Silver Markets: More JPMorgan Chase Shenanigans?

By Patrick A. Heller – Liberty Coin Service

At the beginning of 2011, I made a short term forecast that the price of silver would at least reach $38 by the end of March and that gold would reach $1,600.

jpmorgan chase silver Silver Markets: More JPMorgan Chase Shenanigans?During intraday trading on March 24, the price of silver on the COMEX reached as high as $38.17. Although my prediction for silver was technically achieved, silver has not yet closed above $38.00 yet this year. My forecast for gold was too optimistic, though I expect it too reach those levels later this year. One reason why my predictions ended up being a bit optimistic is the extraordinary actions taken by JPMorgan Chase to suppress precious metals prices.

For instance, the Commodity Futures Trading Commission monthly bank participation report released early this month showed that between one and four large banks had, in total, increased their net short silver position on the COMEX over the previous four weeks by about 30 million ounces! It is suspected that JPMorgan Chase was responsible for all or almost all of this short selling, in part because of other antics they were up to. A few days before the first day of notice for delivery for COMEX March silver contracts, a total of 252 million ounces were owed to long contract holders. As I write this, almost all of these contracts have been settled, with only a small fraction settled by the release of silver from COMEX vaults.

One man reported that his company owned 4,000 long March contracts (20 million ounces of silver) for which delivery of physical silver was demanded. The counterparty was JPMorgan Chase. Instead of silver, the bank offered cash.

After the first offer was refused, the bank offered more than $40 per ounce. When the company turned down that offer, JPMorgan Chase apparently threatened the company that the bank would deliver physical silver against other contracts, then declare a “force majeure” inability to deliver all the silver to this particular party. After this, the company accepted a cash payment, reported to have been for more than $50 per ounce!

I have heard of other contracts settled for cash at or above $50 per ounce. By paying cash to fulfill so many contracts, JPMorgan Chase was able to avoid the 50% jump in silver’s spot price that occurred toward the end of the delivery period for the December 2010 silver contracts. But that isn’t everything that the bank has been up to.

On March 15, JPMorgan Chase applied for approval as a depository of gold and silver for COMEX contracts. Processing the paperwork normally takes about 45 days. JPMorgan Chase was approved within 48 hours! Several analysts suspect that any gold and silver that might be stored with the bank may be used to cover deliveries of short contracts, which is one reason why approval was made so quickly.

With so much price suppression activity occurring over the past two months, it is no wonder that the price of gold has been quiet and that silver only made it just over my minimum expectation. On the other hand, if you think about it, that fact that the price of silver closed today at its highest price (ignoring inflation) since February 1980 and that gold reached an all-time intraday high of almost $1,450 on March 24, that is definitely a sign of major parties taking on the US government’s manipulation of the gold and silver markets. As renowned investor James Rogers said in a speech today, “Don’t sell your silver.”

About the Author:

Patrick A. Heller was honored with the American Numismatic Association’s 2012 Harry J. Forman Numismatic Dealer of the Year Award. He owns Liberty Coin Service in Lansing, Michigan and writes Liberty’s Outlook, a monthly newsletter on rare coins and precious metals subjects. His award-winning radio show “Things You ‘Know’ That Just Aren’t So, And Important News You Need To Know” can be heard at 8:45 AM Wednesday and Friday mornings on 1320-AM WILS in Lansing (which streams live and becomes part of the audio and text archives posted at http://www.1320wils.com). He is also the financier and executive producer of the movie “Alongside Night”.

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