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GATA Chairman Bill Murphy joins The Doc & Eric Dubin on this week’s show to discuss: 

  • Why Murphy believes JPMorgan accumulated vast stores of PHYSICAL SILVER into the 2011 top while shorting the paper market, and has used the physical stockpiles to smash silver lower over the past 3 years- resulting in a paper fortune for JPM, but that the market action over the past 2 months indicates JPM has RUN OUT OF PHYSICAL SILVER to manipulate prices down!
  • Gold & silver’s trading in the wake of the MH17 tragedy- Murphy explains why the cartel never allow the PMs to hold their gains from an international crisis
  • Big money responds to early week take-down of gold & silver with massive physical buying- signs we may be in the early stages of a massive sustained run for the metals
  • The GATA Chairman provides his current outlook for gold & silver, and states that the next rally will see the most volatile and explosive moves to the upside for gold & silver of the entire bull market!

The SD Weekly Metals & Markets With The Doc, Eric Dubin, & GATA Chairman Bill Murphy is below: 

 

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Bill Murphy’s theory on JPM physical silver holdings suggests higher prices

Subscribers to Bill Murphy’s “MIDAS” newsletter (click here for 2 week free trial) have long understood Bill’s theory about JP Morgan’s positioning in the silver market.  Bill believes that during the first half of 2011 JPM was buying physical silver on the ride up to nearly $50.  But at the same time, Bill believes JPM was selling short an order of magnitude larger net position in the derivatives market.  Once the momentum peak hit, JPM cashed in as its derivatives position generated profits far in excess of losses on JPM’s physical silver.  JPM waited until the market turn and then piled-on with physical sales.  

You can think of JPM’s actions as a game of chicken.  JPM helped push the price up, but once momentum had run its course and traders were more amenable to being inspired to sell, JPM beat the snot out of the market with periodic selling of physical silver.  We all recall the initial blast of 5 margin hikes over a mater of days during May, 2011.  It crushed momentum players.  JPM physical silver selling furthered that decline, and its physical sales had an outside downward impact on price given the 180 degree shift in market sentiment.

Market data supports this thesis, from 2011 sky high premiums for silver before the take-down, to trends in open interest — both data points that are not opaque and of questionable authenticity such as commitment of traders data delivered to the CME by bullion banks.

Here’s where things get interesting.  Bill believes JPM’s physical silver hoard has likely been sold into the market in full, leaving JPM with one less tool to affect price suppression.  This would partially explain why silver has been trading differently in the past few months, at times leading the precious metals market higher.  If Bill is right, it will not be long before we see much higher silver prices.

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$24+ call:  Head meet brick wall?

Leading up to last Friday’s show we witnessed a handful of rare failures in typical cartel patterns suggesting the cartel was having a heck of a time maintaining silver in the low $20s.  For example, on July 11th mining shares were beaten down in what looked like a common cartel signaling move — but bullion failed to sell-off the next day.  Mining equities tend to lead bullion prices up and down.  That’s probably a big reason why years ago it appeared that the cartel adopted a strategy of piling on naked short selling of mining shares just before attacking derivatives metal trading.  Andrew Maguire testified before the Commodities Futures Trading Commission about signals like this and in particular, the selling down of silver in advance of a raid on gold.  It’s easier to generate price declines in the relatively tiny precious metals mining share market and paper silver market, and copy-cat momentum and technical traders were already well conditioned to follow the lead of mining shares.

In the last month we have also seen rare follow-through days on price advances for silver and gold — another breakdown in typical cartel patterns.  These breakdowns of typical cartel behavior underpinned my call for getting over $24 and testing $25 by the end of this month.  Hiking margin rates last weekend may very well put that forecast on ice.  Kicking momentum out from under the market with a margin rate hike has worked to taper prices for the time being.  But as Bill noted, gold and silver managed to hang on to gains Thursday, July 17th — yet another departure from a long standing cartel rule of blocking upside from safe haven buying related to geopolitical events (e.g., the shooting down of the Malaysian passenger jet).

Having to endure these cartel smashes stinks.  The monkeys are still in control.  But make no mistake, these pattern breakdowns demonstrate price manipulation is getting more difficult.  It might take an extra couple of weeks to get over $24, but it’s coming.

