Site Down Again and a Chart Update

173
Tue, Apr 10, 2012 - 7:26pm

I would have made this new post earlier but, as you know, the site was down again. It sure seems strange that this silly, little site would crash so often but...whaddayagonnado? Anyway, here's a quick update.

First of all, while the site was actually working this afternoon, our pal SRSRocco posted this handy little chart showing the decoupling today of gold and silver from the DowJonesIndex. Whether or not this is a one day phenomenon is something to be watched. For now, it's just an interesting anomoly.

The move in gold thankfully took us through the $1650 level which had been so pesky yesterday and this morning. Though I'm happy to see it break 1650, gold is still in a bit of a no-mans land, as you can see on the chart below. Until gold can break out of this down-sloping channel and cross back through the 200-day moving average, which would require a close above 1685-1690, there isn't any real reason to get excited. Yes, the CoT was terrific and gold appears ripe for a rally but, with The Cartel and the WOPRs in charge, no one should rush off and buy until that 1685-1690 level is bested.

Silver is in a similar funk. Though it still appears to be forming a very nice, rounded bottom with a solid floor near $31, I just simply can't get overly excited about buying until it gets solidly back above $31.

A quick update on OI. Yesterday, I predicted that total gold OI would recover back above 400,000 based upon yesterday's trading action. This is, in fact, what happened as total OI is now 402,386, a jump of about 2,800 contracts form Monday. Though I of course can't say for certain, the OI jump seems to explain yesterday's action. Gold rallied (some spec longs added) and then was capped at 1650 several times (Cartel shorts added). The net result is a jump of 2,800 OI. Simple as that. In silver, Thursday's rally was clearly short-covering and the decline yesterday was due to some shorts being added back on. The stage is still set for silver to stage a sharp, serious short squeeze in the near future. Again, though, I wouldn't expect anything dramatic until silver crosses back through $33. From there, the short squeeze could take silver quickly back toward $35.50.

Lastly, one final mention of the appearance by The Wicked Witch of New York on CNBS last week. Over the weekend, Ted Butler wrote the best summary that I have seen for the event. Today, the entire piece was released on SilverSeek and I encourage you to go there and read it.

https://www.silverseek.com/commentary/jpm%E2%80%99s-tv-appearance

Better yet, though I'm still unsure how all this internet copyright stuff works, since Ted has released it into the public domain, I guess there's no harm in me reprinting it here. So, here you go. (What's nice about doing it this way is that it allows me to add my personal emphasis through the "bolding" of certain parts.)

JPM’s TV Appearance

Theodore Butler
April 10, 2012 - 7:35am

There was a very interesting and potentially significant development dropped into the silver equation this week. I’m speaking of the appearance of the head of commodities for JPMorgan, Blythe Masters, in a short interview Thursday on CNBC. There has already been widespread reaction to the clip and I must admit that it touched off a whirlwind of different thoughts in my mind. Quite frankly, I’m glad I’ve had a bit of time to sort them out before commenting. If you haven’t had the opportunity to view the segment, here’s the link.

https://www.cnbc.com/id/46969993

I first discovered and revealed that JPMorgan was the big concentrated short in COMEX silver in the fall of 2008 (having inherited the position from Bear Stearns). https://news.silverseek.com/TedButler/1226344970.php Since then, Ms. Masters (The Wicked Witch of New York) has become somewhat of a lightening rod in the silver manipulation discussion world. (Deservedly so.)Although I don’t believe I have ever mentioned her by name, she has been, more often than not, vilified in most Internet quarters. (Again, deservedly so.)While I can empathize with the extreme sentiments that can arise from the outrage over the lingering silver crime in progress and the damage that it has caused to many, I don’t see much benefit in personal attack. (Except in this case.) Now, more than ever, we need to focus on the facts. (and not the fact that she still pines for Turd Ferguson and the Anaconda.)

