The new quarterly derivatives report from the Office of the Comptroller of the Currency was released covering Over-the-Counter (OTC) derivatives positions of U.S. banks. The new OCC report shows a stunning reduction in derivatives positions in the precious metals category held by JPMorgan along with a shocking increase in derivative holdings by Bank of America. JPMorgan’s share of precious metals derivatives has been shrinking for the last couple of years. I believe this is a result of its decision to abandon its dominating control on the short side as a result of it having amassed the largest physical (non-derivative) position in silver (and gold) in history. In other words, they are getting rid of their paper silver while maintaining their big physical position.
As recently as two years ago, Bank of America held no OTC derivatives positions in precious metals. Bank of America’s increase was so large as to be astonishing. From my perspective, it means that JPMorgan is making a beeline to rid itself of precious metals derivatives as rapidly as possible and Bank of America is making a beeline to being the silver short-selling chump of all time. I’ve long contended that JPMorgan was pulling off the largest double-cross in history in slithering out of its silver and gold short positions. Bank of America has now borrowed (and gone short) at least 500 million ounces of physical silver, which just about assures that BofA will be the biggest bag-holder as and when silver explodes in price. The history of banking has no shortage of bad decisions. The bottom line on all this is a setup so bullish in silver so as to defy words.
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