Tuesday, December 14, 2010

Not Buyin It

The big story overnight was an article from the Financial Times that JPM had covered their massive short position in silver. If you've not yet seen it, here's the summary from ZeroHedge:

The US regulator, the Commodity Futures Trading Commission, announced in September 2008 that it was investigating complaints of misconduct in the silver market, although it did not name specific entities.
However, JPMorgan said in a statement: “It is absolutely incorrect to say or imply that the Nymex, CFTC or any other exchange or regulator has instructed or asked us to reduce our position.” The bank declined to comment on whether it had reduced its position in the silver market.
The price of silver has risen more than 70 per cent since mid-August to hit a 30-year high of $30.68 a troy ounce last week on the back of a surge in investor buying and a rebound in industrial silver consumption.
In two previous reviews of the silver market, the CFTC has dismissed claims of manipulation. Most analysts say there is little reason to believe the price of silver is being systematically manipulated.
But Bart Chilton, a CFTC commissioner, said in October that he believed there had been “fraudulent efforts” to “deviously control” the silver price. He did not name any party.
Publicly available data on individual traders’ positions are sketchy. In a speech last Wednesday, Mr Chilton said that “earlier this year, one trader held more than 40 per cent of the silver market”. He declined to identify the trader.
The CFTC’s Bank Participation Report shows that one or more US banks held a gross short silver futures position equal to 19.1 per cent of the total number of outstanding contracts in early December. In January the share was 30.2 per cent.
The CFTC only reports data for the US silver futures market, a small corner of the global derivatives market for the precious metal, which is centred in London and largely traded via private over-the-counter deals. The data also do not cover transactions in the physical market.
Analysts and traders said that JPMorgan’s large short positions on New York’s Comex exchange, a division of Nymex, were hedges for the bank’s long positions in physical silver and London’s over-the-counter market.
JPMorgan has invested nearly $3bn over the past two years in its commodities business led by Blythe Masters.

Sorry, but this is all too convenient. I'm not buyin it. Just last week, Bart Chilton places in the public record that one trader has controlled, in the past, up to 40% of the Comex silver market. The next scheduled hearing is on Thursday. On the Tuesday before, this article appears. I call BS. Its interesting that you at least have an admission of guilt and past sins but I don't, for a minute, believe that the story is honest. Its classic misinformation. Write some truth into the story so that the rest of the story becomes believable. 

On to today, after rising overnight, the EE commenced their expected raid at 8:28 EST. (I say expected because we discussed it here yesterday and even Harvey mentioned it last night.) After reaching a high of 1409 at about 7:00 am, Blythe began her pre-market takedown operation at 1406.60 at 8:28. By 8:32, it was 1398.50. $8 in 4 minutes and JPM Is out of the precious metal manipulation game? Believe what you see, not what some LBMA shill writes in London.

In silver, same deal. We hit 29.99 just before 7:00 am EST and we have a last of 29.52 with the selloff stopping right at 29.50 or so. Perhaps we should look at this chart again from yesterday, hmmm?
Are the BoS laying down support again at another $1.50 higher? Time will tell but we may be onto something.

I'll try to keep a close watch all day as Blythe has clearly signaled her intention to raid the metals today. The battle should be fun to observe. Again, as long as you're not trying to day-trade this market, just sit back, relax and enjoy the fireworks. As with all games, its much more enjoyable to be a spectator when you know the participants.

9:45 EST: One more thing I just thought of, can't you see how this plays out today?
1) FT bs JPM article overnight
2) PMs rally
3) takedown begins as per usual at 8:00 est
4) metals sell off all day on Death Star
5) both get another Outside Reversal Day painted on their charts
6) All the usual a-holes come out of the woodowrk to declare the silver run as finished. It was all "trumped up" "internet spin" that drove silver from 20 to 30 when, in fact, it is trumped up JPM spin and manipulation that is driving the PMs down today.

This will probably work for a day, maybe even a week, but the BoS will keep up the pressure. Do not sell your insurance today!


  1. And I'll start the comments off this morning.
    The reason given for the $ rally and PM/commodity selloff is "more concern for the eurozone". If you, my dear reader, are still being fooled by this outrageous manipulation of the headlines, you need your head examined. This past month has been particularly egregious. Irish sovereignty was sacrificed on the alter of Fed policy last time. Who's next?

  2. JPM is just crawling under a rock to hide from the sunlight. I expect no change in their efforts to keep PM's down. Only way they will stop is when the game goes fully out of control. So I just bought a 25 oz Silver bar this morning. Drop in the bucket, maybe not.

