Guest Post: David Morgan On Silver Price Manipulation, Delivery Default & Supply Shortage Risks

Tyler Durden's picture

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XenoFrog's picture

Your authority is not recognized behind the silver walls of Fort Kickass

disabledvet's picture

Is it the surfer or his board that you're into?
http://www.youtube.com/watch?v=Wi6ZG2CmHo8&feature=player_detailpage
if you say "it's the music" that's okay, too.

bankrupt JPM buy silver's picture

Listening to Morgan is like listening to Batman.  Great call on silver going to $20. 

 

www.silvergoldsilver.blogspot.com

Careless Whisper's picture

the latest member of the silver liberation army calls for people to CRASH JP MORGAN - BUY SILVER

Music courtesy of Mister Gene Pitney; Lyrics courtesy of Mister Greg Diablo

http://www.youtube.com/watch?v=_gbuJpPknFk

 

 

DoChenRollingBearing's picture

I really, really need a silver expert / silver bull to write a "Guest Post" at my blog.  I erally do not know silver well at all, and I have seen some here at ZH who DO know silver (fundamentals, etc.).

Anyone who is interested in writing an article ("The Case For Silver" or whatever) please send me an gmail at my name above.  Same if you want my blog link.

HungrySeagull's picture

I am not an expert. I managed to buy some PM at the top and learned from that and bought some at the dip. Now I am sitting waiting for a certain price and that will take a while. I am a patient man.

Probably that is why I love Silver and Gold, the prices move slowly and you can actually see it coming sometimes.

 

Always buy low and sell high.

Now with that said, I think our Nation thanks to Harry Reid in our Senate who wills it to have the cap, cut and balance bill go away tomorrow morning. If that happens we default.

thepsilocircus's picture

I like to think of silver as a store of purchasing power that has the possibility (what percentage chance I doubt anyone can predict with too much certainty) of greatly increasing in value- not value in terms of number of dollars but in terms of amount of goods that can be purchased.

 

Basically exactly how I see gold, which is probably not the correct way to be approaching silver.

 

Some insight would be nice =).

DavosSherman's picture

With 110 trillion of unfunded liabilities hiding -- a la Enron --- in OFF balance sheet debt ---- hearing Comex default and manipulation is a real shocker.

As always, Chris does and excellent job and David Morgan who has been on FSN is a good listen. 

FMOTL's picture

of course ,what else?

caerus's picture

holy shit a silver price manipulation thread?  maybe i should put down my whiskey...

DavidPierre's picture


For those that still have a shred of confidence in the integrity of our markets, it is worth pointing out that each time a new level of fraud is reported the damage has always been done.
No one ever steps in and catches the crooks in the act before the big losses rattle the market. Think back to the big scandals of the last few years. Enron is one obvious candidate. The Madoff ponzi scheme. The subprime fiasco. One could even go all the way back to the S&L crisis.
In each case the criminals achieved huge profits and there were plenty of red flags but no one had the will to step in and halt the fraud before the billions in dollars in losses were long gone. The regulators always insisted 'nobody could have seen this coming...'
And note how with each new outrage, the amount of money that is stolen just gets bigger, but the number of people thrown in the slammer are fewer. When you have inept enforcement it encourages corrupt people to pull a fast one.
The message here is that crime pays.

This is why the obvious daily manipulation of the metals has become more intense in recent months. It is clear that no one has any intention of putting a stop to it. And it is immensely profitable for the crooks that are throwing the market. On monday someone dumped 50,000 silver contracts in one minute. The silver spot market plunged by over $1 during that session. Whomever was responsible likely covered the position at enormous profits.

Bang your head against the wall arguing with apologists that claim there is no manipulation in the silver pits. Even these pinheads must be squirming a bit today if they review the trading data. There is no room for any other interpretation except a blatant abuse of free market trading that should have immediately drawn a response from the regulators. And yet not a peep has come from this. For anyone that was stopped out of a position during that carpet bombing, do not seek resolution from those entrusted to enforce the rules. You are on your own...

And so when this silver scam eventually breaks down and the losses start piling up, as usual we will hear the lies and nonsense that no one could have seen this coming.
Its all bullshit!
The evidence is right there in the market data exactly what is going on in real time. What is most disgusting about this entire sham is that when the last ounce of silver is long gone from the Comex, the manipulation collapses, and the shortage is driving prices to scary highs for silver, it will all be blamed on the greedy specs that have hoarded silver and caused the crisis.

