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:
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.
$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.
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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