  3. This overnight article is clearly a cheap PR move, which will hopefully blow up right in EE's face. Instead of mollifying the attitudes, it will instead fire up all the sane people even more.

    Listen, Turd, I am clearly missing something here. How is it that JP Morgue is able to sell naked shorts on such consistent basis? What about margin calls? Or do they simply add more money into their brokerage account, courtesy of the Helicopter Benny?

    p.s. My by all means modest bonus this year is going straight to APMEX in exchange for some shiny white metal.

  4. By the looks of it they DO NOT WANT silver to close past that $30 mark. It had been trading above $29.80 for 8 hours this morning, then the comex opens and immediate selloff. It's actually getting kind of pathetic and OLD watching it happen more and more blatantly. Fortunately for them our friends over and China will push it up ever so much on a daily basis, and that $30 gap will close quickly. And hopefully then the gloves will be off and we can actually start trading again!

  5. I like the volatility...I've been lucky so far...many more ups than downs, and I just play with small change. Usually 50 or 100 shares of AGQ. Hey...a couple of hundred...is a couple of hundred. She beats it down...I buy some...then sell it when it goes back up. Just a few dollars...it swings $5-10 just about every day. Since the trend is up...I rarely lose. I don't spit on making $100-200 a day...I'm retired anyway...this is for pocket money.

    So...what's with the name "Turd"?

  6. Hi, Joe. "Turd Ferguson" was a character in a Saturday Night Live skit about 10 years ago.

  7. I agree that headline manipulation does and will happen - no avoiding it, and the sad part is that it will move markets whether we like it or not. On the other hand, blatant and direct price manipulation - while just as rampant - is the crime that I can't tolerate. To that end, is there any way to know that JPM is responsible for the persistently repeated 8:30 cliff as illustrated in the (new and helpful) charts on the upper right? Just out of novice curiosity, what other explanations could there be? In other words, what other players might have the incentives and abilities to drive the price down? I don't mean to challenge the assumption that it's ms. masters and her henchmen, but would appreciate some context about other potential forces.

  8. OK I have my beer and hot dog and I am ready to see the match today.

    Chinese "BOS"
    JPM "MasterBlythers"
    It could be a good one,oh look is that Yao on the Chinese sideline.

  9. Good Ol' Harvey was right in his Monday's prediction of an EE raid. 3 triggers to a typical Taking-Down-Tuesday:

    1. FOMC meeting today needs Dollar to look strong or at least less embarrassing than would be before the meeting.

    2. COT cutoff day is Tuesday so details of today's actions won't come out until Friday of next week.

    3. Gold & Silver re-approach critical price threaten the critical resistance again.

  10. Blythe and EE taking down the PMs a bit right before POMO. No surprise. Asians will buy it up if it goes down to 28. I'm looking for 32 before Monday.

  11. Dude silver should be exploding to the upside on that story about JPM. Seems a little too odd that the markets frequently behave exactly the opposite of what makes sense.

  12. Interesting that this came on a day with no POMO. Easier to fight from the sell side when you remove the fed from the buy side.

  13. John.......if it walks like a duck sounds like a duck.....BTW you always need to look at motive...the Fed must control the PM headlines....it is their fiat currency system that is at risk ie the "Ponzi". Real money is never going to lose to paper over the long run. ONLY the fed has the ability to send unlimited paper to back up such a massive short and WHY would you have a massiv short position for the entire run....ITS THE FED (JPM)

  14. So up a bit for the next 2 hours and then raid #2 coming in around 12-1230?

  15. It may not take that long, Mark, now that we're back up to 1395 and 29.50. I'd say give Blythe time for one more smoke break and then she'll hit it again, about 10:45 or 11:00.

  16. Can someone offer a little perspective here? I assume thte BoS is trying to accumulate physical rather than drive the price in dollars higher. Like them, I'm not terribly displeased with Blythe if she allows me to buy more for less in the short term, especially knowing that it can't go on indefinitely. Thoughts?

  17. Turd, I'd wager a mint condition silver maple leaf that JP and the other bullion banks are engaged in the price manipulation of gold and silver under the auspicies of a National Security Letter. Any thoughts?

  18. I'm looking forward to the outcome of the CFTC meeting on thursday...

  19. I wouldn't be surprised there magicbus...name wouldn't be Ed would it? He's got a "magic bus" too.

    Yup...permission to manipulate the PM markets to keep the fiat's from exploding? Why not?

