JP Morgan on Silver
JP Morgan, the largest U.S. commercial and investment bank, is increasing its stockpiles of silver, betting that prices will move higher as inflation begins to take hold. Silver historically outperforms during the later stages of a growth cycle and prices are poised to outperform riskier assets. JP Morgan is increasing its inventory, knowing that prices will eventually surge higher. JP Morgan’s COMEX silver warehouse now holds the most significant physical silver bullion position of all time.
I am convinced that silver will soon explode in price in a manner of unprecedented proportions, both in terms of previous silver rallies and relative to all other commodities. By unprecedented, I mean that the price of silver will move suddenly and shockingly higher in a manner never witnessed before, including the great price run ups in 1980 and 2011. The highest prior price level of $50 will swiftly be exceeded.
By “soon”, I mean that the move can commence at any time, but more likely before this year’s end. I know that the price of silver has been declining on a daily basis for a while now, itself a unique situation, but I also know the reason for the decline and how the sharply improved COMEX market structure has always guaranteed a rally in a reasonable period of time. The only question is whether on the next silver price bull run, will JP Morgan add aggressively to its COMEX short positions? I’m thinking JP Morgan is not very likely to add to short positions on this next run up.
JP Morgan has amassed a physical stockpile of silver of at least 600 million ounces by calculations at an average cost of around $20 an ounce, all while continuing to make hundreds of millions of dollars in manipulative COMEX short selling. This epic accumulation has changed the composition of the concentrated COMEX short position more than any single factor.
No longer is the largest silver short subject to extreme financial damage should silver prices explode. Instead, JP Morgan has pulled off the accumulation of the largest silver hoard in world history on these declining prices. The bank has never been better positioned for a silver price explosion. In other words, there has never been a better time, from the selfish perspective of JP Morgan, for the price of silver to rip higher or a worse time for the other big shorts. And the recent deliberate price take-down has further reduced JP Morgan’s COMEX short position, greatly enhancing the prospects that JP Morgan will not be adding to its short position whenever the next silver rally gets rolling.
Should JP Morgan not add to its COMEX short position on the coming silver price rally, then it will be only a matter of time before the remaining big shorts wake up to the fact that they are toast. By “a matter of time” I am referring to as little as months.
When silver prices rise, the remaining shorts will panic and begin to try to cover their short positions. This buying will send silver prices skyward and then spark all sorts of other buying, including investment buying and then industrial user buying, perhaps the most compelling buying of all. The best analogy I can come up with is an atomic bomb on top of a hydrogen bomb on top of a neutron bomb.
The big shorts, apart from JP Morgan, appear to be mostly foreign banks according to CFTC data. The speculating foreign banks are precisely the type of short sellers most likely to panic when silver prices really start to rally and it begins to take hold on them that JP Morgan is no longer the shorts’ protector and short seller of last resort.
Even after the recent selloff, the short position in COMEX silver is still at astronomically high levels relative to all other commodities. The seven biggest shorts (ex JPM) are still short around 350 million ounces (70,000 contracts). It is impossible to imagine such an amount being purchased except at prices $20 to $30 higher, at a minimum.
Then other forces will kick in, such as ETF buying, which has largely been lethargic for the past six years or so. On a rally where silver prices jump to $20 or $30, it would not be unreasonable to imagine $2 to $3 billion of investment demand coming from investors excited by rising prices. That’s not much of an investment in dollar terms, but it happens to equate to 100 million ounces of physical silver. I have trouble visualizing where that much silver would come from, particularly when this physical demand would likely occur as the seven big banks (dead men walking) are buying back in a panic. Then add buying by industrial users who face delivery delays caused by investment buying.
The whole silver manipulation has become more obvious than ever, particularly this last deliberate selloff. The concentrated short position hit an all-time extreme a few months back on a rally to only $18.50 — the largest such short position at the lowest price ever.
You have to ask where this thing is headed. How much longer can a manipulation last that is obvious to more observers than ever before? The name of the biggest manipulator is openly called out and the primary regulator can’t address the most basic questions about the illegal nature of the biggest bank in America holding the price of silver down on paper while it scoops up a huge hoard of physical silver.
Something has to give soon, and when it does, it will go down in history. Maybe now is the time to do as they are doing and acquire your silver bullion and other physical precious metals for the long term.
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