JP Morgan Holds Highest Amount Of Physical Silver In History

While everyone is focused on the massive outflows in COMEX registered gold inventories and the gold ETF, GLD, it seems that an important evolution in silver is passing unnoticed. In what follows, Ted Butler, precious metals analyst specialized in COT analysis, reveals a remarkable insight in the physical silver market.

Butler’s calculations show that JPMorgan (JPM) has piled up the largest holding of physical silver in modern world. Since the silver price peak in May 2011, the bank has accumulated between 100 and 200 million ounces of physical silver (if not more). The equivalent in metric tonnes is between 3,110 and 6,220 tonnes.

To put that number in perspective, it surpasses the amounts held by the Hunt Brothers or Warren Buffett (in his investment company Berkshire Hathaway).

On a yearly basis, some 100 million ounces of silver reach the investment market, which translates into 250 million ounces between May 2011 and December 2013. That has a value of approximately $5 billion. Given the size of the too-big-to-fail bank, that amount of silver, how large it may seem, is easily affordable:

  • JP Morgan’s quarterly profit is $5 billion (approximately 200 million ounces of silver).
  • In 2013, the closing of the gold short position, as well as the 20,000 contract reduction in the silver short position, netted JPM more than $3 billion.
  • In COMEX silver, JPM was the largest buyer in 2013.

These facts make it reasonable for JPM to be a big buyer in physical silver.

Methodology

JP Morgan knows the financial markets better than anyone else. It is no coincidence that the bank is (ab)using that knowledge to their own benefit. Evidence of that lies in the record number of penalties for which they have been accused because of market manipulation.

Butler explains that JPM was able to accumulate so much silver without being noticed through the big silver ETF, SLV. In his weekly commentaries to his premium subscribers, he has explained on numerous occasions that the physical silver holdings in SLV have been largely intact on a net basis, but there was a large “churn” in the holdings, which allows for a large buyer to go unnoticed. For instance, 60 million oz were liquidated in the two months after the price smash in May 2011; they were right away absorbed by a big buyer. The data are available on this site http://about.ag/SLV/.

Furthermore, the conclusion that JPM has been the big buyer in physical silver is confirmed by the following facts:

  • The growth of metal in the JPM COMEX silver warehouse over the past three years was 45 million oz.
  • The recent delivery stopped by the bank in December/January COMEX deliveries was 15 million oz.

JPM, being a master in manipulating financial markets, has also (ab)used their ability to set the silver price in the leveraged paper COMEX market, while simultaneously benefiting from lower prices to accumulate the physical metal. In Butler’s own words:

“Causing the price of silver to be depressed via a concentrated short position on the COMEX along with the ability to crush prices in an HFT second, to then scooping up physical metal (and covering paper shorts) at the self-created depressed prices.

What this also highlights is the madness and illegality of having the paper price on the COMEX setting the price in the physical market. If JPM hadn’t been capable of rigging silver prices lower in 2013, it would never have been able to buy back 100 million ounces of short paper contracts and buy many tens of millions of physical silver as well.”

Motive

The underlying motive for JPM to accumulate such a large amount of silver is most likely related to the fact that the bank was on the wrong side of the market when the silver price exploded.
When silver went through its historic rally in March and April 2011, the weekly COT data indicated that speculators did not rush into COMEX futures, which means that the peak in the silver price was not driven by speculation in silver futures. On the other hand, there was buying in the big silver ETFs, including record short selling in SLV.

“So, if it was not highly leveraged speculative paper buying on the COMEX that drove silver prices to the peak, it had to be buying in the physical market (including the ETFs). Therein resides my conviction that we were on the cusp of the first wholesale physical silver shortage in history in April 2011. And clearly it was the investment side of silver’s unique dual physical demand (investment/industrial) that pushed prices higher, as there was no great rush by industrial users into physical silver.

JPM was on the wrong side of the silver market: neither the total commercial net short position nor the concentrated short position of the four largest shorts (including JPM) increased in any way and, in fact, both began to decline in April. This implies that speculators, particularly the technical funds, not only didn’t add to long positions, but reduced long positions on the $15 price jump from March 1, 2011.”

What does this indicate? The explanation that makes most sense is that JPM realized that it was on the wrong side of the trade, after having discovered how tight the physical silver market was. Consequently, the bank had to crush the silver price with their HFT tricks in order to reverse the trend. By doing so, JPM could regain control over the silver market.

Meantime, JPM has built the longest position in physical silver in recorded history. It holds its grip on the silver price through its short corner in COMEX silver.