Weekend reading

Don’t miss the latest analysis from Dr. Paul Craig Roberts and Dave Kranzler on market manipulation.  Click here.  It’s well worth your reading time.

Have a great weekend — Eric Dubin

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  1. Thinking there is still plenty of Silver around; Added nicely this past week without a problem.
    Have been thinking for a long time now that availablitiy is the KEY to everything when it comes to Silver!

    • You mean the physical availability that can and will be depleted literally overnight in a crisis? 

      The physical silver market is $20 billion! Yes, that’s billion with a “B”. That’s less than a month’s worth of QE!

      In this environment, $20 billion is peanuts; it is absolutely minute! There is no perfect timing when it comes to this market, it’s either you are early or you are late; and if you are late, you are SCREWED.

  2. The fact that Bill understands what the mechanics are behind the manipulation of pm’s is interesting but really is of no value to us if they don’t get the timing right. Up to now, all these guys have been terribly wrong in that regard. Thing that has me worried now is, if manipulators can control price/event scenarios(they kept the price of gold down thru the crisis of the airline downing), they might be able to keep pm’s from EVER taking their place as a security hedge.They have done it successfuly to date over and over again, to the dismay of ALL the pm’s experts and novices alike. What makes you guys think they can’t continue to do it FOREVER, if it is in their best interest to do so?

    • The manipulation is an attempted price control.  Price controls never work (even under pain of death) because the artificially low price increases demand.  Eventually supply is exhausted and/or a black market arises.  Either way prices “snap back” to where they should have been.  History is littered with failed price controls.  Even Diocletian, with absolute power, failed miserably in imposing price controls.  Governments love to debase the currency, then try to impose price controls as if the debasement never happened. Market forces eventually prevail.   

      Nobel prize winner Milton Friedman said “We economists don’t know much, but we do know how to create a shortage. If you want to create a shortage of tomatoes, for example, just pass a law that retailers can’t sell tomatoes for more than two cents per pound. Instantly you’ll have a tomato shortage.” http://en.wikipedia.org/wiki/Price_controls
       

    • I remember that period well. It was more like ’79. Intellectually, I saw the distinct possibility of banknotes falling that low, but having had actual past experience of exchanging notes for silver dollars pari passu, the temptation was quelled with a visceral fear of being wrong. Also, I was far too ‘foot loose’ and untethered as a young fellow, and with the advent of Reagan ‘the savior’ rising up on the horizon, I felt ‘he’ll get things right’. (Chrysler sure cured me of that delusion.)

      I felt that same dichotomy in 2000 once I was more ‘rooted’ and even more certain that the economy had grown far, far worse in the interim, which put me solidly ‘on the path’. It’s funny, still with self doubts, I was struggling for weeks at a time in anguish over mere cents per ounce difference in auctions, sometimes going through a dozen lots before finally getting my target quantities and ‘prices’.

      Knowing what I know now, the extremes I’d gone to are comical. Going forward will only make it seem all the more hilarious. But, most of all, what I’ve learned in the last ten years has given me thoroughly unshakable confidence that the effort and sacrifice has one single logical outcome … vindication.

      So, maybe I can rephrase that old Eric Burdon song to say … “As I got old, it was more important, to pay more pain, so to laugh a lot louder, yeah … as I got old’.

    • @PatFields
       
      I got in AFTER the Hunt brothers. Prices fell to about $4.00, many people got burned. Premiums were unheard of. The only stuff I could find was generic rounds, and art bars. Exactly 1 person I knew said Silver would come back. I stacked. Early in Reagans administration, he liquidated the Strategic silver reserve. What the reserve really was, was melted pre 1965 coins. Once all that silver hit the market, the price stayed depressed for decades, I stacked.
      I was as a questionable “young fellow” myself. I drank too much, along with other poor behavior, a poor attitude engulfed me as well. Yet, I stacked.
      Through the 90`s I slowed my stacking. Then, in 1999 the Y2K frenzy started. “Junk” was the prefered vehicle. Once that whole Y2K turned into a bust, the “Junk” hit the market, in droves. As far as I`m concerened, this is where the urban legend of buying Silver below spot came from. I resumed buying. It didnt last long, but it was fun..
       