Since my thoughts are varied, let me see if I can put them into some semblance of order. First, let me give you my visceral feelings and then settle into a more measured and objective analysis. There were quite a few important statements that did come from the interview that go to the very heart of my allegations of manipulation in silver by JPMorgan. I won’t dwell on my knee-jerk reactions, but I do feel I should make them known.

There is no doubt that this wasn’t a spontaneous event. The presentation wasn’t accidental. I’ve watched CNBC fairly religiously for as long as it has been in existence (but with the sound muted for much of the day) and the last firm recollection I have of any mention of a silver manipulation was more than three years ago, when Joe Kernan (first-class douchebag) commented on the Wall Street Journal (worthless fishwrap) article on Sep 25 2008 about a CFTC investigation into silver. I remember Kernan joking about some new Hunt Bros plot to drive prices higher. (What a jackass.) Never again have I heard the silver manipulation mentioned on that network. CNBC has never seriously broached the subject to my knowledge. So I was taken back when the reporter specifically asked about the allegations of manipulation in silver, as if they were widely recognized as common knowledge. I got a special kick out of the reference to all these allegations coming from the “blogosphere.” (TFMetalsReport)(As opposed to the mainstream media, I suppose).

It would be safe to say that the interview tried to present JPMorgan as a contributor to worthy causes, who would never dream of manipulating silver and as a strong proponent of financial regulatory reform. All of JPMorgan’s positions in silver were claimed to be non-directional and only transacted to accommodate legitimate client hedging needs. To the typical CNBC viewer, who has little interest in silver to begin with, I would imagine that the segment appeared little more than a puff piece on an obscure topic. But I doubt that this was all that it was. There was an intent and purpose to this presentation, as many have already suggested.That’s what makes it so potentially significant.

To my knowledge, this is the very first time that JPMorgan has openly acknowledged the allegations against it for manipulating the price of silver. Please think about that. It’s been more than three years, dozens of class-action lawsuits and a ton of reputational abuse (remember “sink JPM, buy a Silver Eagle”?) and this is JPMorgan’s first rebuttal? Years ago, I used to wait for process servers and Fed Ex-delivered cease and desist demands; but I had just about given up on JPMorgan ever responding since so much time had passed. Don’t get me wrong, I’m very glad not be sued; but I am a little underwhelmed with how JPM finally did respond. I can’t help but ask myself – why now and in this tepid a manner? A public relations campaign on CNBC to an audience not remotely aware of the allegations to begin with hardly seems the lasting solution to making the problem go away. So what was the motivation?

Here’s where all the knee-jerk conclusions come in that just might be correct – they are feeling the heat, maybe they know something may be forthcoming from the CFTC (worthless bureaucrats) and are trying to stay ahead of the fall-out. My friend and mentor, Izzy Friedman, says they see the physical shortage about to hit, but none of us can be the fly on the wall and know the details. But we agree that the appearance likely means JPMorgan may be in trouble of some sort. JPM sees no other way out than to claim their COMEX silver short position was and is legitimate and they are prepared to stick to that story come hell or high-water. The beautiful thing is that, no matter what, this is great news. The fact that JPMorgan has spoken up first on the allegations of them manipulating the price of silver and not the CFTC, is particularly good news. (More on that later).

Best of all, this may and should open a dialogue on this issue. Ms. Masters (chain-smoking Chupacabra) gave very reasonably-sounding explanations to the allegations of silver manipulation. But they were very simple explanations offered in the blink of a TV sound bite. To those convinced that silver is not manipulated, her words explained all. To those convinced that silver is manipulated, her statements were false and misleading. That’s because the questions and answers in the TV segment were prepared and scripted. But because they only barely penetrated the surface, they fell far short of setting the matter to rest.

The great thing is that this can be resolved with just a little further explanation. You see this is not an instance of he said, she said. This is a case of fact and commodity law and the right questions and answers. So let’s drill down to the answers given to see if they really addressed the allegations.