There is a great scene in the movie Casino, after a big fraud goes down, and the security staff failed to prevent it. The boss states: "Either you were too stupid to stop it, or you were in on the scam." That pretty much sums up the CFTC.

www.LeMetropoleCafe.com

Manzilla's picture

Boy what a genius comment. Care to share something else every one already knows?

Pladizow's picture

Dont know your background but:

1. as you have only been on ZH for 13 weeks and

2. based on your questions below that I offered info on....

Your statement above is unwarrented!

 

MsCreant's picture

You really are a "nice" pair of tits. I'd of told him to FUCK OFF!

chumbawamba's picture

Ok, that was fucking clever.  I quietly LOLed.

- Chumblez.

Misstrial's picture

Ecclesiastes 8:11 KJV

"Because sentence against an evil work is not executed speedily, therefore the heart of the sons of men is fully set in them to do evil."

~Misstrial

francis_sawyer's picture

Ms. Creant is right...

& if your tits hadn't been so nice, I might have challenged you to a spelling contest...

http://www.youtube.com/watch?v=au2YcZPnmMY

Now... a dude who uses 'hypothecated' in a sentence (& spells it correctly)... Now THAT's a daisy!

SilverIsKing's picture

Please tell us something that no one else knows.

XenoFrog's picture

I like you and would like to subscribe to your newsletter.

r101958's picture

These frauds are ongoing though.

PulauHantu29's picture

So why don't the commodity gurus pass a law that contract holders must take actual delivery? Wouldn't that stop the hanky panky?

HungrySeagull's picture

Suppose they did that and became law within the hour.

Contracts by the pile will be closed down because insufficient silver.

Price will fall. And will result in PM Buyers like me demanding EVEN MORE Delivery cash paid right fucking now.

Back up the price goes and going and gone.

SilverIsKing's picture

Paper price down, physical price up.

HK's picture

Like a number of commenters here, I hold physical and never plan on selling, the kids and grandkids get it.  However, I do buy the miners occasionally and I thought this might be appropriate as the similarities between 2008 and now are eerie.  Again, it may or may not be different this time around, but with the manipulation, the wash, rinse, repeat mantra comes to mind:

http://profitimes.com/free-articles/silver-today-vs-2008-does-it-look-fa...

 

SilverIsKing's picture

I read profitimes too and saw those charts. The similarities are indeed eerie but the circumstances are very different. Regardless, it's worth keeping an eye on.

Raymond Reason's picture

Pulau...regulations and laws aren't going to stop the hanky panky.  What will stop it is a default.  Because the market will then recognize that selling futures on margin does not discover price.  I've made this analogy before...

Real estate appraisers do not use deposits as comparables.  (Banks and State Govts do not accept it).   Deposits are not sales.  Margin is a deposit. 

IMO there will come a day when the market will recognize what a sale is, and what it is not.  And it won't make any difference what the rules are.     

Rodent Freikorps's picture

That sounds kinda crooked.

Manzilla's picture

"Holding physical bullion as a core part of one's precious metal portfolio is absolutely critical. Many of the bars pledged to tradable securities (ETFs, futures, etc) are assigned to multiple owners - meaning there is much less actual bullion underlying these securities than the market thinks."

Is there actual physical proof of this? I'm curious to see if this is really the case or just some talking point that people are pushing. I'd like to see it if anyone can provide it. An interesting and possibly deadly situation.

Pladizow's picture

Adrian Douglas of Market Force Analysis has put out some of the best work on this - his papers are available on ZH.

Also research Ted Butler and listen to King World News Interviews.

I'm sure other ZH's can recomend several other sources.

firefighter302's picture

Read the 10 year silver and gold charts and compared to the other asset classes.

Has anything changed to improve the debt and currancy problems? (no, they are worse.)

Investing in metals is increasing around the globe.

Proves it in my mind and for me.

Help Is Not Coming's picture

Go and get the prospectus for SLV and sit down and read all 48 pages. All of what you are buying and what they can do is buried in there. They're not going to trade it, lease it multiple times unless is says they can in the prospectus.

I also find it curious that the share price which is supposed to reflect the price of silver has a discount to the melt value of silver instead of a premium to the melt value. Accounting, Storage Vaults and guards cost money in addition to the actual metal. The cost of the share should be MORE than the cost of the melt value of silver. That simple fact should tell you that something is wrong with SLV.

caerus's picture

The word "manipulation" has come to have an ugly sound, It needs an alias.

