In Ted Butler's Archive


It is quite unusual that there hasn’t been more significant selling in COMEX gold and silver by hedge funds known as managed money traders. They generally sell on price declines that penetrate the moving averages. Of course, significant managed money selling might still lie ahead on further lower prices. If we do get that selling, the only question will be what took the managed money traders so long?  But since we’re not at that point yet, the question is why haven’t they sold?

There’s also aggressive buying, by JPMorgan, of COMEX gold and silver futures contracts, while other commercials (big banks and brokers) have gone opposite and added to short positions. I started talking about a potential JPMorgan double-cross of the other big commercial shorts in April 2018 when it started buying back its gold shorts. Then again, JPMorgan’s massive accumulation of physical gold and silver over the past nearly 9 years is more of what puts the bank in a position to double-cross the other commercial shorts whenever it decides to pull the trigger. The recent buying by JPMorgan of futures while the other commercials have sold is beyond noteworthy.

In searching for answers to the lack of managed money selling and the unusual buying by JPMorgan, a new thought occurred to me. One of the facts that came out in the most recent Justice Department indictment of yet another former JPMorgan precious metals trader was that the bank’s traders used spoofing and market manipulation to reward certain high-revenue hedge fund clients by achieving much better order executions than would have been possible through legitimate means.

Simply put, did JPMorgan whisper in the ear of certain managed money hedge fund clients that gold and silver prices are about to take off – so don’t sell? Such an expectation would explain JPMorgan’s aggressive buying. Since the Justice Department accused the bank’s traders of enabling certain hedge fund clients to obtain better order executions, it’s not that much of a stretch to imagine an advance notice of a big move coming. Such an advanced notification would surely ingratiate its clients to such a broker. Whether this is the connection between the lack of managed money selling and JPM’s unusual buying remains to be seen. Something has dissuaded the managed money traders from selling like they always have in the past and I have not been able to put my finger on it.

As time has rolled on, the signs have only gotten stronger that the silver manipulation will end in spectacular fashion. Signs like JPM’s epic physical accumulation and very recent aggressive buyback of futures contracts, as well as the lack of selling by the managed money traders for the first time in memory. There will never be an announcement of an official end to the manipulation – it will just end. And when it does, it will be an end like none other. To be sure, whenever we do lift off in price, the real move won’t involve any two steps up, one step back.  The power of the move will shock us all.

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