Butler: JP Morgan "Covering Its Silver Shorts Like Crazy"

[Joanne98]

JP Morgan holds a massive short position in silver, some of which it is said to have inherited as a concentrated speculative position from Bear Stearns. Retreats from such overextended positions are never easy, and therefore never straightforward. Having such a position can be very profitable in the short term since it gives one remarkable control over the paper price of a commodity, paricularly if the regulators are willing to turn a blind eye to certain trading practices.

If it is indeed reducing its oversized short positions, JP Morgan will undoubtedly attempt to 'smack the price' on occasion even as it covers, to prevent the specs and hedge funds from taking too much leash to the long side. This will help to prevent them from provoking a disorderly rout and, God forbid, a 'short squeeze.' In these managed markets, the major players tend to respect each other's turf, so one has to wonder who might take them on.

The 'deadline' if any that they might face is prospective position limits to be imposed and more transparent reporting required by the CFTC. Given the past history, it is most likely that JPM will not be overly inconvenienced by them in the short term. Ted has always been the optimist with regard to regulatory reform and willingness to 'do the right thing.' I also believe this will happen, but slowly. Still, it does seem as though the darkest hour is always before the dawn, and the last few weeks have been disheartening for the metals bulls, as demonstrated in the sentiment indicators.

Let's see what happens in the market and take our cues from that.


"JP Morgan Chase, the big short in the silver market, is "covering like crazy," silver market analyst Ted Butler remarks in his weekly interview with Eric King of King World News.

http://jessescrossroadscafe.blogspot.com/2010/07/silver-jp-morgan-covering-its-shorts.html

[SpiralHawk]

1. "Eat my shorts." - Bart S.

[customerserviceguy]

2. Pure gambling

And our entire economy is the casino.

[indepat]

3. Maybe the Feds will come down on JPM like the Fed did the Hunts: but come to think of it, didn't the

Fed arrange a $billion+ loan for the Hunts in a time of extremely tight credit in the wake of their fiddling in (gaming?) the silver market? :P

[westerebus]

4. think Monty Python

Oh god, if you are truly a God, we beseech thee to strike down JPM in a short squeeze of godly proportions. That they suffer your mighty and justful wrath. As to cause their balls to fall to the good and saintly earth. Whilst their heads explode, leaving bits and pieces about the ceiling as befitting your mercy. Brimstone and trumpets optional as you, oh god, see fit. So that the true light of the shiny stuff may bring joy unto us, and glory unto you. Amen.

[pscot]

9. +1

n/t

[valerief]

5. Subject line sounds like a caption from awkwardboners.com. nt

[FBaggins]

6. Pump and dump.

Imagine there was a stock out there that some analyst claimed was going to go through the roof any day now because massive amounts of shorts had to cover. Then imagine that the author also set himself up to claim that any decline in the price of that stock should be ignored because those shorts had the market power to manipulate prices down for their own benefit... but don't worry, because it can't last... it just means that the price will go up even faster when they have to cover.

You would think the guy was playing the pump and dump and wanted to do it with your money.

And when you learned that he claimed that the same stock was about to "leave the solar system" four or five months ago yet there had been no real change during that time... would you trust him? How about 8-9 months ago?

[Art_from_Ark]

7. You have a point

"XYZ has a major short position in W commodity/stock that they have to cover soon, so the time to invest is NOW!" I've heard that one before.

As someone who has been interested in silver since around the time it was being removed from quarters and dimes, I can say that there are a lot of downward pressures on the silver price that will likely keep its price below $20/oz for a long time to come. Three of the main downward pressures are:

1) It is a common by-product of zinc, lead and copper mining, and can usually be sold by Zn/Pb/Cu mines/refiners at just about any time for a profit.

2) While silver has several industrial uses, its formerly Number 1 use in photographic film has declined dramatically in recent years due to the popularity of digital cameras.

3) Silver has lost a lot of its luster as a precious metal, and its current 65:1 ratio to the gold price means that the equivalent value of one pound of gold would be 65 pounds of silver, making it much less attractive than gold to institutional buyers.

[Po_d Mainiac]

8. Didn't take long to forget the name "Andrew Maguire"

http://www.zerohedge.com/article/whistleblower-exposes-jp-morgans-silver-manipulation-schemeand-same-exact-thing-happens-gold

[westerebus]

10. Are we there yet?

Silver 19.92 at 1430 et.

[Art_from_Ark]

11. Maybe not

It seems like every time silver approaches the $20/oz level, it gets knocked back down, for reasons that I've mentioned upthread. But who knows? Maybe this time will be different.

[westerebus]

12. If you can't afford the Lexus, you buy?

$1200+ might be a little rich for a lot of folks, now $20 is a trip to micky d's. Doesn't matter if you're in Ohio, Osaka, Ost, or Oslo.

Shiny stuff is shiny stuff. All depends on what some one is willing to pay for it.

And you're right, they keep playing the market.

