Thursday, November 17, 2011

The Situation Developing With Comex Silver Could Get Interesting...

The volatility in silver trading is ramping up this week and with good reason:  JP Morgan (this name keeps popping up in connection with fraud and corruption - just coincidence I guess - it's a good thing JP Morgan has an ex-director in the White House advising Obama daily in order to make sure JP Morgan receives proper treatment from the authorities) - JPM  is hopelessly short Comex silver futures and by the explicit admission of one of the CFTC directors, JP Morgan manipulates the silver market illegally.

Interestingly, JP Morgan recently decided to make itself one of the Comex custodians for Comex silver and opened up a vault for that purpose.  The Comex inventory of gold and silver is reported on a daily basis and breaks out the inventory between "eligible," which is metal being "safekept" at the Comex by investors who have taken delivery, and "registered," which is the metal that has been certified by the Comex to meet its delivery standards and is being held for the purposes of delivery. 

Yesterday, in a move which raised eyebrows throughout the precious metals trading community, JP Morgan moved 1.1 million ounces of silver from the the "eligible" bin and into the "registered" bin.  This amount represents nearly 50% of JPM's "eligible" silver.  (Please note:  this commentary will not address questions about the verifiability and validity of the reported Comex inventory of gold and silver, as there have been many questions raised about this, it is not audited independently and, as we have seen with MF Global, et al, Wall Street tends to invent its own accounting standards).

Having said that, in studying the Comex open interest and inventories for nearly 10 years, I can say that the outright size of this inventory move by JP Morgan is unusually large and would suggest that JP Morgan is anticipating the probabilty of having to deliver a lot of silver for the December delivery month, of which JP Morgan is likely short at least 17k of the current 34k open interest, or 85 million ounces.  Please note that there are still 9 trading days until the "first notice" day, November 30th, for December silver and I expect that the open interest will decline substantially between now and then.  However - remember I like to look at the truth behind "however" - in order for the December open interest to get down to a level which represents just the total amount of registered silver - roughly 33 million ounces - the December open interest will have to bleed down to 6600 contracts.  This is a big liquidation in just 9 days.  I would suggest that JP Morgan's inventory behavior implies that delivery supply could get very tight this month. 

I would also suggest that JP Morgan is making a very aggressive effort to manipulate the market lower.  Make no mistake about it, every unusually large price-spike down in the intra-day trading is irrefutably JP Morgan traders manipulating the market for the purpose of trying to create selling by the funds who are long silver futures and thereby alleviate any delivery stress and accountability on JP Morgan and its CTFC certified illegal market activity.  Oh ya, and ultimately accomplishes the ultimate Wall Street goal of taking money from your pocket and putting it in their own pocket.

The key here is to understand that the action between now and first notice day for December delivery has nothing to do with market fundamentals or outright global demand for silver and everything to do with JP Morgan's ability to try and force the silver market lower to protect its short position AND the unwillingness of our Government to enforce the laws in place to prevent this kind of market manipulation.  Furthermore, the key to trading and investing in silver when the market goes through phases like this is to either hold what you got and don't watch the intra-day volatility or buy the down-spikes aggressively and take some profits on the rebound, but make sure you take full advantage of this market inefficiency and wealth-enhancing opportunity and increase your overall holdings. 

One of these days the market is going to blow up in JP Morgan's face because they won't have enough physical supply of silver to meet delivery demands and we'll be reading about JP Morgan the same way we are reading about MF Global, only it will be many multiples more severe.  It will potentially be catastrophic to the U.S. dollar and any remaining faith thereof.  You want to make sure you have as much of your paper money moved into gold and silver because when the market does blow up like that, the end-game will be near and gold and silver will undergo a breathtaking move higher.  I would suggest that behavior like we are seeing by JP Morgan this week indicates that the "blow up" event is getting closer.


  1. I have linked to your analysis.

    Last paragraph sounds like Max Keiser on JPM. lol.

    The shell game is a shell game. So it may blow up, or the futures exchange may just go out with a whimper and a cash settlement, and then continue on.