- Jesse Livermore Reminiscences of a Stock Operator

BrianOFlanagan's picture

Is there not a single person in the silver bug community that understands a lease arrangement?  Just curious, anyone?

BrianOFlanagan's picture

If I lease silver to you and you sell it, I have no claim against whoever bought the silver.  My only claim is against you.  In a lease, the title is passed to the borrower (lessee) and if he sells it, it passes to whoever buys it.  The buyer (SLV in this case) does not care whatsoever whether the silver they bought was leased 10x or 100x over.  They own it free and clear.

 

Global Hunter's picture

in your example if SLV is free and clear what happens to the first 9x or 99x who thought they owned it?

BrianOFlanagan's picture

if their lessee's are unable to source any silver somewhere else to cover the lease, their only recourse is the cash collateral the lessee put up plus damages.  But as far as getting metal, if the lessee can't deliver, they are out of luck.

Bay of Pigs's picture

LOL. Damages? Yeah, no shit. No problem there with lawsuits or anything like that.

Thanks for making the case of possible massive and pervasive fraud though.

BrianOFlanagan's picture

if you lease your silver - you are taking risk.  If your lessee fails to deliver, that is a default.  There could be massive and pervasive defaults, but there is no fraud whatsover with those arrangements. 

CD's picture

The entering into a contract with full foreknowledge and intent to default WOULD be fraud, but difficult to prove. However, the massive, concentrated, systematic and coordinated nature of said activity to with intent to manipulate regulated markets is what makes it especially repellant.

Difficult to prove or prosecute in a court or before a regulatory body? Perhaps, especially as the participants own said tribunals. If you don't mind my asking, WTF is your point? That you are indeed fully aware of the the fundamentally immoral, corruptive and unfair nature of these practices, but since the participants are above the law that makes it OK? As a member and practitioner of this wonderfully profitable and multi-purpose group, you are superior to us peons who are convinced that this is NOT THEIR (NOR YOUR) RIGHT?

Bravo, point well made sir. So as long as you wear a ski mask, gloves and a condom, you are perfectly within your rights to taser a passerby in the dark, drag them into an alley, rape, rob and murder them -- because prosecution is all but impossible, right?

LoneStarHog's picture

Well...let's take the very real scenario where the one leasing the silver to the SLV is the CUSTODIAN of the SLV...and...the leased silver is encumbered 100:1...and...SLV does not actually receive the PHYSICAL silver, but merely a lease agreement...and...the physical leased silver is used to satisfy physical delivery on a CRIMEX contract...and...GET THE PICTURE?

BrianOFlanagan's picture

SLV does not borrow silver.  If they did, you would see a lease liability on their balance sheet.  This only liability I see on their balance sheet is for sponser fees payable (a very small number).

 

http://us.ishares.com/content/stream.jsp?url=/content/en_us/repository/r...

Bay of Pigs's picture

You take the Banksters at their word, although it's a fact they lie, cheat and misrepresent many things. It pretty much explains why you think everything is on the up and up in the silver market.

Leasing isn't the problem. Fraud and manipulation is. But you are correct that many, many people will be SOL on their silver holdings.

 

Urban Redneck's picture

Look at the process of how "silver" enters and leaves SLV, it doesn't prevent leased silver from being used by authorized participants(?) to create baskets.  The issue is on whose balance sheet the liability lies.  If anyone has a competing claim on bars of silver "belonging" to SLV and things go south and SLV winds up in court- then will be NO silver in SLV- as it will ALL be encumbered by the courts and arbitrators in London while they try to sort out who owns what, and whose claims are superior and inferior.  Several years later, owners of SLV shares would receive a fractional fiat payment based on the value of the determined actual and unencumbered SLV assets at the time the shit hit the fan.  Shareholders of SLV have no claim on the underlying assets "silver bars" of the investment vehicle.  Unless a shareholder has a TBTF membership card to Dr. Berankenstein Bailout Club, or a gun to the head of certain executives of the TBTF club involved with the operation of SLV, then the shareholder goes to the back of the line, and receives the scraps.  The prospectus is too long, has too many loopholes, too many conflicts of interest among the parties, and a painfully contorted definition of "silver" itself.  A prospectus is a legal document, and a shareholder is responsible for reading and understanding the consequences of that document, regardless of whether they actually do.  The last time I read it was probably three years ago, and based on what I read- I wouldn't use SLV as even a proxy for silver for leveraged day-trading purposes with monopoly money, because that shit hitting the fan would not be a black swan event.