A Specific Peculiarity

56
Tue, Jul 18, 2017 - 10:02am

For years, we've watched JPMorgan stockpile what is alleged to be physical gold and silver in their Comex vaults. However, something has changed over the past four months and we thought we should bring this to your attention today.

First some background...

During the silver price run-up of 2011, JPMorgan was seemingly caught flat-footed. They appeared to hold a massive paper short position while simultaneously holding no visible physical position. At the time, JPM did not have a Comex silver vault and, as the CFTC-generated Commitment of Traders data showed at the time, the last $10 of price surge was almost entirely due to a "commercial" short squeeze. The most likely "commercial" being squeezed in April of 2011? JPMorgan.

Also in the spring of that year, the was a rapid approval for JPMorgan to start their own Comex silver vault. Evidence of this can be found when we review how this vault came about in March of 2011. This old link details how JPM was suddenly and quickly approved to establish this new Comex silver vault: https://seekingalpha.com/article/259549-will-jpmorgan-now-make-and-take-...

After starting from ZERO in 2011, JPM has quickly amassed a horde of Comex silver and now has a virtual stranglehold and monopoly on this "market". As of last Friday, JPM's Comex silver vault held 112.5 million ounces versus a total Comex vault of 213.3 million ounces. This means that JPM now holds/controls nearly 53% of all silver backing the Comex silver paper derivative exchange.

To help you better understand the scope of this, check these next two charts (click to enlarge). First, here's an old Comex silver stocks report from June 3, 2011. Note the following:

  • Prior to JPM's inclusion in 2011, there had only been FOUR Comex silver depositories.
  • After the first 60 days or so, JPM had only brought in 750,761 ounces, all of it marked "eligible".
  • The total amount of silver held in all vaults was just 100,535,272 ounces.

This next chart I found on Twitter over the weekend and it comes from the always helpful Nick Laird at www.goldchartsrus.com. It shows in dramatic fashion the rising dominance of JPM and their silver vault on the Comex:

JPM seems to have largely amassed this horde through the steady acquisition of silver through the bi-monthly "delivery" process on the Comex. If we check the records since 2015, we see this play out. While only rarely issuing a contract, the House or proprietary account of JPM has consistently stopped (taken) "deliveries" since March of 2015. See below:

March15: JPM House stopped the position limit of 1,500 contracts. At 5,000 ounces/contract, this represents "delivery" of 7,500,000 ounces.

May15: 808 stops for 4,040,000 ounces

July15: 1,161 for 5,805,000 ounces

Sept15: 370 for 1,850,000 ounces

Dec15: 1,400 for 7,000,000 ounces

March16: 1,076 for 5,380,000 ounces

May16: 1,500 for 7,500,000 ounces

July16: 771 for 3,855,000 ounces

Sept16: 405 for 2,025,000 ounces

Dec16: 1,550 (50 contracts in excess of the 1,500 limit) for 7,750,000 ounces.

Adding this all together gives us a total 2015-2016 stoppage of 10,541 contracts for 52,705,000 ounces of silver. Over the same time period, JPM House issued just 342 contracts for 1,710,000 ounces. So, on a NET basis, the House account of JPMorgan accumulated almost precisely 51,000,000 ounces of silver in their Comex Vault over the time period of 2015-2016.

This hoarding continued into 2017 when JPMHouse stopped a whopping 2,689 contracts back in March. This represents a "delivery" of 13,445,000 ounces and is clearly WELL IN EXCESS of the stated Comex front and delivery month position limit of 1,500 contracts. We wrote about this at the time and even went so far as to file a complaint form through the CFTC website. You can read all about it here: https://www.tfmetalsreport.com/blog/8243/march-comex-silver-deliveries

Well a curious thing has occurred in the time since. After illegally stopping 2,689 contracts in March, the House account of JPMorgan stopped a grand total of ZERO Comex silver contracts in May and, thus far in July, they've once again stopped a total of ZERO.