  20. Nice rally this morning! The EE usually raids when the volume is low, and trading has kind of tapered off so she can start a dominant downtrend. If this kind of active volume keeps up today, she may never get a good chance to do any real damage. Glad to see we are above yesterday's close.

  21. thanks, kliguy. fair enough... it makes much more sense if I think of them as one in the same.

  22. Who else thinks that Blythe is planning her exit by buying physical gold and silver for her own personal account?

  23. Joe & Bus: Would the letter give them "immunity" for when the whole thing finally blows up? If so, then yes.

  24. DAX - today in NY session - underperforming other indices like DOW and SnP is a warning flag for me. DAX in recent months clearly was the strongest index - but as of now lagging.
    Also NAZ is lagging. Also crude is not confirming.

    Not sure it means something - but I won't be surprised to see some sort of sell off not too far from here.
    FOMC related? Europe related? ... no clue, but anyway suspicious.

    HUI yesterday and as usual just painted what would happen today - that is: nothing, in comparison with yesterday. Hence that frustrating close yesterday. The message in Europe though was to sell - as gold and silver higher didn't match with the HUI's projection. And exactly that happened - a sell. Just follow HUI's footprints.

  25. raid comin now........come on blythe I'm countin on ya........I need the discount...its xmas...

  26. If in fact a BoS is capturing up metal at what appears to be any price, how does the EE ultimately come out ahead in this game they are playing? I watched to market before I went to bed. Saw this moring in nearly broke $30 and then collapsed. I waited until the raid was nearly over, or at least thought it was, bought a wad of sivr and pslv, picked up $1,500 bucks and sold it. Don't they realize there is always a flip side to the game they are playing and ultimately, the market will find a way to win? They may destroy a lot of players in the process but, the market and thus the remaining players will win. Oh, I like to mess around with the paper silver. My guy just called me and told me the physical stuff I ordered last week is in. Going over to pick it up now.

  27. Turd, I have an important question for you. Please help me understand where my logic is wrong on this:

    Assume JPM is manipulating the silver market through massive naked shorting of SLV, and that SLV doesn't have nearly enough physical to back the paper. Why couldn't the banks' nuclear option be to expose SLV as a sham? Like any other stock exposed with a failure in accounting (Worldcom, Enron, etc.), why wouldn't SLV collapse to ZERO, allowing JPM to close out its horts at a massive PROFIT instead of being buried in a massive loss?

    What am I missing here? Is it that as custodian of SLV's physical reserves, JPM would go down in flames with the ETF? What's the likelihood that they could wriggle out of that outcome? - after all, none of the investment banks went down for aiding and abetting massive fraud at Worldcom, Enron, Madoff, etc. Why would exposing fraud at SLV be any different?

    Is it that exposing fraud at SLV would destroy confidence in paper ETFs and drive demand for physical through the roof, destroying the banks and central governments who are short or who have leased out their clients' precious metals? So therefore, they'd never exercise the nuclear option of exposing SLV?

    I think this is an important question for all of us, since SLV heavily influences the silver sport price (and not vice versa), and that a collapse of SLV would roil prices in the market at least temporarily.

  28. Darn it those Silver Keisers are sold out.

  29. Tit: I think your logic may be flawed. Why would the collapse of SLV cause physical silver to collapse in price? It should be the opposite as all the duped holders of the worthless SLV shares crowd into real physical like PSLV, coins and bullion.

  30. Right on cue at 12:00 EST , here's Blythe!

  31. I know this is off the radars right now - but nevertheless a reminder:


    Is that something still on the table?

  32. You can see into the future? No wonder you're so good Mr. Turd!

  33. Turd,

    I think he's saying that it would collapse the PAPER market...ALL of them. EVERYONE would want to hold the physical and the whole point of the market is to allow "trust" that you WILL get delivery when due.

    I agree with him...say it was some "rogue" trader...your "Dark Lord" Ms Masters perhaps? It's well know already she "owns" the market...let her take the fall. Didn't she say she has a house in the islands? Hide out there...

  34. AGoldhamster...that has been on my radar for about 2 years now. In my opinion, it should be on everyone's radar.

  35. Yes, hammy, the only way all US debts, public and private can be re-paid is through significant devaluation of the $. You pay off yesterday's debt with the abundant currency of tomorrow.

  36. I realize the volumes are too small to really mean anything. But I do find it interesting that COMEX silver is down while PSLV is up.

