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.”

 

 

10 thoughts on “JP Morgan’s Giant Silver Fraud

  1. Dave, why should I invest in silver when you just made clear that the COMEX silver market is completely rigged? This is very depressing!

    1. As I’ve mentioned many times, history teaches us that all attempts by Govts or business enterprises to control market prices always always always fails badly eventually

    2. The answer could be that common sense tells us that no rigging can continue for ever. The day of rekoning will come without a doubt. The problem is though, that nobody can tell you exactly when that day will arrive. However when you watch what is going on in the world of currencies, dept, interest rates, etc. etc.. you might realize that this day is nearing. Remember that you buy phisical PM as an insurance against systemic risk. If you believe that the current system is unsustainable you’ll want to own Gold, Silver and other useful tangible assets, no matter what the current manipulated value measured in paper currency is.

  2. Yep. And by the time they are forced to honor those contracts – to settle those paper ounces with paper money instead of solid silver – the contracts will be marked to market and they will pay a pittance… they have this figured out. They score some loot cheap right now by driving the price down and then when their shorts are called they don’t care because they know they will be devalued to almost (if not) worthless.

    I remember hearing that some smart criminals could have done well in business and people were wondering why they didn’t stop being criminals and go into business. Well, here we have the answer – successful businessmen and politicians but STILL criminals. Be careful for what you wish for…

    Other than miners and holding physical do you see another play on this? when it all comes crashing down what are the second level affects? First level being miners and physical will go up, but then industrial users of silver hurt? Maybe some kind of play there with LEAPS if a venture would be found that has high enough exposure to the price of silver and does not have a supply that they have control of?

    beep beep

  3. What is the total amount of AG accumulated in the last 4 delivery months by JPM?
    If this accumulated amount is growing exponentially, than we have evidence of future direction or a planned event taking place. If JPM is taking 50% of the physical delivery,
    they know that at a future point declare force majure and settle any and all paper claims at that day’s manipulated daily price of let’s say $16.00 an ounce. The next trading day AG opens at $160.00 an ounce and JPM has made a 10 bagger in profit on the physical and has settled out all its bogus/overinflated short position at the piddly $16.00 an ounce closing price. Install Benny Bux and short position solved within a 24hr period—-BRILLIANT!!!

    1. I don’t know the answer to that. I couldn’t find historical delivery notice reports on the CME website.

      I have no doubt JPM is looking all of the vaults it manages, including and especially the SLV vault.

  4. Short paper PM, long bullion was the winning play during the last 2-3 years. Anyone just long bullion will still win the day, once it is all said and done. It’s coming, we’re not quite there yet, but it’s getting close. Months, a few years at the very VERY best, and big things will start happening that the world has not yet seen. Stack the smack and hang on to your metals…

  5. Well, one thing’s for sure- they’re positively magicians (do you think they actually walk into Mercedes dealerships also, wave a wand, sprinkle some pixie dust and announce, “The car’s worth $5,000 ” and just drive one off the showroom floor?)

  6. I actually do not get why they have do kick down the price anyway..? They can just buy all the physical silver available at once if they would like, cause there is so few. 40 mill onces times 20 $.. some 800 Millon . For those guys this is peanuts.

  7. Ayn Rand was right to the extent of his knowledge in his day. When the chickens come to roost, an “Atlas Shrugged” scenario would be a welcome alternative to the sheer chaos we face.

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