Metals & Markets: Silver whale hunting time…
Silver, at last, shows its shiny upside strength, as gold also flexed its spot price this week.
The silver spot price blasted up to close the week around $16.25 oz, about a full Fed Note higher than it closed last week. Keep an eye on the $18 and potential $20 price resistance levels that may be threatened sooner than much likely think is possible.
The spot gold price ended the week up by ten fiat notes, closing at around $1,425 per derivative spot price ounce.
As for the gold-silver ratio, that fell hard this week from 93 down to 88 ounces of derivative silver to acquire one theoretical ounce of derivative gold.
This week, we’re not bringing on any guest.
Instead, we’re going to put this modern silver whale into physical bullion context. We’re gonna name names, talk about how many 100s of millions of silver bullion ounces they acquired.
And even, hear direct from a few of them, as they repeat sage advice they never took, and or repeat scapegoating they never bothered to investigate or conveniently never addressed in full detail.
After this brief message from our sponsor, we’re going silver whale hunting.
Modern Silver Hoard Facts | Largest Silver Bullion Stashes Amassed Privately
Hello and welcome to this week’s Metals & Markets. I am your host James Anderson of SD Bullion.
This past week we had some strong fiat price action for not only gold bullion again, but also finally some upside action in the silver derivative markets.
While doing an interview this past Tuesday with Chris Marcus of Arcadia Economics, I was asked to give my thoughts on a recent article written by Alisdair Macleod published on Goldmoney Insights, entitled “A Whale Accumulating Silver Futures.”
Just past the 19:10 mark I was asked about this topic by Chris.
I even briefly glanced at Ted Butler’s reaction and then felt embarrassed by their subsequent back and forth theory pounding that went on this week (all published at SilverDoctors).
I have had the pleasure of interviewing and speaking with both Alisdair Macleod and Ted Butler over the years.
And given further thought, it matters little in the long term whose speculative theories are perhaps accurate here.
For silver bullion stackers with long term frameworks, the coming performance for silver to the upside is a bigger story than either JP Morgan or China. It will be more so a story about the greatest gold bullion bull market the world has ever witnessed, and quite likely the brief but incredible performance silver bullion achieved in the mania portion of what I bet is to come.
I wanted today’s podcast to simply be a general overview for silver bullion bulls about verifiable facts looking backward. There will also be a few colorful allegations mixed in. But you can then go do your own research and perhaps drop some of the preconceived notions you might have had prior.
We’re going to run through where the modern silver market has been throughout this full fiat currency era, from 1970 to today. All in the context of the largest verifiable silver bullion whales of modern time.
Who has amassed the biggest silver bullion holdings in the modern era?
And perhaps what were, and are their motivations now?
Finally, I will conclude, with the main context and potential valuations drivers that the silver bullion market finds itself in today.
3) Hunt Brothers Silver Hoard 1980
During the 1970s and early 1980 devaluations of the then somewhat recent fully fiat Federal Reserve Note, what most people still call US dollars without definitions or context.
There were three trust fund oil billionaire brothers who went long silver bullion in a big way to the tune of amassing some 100 million ounces of silver bullion. The problem was one never took his own advice. More on that later.
The Hunt Brothers motivation was probably a mix of both underlying fear and greed. The fear of loss, and the lust for more.
First and foremost, the Hunt Brothers began buying silver bullion in the early 1970s back when it was around one fiat and half a dollar per troy ounce.
This was around the same time President Nixon lied to us again claiming that we were suspending the US dollar’s final tie to gold, “temporarily”. It was also a handful of years before confiscated US gold bullion coin savings were again, ‘re-legalized’ among the Constitutional US public.
US Citizens who were seeking wealth protection from various overnight devaluations of the freshly fiat US dollar and building price inflations in the first half of the 1970s, they pretty much had to run to silver bullion or other commodity plays if they were hedging large swaths of capital savings.