  2. (Dave)

    I agree with how the end-game will occur with cash settlement - I have always thought that - but think about the signal that sends to the rest of the world about supply and value of physical gold/silver. You'll see flood of paper currency rushing into physical. It will be like Niagra Falls going through a funnel.

    I believe that when the Comex de facto defaults via cash settlement, it will signal that our system is in the final collapse.

  3. Dave - as I understand it, there has been almost zero movement of silver out of the registered / dealer vaults since September. What has been happening with the delivery notices that have been executed over the last month and half?

  4. (Dave)

    PM Bug, I don't monitor the delivery action. It takes too much time and the accounting for it is very questionable. I don't know of anyone who really tries to make sense of the delivery data as its reported on the CME website. I know that EVERYONE questions the validity of the inventory that is reported.

  5. Thanks Dave. I mostly read Harvey Organ's blog ( ) for his daily summary of the delivery action.

  6. I don't know about this one Dave. The reported COMEX silver inventory is 10 million ounces higher than it was in June. It just seems if there was true tightness in the silver market this would be an easy place to get silver and COMEX would show a rapid decline in inventory. Yes, maybe their accounting is all a fraud but I personally can't invest on conjecture like that.

  7. (Dave)

    Ya Harvey does a great job outlining the daily Comex action. The problem is that about 2 years ago I came to the conclusion that the numbers are fraudulent enough such that they are irrelevant. I also think that - in general - enough traders now follow the COT reports that the trading value of that information largely gets priced into the market quickly.

    In terms of the relevance of the COT numbers, I see even Ted Butler made a comment similar to my belief a few days ago.

  8. Is it your opinion then, that while there has been no report of any silver or gold being moved out of the dealer (registered) vault, delivery notices are being redeemed for metal? That's the implication if I'm understanding you correctly.

  9. (Dave)

    PM, again, I don't know. I know that many of us who have monitored the inventory accounting at the Comex for a long time are always puzzled over the daily accounting reports. I don't really care that much anymore other than if I see a big move like with the JPM move yesterday.

    Pure - you do what you have to do and believe what you want to believe. My belief, backed up by several years of observation, is that the Comex is full of shit on its inventory accounting, just like GLD and SLV are. I don't think it's coincidental that JPM opened up a vault to become a Comex custodian in the last year AND there application was rushed through and avoided the normal, standard application procedures. You can look that up using google if you dont' believe me.

    Beyond that I don't care that much about the Comex/COT reports, although I still look at them on a daily basis.

  10. Questions:

    1) How are you able to get info re how many silver contracts JPM is short on?

    2) If they are intending to deliver, why would they want the price to go down? They would want higher prices for delivery, no?

    3) If they are shorting the silver market for speculation, and not for delivery, one has to ask why? (And maybe more important, are we really sure that's what they are doing?) It's hard to believe that traders at JPM would be massively short a long term bull market--they surely don't have stupid people in trading the markets for them, do they??--so I have to wonder what is really going on here?

  11. Yeah, I know about that JPM vault deal, that was really shady. So I have no worries that Brink's or Delaware Depository is showing an inaccurate amount of silver inventory. They don't care about manipulating the price of silver. JPM holds less than 2% of the total, so they're irrelevant for the time being. So that leaves HSBC and Scotia Mocatta and they hold about 50% of the inventory. I think I'll start comparing moves in their vault with Brinks and DD, to see if anything looks out of the ordinary.

  12. COMEX has the legal power to override any aspect of a contract - price, when and how settled - in an "emergency". JPM can't and won't lose. If you think MF Global ratfucked account holders, just wait until JPM invokes those "emergency" powers to resolve any "situation" with silver.

  13. (Dave)

    pimaCanyon, those are good questions but I don't have time to answer them. You can use google and do searches on "Ted Butler JP Morgan silver" and you will be able to research your questions.

