JPM Appears to be Getting Out of the Silver Manipulation Game

JP Morgan Dimon MastersJPM 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:

Silver Buffs Generic Add2

From TFMetalsReport:

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:

  1. Cover the rest into rising prices. They tried that in 2011 and it didn’t work so well.
  2.  Go the “potato” route and simply default on delivery. http://www.tfmetalsreport.com/blog/4348/simplot-scenario-silver
  3. 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.

Click here for more on what appears to be JPM attempting to extricate itself from its naked short silver position at TFMetalsReport:

 

warbardjuly13

Comments

  1. I just logged into the Shanghai Gold Exchange Website.
    http://www.sge.sh/publish/sgeen/statistics/index.htm
    I believe that each contract is for 1kg of gold. If this is correct total gold delivered from January 2013 to the end of June was approximately 1200 tons. It would have been much higher except for the fact that between April 19th and May 28th pretty much no gold was available to be delivered due to the kamikazee gold/silver price smash on 12th and 15th April. If you extend physical gold delivery out on the Shanghai Gold Exchange for the whole year you are looking at a figure of 2400-2500 tons which is more or less the total amount of gold mined annually. The funny thing is that physical delivery for silver picked up in a big way after the gold ran out in April. The same thing is happening with silver demand in India with all the restrictions on gold imports.
     
    With the negative GOFO rate now for four days, rapidly declining Comex and GLD inventories, declining scrap gold supply and miners reducing production, it really does look like it’s nearly game over for the precious metal suppression scheme.
     
     

    • 59LesPaul
       
      (You’re tempting me to change my ‘handle’ to 61BassVI, man)

      On point, though, I couldn’t agree with you more. The physical demand is FINALLY surpassing the paper chimera’s phony 100:1 fractional ‘supply’ illusion. This, at a point where only the ‘initiated’ are involved. Once the ‘hoi-poli’ start piling on, the long anticipated ‘moon shot’ will light off.

      I’m just patiently waiting for a 14:1 SGR to emerge so I can convert to gold in dribs and drabs and when it gets to 10:1, I’ll be in my Nirvana.

    • @PatFields
      I am like you, waiting for lower GSR.
      However, I have to accept that the complete mining cost ratio currently seems to be very close to that 1:65 figure.
      So what is needed for that ratio to come down? Or has it even ever been lower at all??
      - Silver ore grades could diminish quick that gold’s
      - Silver remaining to be underpriced could be extracted less efficiently by base metal mines, creating a shortage.

      Most any scenario I come up with, revolves around absolute, accute, shortage. And industry/pharma ponying up the lowest price the next physical is prepared to sell for. 
      And, such scenario’s may not last. When silver is well priced, base metal miners will surely extract more of it. Closed mines wil find funding to re-open at 2013 ore grades. Perhaps better even, from earlier closed mines. So, the cost ratio may evven shoot back up to 1:100.  I have no knowledge on how costs were in the past. ust notice that currently they are as well aligned with COMEX pricing as could be. Silver doesn’t look underpriced if you look at break even cost of the mines. This bitterly disappoints me, and I wonder what it means. Perhaps I should have held gold in stead? Or Palladium?

    • XC Skater
       
       
      The so-called ‘cost’ of recovery in banknotes (worthless Plantation Scrip) is immaterial to the GSR. The recovery ratio of 1:9 is what REALLY counts. Money’s worth is a RATIONAL inter-relationship against the good sought to be acquired with it. In other words, for simplistic illustration’s sake, if 10 million loaves of bread are available each year and there are 100 million ounces of silver in circulation, then the RATIONAL price of a loaf of bread is 1/10th ounce of silver. A ‘price’ is a ratio of abundance between two things. Of course other factors are melded in like labor, raw materials, delivery, merchandising and many others, but I’m sure you can see the elemental relationship.

      The beauty of the metallic monetary scheme is that these inter-relationships stay fairly constant over many centuries and when production efficiencies occur, they’re automatically smoothed out by natural supply-demand circumstances (lowering ‘prices’ as they SHOULD). But, governments which tax on percentages of cost and monopoly industrialists who want ALL the profit of production efficiencies magnified by STATIC prices … HATE metallic money for OBVIOUS reasons!

    • @PatFields
      I am not sure your arguments hold true here, or you’re just missing what I’m getting at.
      A ratio is a ratio. Relative cost, expressed in a common denominator.
      Whatever you price it in, silver costs roughtly 1/65 the amount of gold to extract from the earth.
      Doesn’t matter if you end up paying in loafs of bread, barrels of crude, hours of labor. It’s a ratio.
      Today, if the spot price of silver would hike +50% and gold would stay flat, miner would already start to focus their resources more to silver. As that would actually be profitable, and gold still not quite.
      The 1:9 doesn’t say much. About the cost or value of each. Especialy if they’re so different in end uses.
      It could be that miners just make more efforts on gold-rich deposits.
      And that the price is not 1:9 in terms of cost, could be due to gold being that much harder to extract from the oro, even if it were present in a 1:1 ratio with silver. Imagine gold particles being like glue that won’t dry up, and silver being like slippery teflon, trying to fall off any other material it comes in contact with. Pick up the ore and the silver will fall of. but try and get the sticky gold off…much harder. 

