Why Is JPM Hoarding Silver?

245
Thu, Jul 11, 2013 - 12:47pm

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!

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: https://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: https://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: https://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: https://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. https://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: https://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. https://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.

T. Ferguson: prepare for system failure

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

TF

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turd [at] tfmetalsreport [dot] com ()

  245 Comments

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SilverSurfers
Jul 12, 2013 - 11:54am

Poor Thing

Last known report was that Janet was headed to the AZ border with assault rifles intending to shoot to kill. I guess she lost it. Another BHO library card carrying totalitarian, bites the dust.

Iceberg Slim
Jul 12, 2013 - 11:54am

was GLD DRAINED yesterday?

Not sure if it was posted yet or if i missed it...just curious given the Bernanke bump yesterday on whether or not inventory was removed or added.

SilverSurfers
Jul 12, 2013 - 11:49am

Feeling

feel 22? Must be taking the hotter colder game, a bit to personal, with only your bad self, trying to catch 22 yourself. Its kind of tricky for the novice, so its always recommended to start with solo blinds man bluff wearing medical gauze.

Catch-22 (6/10) Movie CLIP - Bomb the Ocean (1970) HD
Catch 22 Major Major.mpg
Catch-22 (4/10) Movie CLIP - I'm Desperate (1970) HD
ag1969
Jul 12, 2013 - 11:41am

Janet Napolitano to resign Homeland Security post

Homeland Security Secretary Janet Napolitano, who has led the embattled agency for the entirety of President Obama’s administration, said Friday she is resigning to run the University of California system.

Ms. Napolitano, who had been governor of Arizona before being tapped to lead the agency, leaves with a trail of successes, but also has become a lightning rod in the immigration debate which is now raging on Capitol Hill.


Read more: https://www.washingtontimes.com/news/2013/jul/12/janet-napolitano-quits-homeland-security-post/#ixzz2YqX4EUaS
Follow us: @washtimes on Twitter

MickeyTF
Jul 12, 2013 - 11:38am

June Surplus

do not forget that in May , benefits due June 1 were paid May 30-so mays deficit was higher than normal and Junes was set up to be lower.

Let's also not forget that the Treasury is now borrowing from Federal Pensions. Which is like me borrowing from my kids savings.

Also, how they "manage" cash flow is important and we know there are massive differences between cash flow deficit and GAAP.

Everything is being manipulated and gamed.

Richard Russell in a depression: "he who loses the least is the winner".

this economy is not getting better-jobs not--12 trillion pissed down the drain. and counting. Obamacare--wait till mid america finds out the true cost of Obamacare and giving free insurance to the 30 million.

If media is concerned about riots over the Zimmerman deal--thats petty cash compared to whats going to come when the silent majority gets pissed off.

Quixote2
Jul 12, 2013 - 11:33am

metals price ratios

snipped from a comment by funthea at: https://www.silverdoctors.com/jpm-appears-to-be-getting-out-of-the-silve...

As far as price ratios of the metals go, that is a bit trickier that most make it out to be. The ratio in the earths crust is one factor. The ratio of ability to mine is another factor. Supply and demand, and overall scarcity are others.

You mention Palladium. Palladium is mined at the same rate as platinum, yet sells for less that half that of platinum. Both are mined at 12 times less than gold. Yet, until recently gold was priced higher than platinum. If you look only at their rate of extraction from the earth and price only from that, you would need to first determine the primer, ie; which one is accurately priced and therefore the benchmark by which to price the others. For example, if gold is accurately priced and we take the extraction rate from the earth of the four PM’s, we get platinum and palladium both priced at $15,400 per oz and silver priced at about $135. If we say that silver is the accurately priced element at $20 per oz then we get gold at $200 per oz and platinum and palladium at $2,400 per oz. If we say that platinum is the accurately priced element at $1405 per oz then we get palladium also at $1405 and gold at $117 per oz and silver at $11.70 per oz. Lastly, if we say that palladium is accurately priced at $717 per oz then we get platinum also at $717 and gold at $59.75 and silver at $5.97 per oz.

Truth is that extraction rates equate to scarcity and not necessarily price. Price is set by supply and demand. Supply is set by price and scarcity. And demand… demand is the twisted one. Mix in to that a little manipulation, a little fear, a little hora and mystic, and a shit load of paper derivatives, and whoa-la… You have yourself one giant cluster-fuck of confusion in price discovery, just as every banker loves.

Key Economic Events Week of 7/6

7/6 9:45 ET Markit Service PMI
7/6 10:00 ET ISM Service PMI
7/7 10:00 ET Job openings
7/9 8:30 ET Initial jobless claims
7/9 10:00 ET Wholesale inventories
7/10 8:30 ET PPI for June

monkry
Jul 12, 2013 - 11:33am

Comex inventory disclosure

Maybe I've had too much coffee, but I find the comex inventory reporting of massive drops to be suspect.

Unless I've erred in my memory of the timing, (which happens to the best of us), right after comex changes its inventory disclosure statement to say it's a best guess effort, and to not rely on the numbers, it starts to report massive declines in its' inventory.

So what the hell is going on? Were the numbers ficticious before, or ficticious now? Or both?

Why did they feel the need to change the disclosure in the first place?

monkrytmosley
Jul 12, 2013 - 11:26am

gofo rates

Found here:

https://www.lbma.org.uk/pages/index.cfm?page_id=55&show=2013

1mth, 2mth, 3mth, 6mth, 1yr

12-Jul-13 -0.04167 -0.02333 -0.01333 0.06167 0.17000
tmosley
Jul 12, 2013 - 11:15am

Anyone have an update on GOFO

Anyone have an update on GOFO rates?

