Monday, August 20, 2012

Boom Goes The Dynamite: Silver Pops

But gold has risen with only slightly more than 1% of the world’s assets in gold.  Right now the world’s assets are about $150 trillion.  Of that number, $60 trillion is in cash, $40 trillion is in bonds, and $40 trillion is in stocks.  But, remarkably, only $2 trillion or just a bit over 1% is in gold.

With inflation headed higher, institutions, which have virtually no allocation to gold today, they will have to increase their allocation to gold.  There have been several studies over the last few months that have suggested that institutions will need to put part of their funds in gold.

If you look at world financial assets, a 1% increase in allocation to gold of the world’s financial assets would require 12 years of gold production at today’s prices.  There simply isn’t the gold available at today’s prices to facilitate even a small move by institutional money into the sector.  Of course they can never get a sizable commitment into gold at these prices.

I would also add that over time they will put a lot more than 1% into gold.  The studies I reference also suggest that institutions will improve their risk vs return situation by moving money into gold.  So I am convinced that there will be a big inflow of institutional money into gold over the next two or three years
- Egon Von Greyerz on King World News

After almost 9 weeks of trying to break over $28, silver closed over over $28 on Thurs/Friday and, after a concerted and blatant attempt by the silver manipulating banks to take silver below $28 this morning, it inexplicably shot up like a roman candle at 9:12 a.m. Denver time.  I say "inexplicably" because I could not find any specific news which might have triggered the move, the SPX did not move at all (so the move in silver was not in correlation with the stock market) and gold moved higher higher as well although not anything that closely correlates with the scale of silver's move.

As subscribers to GATA's Le Metropolecafe know, one of Bill Murphy's sources in Switzerland - someone who is described as being in a position to know - has told Bill that JP Morgan is in trouble with its short position in silver.  Please note, that we only see JP Morgan's massive, illegal but unpoliced short position on the NY Comex market.  We have no idea what its short position on the LBMA or in OTC silver derivatives looks like (although we do know that JP Morgan has by far the largest position in OTC "metals" derivatives per the quarterly BIS report).

Beyond that we do not know much other than JP Morgan has been the big manipulator in the silver market for many years and likely does so on behalf of the Federal Reserve/U.S. Government.  We also know that at some point in the future that JPM's paper short position in silver is potentially the equivalent of a small nuclear device embedded deeply the bank's bowels.  The trigger will be the point at which counterparties to JPM's short position demand physical delivery of the silver JPM is derivatively short on the Comex, LBMA and OTC derivatives market.

On this note, given that JPM is the custodian for the massive SLV ETF, which means JPM is the gatekeeper on the enormous stockpile that SLV is supposed to have stored in JPM-controlled vaults, I would not advise anyone to own SLV.  SLV, like GLD, has the potential to be another Enron.  Just for the record, JP Morgan was one of Enron's primary advisory banks.


  1. What about people who need cash in the crash? Will they be selling their stocks, gold, silver, and what will that do to the price of those things?

  2. Roughly 98% of the population does not own any gold/silver. The people who have a lot more liquidity than they need to live month to month will be flooding into the metals. It will be a no-brainer trade. The big institutions not getting redemptions will be flooding into the metals. It will be a lot more "violent" than the flooding of liquidity into the Treasury market.

  3. Amerika’s Future is Death ~ Paul Craig Roberts

    Readers will not be surprised that I disagree with the presstitutes. Indeed, the conspiracy culture is the product of the presstitute media’s failure to investigate and to report truthfully. I am certain that the Western media is worse than the Soviet media was. The Soviet media devised ways for helping the public to read between the lines, whereas the Western media is so proud to be confidants of the government that they deliver the propaganda without any clues to the readers that it is propaganda.

    Americans have been fed lies by “their” government and the government’s presstitute media for so long that it is not surprising that Americans increasingly believe that there is a conspiracy operating against them. Millions of Americans have been evicted from their jobs, careers, and homes while the crooks who stole from them run free and bankroll the presidential candidates. The world as millions of Americans knew it has come to an end, and no one has been held accountable. The explanation that Americans get from the media is that it is their own fault. They bought houses they shouldn’t have bought, and they didn’t train for the right jobs. It is not unreasonable for Americans to conclude that a conspiracy is operating against them.
    Do not expect Congress or the presstitutes to do anything about the rapid concentration of power in the police state that Bush and Obama have created. Do not expect to be rescued by federal courts. Even if some judges are inclined to defend the Constitution from its domestic enemy, the courts are powerless if the executive branch does not respect the rule of law. Currently, the executive branch is ignoring a federal judge’s injunction against the indefinite detention of US citizens. The Department of Justice (sic) lawyers will not even answer the judge’s questions.

    A gullible population is helpless if government decides to enslave the people. It is child’s play for government to discredit a people’s natural leaders and those who provide the people with accurate information. Most Americans have a very small knowledge base and very large ideological preconceptions. Consequently, they cannot tell fiction from fact.

