SLV And Silver Manipulation

[pmbug]

Jeff Nielson speculates on JPMogan's COMEX shorting:

JP Morgan is the largest silver short-seller in the history of the world. JP Morgan is the “custodian” for the largest “long” silver fund in the history of the world, making this one of the largest conflicts of interest in all of history.

If the unit-holders of the iShares Silver Trust (or “SLV”) make a small amount of profit on their holdings (per unit), JP Morgan suffers massive losses on its “short” position in the futures market – and then at least one hundred times that amount of additional losses on its unimaginably huge, leveraged, silver derivatives. We know this thanks to the loquacious banker, Jeffrey Christian, formerly of Goldman Sachs and now head of the CPM Group, one of two “consultancies” who are quasi-official record-keepers for the gold and silver markets. Obviously JP Morgan has a gigantic personal incentive to try to make sure that holders of SLV units make as little as possible on their investment.

This alone should disqualify JP Morgan from serving as “custodian” for all of the silver JP Morgan supposedly holds on behalf of those unit-holders. Amazingly, with JP Morgan claiming to be sitting on the two largest, single silver-holdings in all the world it has never been required to have both of those holdings audited/verified. Thus JP Morgan has been able to indulge in this blatant conflict of interest while so-called “regulators” actually help it to conceal its activities.

However, the absurdity of allowing the world’s largest “silver fox” to guard the world’s largest “silver henhouse” with absolutely no public scrutiny is only the beginning of this outrage. Those who follow the silver market will have noted an amazing “coincidence” in recent years since the creation of SLV: JP Morgan’s massive short position always closely mirrors the size of the total holdings of SLV.

This led me immediately to a rather obvious conclusion. Each time someone purchases a unit of SLV, JP Morgan uses the proceeds to acquire that one ounce of silver (as it is supposed to do). However, instead of that silver being used to “back” that unit of SLV (in JP Morgan’s role as “custodian”), JP Morgan increases its short position by one more ounce – and then uses the new silver to back its own short position (in JP Morgan’s role as “greedy banker”).

Note that as long as the supposed “regulator” of the silver market (the CFTC) never requires JP Morgan to demonstrate that it has enough silver to “back” both its own, massive short position and its own, massive custodian obligation, then there is nothing stopping JP Morgan from permanently/perpetually using the “long” investors of SLV to fund and “back” virtually its entire shorting operation in the Comex futures market.
...

http://www.bullionbullscanada.com/i...ulation&catid=49:silver-commentary&Itemid=130

It will be interesting to see if his assertions get any sunshine in the class action lawsuit that is in the pipeline.

 

[pmbug]

... I can tell you based on what I have been told by members of the public and reviewed in publicly available documents, I believe that there’s been violations of the law, The Commodity Exchange Act.

They’ve taken place in the silver market and I think any such violation, of course, should be prosecuted to the full extent of the law. I believe there has been repeated attempts to influence prices in the silver market. And there’s been fraudulent efforts to persuade and deviously control the price.”
...

http://kingworldnews.com/kingworldn...ere_is_Manipulation_in_the_Silver_Market.html

Bart is starting to make some noise again.

 

[pmbug]

CFTC investigation in the news today:

A multiyear investigation into the possibility of unlawful acts in the silver market is continuing after regulators analyzed more than 100,000 documents, the U.S. Commodity Futures Trading Commission said.

“In September of 2008, the commission announced the existence of an enforcement investigation into the possibility of unlawful acts in silver markets,” the CFTC said today in a statement on its website. “Since that time, the staff has analyzed over 100,000 documents and interviewed dozens of witnesses and obtained expert advice. It has been a long, detailed and thorough investigation, and it continues in an appropriate and considered manner.”
...

http://www.bloomberg.com/news/2011-...ntinues-after-100-000-documents-analyzed.html

 

[pmbug]

GATA highlighted this commentary on silver manipulation:

Intra-day averages clearly show market intervention

You've seen it before, right? Suddenly, the price of gold or silver drops like a rock. For no apparent reason a chunk of its value is lost within minutes. In other markets however, these kinds of rapid declines are extremely rare.

Why do these sharp price declines seem to appear out of nowhere? Usually professional investors do their best not to execute large sell orders all at once in order to avoid moving the market so as to conserve profits. Nevertheless, in the precious metals market it seems some market participants are often clumsy, triggering abrupt price drops. The reason however is not clumsiness, but other interest: these players want to influence prices with their selling actions. Since August 5th, 1993, when these sudden price moves began occurring with statistically measurable frequency - a number of financial institutions have intervened systematically against precious metal markets.
...

