J.P. Morgan Getting Squeezed In Silver Market? (SLV, JPM)
It is widely known that J.P. Morgan (NYSE: JPM) holds a giant short position in silver. Furthermore, some observers are accusing the bank of acting as an agent for the Federal Reserve in the market – every tick higher in the price of silver undermines confidence in the U.S. Dollar. A lower silver price helps keep the relative appeal of the U.S. dollar and other fiat currencies high.
By selling massive amounts of paper silver in the futures market, JPM has been able to suppress the price of the precious metal. It is believed that these short positions are naked (i.e. they are not backed by any physical silver). In fact, reports indicate that JPM is short more paper silver than physically exists in the world.
An article by Max Keiser which appeared in the Guardian on December 2, 2010 claims that the size of the short position is 3.3 billion ounces of silver.
In recent days, rumors have been swirling on the internet that JPM’s massive short position is about to blow up in their face in the form of an almighty short squeeze and potential COMEX default as large traders demand physical delivery of silver that COMEX does not have in their vaults.
J.P. Morgan is currently under investigation by the CFTC for allegedly manipulating the price of silver. The investigation into the bank can be traced back to November 2009 when London metals trader and whistleblower Andrew Maguire contacted the CFTC to report market manipulation prior to it actually occurring.
Maguire had been told by J.P. Morgan commodity traders that the bank was manipulating the price of silver and subsequently reported this to the CFTC. He also gave the CFTC two days’ notice about an impending silver manipulation that would take place around the Nonfarm payrolls number on February 5, 2010.
The manipulation played out EXACTLY as Maguire had predicted. You can find the emails between Maguire and Ramirez here. Shortly after this information came to light, the whistleblower was involved in a bizarre hit and run accident in London which caused him and his wife to be hospitalized.
The price of silver has absolutely exploded in recent months as these reports have surfaced and it is clear that blood is in the water. The predator (J.P. Morgan) has now become the prey. Every tick higher in the price of silver brings more pressure on the bank to cover their short position. This in turn puts more upward pressure on the silver price.
It is not clear if JPM has been actively trying to reduce their exposure or not – but something is definitely going on. The price of the widely traded iShares Silver Trust ETF (NYSE: SLV), which tracks the spot price of the precious metal, has exploded in recent months.
On August 23rd, the SLV closed at $17.61. The ETF closed on Friday at $28.60 and the price of silver is now trading at 30 year highs. Over the last three months, SLV is up over 47%.
In the overnight futures session on Sunday night, silver is currently trading 2.27% higher at $29.935. SOMETHING IS GOING ON. Making matters worse for JPM is the fact that a viral campaign (Crash JP Morgue Video) to buy physical silver and “crash” the bank is now spreading like wildfire on the internet. Just Google Crash J.P. Morgan Buy Silver.
Furthermore, it appears that significant physical silver shortages are developing in the marketplace and the metal is being sold well over spot where it is available. Shortly after popular financial blog ZeroHedge posted the “Crash The JP Morgue” video (linked to above), the website which created the video, goldsilvergold.com, reported that it was sold out of inventory and will not be taking new orders until December 6.
Another report indicates that JPM may really be on the ropes with their short silver position and are attempting to hedge themselves by buying $1.5 billion worth of copper. According to the Telegraph, the bank has bought “between 50% and 80%” of the 350,000 tonnes in reserve at the London Metal Exchange.
ZeroHedge opines that “JP Morgan is now intent on cornering the copper market, as the monopolist firm stretches its FRBNY-facilitated muscles in an attempt to stem the massive losses incurred via its silver short.”
Readers who are interested in learning more about this story are encouraged to do follow up research and post comments. Those who wish to participate in squeezing the living daylights out of JPM, may want to consider buying physical silver, silver futures and SLV.