  4. I've been following the gold and silver market the past two years and have been stacking modest amounts in the event that the system will implode. Not sure what to make of things at the moment as it likes 2 steps forward 3 steps back. What is clear is that tension is mounting across the globe as natural resources become more scarce. Europe's financial situation hasnt finished yet so watch this space before the end of 2012.

  5. CFTC Commitment of Traders Reports as of July 29 indicated a lot of positive signs for the next up leg in both Au and Ag. Commercials reduced their net shorts by 14.2%. This was before ECB president Mario Draghi made his notable promise that the ECB would take whatever measures necessary to preserve the Euro. SWAPs were actually net long in Au. Producer Merchants also lined up in their lowest net short position since 2008. The big funds in "other reportables" reached a record net long position of over 54,000 contracts. Outside reversals on both the Au and Ag weekly charts pumped up mining shares 3% with the GDXJ up 5%.

  6. Jon Corzine: Taken to Task for Excessive Chutzpah

    Which brings us back to a segment we call Taken to Task.

    Look, I get that proving a crime is tough, but when the guy accused of stealing $200 Million goes to jail and the guy who can't account for $1.6 Billion is likely to get off scott free, something is very wrong.

    In case you didn't know, Jon Corzine is a former CEO of Goldman Sachs, a former Senator and Governor of New Jersey and a former major fundraiser for President Obama. It's really hard to be more "high-powered" and "connected" in American society.

  7. How Congress Helps the TBTF Banks Steal Your Money with Impunity

    My friend and mentor Walker Todd of AIER, who worked as a legal counsel at the Federal Reserve Banks of New York and Cleveland, states the situation succinctly:

    “Basically, there is a new 7th Circuit opinion saying that there is no reason to impose a constructive trust on a lender's takings of customers' funds from client commodity firms that were used (inappropriately) to secure the firms' borrowings, as long as the lender can say that it did not know WITH CERTAINTY that customers' funds were being repledged. Negligence and misappropriation (vs. knowing criminal intent) are now a sufficient excuse for letting the lender keep the money and go to the head of the line for distributions in bankruptcies of the client commodity firms. Spread the word.”

  8. WikiLeaks and Free Speech

    Predictably, the response from those who would prefer that Americans remain in the dark has been ferocious. Top elected leaders from both parties have called Mr. Assange a “high-tech terrorist.” And Senator Dianne Feinstein, the California Democrat who leads the Senate Select Committee on Intelligence, has demanded that he be prosecuted under the Espionage Act. Most Americans, Britons and Swedes are unaware that Sweden has not formally charged Mr. Assange with any crime. Rather, it has issued a warrant for his arrest to question him about allegations of sexual assault in 2010.

    All such allegations must be thoroughly investigated before Mr. Assange moves to a country that might put him beyond the reach of the Swedish justice system. But it is the British and Swedish governments that stand in the way of an investigation, not Mr. Assange.

    Taken together, the British and Swedish governments’ actions suggest to us that their real agenda is to get Mr. Assange to Sweden. Because of treaty and other considerations, he probably could be more easily extradited from there to the United States to face charges. Mr. Assange has every reason to fear such an outcome.The Justice Department recently confirmed that it was continuing to investigate WikiLeaks, and just-disclosed Australian government documents from this past February state that “the U.S. investigation into possible criminal conduct by Mr. Assange has been ongoing for more than a year.” WikiLeaks itself has published e-mails from Stratfor, a private intelligence corporation, which state that a grand jury has already returned a sealed indictment of Mr. Assange. And history indicates Sweden would buckle to any pressure from the United States to hand over Mr. Assange. In 2001 the Swedish government delivered two Egyptians seeking asylum to the C.I.A., which rendered them to the Mubarak regime, which tortured them.

    If Mr. Assange is extradited to the United States, the consequences will reverberate for years around the world. Mr. Assange is not an American citizen, and none of his actions have taken place on American soil. If the United States can prosecute a journalist in these circumstances, the governments of Russia or China could, by the same logic, demand that foreign reporters anywhere on earth be extradited for violating their laws. The setting of such a precedent should deeply concern everyone, admirers of WikiLeaks or not.

  9. Here's the vix

  10. How about that move in AUMN today

    1. Shows you the degree to which it's manipulated by the short sellers. That was aggressive, fearful short-covering.

  11. Ned Naylor-Leyland of Cheviot Asset Management about unallocated versus allocated gold

    Max Keiser talks to Ned Naylor-Leyland of Cheviot Asset Management about unallocated versus allocated gold and silver bullion and permanent backwardation as a sign that everything is breaking down completely in the precious metals market.

  12. Anyone notice there wasn't a Cartel smackdown of silver or gold when the Fed minutes were released today ? That breaks the recent pattern of Cartel action on days when the Fed Open Market Committee meets / Bernanke speaks / Fed Minutes released ( Silver Docs caught this pattern break as noted below ) ..... I wonder if this supports the notions that either JP Morgan is in trouble with their silver position or there is disunity in the Cartel ? ?