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Ask any casual
observer of the silver market what happened to the metal over the past five
years and you’re likely to hear how the price fell from nearly $50 in April
2011 to under $14 at recent lows – a stunning decline of 70%. If you inquire
further, you’ll likely hear a number of reasons for the decline, ranging from
an oversupply of the metal, a strengthening dollar, falling inflation rates,
and the collapse of the commodities markets.
What you will not
hear is how a specific development has transpired over the past five years
that ensures a coming explosion in the future price of silver beyond the most
bullish predictions and optimistic upside targets. You’re also not likely to
hear that the stunning decline in the price of silver over the past five
years was a deliberate feature of an unusually bullish development that
promises to change forever the future price landscape.
While I have
closely researched the silver market for more than 30 years, uncovering more
original findings (including silver’s price manipulation) than anyone, I
fully admit that I did not immediately see the monumental change that began
to occur five years ago. This astonishing development that had begun in 2011
did not come clear to me until late 2013.
I discovered that
the largest U.S. bank, JPMorgan Chase, began to accumulate massive amounts of
physical silver starting in 2011 and has continued that accumulation to this
day. All told, I believe JPMorgan has acquired somewhere between 400 and 500
million ounces, the largest privately held stockpile of silver in history.
What this means is
that the future price of silver is now destined to move far higher in price
than anyone can imagine. I wasn’t looking for something to come along that
would supersede my already ultra-bullish outlook on silver, but that is what
occurred. That’s because the obvious motive JPMorgan has whenever it acquires
a large investment position is to profit on that position to the greatest
degree possible. And since JPMorgan is now in position to profit enormously
when silver prices soar, that means anyone holding silver will profit as
well.
How did JPMorgan
come to acquire hundreds of millions of ounces of physical silver? It was a
circuitous route, beginning in the financial crisis of 2008 when JPMorgan
took over a failing Bear Stearns, then the largest short seller in COMEX gold
and silver futures contracts. JPMorgan stepped smoothly into Bear Stearns’
role as the main silver and gold price manipulator and proceeded to drive the
price of silver from $21 in March 2008 to under $9 through massive short
sales on the COMEX. In the years that followed, JPMorgan continued its new
role as the largest short seller in COMEX silver and reaped billions of
dollars in ongoing profits by shorting silver on price rallies and buying
back those short positions after it rigged the prices lower.
With manipulative
intent and practice, JPMorgan continued to make illicit profits on the short
side of COMEX silver until late 2010. Then a developing physical shortage in
silver drove prices to almost $50 by the end of April 2011. JPMorgan was not
prepared for the developing physical shortage and the price run up nearly
crippled the bank. That’s when it dawned on JPM that it was on the wrong side
(the short side) of silver and the bank resolved to get on the right side –
the long side. But first, JPMorgan had to get off the short side.
JPM did this by
causing silver futures prices to plummet with the full consent of the COMEX
and government regulators at the CFTC, a process that has continued to this
day. JPM regained control of silver prices on May 1, 2011 and by driving
prices sharply lower killed off the developing investment demand that was
causing the physical shortage. But while JPMorgan regained control of silver
prices on the COMEX, it could not buy as many futures contracts as it desired
without causing prices to soar – it needed another angle. That other angle
was for the bank to begin to buy physical silver while it continued to sell
short COMEX paper futures contracts. This way, JPMorgan could have its cake
and eat it too – continuing to profit on paper short sales while acquiring
physical silver at the depressed prices it had created. I labeled JPMorgan’s
actions as the perfect crime in a public article in December 2014.
http://www.24hgold.com/english/contributor.aspx?contributor=Theodore+Butler&article=6181919722H11690
JPMorgan behaved
illegally in manipulating prices lower while accumulating all the physical
silver it could. However, there is no limitation on what any entity can hold
in a physical commodity position. Limitations exist (loosely enforced) on
what traders can hold in futures and other derivatives, but no such
limitations apply to physical positions. This cleared the way for JPMorgan to
hold as much physical silver as it could. Since the price of COMEX silver
determines the price for silver throughout the world, this put JPMorgan in
the catbird’s seat, by enabling it to depress the COMEX price and then
scooping up physical silver in prodigious quantities and at ridiculously
depressed prices.
As far as the forms
of physical silver that JPMorgan has acquired over the past five years, the
simple answer is in any form that could be acquired in size. Most of the
silver that JPMorgan acquired was in the form of 1,000 ounce bars, the
industry standard for silver and the kind deliverable on COMEX futures and
held in the worlds silver ETFs and other investment vehicles. JPMorgan has
secured hundreds of millions of ounces from the big silver ETF, SLV, and in
deliveries against COMEX futures contracts, some of it held in JPM’s own
COMEX warehouse, which opened for business in May 2011 and is now the largest
COMEX silver warehouse (confirming my timeline). Their warehouse now holds 70
million ounces and is their most visible holding. Harder to see is the 100
million ounces they likely have in their London warehouse where they moved
out 100 million ounces of other people’s silver to make room for their own in
2012.
But JPMorgan has
also bought silver in the form of American Silver Eagles and Canadian Maple
Leafs to the tune of 150 million ounces over the past five years, quickly
re-melting the coins into 1,000 ounces bars because it would be impossible to
sell so many coins in coin form. In fact, the curious riddle of record sales
of Silver Eagles and Maple Leafs over the past five years coupled with bona
fide reports of weak retail sales of these coins was an important clue that
someone big was buying many of the coins, roughly 50% of all such coins sold.
When I say I wasn’t
looking to uncover the most bullish development ever in silver that is an
understatement. But as an analyst, I look to the data first and foremost. Not
only has that data tipped me off to what JPMorgan has been up to, the
continuing flow of public data confirm my conclusion daily. Everything from
COMEX silver warehouse movement, deliveries against futures contracts,
changes in the big silver ETF, SLV, sales of silver coins from the U.S. and
Royal Canadian Mints point to the massive accumulation of silver by JPMorgan.
They are positioned to make $100 billion or more in a runaway silver market.
They will make $1 billion on a $2 rise in silver.
The very last thing
I would be interested in at this stage of my life, is to come up with some
wacky premise that threatened to undermine many of my previous findings. I
studiously avoid anything that would damage a reputation I have spent decades
constructing. On the other hand, if I have discovered the most shockingly
bullish silver development ever, how could I not proclaim it far and wide?
I have discovered
that JPMorgan has accumulated more physical silver than any private entity in
history and I don’t care if great numbers of observers come to agree with me
or not. I will openly discuss this with anyone who has questions, but most
importantly I would remind you that if I am correct in my assertion anyone who
aligns themselves with what JPMorgan has done and buys silver will most
likely reap financial rewards of truly amazing proportions.
Ted Butler
March 24, 2016
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