In Ted Butler's Archive


The Department of Justice’s announcement on Nov. 6 of a guilty plea by a trader from JPMorgan for manipulating prices in COMEX precious metals futures is the biggest news possible. The actual guilty criminal plea is news enough, but the real takeaway is that the DOJ left no doubt that this was an ongoing investigation. Not only does this investigation zero in on JPMorgan, but it is a stark departure from the hands-off treatment of JPM by the primary commodities regulator, the CFTC. Is the DOJ focusing on JPMorgan’s crime of manipulating silver prices downward since it took over Bear Stearns in 2008 or is it just looking at the short term, manipulative, effects of spoofing? Hopefully, Justice is looking into JPM’s impossibly perfect trading record of never taking a loss in COMEX trading for more than a decade and its illegal accumulation of physical metal at artificially depressed prices.

JPMorgan took over Bear Stearns (at the request of the U.S. Treasury Dept. and Federal Reserve) in March 2008, and along with that takeover came the assumption of Bear’s concentrated short position in COMEX silver (and gold) futures. This is verified in the public record. At the time of JPM’s takeover, the price of silver was over $20, the highest price it had been in 28 years. From the moment that JPMorgan assumed Bear Stearns’ short position in March 2008, the price of silver went down and remained below $20 until late 2010.

There were, of course, a number of silver price rallies and declines over that time and on every rally, JPMorgan increased its short position in COMEX silver futures and on every price decline, JPMorgan bought back all or most of its added shorts at a lower price than it sold short at, earning itself profits and never taking a loss. Throughout this entire time (March 2008 thru Sep 2010), JPMorgan was the largest single short holder in COMEX silver futures, holding a net short position that varied between 20,000 to 40,000 contracts (100 million to 200 million ounces).

Due to developing tight physical conditions, the price of silver rose from under $20 in Sep 2010 to nearly $50 by the end of April 2011, a seven month period in which JPMorgan’s roughly 20,000 contract net short position (100 million ounces) caused it to sustain an unrealized loss of approximately $3 billion. Such a large unrealized loss prompted JPMorgan to do two things: quickly arrange for a price smash of historic proportions and ensure it would never find itself in this predicament again. JPMorgan engineered the price decline, starting with a $6 Sunday evening price smash on May 1, 2011 and continuing to the present, some seven-and-a-half years later.

The real criminal genius of JPMorgan has been its preventive solution to ever again having a large run-up in the price of silver threaten it with catastrophic losses on its short position. Its solution was to accumulate physical metal on the sly as it continued to manipulate silver prices lower.  JPMorgan pulled off this dual mandate – never lose on added shorts and acquiring physical metal on the cheap – flawlessly, from April 2011 to the present.

JPMorgan has always been net short in COMEX silver futures, never net long. Most often, since March 2008, JPMorgan has been the largest single short in COMEX silver futures, perhaps for 99% of the time. Only a fool could conclude it’s a coincidence that silver prices have declined for nearly all the past eleven years while JPMorgan has always been net short in COMEX futures. The accumulation of a massive physical position while the acquirer was the largest paper short seller is the most egregious act of market manipulation in history.

I have chronicled JPMorgan doing all this for years, but the beautiful thing is that it would be a snap for the Justice Department to certify the facts I have outlined. All the records exist for the DOJ to verify what I have described. The CFTC and the CME Group maintain detailed records of all large-trader activity. Whereas I have to deduce what JPMorgan’s position is from analyzing the data in the Commitments of Traders (COT) and Bank Participation Reports, the CFTC and CME have complete access to the actual identities of the traders and their positions on every single day. The DOJ is quite capable of verifying (or refuting) all the claims I’ve made about how JPMorgan accumulated the massive amount of physical silver I allege it has acquired. It would be a snap for the DOJ to ascertain if JPMorgan was the big buyer of Silver Eagles, the big skimmer of COMEX silver warehouse inventory and the big converter of SLV shares into metal.

That’s why I find the existence of a Justice Department investigation of JPMorgan to be the most important development possible. If there is one single entity capable of connecting the factual dots in such a high-level and important matter, it is the U.S. Department of Justice. That’s why I wrote to them back in April. I can’t say if that is what put them on the trail, but neither can I rule it out. What I can say is that week in and week out for a decade, I have been directly accusing JPMorgan, as well as the CFTC and the CME Group, of running or allowing a massive ongoing silver price manipulation and not once have I heard a direct denial or rebuttal from any of them. How could I not be excited about the prospects of the Justice Department settling this matter once and for all? It will be the biggest thing in the history of the silver market and a time of great excitement for silver investors.

For a more thorough explanation of how bullish Ted Butler believes the silver market is, please go to  – Chris Marcus interviews Jim Cook.

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