Metals

JP Morgan’s Imaginary ‘Silver Hoard’ Is Explained

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by Jeff Nielson, Bullion Bulls:

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Over the past couple of months; several respected commentators and (of course) the mainstream media have been reporting that JPMorgan has supposedly amassed a gigantic hoard of “physical silver”, roughly twice as large as what was amassed by the Hunt Brothers (and their cartel) back in 1980, when the Hunt Brothers were formally charged (and convicted) of “cornering the silver market”.

This report was previously greeted with extreme skepticism in a previous commentary, for a multitude of reasons. When the Hunt Brothers were charged/convicted of cornering the market; their hoard accounted for less than 20% of total global inventories, yet this “squeeze” on the market resulted in the price of silver soaring by a factor of ten (i.e. 1,000%).

The JPMorgan “silver hoard” is supposed to be twice as large as that of the Hunt Brothers; yet it comes at a time where global silver inventories are (at best) ¼ as large as back in 1980. In other words; the JPMorgan silver hoard (if it existed) would represent a market concentration (at least) eight times as extreme as that of the Hunt Brothers. Yet while JPMorgan has been accumulating this (supposed) hoard; the price of silver has been falling.

Let me repeat this point, to ensure that it is clearly grasped by readers. We have a supposed market concentration today in the silver market (by JPMorgan) which is eight times as extreme as that of the Hunt Brothers (when the price of silver increased by 1,000%); yet, today, the price of silver has been falling, not spiking higher.

How is this possible? It’s not. There is no rational/legitimate market (or universe) where a market concentration of this supposed magnitude could not result in a dramatic, upward spike in price. Period. Certainly if this much silver was ever dumped onto the market (rather than supposedly withdrawn from the market), we know what would happen to the price of silver: it would plummet lower.

Obviously “markets”, by definition, move in two directions. If dumping massive amounts of silver (and even paper-called-silver) onto the market causes the price to crash, always, then withdrawing massive quantities of (real) silver from the market must cause the price to soar. Always.

This brings us to the explanation of JPMorgan’s (latest) gigantic silver-fraud, and the purpose behind that fraud. Further enlightenment comes via the interesting observations of Bill Holter (from June 26th):

First, we have an insane situation brewing in Comex silver. The open interest finally exceeded 200,000 contracts (1 billion ounces). I believe the only other time this much open interest existed was back in 1980 or ’81. This makes no sense whatsoever, the price is again plumbing 4 year lows yet open interest has moved to record highs…?

In other words; we have Mr. Holter reporting a market-insanity precisely parallel to what was just noted before this, where JPMorgan has (supposedly) accumulated an extreme, long position in the silver market (larger and more-extreme than in 1980), yet the price has gone down rather than up. Holter continues:

The fact open interest has expanded while price has declined is proof positive the “initiation” of this expanded open interest has been by “shorts” but absorbed by “someone” on the other side of the trade. Total global production of silver is only 800 million ounces or thereabouts so Comex shorts have contracted to deliver 25% more silver than will even be produced globally over the next 12 months. Silver available for Comex delivery only totals 57 million ounces so they sit on a naked short time bomb of more than 950 million ounces!  [emphasis mine]

Enter JPMorgan. Obviously one does not have to be Sherlock Holmes to deduce who is the “someone” on the “other side of the trade.” They are the facilitator for the construction of this gigantic, illegal short position. In an ironic example of role-reversal; we have JPMorgan playing the part of the patsy-long, absorbing all of the bets of “the other side” in this serial shorting – by other Big Bank tentacles of the One Bank (such as Scotia Maccotta and HSBC).

Simultaneously; we have JPMorgan claiming to have accumulated a massive hoard of “physical silver”, when the market tells us that this could not possibly have occurred. Hence we know that the JPMorgan silver hoard is imaginary silver. But this begs an obvious question: why would the most-notorious silver short in the history of the silver market pretend to accumulate a massive long position – while still holding a large short position, itself?

To say that this makes absolutely no sense is the greatest of understatement. Obviously there had to be an ulterior motive to this sham, as JPM would certainly never engage in any behavior to deliberately drive-up the price of silver, which is precisely what it seemed to be doing here. Now, via Bill Holter, we see this “ulterior motive”, plain as day:

they [i.e. the One Bank] sit on a naked short time bomb of more than 950 million ounces!

How do you defuse an absurdly gigantic, naked-short, time bomb in the silver market? With an absurdly gigantic “hoard” of physical silver, (conveniently) delivered to the market, as needed, to prevent implosion of this time bomb. And (in our criminalized system) if you don’t have a hoard of real silver available for this defusing; imaginary silver will be a perfectly good substitute.

Let me refer back to the commentary which first scoffed at reports of JPM’s imaginary silver hoard:

The purpose of JPMorgan pretending to hold “a massive long position”?

That’s an easy one. If JPMorgan pretends to be holding a 350-million ounce hoard of silver and its criminal accomplices who operate and (supposedly) police these markets go along with this massive sham; that is 350 million “ounces of silver” which this fraud-factory could claim to dump onto the market – as part of some future operation to crash the price of silver.

This is exactly what we seem to be seeing now, except with one, different wrinkle. Instead of JPM’s imaginary silver hoard being used to drive-down the price of silver still further (from already extremely depressed levels); this imaginary silver hoard will be dumped onto the market to “cover the shorts” – to prevent an explosive rise in the price of silver when these naked shorts would (otherwise) implode.

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