  37. Turd, thanks for the reply. There's actually two issues we should separate:

    1. Can JPM get out from under their shorts in one piece?

    2. Would a collapse of SLV roil the silver price (at least temporarily)?

    On the first, if JPM is short SLV, they don't have to buy physical to cover. They can buy back SLV shares at a lower price. If SLV collapses, they can close out their shorts at a massive profit, instead of a massive loss. Just like you could buy Worldcom and Enron shares for pennies after their frauds were exposed. Or you could leave the shorts open until the securities stopped trading permanently and effectively close your short positions at $0.

    On the second point, I've been reading that SLV is a primary pricing mechanism for physical silver. If it wasn't, JPM's manipulation of SLV would have NO impact on the price of physical. NONE, ZERO, ZILCH. It doesn't make sense to claim that JPM is manipulating the silver price by shorting SLV, and at the same time claim that a collapse of SLV would have no impact on the price of physical silver.

    Don't get me wrong - any roiling of the silver market from a SLV collapse would be temporary and the buying opportunity of the decade. Once people lose faith in paper ETFs, demand for physical should skyrocket. This is the most logical reason I can think of for the banks not wanting to expose SLV as a sham. As the saying goes, they'd be cutting off their noses to spite their faces.

  38. This - Willie - is the source of that story: http://goldismoney2.com/archive/index.php?t-7932.html

    My question is - there should be footprints, definitely if it happens - and the more the buck sells into yearend - the more likely it is. And the same for the opposite.

  39. Cyclist has the dollar destruction and new currency in 2013 - which makes a lot of sense for all the "Cyclists" out there!
    BTW Cyclist has Gold peaking in Q1 2012. Thereafter you get the next deflationairy spat.

  40. Holy sneiky Hamster! "The Powerz might evade legal responsibility by means of assorted lies and stories, but the end result will be absent gold supply in inventory. No supply, huge demand, and price rises without resistance."

  41. Tit: I see your logic behind the idea of JPM being short SLV, I just don't think they are. IMHO, SLV was created in 2004 to fill demand for precious metal from the investment community. If the average investor were to crowd into futures and miners exclusively, the subsequent, meteoric rise in prices would rapidly end the game. So, this fraudulent SLV was created to soak up investor demand and it is filled with paper silver.
    The problem for the EE is that it hasn't worked. Well, it has actually but it is beginning to unravel now because of its sheer size. Would/could JPM begin to actually short their own fund to cover their losses on the Comex? I suppose but aggressively shorting an ETF for which you are custodian seems egregious, even for them.

  42. Turd --

    What do you think is the end game here? Do you think that the following scenario is probable? How would you modify it?

    1. COMEX halts deliveries of silver to longs, and
    2. forces longs standing-for-delivery to accept cash instead, and
    3. declares liquidation-only market
    4. Shills say "COMEX is still official." ZHers say "COMEX is meaningless."
    5. PRC opens Shanghai Silver Exchange & promises physical delivery.
    6. Prices in Chinese exchange rapidly diverge from COMEX.
    7. We all get rid of our COMEX bookmarks, and Tyler Durden starts making jokes of the form "When I don't have any silver, I sell it for twenty bucks an ounce."

  43. USDX takin another dump today....

  44. I need some mylanta...there are days that just watching turns the stomach.

  45. OK, Blythe, we're kicking some sand in your face. Got the big 3-0 in sight.

    What are you going to do about it?

  46. CMT: While SLV follows the futures almost tick for tick, PHYS and PSLV lag the futures quite a bit. For one thing, PHYS and PSLV have a hefty premium to NAV and I think they're more likely to follow the actual physical market more. Also, PSLV & PHYS don't have near the volume of SLV and GLD. If you watch them during the day PSLV and SLV can differentiate but by the 4:00 close, PSLV will "catch up" and both finish about the same percentage wise. If someone didn't mind staring at a pc screen for eight hours a day, they probably could day trade PSLV using SLV or futures as a leading indicator.

  47. Great thread... getting better every day Turd (btw, shouldn't your answers be in "question form")!

    Back over $1400... looks like the "heads up" the Fast Money guys got ain't goin' so good.

    Blythe has lots of help (remember Andrew Maguire) she spreads the word the day before, and those in the know pile in to make a quick buck... may not cost her nearly as much as we think (great strength today though... hope they all got burned).


  48. background please..what is unethical in the MIghtMakesRight Republic about manipulating prices? Isn't that the whole purpose of capitalist economies? The richer you are, the easier it gets to further distance yourself from the ants that slave in your mines. As an example, smalltown landlord buys all the apartment bldgs in town, then raises the rent in all of them. Them that's got shall get. Why do I sense some outrage or questioning of this completely normal capitalgreed in this culture?