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An Interesting Anniversary

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April 12, 2018 - 11:58am

A year ago, I took the occasion of new appointments at the CFTC as an opportunity to try once again to persuade the agency to step up to the plate and address a silver manipulation that had been in place for more than 30 years.  James McDonald was the newly installed Director of the Enforcement Division.  I made the letter I wrote public –

http://silverseek.com/commentary/another-opportunity-16489

I made special note in my letter to McDonald of the role JPMorgan played in the silver manipulation since acquiring Bear Stearns, including that JPMorgan had never taken a loss, only profits every time it added new short positions in COMEX silver futures over the past ten years. Such a perfect trading record would be impossible in any market that wasn’t manipulated. In addition to JPMorgan never losing, only winning whenever it added COMEX short positions, the bank had accumulated a massive amount of physical silver at prices it was responsible for depressing (by the way, JPM has added 100 million physical ounces over the past year and now holds 700 million oz).

In hindsight, I wouldn’t change a word of what I wrote a year ago.  I never heard anything from the agency or McDonald and don’t expect to. Regardless, I thought it might be instructive to see what transpired in the year just passed, with close attention to my allegations that JPMorgan had never taken a loss, only profits, by shorting COMEX silver contracts. How did JPMorgan fare over the past year – I mean aside from the bank adding another 100 million physical oz on the cheap? 

JPMorgan not only maintained its perfect trading record, it did so in absolutely spectacular fashion, with the past year being perhaps its best year ever in trading silver. On ten separate occasions, starting with McDonald’s first day on the job, JPMorgan managed to either add a significant number of net new COMEX silver shorts as silver prices rose or buy back those added shorts at a profit, never taking a loss. Keep in mind that the past year in silver was one of the least volatile, with no more than a three and a half dollars difference between the high and low prices ($15 to $18.50), making JPMorgan’s perfect trading record all the more impressive.

Before presenting a table of JPMorgan’s silver trades over the past year, let me describe the filters that I used. First, while I appreciate that many will rely on the data that I present as being factual, subscribers can double check what I present by reviewing articles I wrote over the past year and please ask any questions that come to mind. For dates, I will use the Tuesday cutoff for the closest COT report that corresponds with price.

My data source is the COT report (and Bank Participation report) as I have recorded them along the way and wrote about at the time. Finally, I arbitrarily used a minimum of 5000 net contracts as the cutoff for monitoring changes in JPM’s net short position in COMEX silver futures. Keep in mind that there may have been a minor revision or two along the way as new Bank Participation Reports caused me to recalibrate JPM’s silver short position.

The following table shows what I had been reporting over the past year in terms of JPMorgan’s net short position and the price of silver on certain dates. My intent is to show that JPMorgan always increased its short position into price highs and always closed out many or all of those added shorts into price lows. In constructing the table, JPMorgan’s maximum and minimum COMEX silver net short positions were the focal points, with price and date secondary inputs.

Date                      Price                   JPM’s short position      Estimated profit

April 11, 2017         $18.50                34,000 contracts

May 9, 2017          $16.00                18,000 contracts             $110 million        

June 6, 2017         $17.50                28,000 contracts

July 18, 2017         $15.00                 10,500 contracts            $150 million

Sept 12, 2017        $18.20                 38,000 contracts

Oct 3, 2017           $16.50                 33,000 contracts            $25 million

Nov 21, 2017         $17.00                 40,000 contracts

Dec 19, 2017         $15.70                24,000 contracts             $75 million

Jan 9, 2018           $17.20                33,000 contracts

Feb 13, 2018         $16.20                25,000 contracts             $30 million

April 3, 2018          $16.20                19,000 contracts

The prices listed were the prices on the COT dates reported. Clearly, JPMorgan made profits whenever it bought back short positions at lower prices than it sold at and since it never bought back short positions at higher prices than it had sold at, it never took a loss. If anything, my estimates for what JPMorgan made in this trading is very conservative and likely much more than I’ve indicated.

As far as the last two unchanged prices, I believe that might be explained by the emergence of Goldman Sachs as a big silver stopper in the March COMEX futures delivery and JPMorgan backing down from taking deliveries so as not to disturb silver prices to the upside. JPM did this so that it might buy back the 6,000 short contracts that it did into April 3, since those contracts represented 30 million ounces of silver it couldn’t have bought in physical terms over that time. These crooks don’t miss a beat.

Again, the data portrayed in the table comes from what I’ve reported over the past year in running commentary. As to any suggestion that JPMorgan was only hedging, that’s poppycock – bona fide hedging requires a loss on one side of the hedge and a gain on the other side of the hedge. JPMorgan never took a corresponding loss on anything as it made nothing but profits on its COMEX paper trading, all the while adding to its massive physical position at depressed prices. This is a very important issue that few seem to grasp, namely, that there is no legitimate hedging taking place in COMEX silver; certainly none by JPMorgan for its own house account.

The prime motivation for JPMorgan was not to maintain its perfect trading record on the COMEX (even though it made some $400 million in such trading over the past year), it was always the desire to keep silver prices depressed so that it could accumulate the 700 million oz I allege it has acquired. That said, it should be crystal clear that the amounts of short positions that JPMorgan added on rallies were instrumental in capping prices as I have alleged for a decade. The table shows that JPMorgan was always the largest COMEX silver short seller at market tops which, at the margin, was the deciding factor in every silver rally petering out and ultimately failing.

The CFTC and McDonald must know this, particularly after being alerted to it so many times before, during and after JPMorgan’s manipulative activities. Therefore, one must conclude that both are fully under the control of someone and my guess is that the ultimate control rests with JPMorgan. I’ve been told that McDonald is a straight shooter, but after the past year that’s hard to accept. As I said in my letter a year ago, his tenure would be judged by how he handles this issue. To date, he has not handled it at all, unless his aim was to help JPMorgan, in which case he’s done a bang up job.

Please keep in mind that I am openly accusing the nation’s largest bank of criminal market activity and the federal commodities regulator of willful malfeasance. It’s beyond remarkable that neither can address such public accusations. That’s one big reason why more have become convinced that silver is manipulated in price.

In no way should any of this be taken to be at odds with my strong belief that the next move up in silver could and should be the big one. In fact, it enhances that setup in more ways than ever before.

Ted Butler

April 12, 2018

www.butlerresearch.com

 

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About Theodore Butler / Commentary Author

After publishing unique precious metals commentary on the Internet since 1996, I have decided to offer a subscription service. The main reason for the change is that I felt somewhat restricted by my weekly format.

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