Reading between the lines of the still NFL Franchise owning Hunt family. It is pretty easy to assume, the 1970s Hunt Brother distrusted and probably disliked many in the banking and political establishment at the time. Being John Birtch Society followers likely meant that places like New York City, Washington DC, they were not comforting to the Hunt Brothers even as they were getting more wealthy from the general 1970s commodity price boom. And while the Hunt Brothers too often had many of the trappings of wealthy elitists (such as personal high fine art collections, awaiting trust funds compounding capital for later release to their pockets, and thoroughbred racing horse ventures). They were unlikely to ever be accepted in a blue blood Wall St banking clique.
The Hunt brothers probably inherently felt more insecure around east coast longer legacy wealth, than they ever did around newer burgeoning commodity dynasties back then in Texas in Oklahoma.
Often when supposed financial market experts want to discuss inflationary pressure from the 1970s and early 1980’s they drag out the Hunt Brothers scapegoat as an example. If anyone subscribes to this following theory and or parakeets it, you can pretty much guess they have never done any research and quite likely they do this in other areas of their life.
The dumbed-down Hunt Brothers mantra goes something like, ‘three billionaire Texans bought all of the silver in the world and therefore caused an otherwise unexplainable $50 oz USD silver price in January 1980’.
While that is perhaps, how a naive child might suggest silver reached $50 dollars in 1980.
The truth we know is a hell of a lot more interesting than that scapegoat tale.
First and foremost from 1970 through 1980, virtually every commodity we use and trade, they multiplied many folds at one point or another, in their typical fiat US dollar numeraire.
Conversely valued in gold or silver bullion, commodities got cheaper in value over this same timeframe. Put in simpler words, if you held gold or silver over that decade. Virtually everything got much cheaper.
Now, as for the size and scope of the Hunt Brothers 1980 silver hoard.
It is estimated to have peaked at 100 million troy ounces. Not really much of a silver market corner given that it’s esteemed there were some 12 billion ounces of silver above ground in 1980.
The problem was these Hunt Brothers near the January 1980 peak in silver prices, forgot to take their own sage advice. Never gamble on silver prices using leverage and fickle could vanish in thin air fiat credit. Stick your position in silver bullion paid in full.
So its early January 1980, only a few weeks away from when the COMEX rigs the rules to pull the rug out from the Hunt Brothers’ over-leveraged silver betting position.
Hey Nelson Bunker Hunt, aren’t you worried you could get financially hurt with this rapidly escalating silver price?
Once it all of sudden became rule rigged liquidation orders only for silver futures contracts, the silver spot price fell like a rock. Going from $50 to $10 oz over only a few week’s time… the Federal Reserve has to coordinate a then massive $1.1 billion dollar bailout for the over-leverage Hunt Brothers. The scapegoating was on full stop.
The main reason the Hunt Brothers names got so famous, was cause they foolishly went leveraged long silver futures contracts, on the ‘we can change our rules anytime we like’, derivative betting COMEX commodity exchange.
Had the Hunts simply take their own advice, history would likely have unfolded differently. But make no mistake, when the COMEX discontinued silver futures contract betters from effectively going long silver, the only way for the price to go was down.
Probably many silver futures contract specs at the time slid over to the platinum and palladium pits. Same ones still ‘price discovering” on the derivative betting NYMEX commodity exchange.
In the first quarter of 1980, all four precious metals within months of one another had reached then, new all-time nominal price highs in fiat US dollars.
The Hunts had little to absolutely no influence over record-setting gold, platinum, and palladium prices. They didn’t anything to do with the near quadrupling of crude oil prices from 1978 to 1980.
This was a crisis of confidence in the fiat US dollar. It was stagflation, and we will see something like this again in our futures.
Listener sidetone, I will soon be speaking with someone who worked for the Hunt Brother’s former futures brokerage bank. You know, the guy’s who lent the Hunt Brothers fiat currency credit to go out and speculate on the long side in silver futures contracts. We will likely learn more details about, as we hear that person’s first-hand accounts of what went down and why early next month.