      When the price assent started in 2011, I curtailed buying. Not stopped, but curtailed. Since the 2011 spike, anytime the price is below $20.00, I buy. that`s my story

    • @Shamus001
       
      “B.R.I.C.S.”
       
      Bingo!  The time is approaching when: 1) most of the gold and then the silver will be moving East, making it unavailable for any more price suppression games; 2) running out of PMs in the West will necessarily mean an end to the paper PMs as there will be NO chance for physical settlement in the futures pits; and 3) Asians are acutely aware of the high value of gold, will hold most of it, and will be setting the prices.  It would be in their best interests for gold to be as expensive as possible, considering the size of their gold holdings.  Silver will go along for the ride.
       
      @PatFields
       
      “So, maybe I can rephrase that old Eric Burdon song to say …”
       
      That was a good one… but then, so was… “We gotta get out of this place, if it’s the last thing we ever do!”.  That seems to fit the paper Ponzi scheme we are now locked into… for the time being.  At some point, the fundamentals always assert themselves… even for gold and silver.  It’s just a matter of time and the way things are now going, not a lot of it.
       

    • Silver Dollar … “I buy. that`s my story”
       
      Great story. If I wasn’t also flitting from one corner of the country to another … whimsically switching work more on ‘interest factor’ above career stability and thus ‘staying light’, mine might be very similar.

    • Lol that’s what I thought and they where stacking physical big time. Believe who you want to but for me I’m listening to my insides and I Keep Stacking.

    • Nobody sees anyones entire book, and physical markets are opaque… but jpm has taken delivery of net 3,000 contracts of gold so far this year, and 2,000 contracts of silver  Lately they have been making delivery more than taking which suggests to me they have ample supply of metals.

  3.  “SMELLS TO HIGH HEAVEN!”  yes, it all does.  i look like a laughing stock to all my friends & my family thinks i’m involved in some kind of wacko internet conspiracy story.   when i try to tell my friends that a ‘gang of criminal bankers & treasonous politicians are trying to take over the world’, they laugh at me.  i’ve lost all credibility & am growing old fast. 

    • lynnybee,
      “Truth is treason in the empire of lies”
                                                             Ron Paul

    • lynnybee you’re not alone, just hang in there you have positioned yourself on the right side.  I went all in at $33 an ounce and I can tell you I sleep well at night knowing I hold the phyzz.   Most of us are on the internet as we cannot find “bird’s of a feather”.   Even those on the outside that believe something is coming do not grasp the concept of the US dollar being debt money.  Nor do they concern themselves with the FED reserve.  They have been conditioned to believe that banks are good since you go to them when you have a problem and need “money”…..lol…..”MONEY????
      The game is changing just not where we want to see it.  Syria, Ukraine now Israel, Iraq.  Add in the Brics banks and never forget China is working behind the scenes to secure the Yuan as a trade currency in its own circles of economics.   This has the classics clues of an overnight collapse rather than a one step down at a time.  
      Just a thought:  Our only real value to anyone in the world is our consumption strength (credit cards, subprime loans, student loans, EBT all used to mask the real loss of productive savings and spending).  That is why I believe they want TPP as a way to foist whatever strength is left on those who take an oath to use the dollar exclusively in trade.  The clock is ticking as the boomers are starting to retire or cutting back consumption in anticipation thereof.  Any well paying boomer held job will be replaced with much lower wages and benefits.  The doctored GDP was manipulated with obamacare to a positive and then removed at a later date.  
      We are in the endgame.  I was told in 2008 the end is coming in 2015 as the Chinese told us their date for a “convertable yuan”.   TPTB have a good idea when the end is coming.  When the stock market begins is downward move to the final bottom as the wealth is syphoned off to the 1%  you will know “the end has begun”.  Once those proceeds are “invested in tangibles for the new america” by the 1% the curtains on the 40-some year reign of FIAT MONEY will come to an end.  (I never bought into the theory that the “big money” was buying up billions in housing for the rennaisance of america, it is to warehouse the cash”.

