J.P. Morgan is short more paper silver than physically exists in the world?

I'm not an expert on China, and not ready to do the work to become one. I've read that their gold reserves are small relative to the size of the country, and if true, it might be natural to try to buy some gold. I only mentioned China as a possibility above because:

1. China is a large holder of Treasuries and JPM is a primary dealer in Treasuries.
2. China is a large holder of silver and JPM is a market maker in silver.
3. JPM has a presence in China

Give those clues, I thought they would be as good a suspect as any for the role of mystery silver holder behind JPMs actions in the silver market.

That's all.

 

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Typical response from you. i.e. Make it about me instead of the point being made. My own government worries me more than anything to do with the communists. If I were in China then I'd worry about them. In any case, my emotions are irrelevant.

Your post fails as you try to discount that JPM manipulation is just "rumor" because there is no proof then amazingly you conjure up something that simply makes no sense. Mystery silver holder. Of course there is no proof of this either.

FUD and insults are not a way to have a discussion though I admit it's a good way to distract from the real point being made.

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A few reads of Harvey Organs analysis of the CME volume and it becomes pretty clear pretty fast what is going on at the CME. You don't have to take his opinion, but the numbers he provides speak for themselves.

 

JP Morgan is short - so who is holding the longs?

 

It always makes for an interesting read when fatima and cloudsweeper get into a discussion.

 

I enjoy the discussion. The attempt was not to encite anything, but to have a discussion. Can you imagine the difference in opinions at the Constitutional convention? Regardless if somone one-ups me, or comes across as more distinguished, I appreciate the fact that they were willing to share their knowledge.

 

Whether the Fed is using JPM or vice versa is splitting hairs. They work together. JPM is a one of their primary dealers, and gets to borrow money more cheaply than they loan it out to us common folk. If anything JPM is getting the better end of the deal. The Fed money is not tax payer dollars. It's new money printed which devalues existing money. So we still pay for it indirectly.

If you look at the shorts vs. longs in the Bank Participation Reports on the CFTC web site, there is not a concentrated short position on the COMEX for silver. This does not include OTC ('over the counter' AKA 'under the table' in reality) derivatives which are highly leveraged, impact the price, and are not on the books. So there's really no way to know the true long vs. short story or whether any of this OTC shorting is naked.

Besides that, JPM is not only the seller of the paper silver, but they are also the guardian of the silver vaults for the COMEX. So even if it were on the books, there's still no way to know if the books are accurate because the fox is guarding the hen house. Bix Weir and Adrian Douglas allege that the leverage is between 40 to 1 and over 100 to 1 as you've stated, by leasing out the same serial numbered bars to multiple customers, so that they can prove 'Your bars exist, see!', but very few in the futures market actually request delivery of the silver so their hand hasn't been called yet. Even in the absence of hard evidence, anyone can see that the situation has great potential for being taken advantage of. Good deeds have no need for the cover of darkness, but that doesn't prove anything.

Here's an article I found recently on this subject (some paragraphs omitted in quote). Suffice it to say, they are probably the biggest player in the gold market unless India is, and they are buying it hand over fist.
http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=140824&sn=Detail&pid=102055

 

Nathan Rothschild has a rather large stake in the Hong Kong Mercantile Exchange, and his family is also running the show at the Basel BIS. I wouldn't be so certain that the US government wouldn't allow this to happen considering the money trail leads back to the same source.

Also, the reason the Chinese government may be shorting metals is so that their population can buy it up cheaply. These are 2 separate dynamics within the same country. I have no evidence this is the case, merely pointing out why it's plausible.

 

It was you that said JPM wouldn't do business with communists, not me. So if you don't want one of your points challenged, don't bring it up. I gave a few examples of why JPM's actions are legal, and I admit that there might be other legal actions that I don't know about to justify JPM's actions. The entire burden of proof is on you and others who accuse JPM and multiple regulatory agencies with crimes. In my experience, accusing the markets and other market players of fraud is usually just an excuse for your own poor performance. In the case of silver, the price has risen from about $5 to $50 in a dozen years or so and is currently at a price about 6X the low. I don't know how any thinking person can believe this would happen if large criminal enterprises were acting with immunity to keep the price low.

 

Hedge funds, technical trading funds, and firms covering their short positions.