    JPM doesn't want to make deliveries if they don't have to. Some of the silver longs will stand for delivery regardless of the market action. JPM is trying to force out most of the weak hands and take profits on the silver contracts it shorted at much higher levels.

    Beyond that, your questions require long answers

  14. It's easy to forecast PM's.

    In fact, it's quite simple.

    To know their next move, you must think and act like them. You must be willing to put your mind in the gutter, i.e. become overshadowed by greed and power, and, be willing to place yourself above all other humans (and creatures, big and small) even if you have to "remove" them, in the process, to move higher up the ladder. If you can accomplish that then you will begin to understand how someone in their shoes functions. Until you're able to literally experience what motivates them, you will never figure out where gold and silver are headed over the next year or so.

    Long term is a given. You don't need to get possessed for that one. They'll squeeze the weak minded, using the old reliable fear tactics i.e. "The Bubbles Bursting, run for your lives!", to milk them of their PM's and when they feel they've squeezed the last drop, as planned, PM's will break free from the gravitational pull of the "keep it low" manipulation stage and "look out"! You'll either be able to purchase a nice condo on the lake front with a few OHZEE's or, be incarcerated; a dark dungeon at night and breaking rocks with a sledge hammer during the day (clearing the way for Agenda 21), once they've ferreted out where your stash is.

  15. "I believe that when the Comex de facto defaults via cash settlement"

    Already happened. 100%. Have a contact that accepted cash. No one wants to talk about it b/c they are making money hand over fist. Comex is dry. I'm still trying to penetrate with a janitor but its not easy. I'm assuming his salary to clean the comex floors is $300K. Tight lips.

  16. MF Glob's Trustee JPM Stooge, Kicked OWS Hornets Nest, USA of Oil

    Research reveals that his firm, Hughes Hubbard's largest clients are JP Morgan and Price Waterhouse. Both of his clients and his representation of them represent a substantial conflict of interest. Looks like NYC kicked the OWS hornets nest with protests now in the street complete with NYC police using sonic weapons against peaceful protesters. This movement is here to stay! Will it be ignored as is the case in Greece and Italy; Could US politicos make the US a short-lived mini Saudi Arabia? Are we going to breakdown or can we use our domestic resources in a way to build wealth for the citizens away from the current debt model.

  17. OH Crap

    The money, which comes from collateral that traders must put up to complete financial transactions, is deposited with the banks to cover shortfalls in liquidity. CC&G earns a profit by charging banks interest on the money that they borrow.

    One inconvenient question: What happens when the bank can't pay it back?

  18. The party of wrapped fish in newspaper........

    Three Card Monti

    This is way worse than a bad precedent but well said my friend. Oh and another thing. If you are looking at the gold market and wondering why it is so weak stop wondering. In my opinion, all you have to look at is Mario “three card” Monti (credit to Gerald Celente for that name). If I were anyone in Italy that cared I would be checking the gold in the vault every single day. I have zero doubt that Monti is letting the country’s treasure out the back door by the ton in the name of “global stability” and ECB bond purchases. The backroom deals that are happening right now at the expense of the people of Italy have got to be completely off the charts. As I have said many times before, the reason Europe doesn’t announce a solution is because there is no solution. They also know that the minute they announce massive monetization gold and silver will go no offer and the gig will be up.

  19. MF Global...What about Gold ETF GLD & HSBC?

    I heard this guy, this Terrance Duffy and I went back and looked him up. He was saying, ‘In the history of the CME, going back to the days of the Depression, nobody ever lost a penny.‘ Well I have and so have a lot of other people. And he also said, ‘We are the guarantors.’ Well where are you now bigmouth Duffy?....

    “Where’s my money now Terry Boy? How about guaranteeing me my money? How come nobody is putting these people on perp walks? You have to be a fool to have your money in there now. I’ll never do it again. This whole thing is a cooked game, Eric.”