More: http://www.safehaven.com/article/23240/price-irregularities-in-the-silver-market

 

[DCFusor]

You're seeing this in PM's only, because that's your focus. Actually, this kind of manipulation is the oldest horse in the barn and takes place in almost everything traded.
I learned about this early on from an Uncle (yes, I had a rich uncle) who was a floor trader and market maker - back when those existed. I wrote a little about that here:
http://www.coultersmithing.com/forums/viewtopic.php?f=51&t=178#p702

Cramer has admitted to some more complex tricks using options too, but the basic ideas are the same - taking advantage of the human fear of "missing out", and those who are slow to catch the moves.

 

[pmbug]

You're seeing this in PM's only, because that's your focus. ...

I'm aware that the whole commodity complex is similarly structured with paper trades at leveraged multiples of the underlying assets. What is unique about gold and silver though is the banking interest in keeping prices suppressed to maintain faith in fiat currencies.

 

[Steven Douglas]

I'm aware that the whole commodity complex is similarly structured with paper trades at leveraged multiples of the underlying assets. What is unique about gold and silver though is the banking interest in keeping prices suppressed to maintain faith in fiat currencies.

Which brings me to what the CEO of Yahoo once told one of my best friends: "I absolutely love it when my competitors get greedy."

 

[DCFusor]

Yeah, there are special interests in the PM's to be sure, but what I was pointing out (if anyone read it, it was too long to insert here) is HOW they do it. And how you can see it, and go along for the ride.

Dunno if it's heresy, but my approach is to have core holdings of phyz - not traded. But then I find the pm's actually easier to trade than a lot of other things, so my knowledge for one situation gets double use. And knowing how to recognize manipulation events is key to trading them for profit.

Many people argue needlessly when the real difference is unstated, so they never get resolved. Sure, a lot of us know things are circling the drain, and will get there - opinions vary on when, but surely not never. Those people go long forever on PM's, and their reasoning is good for that case and timeframe.

In the meanwhile, they go both up and down, and a trader can make a lotta money scalping the wiggles -- even if like me, that trader also keeps a substantial core holding for when SHTF type outcomes. It may be picking up pennies in front of a steamroller, but heck, just today that was some 10's of thousands of bucks worth of pennies...with which I can do as I please, including buying more phyzz...On the next dip, of course. Yup, paper anything is dangerous and may have no backing - anyone go to GM with their stock and demand a machine tool? Didn't think so. But trading, you're out as often as not, so if that paper gets revealed as a fraud, there's a good chance a trader would have been out of it anyway -- the dip triggered by insiders selling quick ahead of the revelation would trip you out...at a profit if you bought right, anyway.

 

[white&yellow999]

Which brings me to what the CEO of Yahoo once told one of my best friends: "I absolutely love it when my competitors get greedy."

Correct me if I am wrong but yahoo has gone thru several CEO's recently, right?

DCFusor has a good point though. You must know how the manipulation is done so you can play it and take advantage of it. The paper market is good for taking advantage of the short-term upswings and even shorting the market on the way down. The more paper you earn the more physical PM's you can buy.

 

[Steven Douglas]

Correct me if I am wrong but yahoo has gone thru several CEO's recently, right?

Yeah, I didn't want to name names (kind of silly since I named the company) - this was pre-dotcom bubble.

 

[pmbug]

Interesting interview with Eric Sprott (E:

...
E: Sure, well, I think both corrections were orchestrated by people who are massively short silver. When the price went from 20 to 50 roughly, I mean, those shorts had lost about 20 billion dollars. If silver had broken through $50, things would have gone absolutely crazy. Like when gold went to 850, it doubled shortly thereafter, which would have created great stress on those people who were short. And unfortunately in the Comex market, which is mostly a paper market, those who have huge amounts of money can force the price down, and as you may have recalled Patrick, there was a Sunday night around 9:30 when the price went down $6.

P: And it’s usually over the weekend that this happens.

E: Exactly, when nobody was trading. And that particular day the Chinese market was closed and the UK market was going to be closed that day. And of course, everyone comes into work at the New York time and the price of silver is down $6, they already have the margin call. Then the CME raised margins 4 times in the next week which put the long holders of silver contracts under tremendous duress, so they had to sell them. So a lot of the short position has been covered here, I’m not saying there won’t be further raids. There was a raid recently where they recently knocked it down to $27, and that is what happens in the paper markets. Paper markets can trade up to a billion ounces a day, while we only produce 900 million ounces a year. And looking at the physical markets, which I spend most of my time looking at, I can identify something like a 380 million ounce change in supply and demand just in the past five years in a 900 million ounce market. I believe that sooner or later we are going to run into a shortage in physical silver and the physical silver price will then determine the Comex price.
...