    • @ XC Skater
       
      Not sure where you are getting your numbers from for your break even cost of the mines. I recently dispelled a poster claiming particular mines were profitable at $10 per oz. I linked to the miners own websites showing that for silver alone they were negative $6 per oz until you added in the other metals, in particular gold, making the mine profitable. Mines work on absolutes. It matters not what they are mining nor what they are selling. What matters at the end of the day, regardless of ratios, is are they profitable. They may be shooting for copper, and byproduct a shit load of zinc and lead. When they put all their metals to market. Were they profitable or not?
      As far as price ratios of the metals go, that is a bit trickier that most make it out to be. The ratio in the earths crust is one factor. The ratio of ability to mine is another factor. Supply and demand, and overall scarcity are others.
      You mention Palladium. Palladium is mined at the same rate as platinum, yet sells for less that half that of platinum. Both are mined at 12 times less than gold. Yet, until recently gold was priced higher than platinum.  If you look only at their rate of extraction from the earth and price only from that, you would need to first determine the primer, ie; which one is accurately priced and therefore the benchmark by which to price the others. For example, if gold is accurately priced and we take the extraction rate from the earth of the four PM’s, we get platinum and palladium both priced at $15,400 per oz and silver priced at about $135. If we say that silver is the accurately priced element at $20 per oz then we get gold at $200 per oz and platinum and palladium at $2,400 per oz. If we say that platinum is the accurately priced element at $1405 per oz then we get palladium also at $1405 and gold at $117 per oz and silver at $11.70 per oz. Lastly, if we say that palladium is accurately priced at $717 per oz then we get platinum also at $717 and gold at $59.75 and silver at $5.97 per oz.
      Truth is that extraction rates equate to scarcity and not necessarily price. Price is set by supply and demand. Supply is set by price and scarcity. And demand… demand is the twisted one. Mix in to that a little manipulation, a little fear, a little hora and mystic, and a shit load of paper derivatives, and whoa-la… You have yourself one giant cluster-fuck of confusion in price discovery, just as every banker loves.

    • @FunThea
      I am getting my numbers from the likes of SRS Rocco and the like.
      It’s not that compicated. All kinds of mines have roughly (+/- $200) have a $1300 break even cost for mining gold. $20 (+/-$2) for silver. 
      Mining silver doesn’t go automatically for base metal mines. Getting into sellable form just takes extra efforts. If they ignore silver and just s from the top so to say, they will lose production. Yes, mines need to be profitable foremost, but then, base metal prices have plummeted while stock piles have increased to miulti-year highs. What are they mining it for, to throw on the stock piles?
      Indeed Platinum and Palladium are more rare. But mining isn’t especially expensive when you have an ore body that’s worth mining. And you don’t necessarily need to by-product mine too much other uninteresting stuff.
      If all ore around the globe was universal in composition, I suppose platinum and palladium would be very expensive. Then, mines could be located anywhere, as ore is universal. You’d turn a mountain island into one big mine (for the whole periodic table) with it’s own harbour. Away from view, easy logistics.
      Reality is there are a few P-rich ore bodies and they’re being mines profitably, although not always exceedingly so. In South Africa, shooting mine workers on strike was a cost reducing exercise. They earn $2 a day, and still making a profit for the white corporate types wasn’t too easy.
      I am in search for someone who can tell me why GSR will go even as low as 1:50 if it seems the buyers are in the east, and they prefer gold. And mine cost seems well aligned with spot price. Even for primary mines. Could it be that metal prices are so squeezed across the spectrum that only super-efficient mines are left in business, with only few sticking out from that, making good money?



    • @ XC Skater
       
      Your number in particular that I was questioning, and subsequently now know where you got it, at least in part, was the 1:65 ratio. As per your embedded video, I get 1:59 for Couer’s G&S production for Q1 2013. It is important to note, however, that this is the production for Couer, but is not indicative of total mine production of total G&S. Global production of G&S is roughly 1:10. The 1:59, or as you put it, 1:65, is a single companies production and cost divided between two chosen asset classes. Not only were there no other bi-product minerals equated in the ratio costs of production, but the ratio is superfluous in determining the global cost and production ratios of the global perspective metals. It is only relevant to the accountants of Couer, and anecdotal to the discussions of G&S miners as a whole. It is certainly germane to the topic of Couer, but you have seemed to paint the picture that G&S production costs are a fixed value across the board at 1:65.  

    • @funthea
      1:65 is the price ratio last time I looked.
      I found it striking that the costs match this figure closer than the volume mined ratio.
      This video I included was just put up. I’ve seen at least a dozen reports and video’s coming to extremely similar cost prices, and thus rough average cost ratios. not just one mine, not just primary silver or gold mines, but across the industry.