  20. This is a comment from article on gold. Even though most of us already know what he states, I thought it was particulary well written and worth passing on. The second paragraph in particular:

    joeblow says:
    November 16, 2011 at 9:39 pm
    I concurr with many of Agent P’ s assesments.
    I’ve been telling people I know, to take a good look around because this is as good as it gets folks.
    Our standard of living here in North America is going down no matter where you live. (I’m Canadian). This is a reboot people and many of us wont believe what they will see hear and witness. Our consumeristic lives and lack of economic education has ensured and created a “Normalcy Bias” so complete we’ll be willing to be loaded onto rail cars heading for a fema camp nearest you. It wont be much better here in Canada, 70% of our trade is with the U.S. I havent seen a pay raise in more than 3 years and I expect the reverberations from the U.S. to be economically catastrophic when they hit.

    A few notes however on the bright side of gold and silver.
    It’s your wealth that you worked hard for, staring you in the face.
    That shinny ingot or brilliant coin represents your sweat and ability to produce. It takes human labour, giant machines (built by humans), billion dollar companiesbuilt by humans) to pulverize tons of rock to retrieve tiny little flakes of gold and silver and turn it into a coin in your hand That is the basis of money and none holds it better than gold or silver. 5000 years have proven this because it’s the only default currency/money we humans get to run back to each and every time the bankers and politicians f#@k the monatary system up. They push gold and silver out of the monatary system so they can print and promise as much as they like.
    That’s why no fiat currency throughout history has ever survived, none. This is also why bankers and politicians hate gold and silver because they are natural baromerters that reflect the inheirent inflation in the monatary system itself. Gold and silver are the nemesis of bankers and politicians because on one side the banker can create unlimited amounts of currencies and politicians can create unlimited amounts of promises, they are a perfect marriage and go hand in hand. Now that people are running towards that faithful hard currency of gold and silver again this represents a transfer of wealth from fiat to hard assets like physical gold and silver, land. I’m just glad to be awake enough to break my finacial fall and woe to those not savy enough to pay attention to history.
    Long live the sovereign individual!! And may the G-20 become known as the 20 GOLD nations of honest money.

  21. Dave, I'd appreciate your comments on the following line of speculation:

    Imagine the Fed has been using Primary Dealers, including MF Global, to pump up markets. Imagine further, that Corzine has been encouraged, by very high level contacts, to go ahead and speculate with massive long positions in EZ debt, on the understanding that he will be protected if it all goes wrong.

    That would account for why "no-one" can find customers' money or Corzine himself - the trail is being wiped clean and fenced off by Corzine's protectors.

    Your thoughts appreciated.

  22. JP Morgan is trying to take out most of the weak links and make profits on the silver contracts.

  23. (Dave)

    Sumo, that scenario is a bit too conspiratorial for me to go with BUT I don't thhink it's not imossible. I will say that if that were the case I would think that the Fed would have stepped in to secretly save MF and avoid the hoopla.

    Here's what I do think is possible: being that JPM is one of the Fed owners and MF Global is not, I do believe that the money was taken from customer accts and used to cover a $600mm collateral call to MF by JPM and that is why the money "can't" be found.

    As we have seen, when it comes down to either one of the Fed owners losing money or the taxpayers/public, the decision is made to fuck the public up the ass. I believe that's what happened here.

  24. Not condoning but in context peccadillo,,,but how much will she really cost and I wonder if jails are privatized in ole miss?

    Last week, a federal judge in Mississippi sentenced a mother of two named Anita McLemore to three years in federal prison for lying on a government application in order to obtain food stamps.

    Apparently in this country you become ineligible to eat if you have a record of criminal drug offenses. States have the option of opting out of that federal ban, but Mississippi is not one of those states. Since McLemore had four drug convictions in her past, she was ineligible to receive food stamps, so she lied about her past in order to feed her two children.

    The total "cost" of her fraud was $4,367. She has paid the money back. But paying the money back was not enough for federal Judge Henry Wingate.

    Wingate had the option of sentencing McLemore according to federal guidelines, which would have left her with a term of two months to eight months, followed by probation. Not good enough! Wingate was so outraged by McLemore’s fraud that he decided to serve her up the deluxe vacation, using another federal statute that permitted him to give her up to five years.

