Did JP Morgan Just Tip off PAAS That Gold & Silver Are About to Explode Higher?

Pan American Silver (PAAS) announced out of the blue yesterday that just THREE weeks after it announced that it had implemented hedges for a significant amount of its gold and silver production, it had decided to remove them.  This was a stunning and rapid reversal of a big financial decision.
One of the primary Wall Street firms that “advises” PAAS is JP Morgan.  JP Morgan has spent the better part of the last 9 months eliminating its massive, manipulating short position in Comex gold and silver contracts and has actually amassed a considerably large long position in gold contracts.
My bet is that JP Morgan advised PAAS that, based on what it knows as an insider to the precious metals market worldwide, putting on those hedges was not a good idea.
This latest move by PAAS further confirms my view that the metals are marking some time here – ostensibly until after the next FOMC meeting next Tues/Wed – before they begin to make a move to the upside that will take everyone except the hardiest of precious metals investors by surprise.

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It looks like Obama finally put the finishing touches on his fade from attacking Syria without justified provocation.  Hell even AP has ripped to shreds any of the “evidence” that Obama has offered up as proof Syria even used chemical weapons at all:  LINK  What’s most stunning about this whole ordeal to is the ineptness with which Obama and John Kerry handled the entire situation.   This whole stunt the Obama regime tried to pull off was pathetic from start to finish.

To me the worst adjective that anyone can label anything is “pathetic.”  What’s hilarious about the whole ordeal is that the Democrats and CNN are now assuming the role of the neocons and the Republicans in Congress are now largely the pacifists.  It pretty much leaves one speechless.  Certainly anyone who originally supported and loves Obama unequivocally CAN NOT support this tragically pathetic neocon now…

At any rate, I am starting to conclude that gold and silver are marking time for a big move to the upside.  My latest indicator?  Pan American Silver (PAAS) announced out of the blue yesterday that just THREE weeks after it announced that it had implemented hedges for a significant amount of its gold and silver production, it had decided to remove them.  This was a stunning and rapid reversal of a big financial decision and it must have cost them a lot of money to remove the hedges.  I’ll know if the cost was big enough that have to disclose the details in their next 10-Q (it will be pigeon-holed in the footnotes for sure).

I have never cared for PAAS as an investment because I have found the management to be incompetent and full of crap.  More important, they have always been a hedger.  But probably the biggest red flag for me with regard to PAAS is that Bill Fleckenstein was on the board of directors until the end of 2011.   Fleckenstein is probably one of the most disingenuous and incompetent market analysts out there.  For some reason he gets air-time on CNBC, but probably because he represents the “contrarian” investor viewpoint and CNBC has also figured out the he’s an idiot.  We certainly know that CNBC features nothing but idiots.

At any rate, one of the primary Wall Street firms that “advises” PAAS is JP Morgan.  JP Morgan has spent the better part of the last 9 months eliminating its massive, manipulating short position in Comex gold and silver contracts and has actually amassed a considerably large long position in gold contracts.  My bet is that JP Morgan told PAAS that, based on what it knows as an insider to the precious metals market worldwide, putting on those hedges was not a good idea.

There are plenty of other signals being flashed loud and clear for anyone who is paying attention, but this latest move by PAAS further confirms my view that the metals are marking some time here – ostensibly until after the next FOMC meeting next Tues/Wed – before they begin to make a move to the upside that will take everyone except the hardiest of precious metals investors by surprise.

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Comments

  1. Not yet I’m still loading the truck lol.

  2. according to turd ferguson on TODAY`s Keiser Report JPM is still net short silver albeit alot less so. I think the re institution of hedges was a knee jerk pants sh1tting which miners are all backing away from now.
     
    I don`t know that it means anything since I can`t imagine JPmorgan doing anyone any favors except them and their fellow satanists.

  3. Delicious, AND, you were able to toss in a 97-mile-an-hour heater that plunked Obozo square in the noggin, where it wouldn’t hurt him!

  4. Explode higher? So when? Been two and half years and running on that call. Getting creamed again today.
     
    Quite frankly, these markets are totally broken. I’m not expecting any good news on PM prices. Maybe after the collapse comes.

