The JPMorgan ‘Silver Hoard’: Is There Any METAL In It?
by Jeff Nielson, Sprott Money
A recent report from GoldCore hysterically asks the question: is “JPMorgan cornering the silver market”? The use of the word “hysterical” is necessary here, as any sober consideration of this question would result in nothing but scoffs of derision.
What is interesting in that article is that the writer actually compares his hypothesis that JPMorgan is “cornering” the silver market (today) with a real, documented attempt to do so: the infamous Hunt Brothers episode of 1980. The point here is that any comparison to that episode makes it obvious that the writer’s hypothesis is not simply false, but absurd.
First let’s review what actually happened in the silver market, when the Hunt Brothers (along with some Arab investors) attempted to buy-up all available silver, starting in 1979. Before reviewing the facts, and for readers with limited market savvy, an obvious question: why would any person/entity want to “corner” the silver market (or any other market)? Answer: to make lots and lots of money.
When the Hunt Brothers began buying-up silver in 1979; the price of silver was at roughly $5/oz (USD). At the peak of their accumulation; the Hunt Brothers had roughly 200 million ounces of silver, and the price had increased ten-fold, all the way to $50/oz. And this ten-fold increase in price came even though the Hunt Brothers’ total holdings never reached 20% of global inventories.
It is here where the numbers supplied by GoldCore get interesting (if still laughable). We’re told that JPMorgan has (over a short period of time) supposedly accumulated 350 million ounces of silver. This leads to two, obvious questions, for all readers who dwell in the real world. Where did they get all this silver? Why hasn’t the price of silver spiked by at least a factor of ten, given that JPMorgan’s supposed “silver hoard” is nearly 90% larger than that of the Hunt Brothers?
These questions become even more to the point when we look at a familiar chart of global silver inventories:
Note that when the Hunt Brothers began “cornering” the U.S. silver market; global inventories were abundant, but even so, all that buying caused a dramatic spike in price. Today, actual inventories are unknown, since inventory data has now been falsified, by (absurdly) including “ETF-silver” as part of the actual silver inventories.
This absurd perversion of data has been explained in detail in previous commentaries, but the bottom-line is that silver inventory data has not been reliable since 2005, at which time inventories had already plummeted by 90%, all the way down to less than 200 million ounces. Had silver inventories genuinely increased since that time; there would have been no reason to falsify the data, and with such an utterly ridiculous sham. Thus our only rational conclusion is that silver inventories have remained at this precarious level, or declined even further.
So, where did JPMorgan supposedly find 350 million ounces of available silver, when (apparently) there isn’t that much silver available in the entire, global market?
The question becomes even harder to answer when we add in a further detail: according to the same Comex data; JPMorgan has reduced its short position in the silver market, to the lowest level since 2008. Two points accompany this observation. First, “covering” short positions (legally/legitimately) generally requires even more physical metal, as they are “covering” a trade of silver, not paper. Secondly, it is precisely for this reason that where any large-scale short covering takes place, we would expect to see a commensurate increase in price.
So, why hasn’t the price of silver risen from $20/oz (roughly where it was when JPMorgan supposedly began covering its shorts, and supposedly began massive “long” buying) to more than $200/oz (USD), which would be an absolute minimum price gain, given that the parameters here are much more-extreme (in every way) than the Hunt Brothers episode?
In fact; the price of silver has been sliding over this interval, strongly suggesting that neither JPMorgan’s (supposed) reduction of its short position, or (supposed) massive long-buying has ever taken place. Indeed, given that the price of silver has sagged roughly 20% over this interval; the natural market inference is that JPMorgan has increased its short position, or decreased whatever “long” holdings it actually held in this market – or both.
The claim that JPMorgan has “350 million ounces of silver” is totally impossible, unless one adds in one more assumption: that this silver has been drawn out of some gigantic, secret stockpile of silver, totally outside of global, commercial record-keeping. Indeed, a “secret, silver stockpile” was the focus of a previous three-part series.
Note, however, the number-crunching that was done in that series. The collapse in silver inventories from 1990 – 2005 indicated a “burn-rate” for inventories (i.e. supply-deficit) of roughly 130 million ounces per year. With silver demand remaining as strong as ever, we have no reason to assume that this supply-deficit has decreased. If anything, it would have increased.
This implies we would have had a formal default of the silver market as far back as 2007, absent some “secret stockpile” which has been fed into the market, from that point onward, to avoid default. Further number-crunching would indicate that it would require a secret stockpile of roughly 1 billion ounces just to sustain the silver market from 2007 until today – without JPMorgan buying a single ounce of silver.
If there is some “secret stockpile” of silver – and empirical evidence suggests this is the case – it is a finite stockpile, with a high burn-rate attached. With 1 billion ounces of this stockpile apparently already consumed; is it plausible that the holders of this stockpile would bleed-off 350 million more ounces, just so JPMorgan traders could strut around, and talk about “cornering the market”?
For what purpose?
Even talking about “cornering the market” is the sort of bullish babble which puts significant upward pressure on prices. Meanwhile; JPMorgan has previously been the lynchpin of a banking cabal which has spent the last 50 years (and arguably much longer) aggressively suppressing the price of silver. Yet, now we’re supposed to believe that these gangster silver-shorts just woke-up one morning, and decided to abandon “the Dark Side”? Converting Darth Vader was a much simpler (and more plausible) deprogramming.
As even GoldCore notes; JPMorgan’s short position is still “massive”. Every ounce of silver it added on the long side would create additional pricing-pressure on this short position (if JPMorgan was actually accumulating any physical metal). It would be effectively betting against itself. In other words, absolutely nothing in this entire tall-tale (and the numbers which accompany it) makes any sense at all – if we are actually considering real, physical metal.
The only rational conclusion which can be reached is that this is just another, gigantic fraud perpetrated in precious metals market by the tentacles of the One Bank, and facilitated by the corrupt lackeys at the Comex (and CFTC). The purpose of JPMorgan pretending to hold “a massive long position”?
That’s an easy one. If JPMorgan pretends to be holding a 350-million ounce hoard of silver, and its criminal accomplices who operate and (supposedly) police these markets go along with this massive sham; that is 350 million “ounces of silver” which this fraud-factory could claim to “dump” onto the silver market – as part of some future operation to crash the price of silver.
With the price of silver already extremely depressed; such an operation would likely not be aimed at dragging silver far below the present price. Instead, a much more likely scenario is that this “big dump” would be aimed at crashing the silver price following some large spike (due to some dramatic event); or, the pretend-silver could be dumped onto the market to prevent a spike in price (due to some dramatic event).
While this is speculation; what is certain is that JPMorgan does not hold a hoard of “350 million ounces of physical silver”. Such a claim is no more plausible than these banksters claiming to own a “herd” of 350 million pink elephants. Stay tuned for the subsequent chapters of this latest bankster fraud in the silver market.