In this interview with SprottMoney, Ted Butler comments on the latest evolutions in the gold and silver market. The conversation is focused on the current concentrated positions of JP Morgan and the evolution on the gold and silver price. Butler is not only convinced of the manipulation but also that it will end sooner or later with a huge upside impact on prices.
JP Morgan started out this year massively short in gold and silver. Their position was around 75,000 contracts net short in gold and 35,000 contracts net short in silver.
The whole reason behind the decline in the first half of the year was JP Morgan rigging prices through their monopoly in the COMEX to the point that prices came down. In doing so, they were able to buy back many of their short positions in silver and all of their short positions in gold. The company made about 3 billion dollars on closing out these shorts. In gold, they went long till they reached 85,000 contracts long in gold. In the August rally they made another 350 million dollar of profits.
JP Morgan was not able to get long in the silver market however. Right now they are sitting on a monopoly on the long side of the gold market and a concentration on the COMEX silver market.
– Ted Butler on JP Morgan’s incentive to corner the gold market to the long side.
JP Morgan is a for profit organization. Their main motive is to make money. The problem is that they basically created a monopoly (a corner) on the COMEX gold and silver market. They are making their profits on an illegal basis. Companies are not allowed to do so.
– The likelihood that JP Morgan was behind the sharp sell offs in price?
The big declines of recently (including the one of today, Friday September 20th) is nothing more than JP Morgan buying back their 30,000 contracts in gold they recently sold.
The only reason we ever go down in price in gold and silver is that the commercials, but mainly JP Morgan, can buy contracts. And the only reason they buy them is to make money; the way they make money is they eventually sell it. So they’re going to move this position eventually.
This is why prices go up and down.
– What to think about the fact there is not any response on his allegations?
I am sending every newsletter to Jamie Dimon (CEO of JP Morgan), the Board of Directors of JP Morgan and the CFTC directors. I don’t get any response on those, even not a returned e-mail. That is very unusual as price manipulation is the most illegal market practice.
The problem is that I am raising these issues but there is never a response. Not from JP Morgan, not from the exchange which should obviously be concerned about the allegations of market corners existing on their exchange, not from the CFTC.
We just came through the 5 year anniversary where the CFTC has been investigating the silver price manipulation. This is the investigation that was initiated at my doing because the CFTC data showed this huge short position on the COMEX held by US banks.
– Can the gold and silver price only rise after the COMEX and LBMA will default?
The LBMA is the most opaque and non-transparent financial organisation. They don’t provide any information about anything. Let’s leave the LBMA out of this. The COMEX, by contrast, is dominating. COMEX is where prices are set. If the COMEX were to default, it would destroy the shorting mechanism that JP Morgan and other commercials would cease to exist. Silver particularly would go to the upside.
I am not foreseeing a COMEX default. I don’t think it’s the only thing that can free the silver (and gold) market from manipulation.
– Butler’s take on the price of gold and silver for the remainder of this year.
It’s hard to imagine that the year will not close with higher prices than where we stand now.
If the manipulation of JP Morgan on the market breaks, then the sky is the limit. There is a big difference of a price between a manipulated market or a market that is not manipulated. Particularly in silver, when the manipulation is over, there will be no obvious drag on the price. For the time being, investors need to be prepared for every type of price movement.
Ted Butler offers an excellent premium service with weekly updates on the gold and silver market evolutions: www.butlerresearch.com.