    • as you no doubt have seen I`ve come tot he same conclusion. A drug addict won`t change until the are forced to to use a metaphor.. These guys won`t stop until they are either stopped by the law (never gonna happen) or finally crash their casino to the ground.
       
      Sad to say. The die is cast. let`s get on with it already.

    • Just like at the tracks.  Our Jockey has been paid off to slow down the horse.  Little do they know, he’ll change his mind in the final strech.  Our horse is called “Silver”.  Hi yo… away….

  5. How about this: Did JPM get PAAS to take the hedge in the first place at $20/oz so they could cover 5-6M ozs worth of paper silver or so they could further cover their short position?   I don’t know why any silver miner would want to lock in $20/oz for silver.   If silver went even lower than the June low, you can bet copper, zinc, lead, etc prices will also be in the toilet and not only silver mines but also base metal mines will be closing left and right and the supply shortage would fix price in short order.

    • No. You have the mistaken assumption they are required to cover their short position. It will never be covered. 

    • perhaps, perhaps not – but the idea has been forwarded that the cost of covering their costs of the silver shorts will be a pittance to what they will make on the long side in gold. ie. they have limited their risk.

  6. I still stand behind my theory with these clowns, and that is – they will manipulate the shyt out of it until mines are shut and gold miners go out of business and then just step in (thru the bank of course) and just take everything because the company can’t “make their payments”. What an ingenious plan!

    • that may be the case in some countries, but at some point, mark my words, mine nationalization will be the rule not the exception.

    • This plan is not only ingenious but it is time honored tried and true.  This is the EXACT same plan that TPTB used to cause the 1929-39 Great Depression and all of the stock “panics” that came before it.  They also used it to justify the creation of the Federal Reserve System 100 years ago; an organization that is neither part of the federal government nor has any reserves.  This is their version of the now-you-see-it, now-you-don’t money and credit scheme.  Thomas Jefferson warned us all of this 200+ years ago:
       
      “I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.” 

  7. Not on COMEX is it ever going higher.

  8. Who cares, buy on the dips. Buy small, buy often, even out the peaks, and wait…patience and time.

  9. I’m with you @WaitingForSilver just buy the bloody silver when you can. Lol By the way I see it going up. A wee birdie told me. Lol Keep Stacking

  10. Yes, I hear that the explosion will go up to maybe $23.53

  11. I do not understand what you kids are talking about. It has been reported even in MSM silver is to drop to $17.50. I Do not watch news, so you can say I heard it on the street. We know more information than ever, but we step away from our needs culture of creation such as: cutting wood, making dinner, growing a garden, making our own clothes, being independent from the system. Yet we are conditioned to believe in these in our desire culture to pay someone else to do it for us. We know how to balance our check books, but many of us cannot support the system we live under. The question is, why are you still in the system of the empire? The system is rigged, so what makes you think we are getting the upper hand? Whether Silver is up or down, speaking in fiat terms, we need to end this system and go back to our roots of a needs culture.

    We rejoice in the suffering of others.

    They will beg for their own enslave ement- Rockerfella

    In life There are no guarantees, yet having a little Silver can carry you a little bit further.

    • ‘The system is rigged, so what makes you think we are getting the upper hand?’
       
      Thanks for your common sense logic – a threatened species nowadays. I totally agree … I mean why would TPTB paint themselves into a corner, and let it happen over decades WITHOUT having thought out their next steps?
       
      Sadly, though, it will appear that we are going back to our roots, when in fact there will be a super class (almost totally hidden from view) which have all the money, control all the world, and do whatever they want.

    • You believe the MSM?????

  12. The Kenyan BOMBER!

  13. HERE HE IS!

  14. This will only stop when the paper markets for silver are finished.  As long as JPM and others can short 100x the amount of physical metal, real price discovery will never happen.  The paper markets will only end once we have a physical metal shortage for an extended period of time.  Shortages will only happen when either demand skyrockets or supply craters, or a combination of both.  China, India, Russia and others are buying lots of silver and gold, but not enough to force a shortage.  Miners are getting killed, but not enough to cut production.  