More: http://seekingalpha.com/article/307507-this-will-be-the-decade-of-silver-interview-with-eric-sprott

 

[pmbug]

It is so tight, the silver market is so tight that we’ve been waiting three weeks plus, before this takedown, for deliveries of size to arrive. I’m talking about tonnage orders. This is also key, most of the silver being delivered was refined after the orders had been placed, and again, that was before the takedown. You can just imagine how long the wait times will be going forward.

This game is getting so stretched that it’s going to break. You don’t think the Chinese know this stuff. If we get a close above the 200 day moving average in the mid 30’s on silver, watch silver immediately pop $2 or $3. Silver is totally incredible. There is nobody in COMEX silver contracts anymore, other than casino players. The only way they have been able to keep silver depressed is by borrowing silver from SLV to meet immediate demand. That’s the only reason silver isn’t trading $10 to $15 higher right now.

There isn’t enough silver for investors to buy (in large amounts) so they have been using SLV as a flywheel. SLV is over 20 million ounces short on the silver they are supposed to have in the vaults to back the shares which have been issued. The silver isn’t there. So there are people who purchased SLV to own physical silver, but all they have is shares that aren’t backed by the physical silver.

Part of managing the price of silver recently has been for the central banks to attack the gold market. But what is interesting is how this manipulation of the gold price was effected. Obviously, the bullion banks, which are working with the central banks, have inside knowledge as to the timing and just how much gold is going to be available to them.
...

More: http://kingworldnews.com/kingworldn..._-_There_are_Tremendous_Silver_Shortages.html

 

[swissaustrian]

let´s get physical :wave:

 

[pmbug]

...
It will be interesting to see if his assertions get any sunshine in the class action lawsuit that is in the pipeline.

No sunshine for you!

A federal judge has dismissed the class-action silver market-rigging lawsuit against J.P. Morgan Chase & Co. that was brought a year ago in September, ruling that the complaint lacked the specifics and claims of bad intent necessary to be allowed to proceed to trial.

The dismissal was ordered a week ago by Judge Robert P. Patterson Jr. in U.S. District Court for the Southern District of New York. The judge gave the plaintiffs 30 days to show cause why they should be allowed to file a substitute complaint.
...

More: http://gata.org/node/12078

 

[pmbug]

The California Lawyer on Turd's site breaks down the court's decision in the dismissed class action lawsuit (long):

http://www.tfmetalsreport.com/blog/4408/guest-post-summary-silver-civil-suit-dismissal-calawyer

 

[ancona]

So......who's up for some late day paper dumping shenanigans? Silver just took a five minute nose dive of forty cents or so. Sweet!

 

[swissaustrian]

The iShares Silver Trust, the world's biggest silver-backed ETF, rose to 10,112.22 tonnes on January 7th, the highest since May 2011.
http://www.goldcore.com/goldcore_blog/“pension-money-invested-bullion-peanuts-moment”

Chart is NOT up to date:

 

[ancona]

AS,
You don't really believe they actually posess all of that silver do you?

 

[swissaustrian]

AS,
You don't really believe they actually posess all of that silver do you?

No, but the "inventory" numbers have to be derived from something, probably from LBMA paper accounts.

 

[pmbug]

JPMorgan Chase & Co (JPM.N) has won the dismissal of a nationwide investors' lawsuit accusing the largest U.S. bank of conspiring to drive down silver prices.

U.S. District Judge Robert Patterson in Manhattan said the investors, who bought and sold COMEX silver futures and options contracts, failed to show that JPMorgan manipulated prices at their expense, including by amassing huge short positions that were not justified by market events at the time.

In a decision made public on Monday, Patterson said that while the investors showed that JPMorgan had the ability to influence prices, a fact the bank did not dispute, they failed to show that the bank "intended to cause artificial prices to exist" and acted accordingly.
...

http://www.reuters.com/article/2013/03/18/us-jpmorgan-silver-lawsuit-idUSBRE92H10520130318

No more appeals.

 

[swissaustrian]

Judge Robert Patterson is a 89yo zombie. A zombie deciding on a zombie bank.

http://en.wikipedia.org/wiki/Robert_P._Patterson,_Jr.

He is also closely connected to the NY political establishment and Wall Street.

 

[MasterQ]

Well it's to be expected with the sideways action for more than 12 months in silver that SLV isn't doing much of us any good. (if your in)

I got in trying to make a few bucks fast but held on knowing the rollercoaster our precious silver goes through.

Needles to say I'm willing to dump it the moment I see a cent of profit as I have been stacking on the way down.

Oh well..it was worth a try!

-Q