The silver scapegoating of the Hunt Brothers is an interesting story that rabbit holes really deeply. It tells us a lot about our recent financial history, and more importantly, half-truth financial media and slander can hold up, especially if one-sided storytelling is childlike enough to believe without any critical thought. Falsehoods can stick for a long time.
2) Berkshire and Warren Buffet Silver Hoard 1997 – 2007
The next largest modern-day silver bullion hoarder is both a 2008 bailout beneficiary and a regular goldbug antagonist, Warren Buffett and his highly successful Berkshire Hathaway Company.
Warren, and his cuddly curmudgeon, Charlie Munger… they and their holding company bet silver bullion harder and amassed their 129.7 million troy ounce silver hoard in a much faster timeframe than the Hunt Brothers ever did with their former record silver bullion position being only about 77% of silver bug Warren.
The position was acquired in two troughs with by in prices early 1997 of $4.38 oz and early 1998 of $6.05 oz all of course paid for in fully fiat US dollars.
Here is Warren, and his Berkshire boy, Charlier Munger at the 1998 conference with some of their most adoring fans and shareholders.
You will hear, and see if you are watching, the now $100 billionaire Buffet and his sidekick Charlie react when inquisitor about this then record-sized silver position.
You will hear how Warren was obviously the silver bull, Munger would likely prefer guaranteed sweetheart or crony capitalist moat protected investments, then silver bullion speculations he has less control over.
The Berkshire Silver hoard produced some fiat profits for the holding company, but there are some fishy circumstances around the timeline as to why those near 130 million ounces likely were sold so early in early 2006 around $10 and $13 dollars per ounce. Given silver’s eventual near doubling by the spring of 2008, and then its repeating rise to $50 fiat dollar per ounce only within 5 years time.
I have written a blog on the matter at SD Bullion.
For brevity, I will backlink that story in the show notes so you can see how SLV got its silver bullion to begin in 2006, as well, what Buffet’s silver buying spree did to silver lease rates in 1997, and finally the fishy accusations as to why the silver hoard got sold to the derivative silver bullion bank slush fund SLV.
3) JP Morgan (2011 – Present)
Probably working hardest on behalf of their derivative trading proprietary desk first, then serving some of their unnamed and unknown if any big silver clients secondly.
Inheriting the failed bankrupt Bear Sterns silver COMEX short position in the spring of 2008, after silver had run hard to the interim price top of $21 oz and handed Bear Stern losses so large it likely exacerbated its somehow shocking failure.
The team at JP Morgan likely profited handsomely as silver spot prices fell from $21 to just below $9 an ounce by late 2008. Personally, I remember buying some Silver Maple Leaf Coin cases for around $6,000 apiece much in thanks to the derivative price discovery markets failure to actually track what was going on in the real world of physical silver bullion buying and investing.
From that near $9 dollar low point in early 2009 into the spring of 2011, silver prices did a five multiple, and you can bet JP Morgan learned a lot over that timeframe.
Once the silver price got mowed down in late April 2011, JP Morgan’s COMEX Warehouse was quickly approved and they went from being the custodian of no semi-transparent silver COMEX ounces to now having amassed over 153.7 million ounces in the COMEX warehouse to date.
This was a slower acquisition than Charlie and Warren Buffet’s Berkshire, but the circumstances are also strange inviting much speculation over these many years as to why the JP Morgan keeps acquiring such large concentrated silver derivative positions while also seemingly going long and or acting on customer’s behalf going long.
The largest motivations for JP Morgan acquiring both silver bullion and likely large amounts of unpublished gold bullion too are likely two-fold. Greed based profit bonuses on trading the volatile derivatives, as well, ultimately fear-based survival of the organization.