    • Chicago, thank you for presenting some decent logic today,  what many don’t understand is that you CAN’T manipulate a paper market if there are physical shortages, even with silver in the low 20′s for the last 6 months, there are no shortages, physical demand remains very tame.
      China, India, and Russia only buy enough not to move the price higher, the West does not really invest in the PM’s, why?  Developed economies are not in fear of inflation, and are not likely to face inflation down the road.

    • @zman … man, you don’t have the brains to be an effective troll. Physical demand is off the scale. I know the owners of two big retail PM suppliers in Europe and in the last 6 months, they have increased staff numbers by 300 – 500%, to cope with the increased demand.
       
      This whole China meme you guys have created is so trite, when repeated often enough. Go look that up .. ‘trite’.

    • Chief, you better hope I am right, because if this is the type of price action the PM’s get with “strong” physical demand, what will happen if demand slows down from here?
      The issue we were talking about is physical shortages, Do you have of any meaningful evidence of physical shortages taking place today? Are dealers not selling silver at $22 oz, but are only buyers?  That would be the first sign of physical shortages, but it’s not happening.
      Are these suppliers in Europe out of metal?   I doubt it.
      No one can manipulated a physical market, the paper market trades off of the physical market, if shortages were to occur, the paper market will ajust. 

    • Without trying to be too offensive zman, but you really have shit for brains.

    • Bay, you have insulted me many times in the past, it really doesn’t bother me. 
      You use insults when you have no answers to the legitimate questions I propose,  I understand that aspect. 
      Do you think there would be an infinite amount of silver available at $18-$23 oz (for 6 months) if it was such a undervalued asset?   If the real price of silver should be at $50 oz, don’t you think buyers would buyout the available physical silver at the $20 oz range, buyers have had 6 months to do so, yet there is plenty available.
      Maybe silver just trades at $22 oz because of the true supply and demand equation, and the true fundamentals.
      I believe silver could trade higher if the fundamentals were to change, the word is called inflation, and inflation creates real physical demand, so there is real hope for higher prices, but this manipulation nonsense just doesn’t fly.
       

    • Zman, I read on GoldSilver.com just the other day (yesterday?) that there are people with their 100,000 contracts requesting delivery from GLD and are being denied! (against contractual agreements)  It IS happening, demand is high, and there is not enough to hand out. UPDATE: it was posted on Kingworldnews.com on Sept 11. (yesterday)

    • Shamus, you can’t talk to this guy. His head is up his ass on gold, silver, inflation, interest rates, etc…
       
      I’m not sure if he is a paid troll or just plain stupid. Maybe both.

    • @Shamus001
       
      can you post a link, I find this very hard to believe but would like to read the article because if true that is big news in the etf world… The redemption process is what allows the etf function.

    • Found it @Shamus001

      http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/9/11_People_Cant_Get_Their_Gold_Out_Of_GLD_As_Inventories_Plunge.html
       
      Think you better re-read iot, says that *unless* you are one of the big banks you can’t get your gold out of GLD.  I think all here would agree that is obviously true and false at the same time.  If you are a casual investor of course you cannot trade shares for gold, we all know or should know this… but the statement implies that by buying GLD you have bought gold (i.e. the phrase ‘your gold’) which is not the case, you have bought a share and the fund buys the gold. You own a representation of the gold but not the metal.

      I really wonder at kwn if they intentionally try to be misleading or if it just accidental… latter is bad, former downright deceitful.

    • @Shamus001
      Appears you are correct about the KWN piece. I LISTENED to the Grant Williams interview instead of reading a summary. He (Williams) says that there are qualified holders of GLD (currently requiring a position of about $14 million) whose requests to exchange fund shares for physical are being denied by the ETF’s trustees. John Hathaway confirms this in a separate interview by King but I can only find a (edited?) transcript of this (Hathaway) interview, not an audio recording like with Williams.
      I haven’t looked at the GLD prospectus in years but I remember reading someone else’s take on it recently. Something to the effect that even though the request for the exchange of shares for physical goes to the trustee, any one of several bullion banks can somehow nix the deal.  Never understood that part since all of GLD’s physical is supposedly held in HSBC vaults.