Ted Butler has written time and time again that the extent to which JPM adds new short contracts on the next silver rally will determine the strength of the rally. Simply put – if JPM doesn’t add new short positions, the manipulation is over. Someday, JPM won’t add to silver short positions and they, more than anyone else, will be best positioned to realize massive gains.

Further reading

JP Morgan Holds 2 Corners In The Gold And Silver Market
JP Morgan’s Perfect Silver Manipulation Cannot Last Forever
Highest Concentrated Position In Silver In History
The Great Disconnect Between Paper & Physical Silver

This article is based on a previous commentary of Ted Butler’s premium service. Readers are highly recommended to subscribe to the service on www.butlerresearch.com as it contains the highest quality of gold and silver market analysis. Ted Butler is specialized in precious metals markets analysis for 4 decades.


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  • Collin

    The one and ONLY answer to the debt problem is to declare it null and void because of FRAUD ! It is fraud because it is mathematically impossible to repay ! It can not be repaid because the interest is never created on the loan and that is fraud ! And fraud voids all !!! If we don’t void all out of thin air debt the bankers will own almost EVERYTHING !!! And we will be homeless slaves ! They have a license to counterfeit ! Can I counterfeit the money to repay the loan ? Why not ? If we even attempt to repay a impossible debt (the national debt) all we do is show our ignorance ! The way to fix this mess is so simple a 3rd grader can figure it out ! We void the fraudulent debt and everyone keeps ALL the items they have so called debt on ! And we start to use a debt free currency or / and gold and silver ! And then we will have a robust economy like never before — OR WE LET THE BANKERS STEAL EVERYTHING !
    I was in about the third grade when the news was talking about the national debt and I asked my dad who do we owe money to and who could possibly be richer than the United States and where did they get the money? And then my dad took a gulp off his beer and said we owe it to our self ! I said that’s the dumbest thing I ever heard of that’s like borrowing from my right pocket and setting fire to the interest and putting the rest in my left pocket ! This was about 1972 ! And yes it really is this simple !

  • Collin

    The bankers have a shoe in on ALL loans they make ! All they have to do is stop lending and then start foreclosing on ALL debts!-meaning they now own everything that had a debt by having a license to counterfeit ! So we #1 keep getting fleeced by continuing to pay this fraudulent scheme ! OR #2 we declare ALL out of thin air debt NULL AND VOID because of FRAUD ! And we ALL keep everything we have so called debt on! MOST people don’t get this part Every car boat house machine tool farm has already been paid for by the fraudulent paper! so no one looses !! WE sure as hell cant give it to the banksters (let them steal it)!AND IT DOESENT MATTER IF YOU WANT TO JUST REDUCE THE DEBT ITS STILL UNPAYABLE! So when we void the FRAUD This will be the ultimate FRESH start for everyone ! Share this if you want THE solution to the WORLDS problems! if not everything will continue to get worse until we have HONEST DEBT FREE MONEY /and GOLD AND SILVER ! And there is plenty of gold and silver just Divide the paper money (FRN) by the gold /silver and you have the value of them NO MATTER WHAT IT COMES TO per OZ !! Then we would be happy to work for SAY A SILVER DOLLAR A day ! Because NOW a REAL DOLLAR will buy what a $100 did before the reset!! THINK ABOUT IT

  • hank

    Since JPM is an agent of the state—they are planning on profiting from silver. They accumulation of real silver is just being done so they can dishoard silver later to keep the price suppressed through both channels: Short paper; dehoad physical if necessary.

    In other words, you can’t win the game in silver.

  • RS

    This was the very reason Glass-Steagall was instituted after the crash in 1929 because Banks manipulated the markets and bought up assets on the cheap while raping us common folk. Thanks to Clinton repealling Glass-Steagal there is no regulation in place to stop these mofo’s today, no different than back then.

  • nomoleft

    Silver is a smaller market . Force the price down , mines will close . Strong hands will repeat the process of grabbing more and then the delivery freakout after the industrial shortage begins . Then the vault door will be opened up to reveal ???

  • die

    JP Morgan
    are the biggest scum on the earth and hope they are the first to fall in the
    coming crash like liehman bros, the bigger the share price before the tipping
    point the better I will laugh as the price nose dives by more than half in 1
    day.

  • Joe

    When SHTF, I am not sure only long position in silver can save them.

  • sandman

    How can we be sure that JPM owns physical? When the COMEX fails, we will see how much.

  • JR

    Perhaps JPM will back its e-currency, for which it has applied for a patent, with silver? Could this be good news for stackers?