[Po_d Mainiac]

13. Maybe the squeeze is just starting?

Silver, Luxury Goods and Rare Earths
I can’t remember a time in my 23 years in the market when there was so much confusion and uncertainty about the outlook. As the
monetary catastrophe unfolds gradually, some days things look a little brighter, then the sheer enormity of the problem becomes
only too apparent once again.

snip

Quote: Darts commentator Sid Waddell
The silver price has started to trade differently and it appears that BIG MONEY is moving in to the metal (at long last) and
fighting the Cartel. There is evidence that the supply of physical silver is getting tight

US banks (primarily the one whose name begins with the letter between i and k) are short 21.8% of all
of the outstanding contracts on the COMEX exchange in New York. These 26,855 contracts amount to
134.3m oz of silver or 4,176 tonnes. This is equivalent to 19% of all the silver mined in 2009 and 15%
of total silver production if we include the recycling of scrap. Let’s think about that a different way. If
one or two banks were long the entire annual oil output of Saudi Arabia and Norway combined, it would
be equivalent to 15% of the world’s 2009 oil production. Can you imagine the outcry from the public
and politicians about market rigging, greedy speculators pushing up the price of gasoline, etc? In terms
of wheat, it would be the same as a position in 100 MILLION tonnes, equal to the entire aggregate
production of agricultural giants the US and France

snip

Because silver is such a small market, if “big money” started to accumulate physical silver in an aggressive
way, the Cartel could get into serious trouble. This seems to be what’s happening.

more at link

http://www.zerohedge.com/article/thunder-road-report-imminent-surge-silver-and-much-more
If Ag is now looked at as "safer than T's" by serious money, the historic 15:1 Au/Ag may make a comeback :shrug:

[westerebus]

14. Waiting on the kill shot.

Tis the season. At least the propaganda is headed in that direction.

If the play is to take down JPM that suspect list only has two names on it.

TPTB did just pass, the how to dismantle a bank in six easy lessons, sponsored by Goulem, for no reason.

May be they decided to take it for a test drive.

Not to mention all the work the FED has put into tightening the correlation of everything.

Placing the wealth of the nation into a zero gravity environment is tricky stuff.

I think the super bubble (fiat money) is deflating as it passes its age limits.

Zero gravity has it's limits too.

Where do you go?

What do you do?

Girl Gone Mads 1, 2, and 3 is a look inside of a possibility.

Systematic selective default and debt as asset swaps. Why does this sound familiar?

We just did that. The banks defaulted and swapped their trash for cash.

They just want to do it on a larger scale.

In the mean time zero gravity has taken over.

The deflation clock is ticking which takes time off as opposed to the inflation clock that added time to the economy.

This is the stimulation (inflation) vs the austerity (deflation) argument.

What's missing is the gravity equation.

What happens if the economy is really dead?

The body is hooked into life support and suspend in zero gravity. Now that body collects SSI, an IRA, disability, UE benefits, has a government job, works three part time jobs in the private sector, and is related to everyone you know.

The technical term is zombie. Under water, debt infected, afflicted with disaster, disenfranchised, demeaned, and disposed of their path to a brighter future. Did I forget angry?

Is it any wonder the fear levels are compounded to extremes?

We do not have leadership.

We have authority.

Self serving authority.

What's this all mean?

Change is a coming.

Change = Ag.

[westerebus]

15. Bad me.

Sorry, the 1,2,3 was posted by dixiegirrl.

[Po_d Mainiac]

17. When sovereigns guarantee/insure everything

In actuality, nothing will be covered.

[westerebus]

19. Have you read Giorgio Agamben?

The State of Exception. Very interesting read.

[Po_d Mainiac]

16. Since this satellite has mass, there is gravity

These 26,855 contracts amount to 134.3m oz of silver

Hmm..double the spot price of Ag. And assume that JPM sits on the bus for the entire ride. A couple $B+ in margin calls might be a lot of money to some banks. Would that be enough to put a cordite excited silver projectile into JPM? Nah. It may cause a bit of heartburn, but not put them out of our misery.

Besides JPM is one of the TPTB
...............
Will we see the end of fiat currencies? Dunno. We will see the day that the U$D no longer sits on the gilded throne, and has to wait its turn to use the communal porcelain.
...............

NEW YORK — Retail investors have yanked money out of stock mutual funds for 17 straight weeks
http://www.usatoday.com/money/markets/2010-09-08-mart08_ST_N.htm

So the HFT’s and Fed intervention into the markets are scaring the shit out of J & J six-pak. Many moved into Bond funds. If they are smart enough to get out of MF’s, they should know bond funds are wrapped in TNT and the fuse has been lit. Interest rates can’t continue to drop.

So where is there safety? PM ETF’s? Its common knowledge there are more that a couple ponzi funds operating. And the payout is in a fiat currency.

Holding hard is a logical alternative. Many think it’s the only alternative. Ag has not run up as fast as Au. It is also available in multiple forms. What flavor do you like? Pre-65 coinage of various denominations, state mint issued bullion coins/bars, private mint bullion coins/bars, etc? WTSHTF all will have a value towards that one commodity that has a fairly short shelf life, but will always be in demand…OIL.

Yup, Change=Ag (with a side order of brass and lead)

[westerebus]

18. Do you recall the movie Highlander?

Or the series on the tube? The hook was: " there can be only one ".

I think that's a parody of the banking capitalist system.

There are no good guys in the current version. Think hedge funds. Goulem Sacks the world.

Lehman was a member of the PTB club also.

Yeah never know.

--------------------------

Dollars are like used Honda's. There are just to many of them to ever get rid of them.

--------------------------------------------

Brass and lead. Am I gonna need another safe? Well OK.


;)

[Po_d Mainiac]

20. Keep your powder dry