Now why would this be? Does JPM finally feel as if they have enough silver? Did their violations back in March result in a slap in the wrist from the CFTC? Who can say for certain? What's clear, however, is that with a physical horde of 107,000,000 ounces in their eligible vault, JPM now has enough silver to physically settle and cover 21,400 Comex contracts should they ever begin to get squeezed again as they did in 2011. (This of course assumes that the entire 107MM ounces is owned/controlled by the JPM House account.)

Adding more intrigue to the question, however, is what we're also seeing in Comex gold. In 2015, the House account of JPM was actually a NET issuer of Comex gold contracts. Some months they issued and some months they stopped (took "delivery") and the result was an issuance of 1,109 Comex gold contracts for NET loss of 110,900 ounces of gold. This changed in 2016 though as the JPM House account ended up with a NET stoppage of precisely 8,000 Comex contracts for 800,000 ounces.

This continued into 2017 with February seeing 771 stops for a total of 77,100 more ounces. And then a curious thing happened here, too. The House account of JPM had a total of ZERO activity in April. No stops and no issuances. And then, when June came around, it happened again! No June gold stops and no June gold issuances! What the heck??

And so here we are. After being an active collector and hoarder of "physical" gold and silver through the bi-monthly Comex delivery process, the activity of the House account of JPM has suddenly come to a grinding and complete FULL STOP. And the question is: WHY? Why, after participating in every gold and silver "delivery" month for years, has the JPM House account suddenly ceased all activity? Again, are they "full"? Has the CFTC slapped a penalty upon them for repeatedly exceeding delivery month position limits?

Most importantly, what if anything might this mean for price? Has JPM conspired to keep prices low for years so that they could acquire metal as inexpensively as possible? Maybe. And, now that they appear to be "done", might price finally be allowed to rise? Again, maybe.

Unfortunately, all we can do is speculate. The actual answers will very likely never be known as the only thing that remains constant in the world of the paper derivative pricing scheme is the deliberate opacity of the process.

TF

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Markedtofuture
Jul 20, 2017 - 8:10am

How Big Oil Conquered the World

From farm to pharmaceutical, diesel truck to dinner plate, pipeline to plastic product, it is impossible to think of an area of our modern-day lives that is not affected by the oil industry. The story of oil is the story of the modern world. And this is the story of those who helped shape that world, and how the oil-igarchy they created is on the verge of monopolizing life itself.

How Big Oil Conquered the World
BohemianArtL
Jul 18, 2017 - 9:33pm

RE: Chinese Theory

I was writing about it in the past. I don't think it is a theory.

1973 - Chase opens a representative office in Moscow, the first Russian presence for a U.S. bank since the 1920s; Chase also becomes the first U.S. correspondent to the Bank of China since the 1949 Chinese revolution.

I understand that it's not a big deal from your point of view, but it was a huge deal then, in 1973, the political implications. I didn't let it go, of course. Even my professor wasn't able to explain it or give me some logical reason. He didn't even know about it. China and Russia weren't too friendly at that time and the nuclear war with China was a possibility. Yet, Chase was able to strike both deals the same year.

I don't believe that anything would change since then and JP Morgan could still represent the China Central Bank here, on our markets. Who else would and - why not? They sold their prime location with the super vault to Chinese, too. I think that Blythe agreed to that interview with Maria for this exact reason, to make clear that JP Morgan IS working on behalf of some really major client. It could be FED, the China Central Bank, it could be both at the same time and then some, too. Of course they would trade around for their own account, along with their "friendly" hedge funds and other entities they control. One orchestrated "market." China central bank or the Russian Central banks, they don't have to always deal directly. They can use their linked entities as well, even the private ones. They have more gold than they put on their books. It was always this way.