The main theme advanced by Ms. Masters (B-cup Barracuda) is that JPMorgan holds no unhedged silver positions and all its short positions are a direct result of offsetting client positions in the OTC or swaps market. Therefore, it matters little to JPMorgan whether the price of silver rises or falls. For the sake of argument, let me stipulate for the moment that JPMorgan has offsetting client positions behind their big net short position on the COMEX. I don’t believe there are truly legitimate client positions backing JPMorgan’s COMEX short position, but let’s set that aside for a moment while I try to show that client offsetting positions or not, JPMorgan’s COMEX short position is still manipulative. JPMorgan claims they are not manipulating silver, but those are just words. Their actions are quite different. What’s more important, words or actions?

The allegations against JPMorgan for silver manipulation are centered on their concentrated short position on the COMEX. Nothing more, nothing less (aside from HFT). Claiming there were some unspecified client positions offsetting the concentrated short position doesn’t alter, in any way, the fact that the concentration still exists. The point is not the nature of what may be responsible for the concentrated short position, but the concentrated position itself. Even if JPMorgan owned every ounce of silver they held short on the COMEX in physical form, holding 25% or so of any licensed futures market would be manipulative to the price, in and of itself. It doesn’t matter what excuse is given for holding an excessively concentrated market share; such a market share would be manipulative.

If a single trader held a 25% share of any other major futures market, say in crude oil or corn, there would be emergency meetings and decrees to break that concentration before the sun went down. Farmers would be descending on Washington, DC in tractors if a New York big bank held a short position equal to 25% of the Chicago Board of Trade’s corn futures market. It wouldn’t matter one wit to the regulators what was behind the position. Such a market share in a major commodity futures market would be unthinkable. But 25% has been JPMorgan’s usual share of the net COMEX silver (minus spreads) since it took over Bear Stearns and often it has been much larger than 25%. JPMorgan can’t deny that market share in silver as that is borne out in government statistics, so it is doing the next best thing - trying to change the issue into what may be behind the position. What’s behind the position doesn’t matter; the position itself matters.

I’ve often said that I think JPMorgan is stuck with their excessively concentrated silver short position on the COMEX. This TV attempt to explain it all away strengthens my conviction. The thing about the concentrated short position is that there has always been one big silver short holder on the COMEX. It started with Drexel Burnham, got moved to AIG Trading, on to Bear Stearns and, finally, to JPMorgan. My sense is that it won’t be passed on again. JPMorgan is the final holder and I sense them knowing that may be behind the attempt to explain it away. Never, in the 25 years I have been engaged in attempting to end the silver manipulation, has there ever been a public acknowledgement from the big silver short. There is one now.

If holding a giant COMEX short position is such a sweet deal, why wasn’t JPMorgan holding such a position prior to Bear Stearns’ demise? If legitimate client positions stand behind JPM’s short position that implies most of the world’s silver hedgers only do business with JPM, no one else. Why aren’t other banks and financial institutions looking to compete with JPMorgan on the short side of silver and edge them out? That’s because no other firm wants to get stuck like JPM is stuck and reduced to offering flimsy excuses to pre-arranged softball questions on TV.

The CFTC tracks and reports positions and concentration data by individual trading entities based upon who controls the account. If a legitimate hedger wants to sell short on the COMEX to hedge production or inventory it can do so in its own name and for its own account. It doesn’t need to join with others and do it in someone else’s name and in concentrated form. There is no legitimate reason why JPMorgan’s clients can’t hedge in their own names to the extent JPMorgan is claiming, especially since allegations of concentration and manipulation are being lodged against JPMorgan. You would think that JPMorgan would be doing more than pleading their case on TV. One would think JPMorgan would advise clients to hold the COMEX short positions in the customers own names to reduce JPM’s concentration.

