In Ted Butler's Archive


Silver is a vital industrial commodity and investment asset that is both scarce and rare. It’s exceedingly undervalued due to price manipulation on the most important precious metals exchange – the COMEX. The artificial low price creates the potential for large investment gains in a relatively short period of time. Silver has a unique history of large and quick price gains. Silver also has a history of long periods of dismal price performance and sharp selloffs, owing to the same artificial mispricing of the COMEX.

In 2008, thanks to correspondence from the CFTC to various elected officials, I was able to confirm the identity of the largest COMEX short seller and chief silver price manipulator as JPMorgan. For the 23 years prior to that I had studied silver closely, but I never had concrete proof of who was the big short. Since that time, it has been remarkable how this bank has continued to dominate silver. JPMorgan has dominated COMEX silver dealings, purchases of Silver Eagles and Maple Leafs from the U.S. and Royal Canadian Mints and metal conversions from the big silver ETF, SLV. Some might think I have obsessed on JPMorgan’s dealings in silver, but to my mind I have just followed the flow of facts.
There is another little mentioned fact proving JPMorgan’s price dominance in silver. The Office of the Comptroller of the Currency reports quarterly on the over the counter (OTC) derivatives held by U.S. banks. The newest report, as of June 30, 2015, tells the total notional value of OTC derivatives contracts held.

The report indicates the identity of U.S. banks involved in OTC derivatives. It shows that JPMorgan holds more than $20 billion in total silver derivatives. Moreover, JPMorgan’s silver derivatives position increased by 50% or $7 billion in the quarter, an enormous increase with no corresponding increase by any other U.S. bank. JPMorgan’s counterparties had to be foreign banks or non-bank trading companies (like Glencore or Trafigura).

Most importantly, JPMorgan holds nearly 60% of the total $35 billion worth of OTC silver derivatives held by all U.S. banks. There is no instance, as far as I know, where a 60% market share would not be considered to be in violation of U.S. antitrust policy. Not only does JPMorgan have a monopoly in OTC silver derivatives, the bank has a monopoly on everything related to silver. JPM holds the lion’s share (more than 40%) of total COMEX silver warehouse inventories, the second largest stockpile of silver in the world, after starting with zero in early 2011. JPMorgan has taken more deliveries on COMEX silver futures than any other entity this year (20 million ounces) and its own warehouse has added 70 million ounces. JPMorgan has purchased more than 100 million Silver Eagles and 30 million Maple Leafs over the past 4 and a half years, singlehandedly accounting for the current retail shortage. As custodian of the SLV, the largest visible silver stockpile on earth, JPMorgan had an inside advantage in converting shares of the ETF into non-disclosed metal over the past 4 and a half years and must be considered the prime agent behind the deposits and withdrawals of metal from the fund as I’ve been reporting for years. By every measure possible JPMorgan dominates silver. Dodd/Frank and the Volcker Rule were intended to prevent exactly what JPMorgan has established in silver.

Now that JPMorgan holds close to 400 million ounces of physical silver by my estimates, the stage is set for prices to reverse upward (whenever JPM decides). That will benefit JPMorgan the most. That’s the whole point of this unarguable monopoly JPMorgan has established in silver. I never anticipated that JPMorgan would continue the silver manipulation for seven years and end up accumulating the largest privately-owned holding of physical silver in history. Nothing could be more bullish than JPMorgan accumulating a much greater hoard of silver than did the Hunt Brothers or Warren Buffet. Because of JPMorgan the ultimate price of silver will go into the history books.

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