In Ted Butler's Archive


I’m going to take a break from complaining about JPMorgan’s illegalities and instead give it credit for accumulating 850 million ounces of physical silver over the past 8 years. No one can ever buy as much silver as JPMorgan has bought for close to what it paid. Most importantly, JPMorgan’s accomplishment is the single most bullish factor for silver, ever. To be sure, there is no unassailable or documentable proof that shows that JPMorgan has accumulated 850 million ounces of physical silver (or 20 million ounces of gold). If there was such ironclad proof, it would be widely known and built into the price. The world is largely unaware that JPMorgan has acquired close to half of all the industry-standard 1,000 ounce silver bars in existence.

Not only has JPMorgan bought nearly 8 times more than either the Hunts in 1980 or Buffett in 1997, it has done so on declining prices (thanks to its control of prices on the COMEX). There’s no doubt the declining price of silver since April 2011, when JPMorgan began its epic accumulation, has contributed mightily to the world’s lack of recognition of what the bank has done. In addition to it making absolute sense for JPMorgan to remain mum on its massive physical metal accumulation, the bank is in a unique position to keep its acquisition completely under wraps. All told, JPMorgan holds some $13 billion of physical silver and $26 billion of physical gold. How the heck do you hide $40 billion on your balance sheet? JPMorgan’s balance sheet contains $2.5 trillion in total assets, so hiding a bit over 1.5% of those total assets is no big deal, given JPM’s army of accountants and lawyers and its use of special-purpose entities expressly created for such situations. No one sees anything on JPM’s books that it doesn’t want you to see. Clearly, JPMorgan doesn’t wish for anyone to see its silver and gold holdings.

It is only on JPM’s balance sheet that 850 million ounces looks small. By every other metric, 850 million ounces of silver is shockingly large. It is the same amount that the world mines in a year. After all the industrial demands are satisfied, there are only 100 million ounces “left over” annually for investment purposes. In essence, JPMorgan has managed to acquire 100% of that 100 million ounces every year since 2011.

JPMorgan holds 150 million ounces in their COMEX warehouse and another 50 million ounces in other COMEX warehouses. They accumulated this silver through COMEX futures skimming warehouse inventories, share-for-metal conversions in SLV and the melting-down of silver coins.   The logic of JPMorgan accumulating so much physical metal is simply that it intends to make as large a profit as possible. That means that silver and gold will climb sharply in price. That, I believe to be inevitable.

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