Unless, of course, that there is only one major client behind JPMorgan’s concentrated COMEX silver short position. In other words, if JPMorgan is representing only one or a very few related clients and that is what backs the concentrated short position on the COMEX, then that raises the issue to a whole new level of possible criminality. If JPMorgan is facilitating and enabling an unnamed client or clients in holding a concentrated short position by agreeing to put it in JPM’s name on the COMEX, then JPM may be the transfer mechanism in what can only be described as hiding the identity of a market manipulator. The terms aiding and abetting and fraudulent conveyance come to mind. In many ways, particularly if the real hidden short is foreign and outside US jurisdiction, that’s even worse than JPMorgan holding the position itself. Enabling a foreign entity to evade US commodity law and manipulate a US futures market? This gets worse the deeper you dig.

Much is made of the great size of the OTC market when compared to the COMEX. While I think that claim is bogus, many insist that the OTC market (including the LBMA) is much bigger than COMEX. In fact, the client positions that JPMorgan claim backs the concentrated short position on the COMEX, are implied to be OTC positions. But if the OTC market is so much bigger than the COMEX and JPM is the acknowledged leader in OTC trading, then why doesn’t JPMorgan just hedge its client’s OTC positions with other OTC positions? Why resort to selling short so excessively on the COMEX where it gets picked up in CFTC data? If JPMorgan offset their clients’ OTC positions with other OTC positions, we wouldn’t be having this discussion. All these positions wouldn’t be included in the COT and Bank Participation Report data and I wouldn’t be able to analyze and write about it.

This is also what makes all the threats about traders abandoning our listed and regulated exchange traded markets to the regulatory-free big international OTC markets a pile of junk. Because the COMEX is the most important derivatives market in the world for precious metals, any large silver derivatives position must be reflected in COMEX positioning. If JPMorgan could just make this COMEX concentrated short position disappear by dealing instead on the OTC market, they would have done so long ago. The simple answer is that they can’t because the OTC market is smaller than the COMEX. JPM is reduced to trying to convince anyone who will listen that the COMEX concentration doesn’t matter because the real big short is someone else hiding behind a tree that you can’t see because of client confidentiality. It’s no wonder many folks are coming to hate the banks, because the banks always have a slick answer to what we all know is simply bad behavior. How about the reporter asking JPMorgan what the heck are they doing trading in silver in the first place? Shouldn’t they be out taking deposits and making loans like banks are supposed to?

The real problem is that the COMEX sets the price of silver for the world. Therefore, JPMorgan’s concentrated short position, by its size, unduly influences the price of silver. Manipulation aside, this gives JPMorgan control of what price its clients transact in the supposed private silver hedges with JPM. This is a serious conflict and certainly not in the clients’ best interest. What fair and open good business practice would permit JPMorgan to first set the price on the COMEX and then use that price to transact hedges with clients at the “set” price?

It is because I go so far back with this silver manipulation that I see it in a different perspective than most folks. Eight years ago, on May 14, 2004, the CFTC made public a long letter which denied that any silver manipulation existed. The letter took aim at me (not mentioning me by name) and concluded that investors had best be very careful before investing in silver. On the day of the letter, the price of silver was around $5.60. https://www.cftc.gov/files/opa/press04/opasilverletter.pdf

Almost to the day four years later, the CFTC released another long public letter, dated May 13, 2008, which basically re-iterated that there was no silver manipulation or undue concentration on the short side on the COMEX. On the date of this letter, the price of silver was $16.66. https://www.cftc.gov/ucm/groups/public/@newsroom/documents/file/silverfuturesmarketreport0508.pdf

I’m not much for cycles, but it would appear that we may be at the anniversary of a four-year cycle that began in 2004. The question is if we will get yet another long-winded and soon disregarded public letter from the CFTC assuring us there is nothing wrong in silver or will it play out differently this time? The remarkable thing is that the first two CFTC letters had absolutely no effect on persuading growing numbers of observers that silver wasn’t manipulated. Even more remarkable is that the basic issues haven’t changed over the past 8 years. The only thing that changed was the big silver short. In 2004, it was AIG Trading; in 2008, it was Bear Stearns. Today, it is JPMorgan.

