Why Is JPM Hoarding Silver?

There's a lot going on and I'm diligently trying to connect all of the dots.

In fact, there are so many dots to connect, I don't know where to start. I guess we'll start with price. Surprise, surprise! The Bernank tipped his hand yesterday regarding QE∞ and really moved the markets. Stocks, bonds, the metals...nearly everything has rallied. The only victim was The Pig, which immediately fell over 2 points, which is an historic, monstrously large move. I don't ever recall seeing a POSX move of that size before. Amazing!

The metals have rallied but the shorts remain in firm control, at least for now. We got a bit of a panic squeeze in the afterhours late yesterday but, once London opened, things we're jammed back down. (Why anyone in their right mind buys gold futures between midnight and 2:00 am NY time is beyond me.) The charts look better and it's always nice to see some green on the screen but don't go getting carried away just yet. Momentarily clearing $1300 and $20 is nice but we really need at least $1350 and $21 before we can begin to get excited. Until then, just keep stacking your physical, a little bit at a time. For example, I ordered 50 ASEs late Tuesday. Glad I did! smiley

OK, let's dig into the weeds a little bit and see what we find. LOTS of talk about the negative GOFO rates out there...which continue negative for the 4th consecutive day...which is unprecedented. What the heck does this indicate? My friend, DenverDave, does as good a job as I've seen explaining the implications. If you haven't yet, please take the time to read this: http://truthingold.blogspot.com/2013/07/gofo-explained-and-why-its-now-very.html

So, what other indications of shortage and backwardation are out there? Well, we've got this from Harvey:

"Tonight, the Comex registered or dealer inventory of gold falls below 1 million oz to 985,969 oz or 30.66 tonnes.  This is getting  dangerously low.  The total of all gold at the comex (dealer and customer) falls again and registers a reading of  7.095 million oz or 220.680 tonnes of gold. JPMorgan's customer inventory remains constant at  136,380.609 oz or 4.24 tonnes.  It's dealer inventory also remains  constant at 401,877.493 oz but it still must settle upon contracts issued in the June delivery month which far exceeds its inventory. The total of the 3 major gold bullion dealers( Scotia , HSBC and JPMorgan)  in its Comex gold dealer account registers only 26.03 tonnes of gold. The total of all of the dealers falls to 30.66 tonnes!! And tonight, Brinks dealer inventory falls to a record low of only 4.18 tonnes of gold!!"

Let's see...The Banks only show 30.66 metric tonnes of registered (approved and ready to be delivered) gold. This may sound like a lot but it's not. Check these two charts below:

These two charts came from Jesse's site and he's got a terrific piece on the subject that you should read by clicking here: http://jessescrossroadscafe.blogspot.com/2013/07/registered-gold-on-comex-breaks-million.html

So, inventories are extremely low and falling. The Bullion Banks (at least the U.S.-based ones) are now demonstrably long Comex gold futures. And now we have negative GOFO rates which seem to indicate a true tightness and lack of desire to part with physical gold, even in the face of an easy short-term profit. What the devil is going on here? Are we finally seeing the entire fractional reserve bullion banking scheme come apart at the seams?? It certainly appears that way.

And now to the title of this post. It appears, on the surface at least, that JPM is aggressively hoarding physical silver. Uncle Ted and Andrew have been all over this for some time now. Let's review. First Andrew.

Again, even if you're not an active trader, being a member of "Turd's Army" is well worth the money. Besides an ongoing daily commentary with instant notification of any trades he makes, Andy writes up a weekly commentary which he publishes every Sunday. This is, hands down, the most important and valuable newsletter you will ever receive. If you'd like to sign up, click here: http://www.coghlancapital.com/daytrades-application?ak=turd_army. Anyway, Andy has been noting to subscribers that, for about the past three weeks, there has been a large, institutional buyer appearing at each and every London silver fix. Because of the size of the orders, this buyer could only be a Bullion Bank and he has deduced that is likely JPM. So, if Andy is correct (and I have absolutely no reason to doubt him), then suddenly JPM has taken to quietly acquiring as much physical silver as they can.

Now, add to that what has been going on this month at The Comex. Uncle Ted (another simply outstanding newsletter you should take: http://www.butlerresearch.com) has been all over this since the first of the month. Back on Saturday he wrote this:

"I believe the statistics from the first six days of the July COMEX silver futures contract provide enough data for attention.  The standout feature for the first week of deliveries against the July silver contract indicates that JPMorgan has taken roughly 90% of the metal offered for delivery, or a total of 1637 contracts out of a cumulative total of 1828 delivered so far. In turn, of the silver contracts stopped or accepted by JPMorgan, 90% (1479 contracts) were for JPMorgan’s own house or proprietary trading account. In other words, JPMorgan took delivery of roughly 7.4 million ounces of silver in the COMEX warehouses for their own benefit and risk".