Markedtofuture
Jul 18, 2017 - 7:44pm

Navigating the Business Cycle = Prosperity

Posted Jul 18, 2017 by Martin Armstrong

The key to the future is understanding (1) the past and (2) how everything functions. Sure there is a risk of a Dark Age after 2032. Hopefully, we can learn from the past to push things in the right direction at least for once. For whatever reason, the people who like to run government are the least qualified. They seem to be people who just like to order others around.

Since they have typically never had a job in the real world, they remain clueless about how to really deal with society no less the economy. This last crisis is the classic example. We have people in power who do not understand the past no less how things really function. As a result, someone comes up with this idea of lower interest rates to stimulate demand and NEVER even once do they review history and asked – Hey; did this every work before?

I find it truly amazing that I can even write about how lowering interest rates failed to stimulate the economy for almost 10 years in Europe, and yet people want to argue that somehow I am wrong. They never review the past and offer only opinion often taught in school as if that makes it absolute doctrine. Interest rates NATURALLY drop in a recession/depression because demand declines as people lose confidence in the future.

You cannot reverse a recession/depression by lowering interest rates. Until people BELIEVE they can make a profit in the future, they will never borrow as long as the horizon appears dark as dismal.

This solution from the 2007-2009 crisis of lowering interest rates has undermined the Pension funds. This has set the stage for the collapse in government as pensions being to fail first in the state/province level of government and municipalities.

I’m sorry. This is not Nobel Prize winning theories here. All you have to do is just open your eyes, shut your ears to propaganda, and look at the history. Just ask what happens and let the charts show you without political bias.

Throughout history, the solution to every crisis sets the stage for the next crisis. This is what happens when we have unqualified people running the joint.

The key to making money to secure your future is to shed all bias and just let the markets dictate the outcome.

https://www.armstrongeconomics.com/world-news/sovereign-debt-crisis/navi...

JQuest
Jul 18, 2017 - 5:12pm

@ Maxine Waters

Moved out of her district 45 yrs ago

Markedtofuture
Jul 18, 2017 - 4:40pm

Maxine Waters' Contributions Collapse As Her "Resist 45" Efforts

Maxine Waters' Contributions Collapse As Her "Resist 45" Efforts Fail To Inspire

Maxine Waters, the Democratic Representative from the progressive paradise of California, has been an active participant in the "Resist 45" movement. Of course, it's somewhat likely that all of her grandstanding has been nothing more than a political stunt designed to raise extra cash for the Democratic Party. But, the only problem with the plan is that it doesn't seem to be working at all.

JQuest
Jul 18, 2017 - 4:27pm

The Only thing..

That matches the fall off in gold the last 30 minutes

is the correlation to the VIX.

JPY flat

USD Flat

Market Flat

Oil Flat

====================================================

Someone Is Getting Impatient:

The Price Of VIX Convexity Just Hit An All Time High

https://www.zerohedge.com/news/2017-07-18/someone-getting-impatient-pric...

Fatso
Jul 18, 2017 - 4:21pm

Turd today JPM

So follow the DOTS
With financial tools, silver is leveraged about 500 to 1
The silver physical supply is very tight.
Regulators aid the cartel
PMs must be held down or fiat loses confidence
Crypto currencies are parabolic
In spite of Turd buoying us up, membership is down.
MSM says PMs are shit.
Industrial silver users are trying to buy directly from miners.
Everyone Turdites educated think that we are stupid.
Central banks are buying stocks with printed money.
Italy nationalized 3 banks
India imported record silver/gold in May 2017
JPM has perhaps gone from short to long
JPM may hold record physical inventories

SO if banks fail though derivates exposure, would JPM survive with its metal hoard?

mavens
Jul 18, 2017 - 4:02pm

@OOOBuck

also in the "pro" column for cows = they are absolutely delicious.

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Angry Chef
Jul 18, 2017 - 3:56pm

Libero Is Right

The PM's are rallying because the Russians did it.....

gold slutOOOBuck
Jul 18, 2017 - 3:48pm

@OOOBuck

For God's sake man, stop tip-toeing around the subject and tell us how you really feel!

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