JPM is getting out of the silver manipulation game. Perhaps they’ve been warned by the CFTC.
Perhaps they simply see the writing on the wall. It’s impossible to say.
What we do know is:
Andrew Maguire has been noting to subscribers that, for about the past three weeks, there has been a large, institutional buyer appearing at each and every London silver fix. Because of the size of the orders, this buyer could only be a Bullion Bank and he has deduced that is likely JPM. So, if Andy is correct (and I have absolutely no reason to doubt him), then suddenly JPM has taken to quietly acquiring as much physical silver as they can.
Now, add to that what has been going on this month at The Comex. Ted Butler has been all over this since the first of the month. Back on Saturday he wrote this:
“I believe the statistics from the first six days of the July COMEX silver futures contract provide enough data for attention. The standout feature for the first week of deliveries against the July silver contract indicates that JPMorgan has taken roughly 90% of the metal offered for delivery, or a total of 1637 contracts out of a cumulative total of 1828 delivered so far. In turn, of the silver contracts stopped or accepted by JPMorgan, 90% (1479 contracts) were for JPMorgan’s own house or proprietary trading account. In other words, JPMorgan took delivery of roughly 7.4 million ounces of silver in the COMEX warehouses for their own benefit and risk”.
He followed that up yesterday with this:
“A quick note on JPMorgan’s unusual taking of delivery of silver in the current July contract I first mentioned on Saturday. In the two delivery days since that review, JPMorgan has taken (stopped) an additional 369 contracts, 350 of which were for the bank’s house or proprietary trading account. Of the 2220 total contracts delivered so far in the July COMEX contract, JPM has taken 2006 contracts, including 1829 contracts for the bank’s own house account. Over the past two days, customers of JPMorgan have delivered close to 200 silver contracts as well, raising the question if JPMorgan is double dealing. Another point is that the 1829 contracts (9.145 million oz) that JPM has taken in its own name is above the level of 1500 contracts that COMEX rules dictate can’t be exceeded in any one delivery month by any single trader. Hey – have you ever heard of a rule or regulation that JPMorgan couldn’t evade? Me, neither.”
There are still about 1,200 July contracts that remain to be settled so we’ll see where those go…but what the heck is going on here? Of the 2,220 July13 contracts that have been settled so far this month, JPM has claimed over 90% of them. Further, 90% of those have gone directly into JPM’s own house account!
So we’ve got JPM soaking up as much Comex silver as they can without disturbing the price downtrend AND we’ve also got JPM appearing each day at The Fix, buying up as much silver as possible there, too. Connecting these dots leads me to this conclusion:
JPM is getting out of the silver manipulation game. Perhaps they’ve been warned by the CFTC. Perhaps they simply see the writing on the wall. Again, it’s impossible to say. What we do know is:
- During this 9-month decline, they’ve trimmed their naked Comex short position from roughly 35,000 contracts down to approximately 15,000 contracts.
- The startling, surprising and historic rise in the “other commercial” gross long position from 40,000 to over 60,000 contracts has likely prohibited them from reducing their naked short position to zero.
So, JPM sees the writing on the wall and is left with three choices:
- Cover the rest into rising prices. They tried that in 2011 and it didn’t work so well.
- Go the “potato” route and simply default on delivery. http://www.tfmetalsreport.com/blog/4348/simplot-scenario-silver
- Continue to cover the naked shorts as much and for as long as you can BUT also acquire as much physical silver as possible so that you actually can physically deliver against all your short paper if it comes down to it. If you’re short 10,000 contracts and suddenly those 10,000 longs stand for delivery, it would greatly benefit you to actually have the 50,000,000 ounces on hand. Settle it out and it’s over.