    • @lynnybee  I’m a Federal Engineer.  I hold silver as an insurance policy. Of the Engineer’s I’ve worked with in the past 5 years, approximately 50% of them not only hold silver or gold, but do so in 800% quantity than I.  Considering the combined I.Q. of the company in which I am surrounded, I am confident I am of the correct fiscal mindset.  Consider your company when sharing bad tidings Lynnybee.  And be careful whom you share your financial stratedgy with.  Remember even Jesus was crucified for bringing unwelcome news and the truth to the world.  What do you think they’ll do to you?

    • Oh! and about 25% of the enginerooms I’ve worked in are stocked with Pat Benitar CD’s.  So you would be wise to enjoy her music! ;)  (Ha! talk about birds of the feather!)

    • @lynnbee – Here are a few notes that I just jotted down simply to let people (friends and family) know what I think about what is coming. It is not comprehensive, but will give anyone who wants to know the gist of what I think. I put this together for them (and may expand it -thoughts are welcome) so no one will be able to say that I didn’t tell them. (Hey, what’s going on?…Why are the banks closed?…ATMs are down?…Why do we have martial law? What’s a dollar devaluation?)
       


      My personal predictions of likely financial/societal scenarios based on what I have read or otherwise learned over the last few years:
       
      1.     The United States in anything resembling its present form is not long for this world (dead-man-walking).
      2.     The US dollar, being a fiat currency, will dramatically lose purchasing power (strength) over the next few months or years. Inflation will most likely increase, and very likely turn into a hyper-inflation (perhaps a biflation, in that unnecessary items will see price declines, while necessary items –food, fuel, etc., will see rises).
      3.     There will more than likely be a major stock sell-off (50-80% or more) in the next few months or years.
      4.     Safe havens for wealth preservation will more than likely be precious metals, land and debt-free property, and owned/held physical assets (food and other essentials for life and survival).
      5.     There may very well be a swift societal collapse with the implementation of martial law and the US very likely turning into a dictatorship.
      6.     Act accordingly.

  4. I sure hope Mr. Murphy’s assessment is correct. It’s got to come at some point. There’s only so much physical inventory they can juggle around before they run out of ‘balls’. Murphy’s deconstruction of their probable trading strategy made for some pretty cool analyses that made a lot of sense.

    • Agreed, AG.  Just remember, folks… we’re not in this for the approval of those who don’t “get it”.  We are in this because WE DO.

  5. Just noticed that according to the July 15, 2014 COT for silver, Hedge Funds were long 55,361 contracts, about 275,000,000 ounces of silver. This large amount of longs says to me parasites would like to force Hedges to sell for a loss. How could parasites make Hedge Funds lose a lot of money off Hedges’ long position? Merchants’ have 46,000 contracts, 230,000,000 ounces of silver short. It seems to me the merchants are betting the price is going down, and Hedges are betting the price of silver is going up. Which will be correct and make a lot of money? 

    • hedge funds are not hedgers.  Prodecer/Merchants are hedgers, shorts in this line indicate that someone is selling production, bigger shorts=more sales. End Users will hedge as well, long positions indicate buying by the end users. Hedge Funds are the big money that provides liquidity, but also moves quickly when they want to change positions. Lets say they want to go from long to short in about the same magnitude, that would mean selling 100k contracts, and usually when they want to go they just go and you get the waterfalls with pile on selling/buying to send the price up/down quickly.

      Yes, that infamous cartel smashes the price higher too, in illiquid hours, etc, but you wont read about that here.

    • Hedge Funds ARE Hedgers, by definition! 
      But, true to your thought, they are hedging the U$D with PMs on the opposite of the teeter-totter… 
       
      Hi Mikey, Where you been lately, Old Boy???

  6. The 2 scenario’s that I see as probable for the rest of July for silver are either a lower Summer low, which is Bo’s thing, or sideways trading, silver staying around 21 or 21.50.  It will be the goal for the Cartel to keep silver trading sideways to lower for the rest of the year.  It is going to take the correct Black Swan to happen and surprise all of us to get this market moving forward in my humble opinion.  And, when that happens is anyone’s guess.  Bo will be proven incorrect as far as his 2000 dollar gold call for 2014 and he will be relegated to the long list of guru losers in my estimation.  I do hope he is correct though.  And, I hope that Murphy is correct as well.  Murphy has been so wrong for so long that I don’t even listen to his interviews anymore.  He is just not relevant.    

