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Institute for Truth Studies

John ellis water

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Citizens Look to Squeeze Silver Manipulator


By Eric Fry

There’s a lot of rumor, buzz, innuendo, chitchat and scuttlebutt about the precious metals markets these days. Most of the buzz is about JPMorgan and silver. Rumor has it that JPMorgan has amassed a whopping short position in silver.

The scuttlebutt, according to Scott Rubin of financial website, is that JPMorgan “holds a giant short position in silver. Furthermore, some observers are accusing the bank of acting as an agent for the Federal Reserve in the market . . . i.e., a lower silver price helps maintain the relative appeal of the U.S. dollar.”

“By selling massive amounts of paper silver in the futures market,” Rubin continued, “JPMorgan has been able to suppress the price of the precious metal. It is believed these short positions are ‘naked’ (i.e., they are not backed by any physical silver).”

If the silver price were falling, Morgan’s (alleged) short position would be lauded as a stroke of genius. But since the silver price is soaring, Morgan’s (alleged) short position looks much less laudable.

“In recent days,” Rubin notes, “rumors have been swirling on the Internet that JPMorgan’s massive short position is about to blow up in its face in the form of an almighty short squeeze and potential COMEX [Commodity Exchange] default, as large traders demand physical delivery of silver that COMEX does not have in its vaults.”

Based on some of the latest conjecture, Morgan’s short position totals a whopping 3.3 billion ounces. If, therefore, the buzz about JPMorgan and silver is even half true, the prestigious investment bank could be cruisin’ for bruisin’.


For perspective, 3.3 billion ounces is roughly equal to one-third of all the world’s known silver deposits; two times the world’s approximate stockpiles of silver bullion; four times the annual mined supply of silver; 30 times the inventory of silver at the COMEX.

Short positions—even titanic ones—are usually no big deal, as long as the price of the underlying asset is falling. But if, inconveniently, it is rising, the spaghetti can hit the fan in a spectacular and gruesome fashion.

The silver price is rising by a lot. From less than $10 an ounce two years ago, the silver price has almost tripled.Therefore, if JPMorgan does, in fact, hold a 3.3-billion ounce short position, every one-dollar increase in the silver price would produce a loss of $3.3 billion, at least on paper.

Unfortunately, Morgan cannot simply unwind this trade with a couple of mouse-clicks in an online stock trading account. The position is too large, both in relation to the world’s physical supplies of silver and in relation to the paper “supplies.” Morgan holds almost half of all short positions on the COMEX, which is essentially a “paper market”— where participants rarely take delivery of physical silver.

To make matters even more dicey for Morgan, the supplies of physical silver are disappearing rapidly from the marketplace. Increasingly, the kinds of folks who invest in precious metals are also those who distrust intermediaries. These precious metal investors want to know that the shiny stuff is in their personal possession.

Meanwhile, the ETFs, or exchange-traded funds, that hold precious metals are soaking up massive quantities of physical metal. Over the last 12 months, the silver ETFs around the globe have increased their holdings by nearly 100 million ounces—almost as much silver as the entire inventory of the COMEX. The trend in gold is identical.

Therefore, as a result of soaring demand from both individual investors and ETFs, the physical stockpiles of gold and silver are atrophying in relation to the paper claims on both metals. This is not a pleasant picture for a short seller of silver.

Furthermore, the type of people who tend to buy gold and silver are also those who have contempt for Wall Street and for Wall Street banks like JPMorgan. So it should come as no surprise that a grassroots campaign has formed, the sole purpose of which is to punish JPMorgan for its attempted manipulation of the silver market.

“A viral campaign to buy physical silver and ‘crash’ the bank is now spreading like wildfire on the Internet,” Rubin reports. “Just Google [the words] ‘Crash JP Morgan; Buy Silver’ [to learn more about it]. . . .Those who wish to participate in squeezing the living daylights out of JPMorgan may want to consider buying physical silver, silver futures and [the iShares Silver Trust, which issues stock backed by silver].”

Maybe the story about JPMorgan’s short position in silver is mere innuendo. Maybe not. But two facts are irrefutable:

1. JPMorgan is already under investigation by the Commodity Futures Trading Commission (CFTC) for manipulating the silver market. “The investigation into the bank can be traced back to November 2009,” Rubin reports, “when London metals trader and whistleblower Andrew Maguire contacted the CFTC to report market manipulation prior to it actually occurring.”

2. Precious metal investors are increasingly keen to get their hands on physical gold and silver, rather than mere paper facsimiles.

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(Issue # 1 & 2, January 3 & 10, 2010)

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