 

And your thinking is the correct way to look at it. More can be gained from trying to figure out why market players do what they do than by imagining criminal activities all over the place.

 

It's all relative really, compared to where the price 'should be' which is unknowable, but if the price should be $1,000 per oz then it would require a huge amount of price manipulation to have things where it is today. Not saying this is the case, but just because the rise we've seen is large doesn't mean it shouldn't have been larger, or smaller for that matter. You could make your same case if it were 2x, 10x, or 100x.

 

Don't the shorts have to hit a dead end eventually? Either through a short market collapse, or by actually delivering of physical silver? Wouldn't both cases benifit physical silver holders, and result in a rise in pricing? If the fed is not involved, and it has nothing to do with balancing the power of the dollar, or keeping silver low for industrial prices, than I would suspect that JPM is anticipating that production with supercede demand.

 

Only if the shorts are naked, as in they have sold a contract for a product they do not have and thus cannot deliver. If they have the product then a short is merely a valid sale, and nothing has to hit a dead end. If the valid shorts are liquidated then that would have a 'buy' effect on the market, thus rising the price due to supply and demand, but there's no reason that has to happen. If the shorts are in fact naked then we could see some serious fireworks upon failure to deliver. I have no idea why anybody would speculate against silver except to make a quick buck off of the volatility. It has the most rock solid fundamentals I've ever seen except for maybe arguably oil.

 

Just as a FYI, Hong Kong operates independently from Communist China. It has it's own legal system, laws, and most importantly, its own currency that is separate from that of mainland China. This was by treaty with the UK when it was turned back over to the Chinese. China, could abort the treaty at anytime, but the repercussions would be pretty harsh and certainly not worth the the gains by playing around with the silver market.

At least the reason of making the metal cheaper is a more plausable explanation as compared to the nonsense above, but I don't think this is it simply because I don't think the Chinese hold silver in high regard as a preservation of wealth. (I could be wrong) From what I can tell, that position is held by gold much more there, than here.

In any case, I can't see any possible scenario where JPM would agree to "guarantees" against losses from the Chinese government or the USA allowing it. If the Chinese changed their mind, guess who ends up with the mess. IMO, the most plausible reasons are the ones given in the OP and what evidence there is, supports it.

 

I can only guess as to how the Chinese feel about silver today, but I can tell you that China and India were the last nations to demonetize silver after the US did in the Coinage Act of 1873 as well as European nations before and thereafter. So for one, they thought it was worth keeping more than we did, and for two, they got burned bad by it. The rule is: last to make the switch ends up holding the bag as the value of your money is drops with demand. Obviously they are preparing for the switch back to metals, but whether they like silver as much as gold I don't know. If you believe GATA there is price suppression in the gold market, but from what I can tell they aren't saying anything about silver.

 

The Nationalist government that did this, is now sitting in Taiwan. I wouldn't be surprised if they still feel this way about it, but they aren't much of a player in this. The communists took over China in 1948, got rid of the foreign devils and essentially closed off the country until Nixon went there in 1971. IMO, the current generation doesn't know that much about silver, but have been encouraged to buy gold.

 

Found this interesting article on silver monthly. Not sure how biased it is.

http://www.silvermonthly.com/long-short-silver-cabal-traders-manipulating-price-silver/

 

No. The game that is being played is that people who are holding a short are getting paid off in cash along with a substantial premium added for doing so. During the period where silver ran up to $50/ounce there was a lot of discussion (elsewhere) on how this was almost free money. Buy a short, hold it for delivery, make 130% on the investment. It's high states gambling and if you don't have a lot of funding, expect to get wiped.

Of course if you are a bank holding company, you can borrow all the money you want at ~0% from the Federal Reserve which gives you a lot of ability to play this game. Why bother with such mundane things as providing money for industrial development, small business, etc?

 

Relative to most other investments, and relative to the historical performance of investments, silver has done extremely well and there are no signs of lasting or systemic price manipulation. You are correct that nobody knows for certain what the price could be under different market conditions.

 

If the big shorts own physical silver to back their position, and there is no evidence that they don't even though many people just assume this is so, then the game can go on forever because they will make money regardless of the direction of silver prices. So you may have big banks shorting for clients, or producers shorting for their own account to lock in a high return on investment. It would be a mistake to believe that all shorts are speculators.