JPMorgan's Domination of COMEX Silver

 

JPMorgan's Domination of COMEX Silver

Written by Craig Hemke, Sprott Money News

 

Much has been written lately about the size and scope of JPMorgan's COMEX silver vault. We thought we'd add to that conversation today.

First of all, some background.

JPMorgan didn't even have a COMEX silver vault in early 2011. The application was only rushed through in March of that year, and they began accumulating silver that summer. (https://seekingalpha.com/article/259549-will-jpmorgan-now-make-and-take…) See below for a graphical representation from GoldChartsRUs. 

 

Since 2012, JPMorgan has aggressively "stopped" contracts during the COMEX delivery process. The most recent data shows that the House Account of JPM took control of 5,239 silver contracts in 2015 and another 4,960 in 2016. They added 5,489 in 2017 for a three year total of 15,688 contracts. At 5,000 ounces per contract, that's 78,440,000 ounces of silver straight into the JPM proprietary account and likely included in the "eligible" category on the CME Silver Stocks report shown below: 

So it's easy to conclude that this massive hoard of silver is not customer silver in storage nor is it held in custody as a part of the SLV. Instead, this is very likely JPM's own silver, against which JPM can issue contracts as an alleged hedge. Just as selling call options against a large equity position can yield an investor additional income, we believe JPM sells futures against this physical position. This allows them to manage price and consistently create profits for their commodity trading desk.

This dominant position also allows them immunity against pesky regulations put in place to assure against monopolistic and manipulative control of the markets. The stated front and delivery month position limit in COMEX silver is 1,500 contracts. However, as you can see below, twice in 2017 the House Account of JPM was in clear violation of these limits by stopping 2,689 contracts in March and another 2,800 in December.

 

We filed an official complaint with the CFTC in March of 2017 (https://www.tfmetalsreport.com/blog/8243/march-COMEX-silver-deliveries) and reported this second violation in December. In an exchange of voicemail messages on the matter, we were told by Charles Ricci of the CFTC that "there are (position limit) exemptions that apply with regard to hedging if your firm qualifies."

So there you have it.

JPMorgan has amassed a monopolistic and manipulative position in COMEX silver. They can create and sell thousands of COMEX contracts and then justify their short position (and clear violation of mandated position limits) through their CFTC-blessed "qualified exemption".

These are your "markets" in 2018. They are dominated by Big Banks—often operating under the veil of protection offered them as Primary Dealers for the Federal Reserve. The so-called regulators have been marginalized to the point of being powerless to enforce even the simplest of statutes. Thus, price manipulation continues with no end in sight. 

 

JPMorgan's Domination of COMEX Silver

Written by Craig Hemke, Sprott Money News

 

 

Check out these other articles by our contributors:

 

Standing Ready to Lease Gold - Keith Weiner (19/03/2018)
Poloz to Queen’s University debt slaves: don’t worry about the “poverty effect” - Peter Diekmeyer (19/03/2018)
The Race to Repatriate Gold Reserves Accelerates - Nathan McDonald (15/03/2018)
 

Comments

Ink Pusher Thu, 03/22/2018 - 10:06 Permalink

Using derivatives to manipulate REAL COMMODITY pricing and then fucking the buyer over on delivery to boot, what a sweet fucking scam !

Be advised: JPM,Citi,BoA and Wells Fargo are all working in concert with the Chinese to screw over the USA.

 

BobEore Ink Pusher Thu, 03/22/2018 - 10:54 Permalink

Too late mate!

This scurvy crew WERE advised! For more than 5 years the word was out... bout JPMs new role as dogsbodies for the PANDA clan... and how they were scarfin up silver like there'd be no tomorrow... 

on behalf of a Chinatown hungry for the means to make a SOLAR REVOLUTION of the energy independence kind. 

|Silly|Teddy B was ringin bells - they said Ted - go to hell! Other articulate and informed voices gave the gospel truth ... and were accosted n abused by a troop o goofs with nothin above the neck line save  a chalk line for where plumbing was never installed! 

and rested secure in the conceit that their votes buttons would ward off all evil... of the terrible truth kind.

Thus = tis over... for the crew o roadkill warriors who religiously subscribed to the hype of hucksters shoutin "silk road express" ... last call for the Silky Road to success!   The Art  o Deception. 

Takes  a village. O gobsmacked gomers who 'never saw it comin.' 

Who coulda guessed? 

In reply to by Ink Pusher

Give Me Some Truth Bay of Pigs Thu, 03/22/2018 - 11:28 Permalink

RE The Petro yuan for gold roll-out

By now I’ve become skeptical that any event hyped as gold bullish will materialize. Indeed, I fully expect the opposite to occur. “Take that, you damn gold bugs!” Might be the statement sent by the manipulators.

Also, if this scheme is legit and does “take off” won’t China risk the rapid evaporation of a gold hoarde it has worked so hard to accumulate?

All of this said, I too will be watching this possible “game-changing” development with interest.

In reply to by Bay of Pigs

Give Me Some Truth Ink Pusher Thu, 03/22/2018 - 12:13 Permalink

Re: China’s possible role in all this

I agree. We still don’t know China’s real long-term goal. Does it want to “play the gold card” and expose America’s manipulation (and how little gold America probably owns free and clear)? Or do they want to protect their most important export market? And do China’s dictator-like leader(s) want and need to create/protect their own Ponzi printing press?

China might not be the friend of gold that some of us hoped. Or maybe they are. To be determined, I guess.

