THE MAIN REASON
At the beginning of 2010, visible world holdings of silver bullion amounted to roughly 600 million ounces and grew to 850 million ounces at the end of 2012. The acquisition of this 250 million ounces (worth some $7 billion) by investors largely accounted for the move in silver prices from $17 at the start of 2010 to $30 at year end 2012. Whereas gold holdings fell dramatically this year, total silver holdings grew by an additional 25 million ounces to 875 million ounces, despite silver falling in price.
What accounts for the big gold liquidation this year and the lack of any liquidation in silver holdings? Why did investors liquidate roughly $35 billion in gold (25 million ounces) over the past nine months and not any silver; even though silver prices fell more? I think the correct answer is that investors believe they can make more money in silver.
The reason to invest in silver is to get rich. Because the current price is lower than production costs, silver should handily preserve purchasing power and maintain wealth in the long term. But that role is almost beside the point. Silver should be bought to achieve a financial windfall. Buying silver is like buying a lottery ticket that never expires and the odds of winning are in your favor. Buying silver at a price that’s cheaper than the cost of mining it has to be the bargain of the century. It will ultimately earn you a fortune.
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INTERVIEW
Q: Lately you’ve been suggesting the silver manipulation you write so much about is on its last legs. Why?
A: It has turned into one of the longest manipulations in history and since all manipulations must end, it is going to end soon. That’s largely a function of how blatant it has become. So many people see it now. The new Enforcement Director at the CFTC recently brought charges of manipulation in COMEX gold and silver futures. This indicates a remarkable turnabout for the agency.
Q: You’ve been focusing on JPMorgan’s perfect trading record. Can you explain why?
A: Because it is incontrovertible proof that JPMorgan is the big crook behind the silver manipulation.
Q: In what way?
A: Just like no baseball slugger can bat 1.000 for 9 years running, no one can establish new short positions in COMEX silver for 9 years running without ever having a loss. They have only profits on hundreds of thousands of contracts. No one is that good. The only possible explanation is that the game is rigged.
Q: If a person shorted 100 stocks, the chances of them all going down is almost impossible. Are you saying they did hundreds of thousands of silver trades on the short side and they made money on all of them?
A: Yes.
Q: How do you know this for sure?
A: The same official CFTC data that I have followed and written about for decades show this clearly. That’s why I get away with calling JPMorgan the big silver crook without any challenge from the bank, the COMEX or the regulators. It smells to high heaven.
Q: That sounds like a form of corruption. How much physical silver has JPMorgan accumulated while they held the price down?
A: My best estimate is upwards of 600 million ounces, or around 100 million ounces per year for the past six years.
Q: Why did they buy all this silver?
A: Unless JPMorgan has secretly converted into a non-profit organization, I would assume it did so to make a lot of money, same as with any asset it acquired. The kicker here is that JPMorgan has made hundreds of millions of dollars in trading COMEX silver futures from the short side and now stands to make billions when it takes its boot off the neck of the silver price.
Q: Talk about the perfect crime. How did they pull this off?
A: JPMorgan and two or three other large short sellers were able to add as many new short contracts as needed to cap every silver price rally for the past nine years. JPMorgan could wait it out until the buyers, the technical funds, began to sell at some point. Then the big shorts would buy back their short positions at lower prices, with profits and never a loss. It’s quite the racket.
Q: Isn’t that against commodity law?
A: Sure, but up until now the regulators at the CFTC have looked the other way.
Q: Do you see any change on the horizon?
A: I’m hopeful that the new Enforcement Director at the CFTC, James McDonald, might make a difference.
Q: In what way?
A: First, let me take a moment to thank all your readers who did take the time to write to McDonald the beginning of April. We can’t know for sure what effect writing to him might have had, but he did announce on June 2nd charges related to manipulation in COMEX silver and gold futures for the first time in decades.
Q: You still seem to think that this is a big deal?
A: At this point, yes. However, if much time passes and JPMorgan is still allowed to add silver short positions on higher prices, then I will change my mind. As I’ve said, time will tell.
Q: What do you hope McDonald will do?
A: Tell JPMorgan, behind the scenes, that it can’t add new silver short positions.
Q: What will that accomplish?
A: It will end the silver price manipulation once and for all and set the price free.
Q: JPMorgan could decide to stop shorting at any time. They don’t need government prompting do they?
A: They could do so at any time they choose and they very well may. They certainly have plenty of reasons to let it fly.
Q: What’s the biggest reason?
A: JPMorgan can make the truly big money – many billions, when silver prices soar. Should silver go to $100 an ounce, JPMorgan will make $50 billion.
Q: Does their big silver hoard make a price rise inevitable?
A: Absolutely, there’s no question we are going to see silver at dramatically higher prices.
Q: Unfortunately, a lot of people who own silver are losing patience with it. What do you say to them?
A: The underlying facts are more bullish than ever. The price is ridiculously cheap and the risk is virtually nonexistent.
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