In Ted Butler's Archive


JPMorgan increased the amount of silver in its COMEX warehouse by more than 1.5 million ounces to just under 115.5 million ounces, another new high. No one can dispute that JPMorgan has corralled more silver in its COMEX warehouse than anyone else, but this is just the tip of the iceberg when it comes to JPM’s accumulation of physical silver over the past six years. Even though JPMorgan has stopped taking delivery of COMEX silver futures contracts since the end of March and stopped buying Silver Eagles since near year-end, the bank has shown no signs of ending its massive and historical accumulation of physical metal. Instead, it is acquiring physical metal by share-to-metal conversions in the big silver ETF, SLV.

Total shares outstanding in the trust must be matched by a similar amount of physical metal. If shares outstanding grow (due to new net investment buying), new metal must be deposited (unless new short selling occurs). If shares outstanding fall (due to net selling), the appropriate amount of physical metal is removed from the trust. The catch is that this process can work another way. Existing shares can be converted to physical metal and removed from the trust. Such a practice would be used by a large entity seeking to accumulate physical metal on the sly. Because too large a share position (over 5%) would require SEC reporting and public disclosure, a conversion of shares to metal would avoid public disclosure (there are no reporting levels for physical metal ownership). JPMorgan is better equipped to pull off share to metal conversions in SLV than any other entity, because it is not only an authorized participant (AP), but is also the sole custodian of the physical silver in the trust. In terms of share to metal conversions in SLV, JPMorgan is in the catbird’s seat.

Over the past month, more than 13 million ounces have “come out” of SLV, with 3.8 million ounces this week alone. Remember, silver has rallied $1.50 over the past month with more than half of the gain coming the week before last. Normally, higher prices denote net investor buying, as the buyers are more aggressive than the sellers, and that results in new shares outstanding being created and more metal deposited into the trust to back those new shares. Yet, I just reported the opposite – strong buying on higher prices with metal coming out of SLV instead of going in. What gives?

What gives is that JPMorgan has ramped up its accumulation of physical silver through the share-to-metal conversion route in SLV and this, alone, accounts for the phenomenon of big metal withdrawals on rising prices. The motive for JPMorgan is obvious – accumulate more physical metal without having to disclose that fact. I would estimate that JPMorgan has acquired more than 17 million ounces of physical silver over the past month or so. That means the world’s most crooked bank now holds a lot more than the 600 million ounces I pegged them at some months back. I’m hesitant to add on 50 million ounces to JPMorgan’s physical silver hoard willy-nilly, but 17 million ounces in a month is not exactly chump change.

For subscription info please go to

Start typing and press Enter to search