In reply to by Ink Pusher

Pearson365 Thu, 03/22/2018 - 10:15 Permalink

If JPM is able to accumulate 700m oz of silver and at the same time manufacturers used  silver in products requiring it and they have not had supply problems,  where is the supply problem?  Looks to me like the silver price will be depressed indefinitely.

Give Me Some Truth Pearson365 Thu, 03/22/2018 - 10:33 Permalink

Sentiment for investment silver is effectively dead. Most of the most zealous silver bugs have quit buying. They either have reached their ounce goal already, and/or have gotten the message - silver will NOT be allowed to go up in price in any significant degree. That is, JPM might be the only real buyer of size for investment silver. This btw was the goal of the manipulators. Make it where only a fool would invest in silver. In such a world, it is much easier to protect the all-important fiat printing press.

In reply to by Pearson365

Give Me Some Truth Michigander Thu, 03/22/2018 - 11:14 Permalink

Re why should I invest in a product that is brazenly manipulated ...

Because you still believe that the truth will some day prevail, that markets cannot be rigged forever. Maybe they can though. I still think that the Law of Opposite Effects re central planners will prevail. The effort to perpetually suppress these prices will ultimately result in their prices going sky high. 

In reply to by Michigander

RedBaron616 Michigander Thu, 03/22/2018 - 11:24 Permalink

Just like the Hunt Brothers, this monopoly, if accurate as portrayed here, may go down in flames. If the commodity is worth having and holding, let them keep the price depressed. Stock up at these prices. One could argue that every market is manipulated to some degree. Find me a true free and fair market where there aren't dominant players. Even Bitcoin doesn't qualify.

In reply to by Michigander

MrBoompi Thu, 03/22/2018 - 10:33 Permalink

The only way I'd believe any reports about physical metal coming out of JPM would be if I weighed it for myself and verified the assays.  We can probably find out the dimensions of the vault and the construction of it, but that doesn't mean it holds anything.  The actual vault could be the size of a hard drive.  

Give Me Some Truth Thu, 03/22/2018 - 10:58 Permalink

For a couple of years the demand for investment silver was buffeted by the thought that the shit was getting ready to hit the fan any month now. This never happened (or it has been largely concealed from the masses via various dubious means). Eventually even proud silver bugs - like a dog beat too much - submitted or capitulated. Also, I suspect that industrial demand for silver has been flat,  maybe even  negative if proper stats on the real economy were used. That is, if the economy was really growing at the rate we have been told, industrial purchases of physical silver would probably cause the price of silver to increase at least some.

Ironically or by design, the effort to suppress the prices of silver and gold have helped make possible the fake news that the economy is doing great. This effort at manipulation and deception has certainly helped steer massive amounts of fiat into the stock markets. In turn, ever-rising stocks give investors yet another reason to stay away from silver and gold. 

Conax Thu, 03/22/2018 - 11:36 Permalink

If it's wise to "buy when there's blood in the streets" then now might be a good time to place an order.

The old saw says to buy low and sell high, what's lower than silver?

Everyone is cowering in fear.  Go buy some real money. It will make the juices flow back into your balls.

Give Me Some Truth Conax Thu, 03/22/2018 - 11:51 Permalink

Indeed. A bet on silver is also a bet that our arrogant central planners will screw the pooch eventually. They are messing with “economic Mother Nature.” They will lose spectacularly in the end. But they are great at kicking the can. Investing in silver ain’t for sissies that’s for sure. It is the ultimate contrarian play. 

In reply to by Conax

dutch04 Give Me Some Truth Thu, 03/22/2018 - 13:26 Permalink

Agreed!

According to my mom (w/ middle name being Thomas "the doubter") I was born a contrarian.  I questioned (and still do) EVERYTHING.  All it took was my grandfather to introduce me to kennedy silver half dollars at age 5 ("See this, this is real money") for me to put two and two together about silver as a long term investment. 

Mind you, I'm in late 30s and have never lived under currency backed by real money. Yet, somehow I managed to see through fiat currency paradigm bullsh!t.

Thanks Opa! 

In reply to by Give Me Some Truth

Conax Give Me Some Truth Thu, 03/22/2018 - 12:21 Permalink

One thing my 60+ years on this rock have taught me is that *nothing stays the same forever. 

When I initially bought some silver I had no idea I was joining a battle against the devil himself. I looked around, saw silver for 9 bucks and said, heck, I'll take a couple hundred of those! Upon delivery I had rushes and thrills running all through me. Lols.

Now I'm a raging contrarian because I know *.

In reply to by Give Me Some Truth

Silver Savior Thu, 03/22/2018 - 12:09 Permalink

It seems quite simple to me. If they keep managing to keep silver spot price down then physical silver that comes to market will eventually have thousand dollar premiums added to spot price.

Because after all you can't fabricate an electronic device using a silver speculation contract! Less physical silver supply + future high demand = a perfect storm.

Give Me Some Truth Silver Savior Thu, 03/22/2018 - 12:24 Permalink

At some point real people and real institutions are going to have to start buying silver in much larger numbers. I don’t think any increase in silver demand for electronic devices will offset the sizeable crash in sentiment for investment silver. Also the manipulation keeps prices for industrial silver very low, which the crony manufacturers must appreciate.

The question becomes how is the world going to see a tremendous increase in buyers of investment silver if the price of silver is one of the few assets/commodities that always plunge in price? That is, people would start buying if they thought the price would go up. They won’t if they “know” the price is capped. Thus: Operation Destroy Sentiment. Once this has been achieved (like right now) all they must do is keep said sentiment dead. They can’t let sentiment for gold and sentiment roar back to life. This would jeopardize their entire way of life.

In reply to by Silver Savior