One thing I am encouraged by in JPMorgan’s breaking of the silence is that it may indicate real change. Prior to now, the CFTC always did the dirty work for the silver manipulators. By publicly denying that a silver manipulation existed in 2004 and 2008, the CFTC automatically protected and coddled the silver manipulators, who didn’t have to answer to anyone. This CFTC cover also protected, effectively, the silver crooks from civil litigation. The COMEX commercial crooks, including the CME Group, could always hide behind the CFTC’s skirts and proclaim that they were highly regulated and if they were doing anything wrong, the CFTC would say so. If the CFTC protecting the silver crooks didn’t cause your blood to boil, you need new blood.

Please don’t get me wrong; it is shameful and deplorable that the CFTC has taken no action against the silver manipulators for so long. But one possible advantage to that delay now is that it may be forcing JPMorgan to speak out instead. That’s much better. Particularly given how hollow JPM’s words were in their first public defense. Of course, the CFTC can still manage to cover themselves with additional shame if they do decide to side with JPM and the CME once again. For the sake of everything that is still good with the US, let’s hope they don’t. Let’s hope that the CFTC continues to allow JPMorgan to explain its concentrated short position.

Ted Butler

April 7, 2012

For subscription info, please go to www.butlerresearch.com

OK, that's all for tonight. More on Wednesday. As I take my leave, here is the original in the series. An oldie but a goodie. TF

The Wicked Witch of New York

About the Author

Founder
turd [at] tfmetalsreport [dot] com ()

  173 Comments

Apr 10, 2012 - 9:53pm

The big short behind the JPM position

Ted posits it is a "foreign" entity, and I find this interesting. Everything else he says makes great sense. But this? Perhaps he is floating this idea as a gambit to drum up interest in the topic by elected officials who might see an easy headline or two by pursuing this (I give Ted alot of respect for being a good man who is also very smart)... But... What foreign entity would have these kinds of deep pockets, incentive, plus the ability to bamboozle or buy the regulators... None. Logic points to US Gov via treasury, Fed, or likely both. This position is a hedge, all right... But they are hedging fhe ability to print unlimited fiat.

GroanerS Roche
Apr 10, 2012 - 9:57pm

Yeah, I guess I am the glass 1/2 empty guy

thanks for the info.. I thought today's spike was something to sink our teeth into.. I guess not.

TomMack
Apr 10, 2012 - 10:13pm

discouraged but hopeful

hanging in there but... if in 2004 an oz of silverwas 5.60 it would buy approx 2 gallons of gasoline: if it was 16.60in 2008 it bought approx 7 gallons of gasoline. now it buys a little more than 8 gallons of gasoline. i am not too sure but in the 60's gasoline was about was about 20 cents a gallon or approx 6.5 gallons to the ounce. am i missing something for this breakout?

¤
Apr 10, 2012 - 10:14pm

Pining

London UK in concert with the Fed?

RuNuts
Apr 10, 2012 - 10:16pm

Site down?

Half the time I can't tell if it's down or just the usual slow loading. What's the story on that?

Robespierre
Apr 10, 2012 - 10:18pm

LOOSE LIPS SINK SHIPS

MY FELLOW MARINES PLEASE DO NOT POST ANY INFORMATION ON THE TROOPS MOVEMENTS . IT CAN BE DETRIMENTAL TO OUR CAUSE. SILENCE IS GOLDEN!!!!!!

tread_w_care
Apr 10, 2012 - 10:18pm

My money is on the Fed

As the mystery behind the tree "client" of JPM.

kn33bar
Apr 10, 2012 - 10:19pm
SilverHawk
Apr 10, 2012 - 10:19pm

When are we gonna back up the truck?

What's the magic number?

Until then - take some notes...

tow truck backing up 18 wheeler part 1
atarangi
Apr 10, 2012 - 10:58pm

@silverstax - - -

The new avatar won't show for about one week then it will appear as if by magic. It's just a matter of patience. The Mods explained the technical reason for the delay a few weeks back, but I have forgotten the exact reason.

Subscribe or login to read all comments.

Contribute

Donate Shop

Get Your Subscriber Benefits

Private iTunes feed for all TF Metals Report podcasts, and access to Vault member forum discussions!

