JP Morgan Admits To, Reduces Massive Silver Short Position

Looks like old JP Morgan is up to no good again!
http://blacklistednews.com/JP-Morga...acy-Theorists-Correct-/11905/0/24/24/Y/M.html

How do you think this is gonna effect the markets?

 

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hopefully it will drop silver prices to all time lows so I can buy as much as possible before it goes to new all time highs!

 

I always hate these stories when the media is biased like this, (I know, all media is biased). I wish they would at least ATTEMPT to educate their readers and tell them that as the market maker JPM has to sell shorts. I am not saying they weren't overdoing it, but this piece makes no attempt to let readers know that, just scaring uneducated readers into a false conclusion. Honestly, it would not surprise me if the author didn't know this, financial literacy in this country is abysmally low.

Chris

P.S. The effect on the market will be less liquidity, that is for sure. I do not know what affect on prices it will have.

 

Normally, short-covering is associated with higher prices. This is what has been happening with silver. If someone tries to go long in the futures market, and JPM isn't there to take the short side, the price will move up until someone else steps in to do it.

 

Probably right. Its most likely at least, but didn't want to lay this out as known. The only known factor would be reduced liquidity in the market, probably amounting to increased prices if nothing else changes.

 

I would turn that around and say it is definitely right that short covering raises prices, and probably right that it reduces liquidity. I think that instead of liquidity being reduced, it merely becomes available at a higher price.

 

Semantics maybe. You are thinking immediately, I am thinking the next day. A reduction in contracts written, (since JPM is writing all of the contracts), has to reduce liquidity since there are fewer options to be able to buy. I honestly think it will lead to greater instability in the market and less stability long term. If I were to give a full commentary, (absent any other market changes), I would see higher prices intially, then less liquidity leading to a greater ability of a hedge fund to manipulate this thinly traded market, leading to quicker and sharper rises and falls, especially falls.

All of these "conspiracy theorists" have just handed hedge funds and others who profit from manipulating markets an early Christmas gift.

Like always Cloud, we basically agree but find reasons to disagree.

 

Not that I agree or disagree, but you guys make this sound like news instead of the norm. Brokerage firms have been doing this since our great grandfathers were young men, and will be doing long after we're gone. It's just another typical day on Wall Street.
Guy

 

Wouldn't such a position be hedged in some manner?

 

I think they have been unwinding for a couple of weeks. Since 12/7 when the price of SLV went from 30 to mean of about 28 the next day, it stayed around that figure until the 10th and then went up another dollar to about average of 29 to today. They are ( IMO of course) controlling silver price as they move their shorts. They would have to want a lower price to close the shorts, but pressure can force it up. I am dabbling a little, as I expect it to break upward when they have finished. Today's Fed action seems to be tolerant of PM and other commodity inflation as long as they can try to revive housing. All IMO.

Jim

 

I think you are correct.

This will no doubt give the hedge funds greater ability to move the price around, but without JPM out there always willing to take the short side, the path of least resistance appears to be up.

 

It's useful to remember that a lot derivative trading that's nominally based on a commodity is conducted without any party to the transactions selling or buying said commodity.

 

Great discussion. I'll concede that a JPM and short sellers in general are required for the market to function. I guess the question is - how much is a service (for a price, of course) and how much is simply manipulation for oversized profits.

That said, since there have been markets, anyone with an edge has sought to exploit that advantage. Anyone in the room think the odds aren't on the side of the house? Read some Jesse Livermore.

As for the longer term implications, I don't think it will be as bad as portrayed - mostly due to the internet and globalization. Cripes we're almost at 24/7/365 internation markets now. Something happens in BF Nowhere and we're seeing it live.

As for JPM, I think they were starting to get burned badly and looking down the road saw nothing good with being short silver. The picture is too bullish and potentially so bullish the risk was too severe to be sitting on a pile of silver shorts.

just my humble opinion,

peace,

rono

peace,

rono