Keep a close eye on this market during the coming week…
Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2010/12/06/benzinga668905.DTL#ixzz1K1SIPIAu
Source: Scott Rubin
The Silver Eagle is the only silver bullion coin the world with its weight, content, and purity guaranteed by the U.S. government. This alone makes the coins preferable to privately minted “rounds,” and is clearly worth the minimal premium associated with Silver Eagles. New, uncirculated Eagles typically sell for between $1.80 and $2.50 over the spot price of silver, while “used” Eagles may trade for as little as $1 above spot.
Much like the Silver American Eagle, the Silver Canadian Maple Leaf is a government-issued, legal-tender coin. Although it lacks the caché of the Eagle in the U.S. or abroad (anywhere but Canada, of course), the Silver Maple Leaf remains one of the world’s most recognizable silver coins, and is also one of the most aesthetically appealing. Maple Leafs are magnificently designed, and a truly beautiful sight to behold. They’re also the purest of government-issued silver coins, at .9999 fine silver (most others are just .999).
While Silver Eagles command a premium due to their easy recognition, and Maple Leafs are valued for their stunning beauty and low mintage quantities, when it comes to getting the most silver for your buck, APMEX Fine Silver Rounds are your best bet—at least in terms of “coin” form. Technically, non-legal tender issues by private minters are not considered “coins” at all and must be referred to as “rounds” for legal purposes. But silver is still silver, no matter if it’s issued by the U.S. government or a for-profit corporation like APMEX, and the latter’s “rounds” are among the most widely recognized and accepted of private issues.
Morgan Silver Dollars are U.S. government, legal-tender coins that were minted from 1878 to 1904, and then again for one year in 1921. They’re 0.86-ounce coins made up of 90% silver and 10% copper, giving them a silver weight of 0.77344 troy ounces—almost exactly the silver content of the original Spanish dollars on which the U.S. currency was originally based.
The Austrian Silver Philharmonic is a rare coin that even outdoes the Canadian Silver Maple Leaf in terms of beauty. It is also the only silver coin that is denominated in euros, with a legal tender value of €1.5. One side of this coin features selected instruments from Austrian Philharmonic Orchestra—a national treasure of Austria—while the other side depicts the Golden Hall in Vienna, which is the site of the orchestra’s annual New Year’s Day concert. Fans of Austrian economics also seem to have a soft spot for these coins.
Although one-ounce has become the standard weight of silver coins and rounds, there are advantages to ½-ounce issues. For one, they are more liquid. If using silver in the course of barter, what do you do when you need to make change? You can’t cut a one-ounce coin in half, and if you go to the trouble of melting it down and recasting it, there’s a lot of effort and expense involved. For this reason, two ½-ounce silver rounds are always more valuable than one full-ounce silver round—all other things being equal. This is a hard concept for a lot of silver investors and traders to grasp, since we’re so used to using “token” currency.
From 1837 to 1964, United States ten-cent pieces were made of 90% silver and 10% copper—just like the Morgan Silver Dollar. Dimes, of course, were smaller, and thus contained less silver; roughly 0.0715 troy ounces.
Similar to junk-silver dimes, United States quarter-dollar pieces were also made of 90% silver and 10% copper from 1932 to 1964, and were exactly 2.5 times as heavy as silver dimes.
It’s not just the U.S. and Canada that issue one-ounce silver-bullion coins; our neighbors to the south do as well. Mexican Silver Libertads are beautiful coins, but they command a pricier premium upwards of $2, and are somewhat less marketable than the issues of “trustier” governments like the U.S. and Canada.
To reiterate, the smaller the coin, the more liquid—within reason. In addition to ¼oz and 1/10oz rounds, Monarch also produces 1-gram rounds, and with coins that tiny, the cost of production outdoes the value of the metal by several times. One-tenth ounce, however, is a great weight for trade; and yes, ten 1/10-ounce coins are always going to be worth more than one one-ounce coin, all other things being equal. This can be verified by a quick eBay search, and it makes sense, too: As stated earlier, going to the trouble of breaking down existing coins into smaller increments would be costly, and these coins have already been broken down. They cost quite a bit more—about double the price of their silver content at current rates—so they should definitely not be your only coins, but they are a welcome addition to any diversified silver portfolio.