    • Suppose that they got that false flag planted between their butt cheeks?  It just might look good in that position.  Painful, though.  ;-)

  7. This is one of the best podcasts that I’ve listened to. This link is to a show that he did on silver. His over shows are just as good!

    [audio src="http://traffic.libsyn.com/modernamericanprepper/episode_6.mp3" /]

  8. Can anyone explain to me what the MAIN FACTORS were that pushed the price of Silver up to nearly $50/ounce in 2011 and why did’nt price manipulation keep prices down during that period? (2011). Also whats different today that was present during 2011 to drive prices so high verses current prices at around $20/ounce? Would like to know all your thoughts and opinions, thanks in advance! So in short 1) What factors drove prices higher in 2011 to record highs?, in my view understanding these factors would be critical to understanding the current situation and where its heading, imho..

    • Whodareswins … “whats different today that was present during 2011 to drive prices”
       
      100x hypothecation on a much larger inventory then, as opposed to 250x on a far, far smaller inventory today?

      Most ‘public’ involvement in silver takes place in ETFs (and other ‘unallocated’ repositories), where paper ‘deposits’ can masquerade as ‘physical’ and the ‘investors’ really only want additional credit units anyway. Thus the 150% increase of ‘derivatives’. The ETFers have IOUs in the ‘vaults’ … and don’t care. But, conversely, there’s no metal to fall back on for ‘keeping up appearances’.

      As banknotes continue to exhibit increasing purchase power depreciation, there well come a juncture where a sufficient number of folks ‘see the sense’ in what ‘stackers’ have been yammering on about the past decade and ‘make the leap’ into physical demand. That’ll leave the bullion bankers no choice but to capitulate in allowing another ‘run’ to play out again.

      If a serious ‘crush’ of physical availability develops, even for relatively small lots, this time … combined with inflation that can’t be shunted out of sight, into ‘exclusive’ assets; rather gushing into common circulation … then the ‘mania’ will come about.

      There. That’s my ‘two cents’.

    • The PM drop in prices occured about the same time the QE 40 billion – 80 billion ramped up.  When your printing FRESH NOTES, then DUMP FRESH INK PAPER ON THE PM MARKET (pretending it’s metal) it doesn’t cost anyone much wealth to crash the paper price.  Now that I’ve said that… I just got to thinking how FREE it could happen.  40 billion in stocks and 40 billion in houses- sold to the tax payer at whatever price the bank states it’s worth = profit.  Take said profit and sack the metals price and cash in on stop losses. BINGO You’ve successfully dropped PM’s for free and took those poor ETF schmucks money in the process!
      Not to mention spending all of that FREE INKED PAPER on military buddies, handouts, favors, slip a little in yer pocket here… there… i mean, at a trillion a year… who can possibly account for that 12 billion that went missing over seas?  ITS A PRINTING PARTY! Whoo ho!
      …. Oh…. and your NOT invited! (slams door in your face)  - (laughter, cigar smoke, and cork popping ensues in the fading backdrop)

    • “Can anyone explain to me what the MAIN FACTORS were that pushed the price of Silver up to nearly $50/ounce in 2011 and why did’nt price manipulation keep prices down during that period? (2011).”
       
      Who is to say that it didn’t?  Perhaps without these manipulations, silver would have gone to $100 or more?  $50 seems high by historical standards but it is also quite possible that silver and gold should be MUCH higher in fiat terms than they are today.  
       
      The money printing presses have been running hard, cranking out more than a trillion US$ each year that did not exist before, not to mention all those new “1s” and “0s” the Fed creates on their computers.  If the money supply triples or quadruples AND the prices of gold and silver fall or remain flat, something HAS to be interfering with normal price discovery.  Doubling the money supply, all else being equal, should reduce the value of each FRN by half.  It should take twice as many of them to buy the same oz. of gold or silver, yet that is not what we are seeing.  But, like the pics shown here of a submerged beach ball, it cannot be held down forever.  There will come a time when it slips free and bursts into the air, free at last!  Until that time, it is prudent to buy all we can afford.  Once this low price era ends, we may not see it again.  As our good friend, Charlie, says, “KEEP STACKIN’ “.  :-)
       

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