In Ted Butler's Archive


The biggest story for me is the absolute surge of physical silver coming into the world’s silver ETFs, particularly the largest, SLV. This week, another 10 million ounces came into the SLV, on essentially what was a flat week, pricewise. Total holdings in SLV now stand at 491 million ounces, another new all-time high and up by 130 million ounces since March. Over the past three months some 200 million ounces have been deposited into the world’s silver ETFs, or close to $3 billion worth. Over that same time, some 15 million ounces of gold have been bought and deposited into the world’s gold ETFs, or some $25 billion worth. That’s a remarkably high dollar level of silver being bought relative to gold – one dollar’s of silver compared to eight dollars’ worth of gold. After all, gold is nearly 100 times more expensive than silver. Besides, gold’s price is at seven-year highs and within spitting distance of all-time highs and it’s hard to find any well-known investor not bullish on gold’s prospects.

The buying in the silver ETFs would appear to not be “hot money,” subject to immediate liquidation. You won’t find SLV in the ranks of the hot stocks favored by the kid traders at Robinhood. Someday, I believe you will, just not now.  The only difficulty is in trying to figure out why the price of silver hasn’t risen in light of the unprecedented massive physical buying in the silver ETFs. That’s the only question that really matters.

The most plausible explanation I have been able to uncover is that JPMorgan has been leasing the physical silver, at least 100 million ounces, to other banks which in turn have sold it to the ETFs. My reasoning is based on JPM being the only entity with silver to sell or lend, having been virtually the only significant buyer over the past nine years. In lending the metal, JPM is putting its competitors deeper into a shorting hole. It’s also enabling JPM to continue adding to its silver hoard. JPMorgan is now ahead by more than $13 billion on its 25 million ounces physical gold position and one billion ounces silver position. That’s in addition to all the realized profits it has taken in COMEX gold and silver trading for more than a decade (with never a loss).

For those scratching their heads about how silver prices could be flat considering all that is going on (physical flows into the ETFs, combined with an outright bullish COMEX positioning setup), the answer is in the 385 million ounces held short by the 8 largest traders on the COMEX, the largest concentrated short position in real world terms of all commodities. The rise in gold prices over the past year has absolutely kicked the big shorts in the teeth, but to this point silver has not caused much if any financial damage because silver prices have yet to rise. But the big shorts have been reducing their large gold short position, by deliveries and buybacks, to the point where it looks like the bigger potential losses for them may now be in silver.

If you are looking for a reason why silver prices haven’t exploded (aside from JPMorgan leasing physical silver), it’s because the 8 big shorts have managed to keep a lid on prices. It’s often easier to contain prices by not letting them get much momentum to the upside. But in succeeding in capping silver prices (with JPM’s help) the big concentrated shorts have confirmed that they manipulated silver prices.

That the concentrated short position in silver hasn’t even started to be resolved is both frustrating and exciting at the same time, made more exciting by JPMorgan’s incredible double-cross of the other larger silver shorts. Everything going on with silver today is more bullish than I’ve ever seen it. We are closer than ever to a price resolution that will be one for the ages.

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