    • @junkman
       
      i just listened as well and onlheaders him say that he’s heard of people with enough shares ask for redemption and they’re told ‘no’
       
      thqt is how it works, have to be an AP to redeem shares.  If I missed where he said APs are being told they can’t have gold tell me time he mentioned it, that would be huge as the role of the AP is to be Abe to arbitrage paper shares and physical gold in order to make a profit, this in turn allows the paper prices to mirror the physical, which is obviously the goal.

      Eric king knows this which is why he got it right on his summary of the interview.

    • @zman
       
      good posts and good logic, in any market i’ve seen where prices are too low or too high, the market gives you almost no time to capitalize as there is very little available at low prices, or floods of it at high ones…  multiple months of sideways trading with declining premiums and with no reported shortages,  (except occasionally in bullion products, but not one in bulk markets) does not seem inherently or imminently bullish.

  15. At any price of Silver is great price to stack.

  16. If this is true, why did the price get smashed today?

    • to put people off … it works, right? It’s a mind-game, like the news. But, soon, it’s gonna explode, along with the entire Middle East, USA, Europe, and everything else we call daily life.

  17. Nice! Logged on to see a solid hit to metals today, and for the first time in several months I have a nice amount of dry powder rdy.
    Perhaps I’ll make a small purchase today, and another larger one next week…

  18. Hold still boys and girls, THE UNITED STATES INC. has just lost super power status. Once the US INC. has relinquisHed its power with the Precious Metals, a change will occur in the price of the floating Silver & Gold. Please take note, the UST will also find its equilibrium.

  19. Correct me if I’m mistaken but don’t the ETFs trade 100 / 1 of physical and if that is correct I’m also thinking with that kind of leverage dosent and isn’t price suppression an obvious and blatant fact?

    • Be rest assured, the fiat, paper manipulation, ponzi, theft, casino, etc game does not back up paper assets. Either it’s real or it needs to backed (up) by something else. ETF’s supported by paper will come to an end, yet there are many types of commodities to back it up.

      Another way to look at it is the Brenton-Woods will be in effect.

    • @SILVERTONGUEDEVIL
       
       I can’t speak for them all but at least gld and slv are almost 1:1.  Leveraging these would defeat the purpose of an etf designed to track the metal price 1:1.

    • I have no doubt that there are some ETFs that use leverage to increase an investor’s exposure to gold and silver, both as longs and as shorts.  But there are a number of physical metals ETFs that are required by their prospectuses to hold an amount of metal that corresponds very closely with the number of shares issued.  Typically, this is 1/10th of an oz. per share for gold and 1 oz. of silver per share for silver.  While they can set this ratio anywhere they want, once they do it is set at that ratio permanently.
       
      When a physical metals ETF receives share redemption orders from the share owners, they HAVE to sell metal into the open market in order to get the money to pay these people for their shares.  Likewise, when share buyers come in with cash, these ETFs HAVE to buy metal in the open market in order to maintain their set oz / share ratio.
       
      One other thought… ETFs are paper investments, some of which hold real commodities, such as gold and silver, in their vaults / storage systems.  Using them is not a good way to acquire gold and silver metal.  GLD and SLV, for example, do not allow small share holders to settle their share sales in terms of the underlying metal.  It is cash only, as specified in the prospectus.  Large shareholders, on the other hand, probably can.  People like George Soros,  John Paulson, Bill Ackman, Carl Icahn, and other hedge fund billionaires very likely can get metal for the many shares they own.  Not that this would happen directly but they could get a vault or warehouse receipt that could then be taken to the vault or warehouse where this property is stored, and swap the receipt for the appropriate amount of gold or silver.  Very few do this, however, as their goal is to make money from the price moves in PMs without having to deal with the storage, insurance, transport, handling, guarding, etc. of real physical precious metals.
       

  20. They have been publicly friendly commodities all year (admittedly cautiously friendly metals), same timing as above they released their latest report which was friendly metals again, they’re not sneaky about their public opinion… But as always, watch for what they do, what say means less

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