The Bank for International Settlements has a working group that has the G20 sign onto supranational legislation calling for bank bail-ins, not bank bailouts the next time some listed global systematic important bank or listed financial institution goes bankrupt.
At the top of the explicit too-big to fail bank alone remains, you guessed, them. JP Morgan Chase.
Given that gold is now a tier 1 asset, it would make sense for JP Morgan to hold some physical gold bullion, you know, just in case some bad derivative bet chain somewhere took them down. Problem is physical gold bullion in large volumes is being gobbled up by central banks at the moment, to the record-sized tune of levels not seen since the last public record timeframe, in which government gold price rigging backfired in their face.
London Gold Pool – Collapse – Confiscated US Citizen Gold Lost
By JP Morgan having such a record large semi-transparent COMEX silver bullion position. One in which we don’t fully know yet for whom it is acting for. With JP Morgan currently under US Department of Justice investigation for manipulating the precious metal derivative markets for handfuls of years. Well, one could easily surmise greed might be at play.
By having such a large dominate physical silver position on the COMEX it is easy to tell the CFTC to pound sand if they ever ask about JP Morgan’s outsized silver futures concentrated position. By having the largest positions in both silver COMEX derivatives and slim fractional reserved silver bullion underlying the total notional trading on the COMEX silver market annualized. JP Morgan can theoretically dictate rapid price movements virtually any direction it may deem fit for itself in the COMEX silver futures market.
In this week’s show notes, I will leave one recent and classic example of the kind of bonus fiat currency which can be made in very short timeframes by simply moving derivative price discovery markets with concentration, to favor one’s bets either to the up or downside.
Silver Derivative Bet Bonus Example 2 minute mark – Partly Why Precious Metal Derivatives Get Manipulated
That leads me to the final takeaway from this record size silver bullion position missive.
Stay with me on these facts.
The world is using about 800 million new ounces of silver per year.
Silver demand and applications appear to be only growing industrially and within newly discovered scientific applications.
Yet silver to many in the investing world is also money. So much so that only a handful of years ago about 1/4th of all the new mined silver that came out of the world went into silver bullion investor hands. This was during a time when we were not having a financial crisis. When fiat currencies were not devaluing with high velocity yet.
This world we live in has over $245 trillion dollars in record level debt, some thirteen of which are negative-yielding. The system is not sound no matter the fiat price propaganda we have been seeing the last handful of years. Most of it has been masked by debt, and much of the debt and underfunded promises made, they won’t be paid in full.
There is easily over $300 trillion fiat US dollars in supposed asset values around the world. As every recorded piece of debt is alternatively someone else’s counterpart risk lade asset. All the arable land, real estate, fiat currencies, businesses, and properties, everything that has value and is owned in the world.
Silver bullion inventories these days are probably around 4 billion troy ounces. That takes into account all annual fee laden silver ETFs, commodity exchange silver holdings, and private investor silver bullion buying from the mid-1980s onwards.
Total silver bullion valuations currently are a grain of sand on a beach awash with debt, currency and credit bubbles, with a tiny pile of physical gold likely to also continue increasing in value in the decade to come.
A silver whale is not going to save nor drown your longterm silver bullion position. The currently limited downside versus the explosive upside for silver ahead is about as clear a trade, that even the recently deceased Nelson Bunker Hunt would hopefully make intelligently this time around. Simply buy and hold a prudent silver bullion position for the long term.
No silver whale will make silver values get to where they are destined. That was not why we visited $50 oz silver in 1980 nor in 2011.
It was then and most likely again going to be the predictable result, the cause and then effect, of this deranged financial system we have allowed to grow around us collectively that will set silver to its nutty valuation levels to come.
I look forward to taking that ride with your listener ahead.
And thank you for tuning in to this week’s Metals & Markets Wrap.
Until next week, all the best to you and yours.
About the Author
James Anderson has a BA in finance from Loyola University New Orleans. He has both worked and invested in the physical investment grade bullion markets prior to the 2008 global financial crisis.