He followed that up yesterday with this:

"A quick note on JPMorgan’s unusual taking of delivery of silver in the current July contract I first mentioned on Saturday. In the two delivery days since that review, JPMorgan has taken (stopped) an additional 369 contracts, 350 of which were for the bank’s house or proprietary trading account. Of the 2220 total contracts delivered so far in the July COMEX contract, JPM has taken 2006 contracts, including 1829 contracts for the bank’s own house account. Over the past two days, customers of JPMorgan have delivered close to 200 silver contracts as well, raising the question if JPMorgan is double dealing. Another point is that the 1829 contracts (9.145 million oz) that JPM has taken in its own name is above the level of 1500 contracts that COMEX rules dictate can’t be exceeded in any one delivery month by any single trader.  Hey – have you ever heard of a rule or regulation that JPMorgan couldn’t evade? Me, neither."

There are still about 1,200 July contracts that remain to be settled so we'll see where those go...but what the heck is going on here? Of the 2,220 July13 contracts that have been settled so far this month, JPM has claimed over 90% of them. Further, 90% of those have gone directly into JPM's own house account!

So we've got JPM soaking up as much Comex silver as they can without disturbing the price downtrend AND we've also got JPM appearing each day at The Fix, buying up as much silver as possible there, too. Connecting these dots leads me to this conclusion:

JPM is getting out of the silver manipulation game. Perhaps they've been warned by the CFTC. Perhaps they simply see the writing on the wall. Again, it's impossible to say. What we do know is:

  • During this 9-month decline, they've trimmed their naked Comex short position from roughly 35,000 contracts down to approximately 15,000 contracts.
  • The startling, surprising and historic rise in the "other commercial" gross long position from 40,000 to over 60,000 contracts has likely prohibited them from reducing their naked short position to zero.

So, JPM sees the writing on the wall and is left with three choices:

  1. Cover the rest into rising prices. They tried that in 2011 and it didn't work so well.
  2.  Go the "potato" route and simply default on delivery. http://www.tfmetalsreport.com/blog/4348/simplot-scenario-silver
  3. Continue to cover the naked shorts as much and for as long as you can BUT also acquire as much physical silver as possible so that you actually can physically deliver against all your short paper if it comes down to it. If you're short 10,000 contracts and suddenly those 10,000 longs stand for delivery, it would greatly benefit you to actually have the 50,000,000 ounces on hand. Settle it out and it's over.

Again, this is just a hunch...an attempt to connect some dots. Let's watch this situation closely as we head through the month and see if it continues to play out.

Just a couple of other items. First, Pat Heller has written an excellent piece called "Where's The Gold?". You should read it: http://www.coinweek.com/bullion-report/wheres-the-gold/ And, speaking of "where's the gold?", our CBC documentary from back in April is finally set to make its American premiere on Saturday. It will debut on The History Channel known as "H2" and it will be shown at 10:00 pm EDT Saturday night. http://www.history.com/schedule/h2/7/13/2013

Lastly, I had a 30-minute conversation with Felix Moreno of GoldMoney back on Tuesday. They've now released it as a podcast and I think it turned out pretty well. It's worth a listen, even if I do say so myself.

That's all for now. I hope you have/had a great day!

TF

245 Comments

Marblesonac's picture

first

WOOOHOOO

Silver Bitches!

Iceberg Slim's picture

2nd!

hiyooooooo silver!

Igiveup2's picture

3rd

Hard to help ones self.  Life's triumphs so few and far between.

tyberious's picture

4th

and Turd, you are on fire!!

Maybe I should take a vacation!

49Pan's picture

5th

I will just sit tight and be right.  Hi Oh Silver!!!

phils6's picture

6th

wow

Mudsharkbytes's picture

7th

don't buck a trend.

Pining 4 the Fjords's picture

8th

Best thread start evah!

P.S. -  this is like watching a pitcher working a perfect game... how long can he keep it up, and whose cheap-assed bunt single will break it up?  CONTENT?  WE DON'T NEED NO STINKING CONTENT!

1ShotAK's picture

9th :)

:)  Number Nine,  ,,  ,, number Nine .....

OutsideTheMatrix's picture

10th

Nice read!

argent rampant's picture

10:00PM SAT on H2

Wow. Could they have found a smaller demographic venue in which to bury it? frown

Thanks, Turd. Another great piece of analysis! Enjoyed your interview on GM, too.

Turd Ferguson's picture

For all the degenerate gamblers

MODERATOR

Today is International Craps Day.

7-11

Good luck at the tables!

Stock_Canines's picture

Interesting post on Jesse's site

http://jessescrossroadscafe.blogspot.com/2013/07/brinks-is-being-drained-of-gold-with.html

"If this is correct, then this is a decline of 70 percent in the gold held in private accounts at Brinks in just one week."

achmachat's picture

1shotAK

I just had to hat-tip that wink

by the way... if you haven't played that backwards yet, you really should!

meddle magic's picture

the Bernank

needs to buy more bonds; so far not much of a rally

DeaconBenjamin's picture

Gold zooms to 3-week high; up Rs 610 on strong global cues

 

Gold in Singapore, which normally sets the price trend on the domestic front advanced 3.1 per cent to USD 1,298.73 an ounce.Gold in Singapore, which normally sets the price trend on the domestic front advanced 3.1 per cent to USD 1,298.73 an ounce.

