JP Morgan inherited Bear Stearns huge “short” position in silver (and gold) when the Fed arranged for them to takeover (the bankrupt) Bear Stearns. They have been trying to extricate themselves from that position since 2008. They are trapped. Even now, when they desperately try and reduce their shorts but pulling their bids and allowing the market to fall, with the hope of buying all of the sales at a lower price (to help cover their shorts), the “Raptors,” (large hedge funds) step in and buy many of the contracts, making it impossible for JPM to cover.
People I talk to also feel that the reason gold is punished is to influence the price of silver, to the downside of course, in aid of JP Morgan’s quest to shed their huge short silver position.
Here is what Ted Butler had to say about JP Morgan’s short position and the Bear Stearns position they inherited:
The Real Story – Silverseek.com
November 10 2008
The price of silver at the time of Bear Stearns implosion was $20 to $21 an ounce. A free market covering of a concentrated short position of this size would have driven silver prices to the $50 or $100 level and would have exposed the long-term manipulation. Rather than let the free market deal with the required short covering of such an uneconomic and unbacked short position, government authorities arranged to have the short position transferred to JP Morgan. This was undertaken by the U.S. Treasury Department, along with taxpayer guarantees against loss to Morgan worth billions of dollars. This was done, no doubt, to save the financial system from imploding. This was also patently illegal, as it aided and abetted the silver manipulation.
I’m sure the motive behind the illegal transfer of the silver short position was the mistaken assumption by Treasury that an explosion in the price of silver (and gold) would threaten overall financial stability. Well guess what – they succeeded in crushing the price of gold and silver, but to no avail, as financial stability has been shattered.
JP Morgan was not just an accommodative good corporate citizen in the illegal transfer of the manipulative silver (and gold) COMEX short position. In addition to undisclosed government guarantees against loss, JP Morgan was given free reign to liquidate the COMEX short position at their discretion, knowing full-well the regulators would look the other way, no matter what dirty tricks were necessary to cause the price to collapse. Nor was JP Morgan a neutral agent in the silver price collapse. Data from the Office of the Comptroller of the Currency (OCC) http://www.occ.gov/deriv/deriv.htm indicates that JP Morgan held a much larger Over The Counter (OTC) derivatives position in silver and gold than was transferred to them from Bear Stearns.
My analysis shows that Morgan has made many billions of dollars, perhaps tens of billions, from their downward engineering of silver and gold prices from their combined COMEX and OTC short positions. They have used that engineered price decline to buy back as many short positions as possible. If investors are wondering what caused the destruction of billions of dollars in gold and silver values, metal and share price alike, look no further than JP Morgan, and the government officials who enabled them.
There can be no question that the CFTC is complicit in all these illegal activities. Same with the CME Group, owner of the NYMEX/COMEX. It is not possible that they are not privy and an active party to this successful downward manipulation. To think that officials at the CFTC, from the top of the agency, to staffers and even the Inspector General, have taken oaths of office to uphold commodity law and then have allowed that law to be repeatedly violated is beyond repugnant. That they have knowingly participated in an organized cover-up of this manipulation and have taken to lying to a Congressman calls for criminal prosecution.
Continue reading on SilverSeek.com
Here is a discussion from NIA on this topic, which adds to Butler’s position:
…March 14th, 2008, the very day Bear Stearns failed, was the same day silver reached a multi-decade high of about $21 per ounce. Bear Stearns was on the verge of being forced to cover their naked short position in silver, which could have quickly sent silver as high as $50 per ounce. This would have caused a loss of confidence in the U.S. dollar and a possible currency crisis. Instead of allowing this to happen, the Federal Reserve orchestrated a bailout of Bear Stearns and JP Morgan acquired their assets with the backing of the Fed. Shortly after taking over Bear Stearn’s silver short position, JP Morgan was able to manipulate the price of silver down to below $9 per ounce. (They made billions!)
Continue reading on inflation.us
For those of you who want to know more about how this all happened, I have re-printed a detailed explanation that Butler published three months ago, titled A Manipulation Timeline.
Do you agree? A lot of smart people think this is exactly what is going on. One of these days, JPM will have to bite the bullet and move out of their position, regardless of the price, and it will most likely be caused by a rising market, in spite of the manipulation.
My silver position is as large as my gold position. My expectation is simple – silver will outperform gold, and if it doubles gold’s gains from now forward, I will not be surprised at all!
Yesterday, Bill Holter discussed the shortages of ammo and guns in Texas. I have experienced the same thing here in Miami and in Minneapolis. A friend, here in Miami, owns a guns store. He turns customers away. He hasn’t had a new gun, handgun or assault rifle, to sell in months. I visited a major gun dealer in Minneapolis, after the first of the year, and they were virtually out of everything.
There was some inventory, but a fraction of what they usually have. The store was crowded. Yes, ordinary Joes are stocking up on guns and ammo. They are afraid – not only of the bad guys, but of our own government.