Key Economic Events Week of 10/21

10/22 10:00 ET Existing home sales
10/24 8:30 ET Durable Goods
10/24 9:45 ET Markit flash PMIs
10/24 10:00 ET New home sales
10/25 10:00 ET Consumer Sentiment

Key Economic Events Week of 10/14

10/15 8:30 ET Empire State Fed MI
10/16 8:30 ET Retail Sales
10/16 10:00 ET Business Inventories
10/17 8:30 ET Housing Starts and Bldg Perms
10/17 8:30 ET Philly Fed MI
10/17 9:15 ET Cap Ute and Ind Prod
10/18 10:00 ET LEIII
10/18 Speeches from Goons Kaplan, George and Chlamydia

Key Economic Events Week of 10/7

10/8 8:30 ET Producer Price Index
10/9 10:00 ET Job Openings
10/9 10:00 ET Wholesale Inventories
10/9 2:00 ET September FOMC minutes
10/10 8:30 ET Consumer Price Index
10/11 10:00 ET Consumer Sentiment

Key Economic Events Week of 9/30

9/30 9:45 ET Chicago PMI
10/1 9:45 ET Markit Manu PMI
10/1 10:00 ET ISM Manu PMI
10/1 10:00 ET Construction Spending
10/2 China Golden Week Begins
10/2 8:15 ET ADP jobs report
10/3 9:45 ET Markit Service PMI
10/3 10:00 ET ISM Service PMI
10/3 10:00 ET Factory Orders
10/4 8:30 ET BLSBS
10/4 8:30 ET US Trade Deficit

Key Economic Events Week of 9/23

9/23 9:45 ET Markit flash PMIs
9/24 10:00 ET Consumer Confidence
9/26 8:30 ET Q2 GDP third guess
9/27 8:30 ET Durable Goods
9/27 8:30 ET Pers Inc and Cons Spend
9/27 8:30 ET Core Inflation

Key Economic Events Week of 9/16

9/17 9:15 ET Cap Ute & Ind Prod
9/18 8:30 ET Housing Starts & Bldg Perm.
9/18 2:00 ET Fedlines
9/18 2:30 ET CGP presser
9/19 8:30 ET Philly Fed
9/19 10:00 ET Existing Home Sales

Key Economic Events Week of 9/9

9/10 10:00 ET Job openings
9/11 8:30 ET PPI
9/11 10:00 ET Wholesale Inv.
9/12 8:30 ET CPI
9/13 8:30 ET Retail Sales
9/13 10:00 ET Consumer Sentiment
9/13 10:00 ET Business Inv.

Key Economic Events Week of 9/3

9/3 9:45 ET Markit Manu PMI
9/3 10:00 ET ISM Manu PMI
9/3 10:00 ET Construction Spending
9/4 8:30 ET Foreign Trade Deficit
9/5 9:45 ET Markit Svc PMI
9/5 10:00 ET ISM Svc PMI
9/5 10:00 ET Factory Orders
9/6 8:30 ET BLSBS

Key Economic Events Week of 8/26

8/26 8:30 ET Durable Goods
8/27 9:00 ET Case-Shiller Home Price Idx
8/27 10:00 ET Consumer Confidence
8/29 8:30 ET Q2 GDP 2nd guess
8/29 8:30 ET Advance Trade in Goods
8/30 8:30 ET Pers. Inc. and Cons. Spend.
8/30 8:30 ET Core Inflation
8/30 9:45 ET Chicago PMI

Key Economic Events Week of 8/19

8/21 10:00 ET Existing home sales
8/21 2:00 ET July FOMC minutes
8/22 9:45 ET Markit Manu and Svc PMIs
8/22 Jackson Holedown begins
8/23 10:00 ET Chief Goon Powell speaks

Forum Discussion

by Trail Trekker, 1 hour 26 min ago
by admin, 3 hours 26 min ago
by NW VIEW, 4 hours 23 min ago
randomness