NEW DELHI: Gold prices zoomed to three weeks high by surging Rs 610 to Rs 27,325 per 10 grams in the national capital today on brisk buying by stockists and investors driven by strong cues from global markets.

The precious metal spurted to regain Rs 27,000 level after June 24 as it rose in global markets following Federal Reserve Chairman Ben S Bernanke backed sustained stimulus for the for some time.

http://economictimes.indiatimes.com/markets/commodities/Gold-zooms-to-3-week-high-up-Rs-610-on-strong-global-cues/articleshow/21018602.cms

Sneed Hearn's picture

No need to evade

"Hey – have you ever heard of a rule or regulation that JPMorgan couldn’t evade? Me, neither." When the law doesn't apply to you there is no need to evade it.

DeaconBenjamin's picture

How can $US/$HK be unchanged, but HK silver is up higher %?

1.gifUS Dollar -- 07/11-13:13 -- -- 19.97 +0.51 1.gifup/down +2.59%1.gif
1.gifAustralian Dollar -0.56% 07/11-13:10 1.0945 0.9137 21.86 +0.68 1.gifupdown +3.19%1.gif
1.gifBrazilian Real -0.11% 07/11-13:12 2.2620 0.4421 45.17 +1.29 1.gifupdown +2.93%1.gif
1.gifBritish Pound +0.51% 07/11-13:12 0.6620 1.5107 13.22 +0.27 1.gifupdown +2.11%1.gif
1.gifCanadian Dollar +0.59% 07/11-13:12 1.0387 0.9628 20.74 +0.41 1.gifupdown +2.03%1.gif
1.gifChinese Yuan -0.01% 07/11-04:30 6.1304 0.1631 122.42 +3.21 1.gifupdown +2.69%1.gif
1.gifEuro +0.32% 07/11-13:12 0.7679 1.3023 15.33 +0.34 1.gifupdown +2.30%1.gif
1.gifHong Kong Dollar 0.00% 07/11-13:12 7.7573 0.1289 154.91 +4.42 1.gifupdown +2.94%1.gif
foggyroad's picture

Sharp Timing

That was some pretty sharp timing on that 50 ASE purchase, you really are 'Smokin'.

Thnx. T. F.

Edit.

Curiouser and curiouser

response to Jesse link. 

http://jessescrossroadscafe.blogspot.com/2013/07/brinks-is-being-drained...

kudos S_C

SilverTree's picture

JPM is hording/stacking for

JPM is hording/stacking for the same reasons that we are. crying

57Goldtop's picture

Green Lantern

I'm sorry to have a laugh at your expense this morning. Your posts were quite funny.

It's just that - It's been a while since someone suggested I was too optimistic. Hope you got to the beach in time.

GT

Turd Ferguson's picture

Was sent this

MODERATOR
DeaconBenjamin's picture

Iran asks India to settle all oil payment in rupees

 

 
Iran Oil Tanker
The US and European Union slapped sanctions on Iran to block oil revenues over its disputed nuclear programme, which they suspect aims to build weapons.

NEW DELHI: Iran has asked India to settle all oil trade including $1.53 billion owed to Tehran in the partly convertible rupee as the sanctions-hit nation cannot find an alternative payment channel, industry and government sources in Delhi said.

India has been paying for 45 per cent of its Iranian oil imports in rupees, which has limited international acceptability, and was settling the remainder in euros through Turkey's Halkbank, but this was halted in February under pressure from tighter western sanctions.

The US and European Union slapped sanctions on Iran to block oil revenues over its disputed nuclear programme, which they suspect aims to build weapons. Iran denies this claim.

 
ClinkinKY's picture

For TF's (and anyone else's) listening pleasure...

...TF, I know you like JD McPherson so I think this might be "right up your alley":) What else are ya' gonna' do when the markets behave the way are they now?

Fat Willie's picture

Turd

Your posts continue to get better and better.  Truly exceptional. 

Thank you for all of your time and effort not only in sharing this info, but holding the community together during this brutal correction period.  

Better days ahead.   

Well done.   

FW

brokerk22's picture

Congrats TF

Did anyone hear our fearless leader the Turd Man Ferguson on silverdoctors?  Great job TF.

Turd Ferguson's picture

Almost there

MODERATOR

Santelli almost gets there in this clip...Dare not state the real purpose of QE...but he almost did!

 

Swift Boat Vet's picture

Yes, JPM IS Stacking now ----

Just like we've been all this time, BUT they have known exactly when to sell AND when to buy.  Clear as day evidence of manipulation now that an up move is, more than likely, in the beginning throes of the next up leg.

Swifty

ancientmoney's picture

@Turd re: International Craps Day . . .

Not only is it 7-11.

It is 7-11-13.  Could only be better if today was a Friday.

meegoreng1's picture

@Turd

Sorry for the tongue in cheek insolence on my last post towards you.

The information that you provide here is unmatchable. Even today for example, great facts and report about JP Morgue. I appreciate what you have done through this website. I know you have heard this many times before but the community that you have build here rocks! Your dedication to this site is grateful.

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