In Ted Butler's Archive


The silver/gold price ratio has widened out to 88 to 1. That’s the cheapest silver has been relative to gold in more than a quarter century. As for why silver is so cheap, look no further than futures contract positioning on the COMEX. Supply-demand fundamentals have nothing to do with the extreme low price of silver. Actual silver production is down and demand is up. What does exist is ironclad proof that speculative positioning on the COMEX is solely responsible for silver’s depressed price. Furthermore, the biggest speculator of all, JPMorgan, has been nothing short of masterful in rigging prices lower for the express purpose of buying as much silver (and gold) as possible.

The May 10th COT and Bank Participation report data indicate that JPMorgan’s net long position in COMEX silver futures was 5,000 contracts. In other words, they no longer have a COMEX short position, a rarity of notable significance. JPMorgan’s holdings of physical silver, estimated by me to be at least 850 million ounces, is fully exposed to the upside. A one dollar move in silver means $850 million to JPM, with a ten dollar move equal to $8.5 billion.

The monumental accumulation of physical silver and gold by JPMorgan over the past 8 years is the explanation for why JPM has suppressed prices and set itself up for the most massive financial score in silver and gold in history. Let’s face it – something had to account for why gold and, particularly, silver prices have been so rotten in the face of historical price rallies in every other asset. The money creation that drove all other assets higher has long been considered the prime driver of precious metals.

It’s easy to marvel at what JPMorgan has achieved in silver and gold, even though it used illegal means to do so. Who could have imagined that anyone would be so audacious as to be the largest paper short on the largest silver and gold exchange in the world in order to amass the largest physical quantities of each metal in history?  No one could possibly fabricate such a story. It defies belief. Yet there is absolutely no alternative explanation.  We have to be close to a rally, and a breakout in gold and silver. JPMorgan is holding its largest net long position in silver and gold ever, it’s reasonable to expect them to let the price run soon. The amount we stand to go up in silver indicates the most lopsided and profitable risk/reward setup ever.

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