In Ted Butler's Archive


A question from a close associate a week or so back prompted a whole new line of thought. The question set me back so much that I told him I had to think about it before responding. I’ve thought of little else since. The question was whether the big buyers of the 300 million ounces (over the past four months) in the silver ETFs were the big concentrated shorts in COMEX silver futures?

In other words, did the big shorts eliminate their money-losing short position by buying physical silver in the exchange traded funds (ETFs)? This would defuse a budding crisis for the COMEX, the regulators and the big shorts themselves. It would also remove the taint from JPMorgan’s silver manipulation that enabled them to procure a billion ounces of physical silver while holding down the price. The silver added to the ETFs had to be coming from their stockpile. It’s the only possible source for that much silver.

At first, I rejected the idea that a deal could be made among the various parties, but quickly came to see it as not only feasible, but something that checked off all the boxes and then some. After contemplating my associate’s (Jim Cook) question, I am also inclined to believe JPMorgan has sold some of its silver under orders from the government. I am also convinced that the silver manipulation is very close to coming to an end and that termination will send prices sharply higher. Any negotiated solution to the decades-old silver manipulation would include input from all parties at the negotiation table. The entities at the table would be the DOJ, CFTC, CME, the master manipulators of silver, JPMorgan, and even the big shorts.

What I am suggesting is that an agreement has been reached and largely already put into place whereby JPMorgan has agreed to relinquish a chunk (say around 300 million ounces of its one billion ounces silver stash) of its physical holdings and has agreed to no longer overtly manipulate the price of silver. By doing so, JPM gets the feds off its back and escapes any criminal findings. It also gets to reap the rewards of sharply higher silver (and gold) prices. Sure, JPM admits to spoofing and throws a few of its traders under the bus, but that was going to happen anyway. And while 300 million ounces is a lot to give up, it’s not when you still have 700 million ounces remaining.

Such an agreement would allow the Justice Department and, particularly, the CFTC to gracefully conclude and exit from a quagmire that would have eventually engulfed them both. As silver prices climb, the frustration and anger at silver being manipulated for so long will dissipate and be forgotten in time. After all, it’s hard to be angry when you are making money. Ditto for the CME Group. For the big shorts, all prospects of financial ruin and potential disorderly markets are conveniently sidestepped. By allowing the big shorts to be the buyers of the roughly 300 million ounces sold by JPMorgan to the silver ETFs and in recent COMEX deliveries, the concentrated short position is neutralized. Under this solution, everyone that matters wins – that’s what makes it the perfect solution.

There is little reason for the big shorts to put their heads back into the lion’s mouth after executing such a perfect escape. Simply not adding aggressively to the short side on rising prices should be enough to allow silver prices to soar. The timing of this perfect solution would appear to be impeccable. The financial world appears set to alight on silver as the world’s last remaining investment bargain. It would appear a wall of money is about to discover silver just as the single reason for what made silver so cheap – the concentrated short position – may cease to exist and no one will be blamed for soaring prices. If every data point didn’t confirm everything I just wrote, it would be a story impossible to invent.

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