan is short  14 ounces of paper silver for every ounce of silver in its registered account.

The bottom line issue in all of the above analysis is the fact that the CME permits JP Morgan to aggressively short paper silver in order to drive down the price and then turn around and aggressively take delivery of physical silver at a price which has been artificially manipulated a lot lower than it would be if the CME, CFTC, SEC and Justice Department enforced the rules that are in place to prevent market manipulation.   Yet, the market manipulation in Comex silver is by far the most blatant and extreme inthe history of all markets.

Circling back to my quote at the top, the Comex is one of the most corrupted criminal enterprises operating in this country.  Given the nominal amount of dollars involved, it makes any of the endeavors of the Mafia look petty by comparison.  JP Morgan is being allowed by our Government – which has rules in place to prevent this – to drive down the price of silver on the Comex using fraudulent paper silver and then turn around and accumulate millions of ounces for its own proprietary account.

In applying my “think like a criminal” theorem to the situation with JP Morgan’s silver activity on the Comex, I came to the conclusion about a year ago that, more than likely, a couple of these big bullion banks that appear to be catastrophically short paper gold and silver have actually been accumulating a lot of physical gold and silver that is being safekept at the large new gold/silver depositories in Singapore and Hong Kong.

When the time comes when the hedge funds who are holding the long side of the huge paper short positions held by JP Morgan, HSBC and Scotia, ask for delivery of the metal represented by those contract, the little known “force majeure” clause buried in Comex metal contracts will enable these banks to settle with printed U.S. monopoly paper.

Gold was an objective value, an equivalent of wealth produced. Paper is a mortgage on wealth that does not exist, backed by a gun aimed at those who are expected to produce it. Paper is a check drawn by legal looters upon an account which is not theirs: upon the virtue of the victims. Watch for the day when it becomes, marked: ‘Account overdrawn.’   – from Francisco’s “money speech” in “Atlas Shrugged.”