  • AK

    It is entirely possible that JP Morgan could use the Silver stash to smash the silver price but first they are going to want to profit on the long side by letting Silver go. Once the price reaches a certain point and they have reaped in billions in profits they can use their stash to drive down the price while heavily shorting silver profiting again on the way down. Once the price is down they accumulate more physical and start all over again. They will rinse and repeat as long as the physical market lets them. My guess is that before too long the physical market will become so tight that they will not want to dishoard any of the physical they have accumulated.
    What does all that mean for the individual investor who stacks silver? Short paper silver when it’s clear that the commercials are going massively short and then use those profits to buy physical silver after the price has been hammered down. I certainly would NEVER sell my physical at higher prices in hope to buy back at lower prices. That may work until one day it doesn’t and you are out your physical ounces.

  • jrf30

    So we have been told, by this author and others, for years that JPM was the manipulator of silver. Shoot, even attempts for all people to take physical delivery so we could crush JPM. they were the most short company in the history of the world Now they are the largest holder of silver? And nobody questions how they went fro being the #1 short to the #1 holder just like that? Like maybe all that talk for years of JPM being the manipulator is now … untrue? Just like the investigations FOUND? Wow. I guess some people will say whatever they seem to think is the most bullish statement at that time. But I’m not happy with ted Butler’s response to this supposed massive change. Basically “I am bullish because JPMIs short so much silver, and that is manipulation that will end and it must go up because JPM is short” to “I am bullish because JPM is long physical silver”. Seems like BOTH directions no matter what JPM does, it is bullish to ol’ Ted. Nothing can make the price go DOWN ted? Oh wait. It IS down. Down from where you were extolling its merits at $35 to now $19. And you were bullish the ENTIRE way down. Why should we listen to you again??

  • DA

    Yeah, sure they’ve got that much silver…and Fort Knox is full of gold, too.

  • nobody

    They acquire the physical so that they can postpone the default, which allows them to continue to short the market keeping investors/demand away. Gold will soon settle in $, while the game continues in silver…for just a while longer.

  • Hoser

    F__K Me Sideways!

  • http://www.zombielogic.org/ Thomas L. Vaultonburg

    That was my first reaction, too.

  • Dang

    They buy the real stuff they want to turn it into paper silver. And even at low prices the paper silver is worth its weight in true gold. Just one roll of paper silver toilet paper is 100 sheets to 1 ounce of the real stuff. So we do math say avg is $20 x 100 = $2,000. yes its truly worth its weight in gold.

  • Dang

    Sorry folks the pm war is lost. I tell you why an its a going to be a very true story. The plan is an always was to keep the pms in check. Keeping a lid on it. Pretty much a roller coaster ride for kiddy land. I come to this conclusion from the past history in the pm market which is 100% fact. 1# They capped the price 2# They made it hard to mine for a profit. 3#They drained the warehouses and it all leaving the USA huge amounts lately. Now just with 3 known facts. What is your guess as what is about to happen? It should be very obvious. The next chess move by the government should be game loss for the pm market. And it will happen by the end of march 2014. The stock market is going to start a long slide an is going to all most hit the ground. And when it does it will take the comex down with it into default. Since there is no product and no sellers at this cheap manipulated price. Hence they create the problem so they can fix it. The government will come to the rescue. To freeze prices till they can get things under control. And if the street price takes off to the moon. The answer is they will probably outlaw it again. I wouldn’t be suprised if that is what will happen. Since there is so much metals moving out of the usa right now. Somebody knows some thing we don’t.

  • GregBuls

    it’s already trading around production costs. They can take it down more, but can’t hold it there for long.

  • Reincarnated FF

    Perhaps this article is just so much BS? Look at the estimates given in the article – LOL. Like saying your dog weighs between 25 and 50 pounds.

  • sotiredoflies13

    If JP fails,it will only hurt others for those running JP have all ready taken more than enough money for them to live anywhere they want, and very well. Only prison cells will hurt them.

  • strangerthanfiction51

    Come, now, you rich men, weep and wail over the miseries that are coming upon you. Your riches have rotted, and your outer garments have become moth-eaten. Your gold and silver are rusted away, and their rust will be as a witness against and will consume your flesh. What you have stored up will be like a fire in the last days. Look! The wages you have withheld from the workers who harvested your fields keep crying out, and the cries for help of the reapers have reached the ears of Jehovah of armies. You have lived in luxury and for self gratification on the earth. You have fattened your hearts on the day of slaughter. You have condemned; you have murdered the righteous one. Is he not opposing you? James 5:1-6

  • jase

    “trading around production? I call BS on that. Unless of cours you could link us a RELIABLE source document for that:) Which you will not be able to do because (as mentioned earlier) what you wrote is BS

  • jase

    total RUBBISH,you are clearly an idiot