      I see a pattern emerging of silver to gold cost ratio to be very much in line with price ratio. This is just striking. When people like myself go around telling that we’re expecting a 1:10 price ratio. But, based on what? More on volume ratio than cost, which is much more directly an aspect in fair price finding. 
      As long as silver doesn’t get sold out before the other, there seems little real reason for the price ratio to fall. Or, educate me!
      It may be that one metal is more labor intensive and the other oil intensive, I don’t know.
      I just want people to stop talking about the mined volume as if that effects price at all. And don’t use the 1:9 and GSR in the same sentence as if they’re connected. Could it be that in the ancient past it was, because ore was multiples richer and the only cost factor was labor?

    • @ XC Skater
       
      I’m not disagreeing with most of what you are saying. I don’t subscribe to the notion of a 1:10 price ratio either. But nor a 1:65 as well. As I stated, there is much to go into cost. However, as a miner looks for the highest yields for profitability, (usually gold) the bi-product just comes with the cake. To extract individual cost at that point is merely an exercise in futility, and not germane to true individual cost per metal.
      Correlation is not causation.

  2. Didn’t JPM come out yesterday proclaiming the Taper is definitely still on for September. That’s a bit like farting in a full elevator.
     

    • LOL! 
      Unless they are correct, and it is still NOT POLITE! 
      :D
       
      The Statement was probably designed to move some price for them… 

  3. C&P from FB side …

    Or, perhaps, the ‘ball’ is simply shifting over to the centralized Chinese exchange? The whole object of the PM suppression ‘shell game’ is to keep the enslaving banknotes of EVERY GOVERNMENT alive and kicking.

  4. Let me see, JPM took delivery on contracts totaling over 7 million oz’s of silver? This on top of a 2nd QTR 2013 bonanza of over 26 billion in revenue netting 6.5 billion? 1.5 billion net over 2nd QTR 2012, and the silver? Well shit…

  5. There is so much drama and confusion happening the luciferians are making many mistakes  ,there are Worldwide forces against them..the Magic is fading away

  6. WIth JPM’s profits up over 30% this quarter, tipping the scales at $6.5 billion, I wouldn’t put anything past this company.  They are a very large pack of wily smart SOBs.  Illegal trades or not, they know how to make money at every turn. 
    Leaving the IR swap loss of last year behind them, 2013 is proving to a profitable year.  Anything that has to do with precious metals is right in their wheehouse. Betting against JPM has been a losing game for stackers for hearly 2 years.  As much as I dislike the notion of betting with this house, if they go long on silver and gold I am inadvertently with them, hoping that they want to go long as ardently as they went short.
      Let’s see how this plays out.   Shortages and demand are going to push these metals more than anything out there.  Even JPM can’t staunch the tide of demand as it stands today.  4 billion people are demanding physical.  A smart banker always tries to cater to that large a client base even if its only to make money on the suffering of others.  J Pierpont must be smiling right now
    There was a line in the new movie with Mark Wahlberg and Russell Crowe. The movie is called Broken City, about a crooked mayor, Crowe, running for office and involved in a shady $4 billion developement. Towards the end of the movie Walhberg thought he had caught Crowe and Crowe responded that people like him steal and get away with it ‘because they can and it’s fun’ or words to that effect.
    It’s not so much the money that can be made. It’s the pleasure of taking it, the pain it causes and the enjoyment that results in creating harm to others. That’s the game they play. We are collateral damage but if you can hold against that damage long enough you will be able to ‘ride out’ and defeat the SOBs that cause that harm



    • @4 oz
      You talk’in to me?  I said, You talkin TO ME??  Hey buddy, Wat are you talkin about?  So your a tough guy? EH?
      Fagget about it!
      So are the gangs and the Mob looking to control the physical market in the Tri-State area?  Gee what a good way to hide money. 
      Glad to see the homies are onboard.  They’re gonna need it when the food semi-trucks stop rolling in from Cali…

  7. This must be ‘Graphics Day,’ so here is my contribution.
    Dedicated to all the ‘experts’ who are telling us what PM’s are going to do next.
     

  8. More importantly, where is our point guy Bart Chilton?
     
    The FBI, SEC and CFTC all sit and watch while Rome burns. The USA has become a total shit show and the rest of the world knows it.

  9. I don’t think so.  Crooks make money in either direction, so let’s just manipulate it up for a while.  don’t want the mines to shut down, unless we want them pressured into selling it to China.  Silver Users Association?  Well, we’ve been good to them for too long.  Pass the word, “Silver is a buy, now.”

  10. R of Mars   The cat needs 2 hats  One to crap in and another one to cover it with.   What I really want to see is what Charlie Brown said to Lucy (or did) when she yanked that football out for the 79th time. 

  11. Woolly, you’re so bad! LMAO~!~!
    REPUBLIC OF MARS: You are getting near tied for first place…keep tryin’.

  12. Interesting if true, next week will tell the tale.

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