In Ted Butler's Archive


I awoke on Wednesday night from a nightmare about a margin call on silver because I couldn’t find the order ticket on which I bought protective put options. It was all a dream because I’ve never held silver on margin. Unable to fall back to sleep, I started to think about that day’s trading activity. My market antennae was stirred by the relative outperformance of silver. As I lay awake contemplating that day’s trading action, it dawned on me what may have occurred. Silver prices opened higher on huge volume and stayed higher all day.  Prices closed up 25 cents. The extraordinarily large trading volume on Wednesday was highly unusual given that no new price lows or upside penetrations of the moving averages occurred.

I asked myself who were the likely buyers and sellers that day. I was only coming up with likely sellers and no obvious buyers. Then it dawned on me – this would have been a perfect time for JPMorgan to have been a big buyer; buying into selling from the managed money traders, the raptors and the other reportable traders. With so much selling, a large number of net contracts could be bought, perhaps as many as 10,000. Throw in the fact that all this occurred on a Wednesday, meaning the full extent of big potential buying by JPM wouldn’t be known until the following COT report over a week away and you have the makings of a very bullish situation.

On silver’s somewhat unusual 30 to 40 cent rally that Wednesday, the only buyer would be someone going against the grain of selling from the raptors, the other non-commercial traders and even the managed money traders who were selling. Maybe I’m giving JPMorgan too much credit for doing what I think it did, but a bigger mistake would be underestimating them. I don’t talk much about the dollar, the stock market, cryptocurrencies, interest rates, the state of the political world, the actual supply/demand data or the man in the moon. All of that is peripheral and secondary to two things – COMEX positioning and what JPMorgan is up to. How can I possibly think otherwise when I believe that JPM has acquired 700 million ounces of physical silver and 20 million ounces of physical gold?

Every silver rally over the past ten years has eventually been snuffed out due to JPMorgan adding to its COMEX short position. The next silver rally that JPMorgan does not short into, therefore, is bound to be the big one in which the price explodes. Certainly, if JPMorgan has bought back the number of short contracts I have speculated on Wednesday, it is in a good position not to add to short positions on higher prices. In fact, it is in the best position ever not to do so. It would be an ideal time for JPMorgan to throw in the towel on the silver manipulation and make some really big money, thanks to its massive physical position.

Based upon all the important factors, like COMEX deliveries, warehouse statistics, deposits in SLV and, most importantly, the growing competition for an ever bigger share of the managed money pie of COMEX futures positioning, the time has never been better for JPMorgan to refrain from adding new short positions on the next rally. Should JPM refrain from adding shorts, the manipulation will end and the price will explode. Without the guiding hand of new short selling by JPMorgan to control prices at the margin, the silver manipulation gig will be up. One must be extremely circumspect before stating “this is it” or any other sentiment implying certainty about the future. On the other hand, I feel strongly that we are at a critical inflection point based upon all the facts. It wouldn’t be proper for me not to share such strong feelings.

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