Urban Roman
Jul 12, 2013 - 11:07am

Yeah, same here Bollocks.

I didn't even watch the whole thing. Just some bloke reading ... it wasn't even the guy I was expecting.

Bait and switch -- tyberious said Jim Grant. Who usually just talks about bonds. Bond-bonds.

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Key Economic Events Week of 7/6

7/6 9:45 ET Markit Service PMI
7/6 10:00 ET ISM Service PMI
7/7 10:00 ET Job openings
7/9 8:30 ET Initial jobless claims
7/9 10:00 ET Wholesale inventories
7/10 8:30 ET PPI for June

Key Economic Events Week of 6/29

6/30 9:00 ET Case-Shiller home prices
6/30 9:45 ET Chicago PMI
6/30 10:00 ET Consumer Confidence
6/30 12:30 ET CGP and SSHW to Capitol Hill
7/1 8:15 ET ADP Employment
7/1 9:45 ET Markit Manu PMI
7/1 10:00 ET ISM Manu PMI
7/1 2:00 ET June FOMC minutes
7/2 8:30 ET BLSBS
7/2 10:00 ET Factory Orders

Key Economic Events Week of 6/22

6/22 8:30 ET Chicago Fed
6/22 10:00 ET Existing home sales
6/23 9:45 ET Markit flash PMIs for June
6/23 10:00 ET New home sales
6/25 8:30 ET Q1 GDP final guess
6/25 8:30 ET Durable Goods
6/26 8:30 ET Pers Inc and Spending
6/26 8:30 ET Core inflation

Key Economic Events Week of 6/15

6/16 8:30 ET Retail Sales
6/16 8:30 ET Cap Ute and Ind Prod
6/16 10:00 ET Chief Goon Powell US Senate
6/16 4:00 pm ET Goon Chlamydia speech
6/17 8:30 ET Housing Starts
6/17 12:00 ET Chief Goon Powell US House
6/18 8:30 ET Initial Jobless Claims
6/18 8:30 ET Philly Fed
6/19 8:30 ET Current Account Deficit
6/19 1:00 pm ET CGP and Mester conference

Key Economic Events Week of 6/8

6/9 10:00 ET Job openings
6/9 10:00 ET Wholesale inventories
6/10 8:30 ET CPI for May
6/10 2:00 ET FOMC Fedlines
6/10 2:30 ET CGP presser
6/11 8:30 ET Initial jobless claims
6/11 8:30 ET PPI for May
6/12 8:30 ET Import price index
6/12 10:00 ET Consumer sentiment

Key Economic Events Week of 5/25

5/26 8:30 ET Chicago Fed
5/26 10:00 ET Consumer Confidence
5/27 2:00 ET Fed Beige Book
5/28 8:30 ET Q2 GDP 2nd guess
5/28 8:30 ET Durable Goods
5/29 8:30 ET Pers Inc and Cons Spend
5/29 8:30 ET Core Inflation
5/29 9:45 ET Chicago PMI

Key Economic Events Week of 5/18

5/18 2:00 ET Goon Bostic speech
5/19 8:30 ET Housing starts
5/19 10:00 ET CGP and Mnuchin US Senate
5/20 10:00 ET Goon Bullard speech
5/20 2:00 ET April FOMC minutes
5/21 8:30 ET Philly Fed
5/21 9:45 ET Markit flash PMIs for May
5/21 10:00 ET Goon Williams speech
5/21 1:00 ET Goon Chlamydia speech
5/21 2:30 ET Chief Goon Powell speech

Key Economic Events Week of 5/11

5/11 12:00 ET Goon Bostic speech
5/11 12:30 ET Goon Evans speech
5/12 8:30 ET CPI
5/12 9:00 ET Goon Kashnkari speech
5/12 10:00 ET Goon Quarles speech
5/12 10:00 ET Goon Harker speech
5/12 5:00 ET Goon Mester speech
5/13 8:30 ET PPI
5/13 9:00 ET Chief Goon Powell speech
5/14 8:30 ET Initial jobless claims and import prices
5/14 1:00 ET Another Goon Kashnkari speech
5/14 6:00 ET Goon Kaplan speech
5/15 8:30 ET Retail Sales and Empire State index
5/15 9:15 ET Cap Ute and Ind Prod
5/15 10:00 ET Business Inventories

Key Economic Events Week of 5/4

5/4 10:00 ET Factory Orders
5/5 8:30 ET US Trade Deficit
5/5 9:45 ET Markit Service PMI
5/5 10:00 ET ISM Sevrice PMI
5/6 8:15 ET ADP jobs report
5/7 8:30 ET Productivity
5/8 8:30 ET BLSBS
5/8 10:00 ET Wholesale Inventories

Key Economic Events Week of 4/27

4/28 8:30 ET Advance trade in goods
4/28 9:00 ET Case-Shiller home prices
4/29 8:30 ET Q1 GDP first guess
4/29 2:00 ET FOMC Fedlines
4/29 2:30 ET CGP presser
4/30 8:30 ET Pers Inc and Cons Spend
4/30 9:45 ET Chicago PMI
5/1 9:45 ET Markit Manu PMI
5/1 10:00 ET ISM Manu PMI

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