    He ultimately gave her three years, saying, "The defendant's criminal record is simply abominable …. She has been the beneficiary of government generosity in state court."
    Here’s another thing that boggles my mind: You get busted for drugs in this country, and it turns out you can make yourself ineligible to receive food stamps.

    But you can be a serial fraud offender like Citigroup, which has repeatedly been dragged into court for the same offenses and has repeatedly ignored court injunctions to abstain from fraud, and this does not make you ineligible to receive $45 billion in bailouts and other forms of federal assistance.

    This is the reason why all of these settlements allowing banks to walk away without "admissions of wrongdoing" are particularly insidious. A normal person, once he gets a felony conviction, immediately begins to lose his rights as a citizen.

    Read more:

    Read more:

  25. A big game of BS...

    Loans Lose All Value, and More

    Trepp, a data collection and analysis firm, offered the verb form this week after an unfortunate commercial real estate securitization trust disclosed that it took huge losses last month on five department store locations that had been secured by leases to Boscov’s.

    “To be Boscoved,” said Trepp, is to suffer losses on a loan of more than 100 percent of the amount lent. That happened on all five of the loans that were included in the Bank of America Commercial Mortgage Series 2006-3, a securitization sold by the bank in 2006.

    Until June, prices of existing securities seemed to be rising, and banks were showing more willingness to make commercial real estate loans and hold on to them until they had enough to package into a securitization. But early this year, the American International Group, encouraged by the seemingly solid market, offered to buy back a package of residential mortgage-backed securities that the Federal Reserve Bank of New York had taken when it rescued the insurance giant in 2008. The Fed decided to instead offer the securities to the market.

    It turned out that while banks had been happy to mark up values of such securities, they were less interested in actually buying more of them. When the securities began to be sold in June, the low prices being received “kind of shocked the market,” said Manus Clancy, senior managing director of Trepp. Investors grew wary of buying new issues, and banks made little money when they securitized the loans they had accumulated. Their desire to make more loans declined, and so did the supply of new securitizations being put together.

    At the same time, the proportion of loans in existing securitizations that were delinquent, which had seemed to decline in the spring of this year, began to rise again.

  26. What price the new democracy? Goldman Sachs conquers Europe

    While ordinary people fret about austerity and jobs, the eurozone's corridors of power have been undergoing a remarkable transformation

    The ascension of Mario Monti to the Italian prime ministership is remarkable for more reasons than it is possible to count. By replacing the scandal-surfing Silvio Berlusconi, Italy has dislodged the undislodgeable. By imposing rule by unelected technocrats, it has suspended the normal rules of democracy, and maybe democracy itself. And by putting a senior adviser at Goldman Sachs in charge of a Western nation, it has taken to new heights the political power of an investment bank that you might have thought was prohibitively politically toxic.

    This is the most remarkable thing of all: a giant leap forward for, or perhaps even the successful culmination of, the Goldman Sachs Project.

  27. You dummy. They’re laughing into their martinis. Ha, ha! Yes, let the good times roll.

    How to steal like Wall Street

    BOSTON (MarketWatch) — It’s a lucky thing these kids only tried to “occupy” Wall Street.

    If they’d been really radical they would have done something much more dangerous.

    They would have just imitated Wall Street.

    Everyone now knows the rules down on America’s Street of Shame. These are almost the exact opposite of the rules in the real, normal, moral economy the rest of us inhabit.

    On Wall Street, you take every nickel and dime you can get your hands on. If it’s not nailed down, it’s yours. You take without conscience or shame. If you see a blind man selling pencils on the street, steal the pencils. Steal his pennies. Steal his dog.

    On Wall Street, you gamble. You gamble big. But you gamble with other people’s money.

    Borrow as much as you can. If it doesn’t work out, too bad — for someone else. Heads you win, tails they lose.

    MF Global, anyone?

  28. CFTC, JPM, Corzine all eat shit.