Ted Butler: More Evidence Of JP Morgan’s Manipulation Scheme In COMEX Silver

Ted Butler has written extensively about silver manipulation. He has been the first analyst in this area to explain in great detail the mechanics of silver manipulation, but also to provide hard evidence on numerous occasions. In his latest update to his premium subscribers, he explains how JP Morgan is applying manipulative tricks in the March 2015 futures contract on COMEX silver.

** By Ted Butler **

I don’t usually dig into the details of COMEX deliveries against futures contracts, primarily because there is usually not much to report. One reason for that is because the deliveries are reported by clearing member and not by who is actually behind the deliveries. But because it is the delivery mechanism that underpins the COMEX as the silver price setter, I’m always on the lookout for anything even slightly unusual.

One very transparent feature to the otherwise opaque data is the classification if the clearing member is making or taking delivery on behalf of a customer or for the clearing members’ own house or proprietary trading account. On the first two delivery days of this month’s March silver futures contracts, a total of 1393 contracts (almost 7 million oz) were issued (put out) and stopped (taken). The majority of deliveries both issued and stopped were for the house, or proprietary, trading accounts of a few big banks, including, JPMorgan, Bank of Nova Scotia, Credit Suisse and Citicorp: http://www.cmegroup.com/delivery_reports/MetalsIssuesAndStopsYTDReport.pdf

A few observations. First, in this day and age of almost non-stop findings and reports that the big banks have conspired to fix prices in almost all the markets they deal in, the COMEX March silver deliveries would seem to certify that they are certainly the kingpins of COMEX silver. I’m sure all these banks could come up with a litany of cockamamie stories as to why they must deal in silver for their own accounts away from the simple explanation that they are just speculating and controlling the market, but you would be hard-pressed to come up with clearer evidence to the contrary than in the March deliveries so far.

Second, the fact that JPMorgan, in its proprietary trading account, was the largest stopper of 735 deliveries (3.7 million oz) would seem to coincide with my speculation that the bank has been accumulating physical silver in a serious manner, even as a number of its own customers issued deliveries this month – an apparent conflict of interest.

But the biggest concern is this – JPMorgan has been the biggest short in COMEX silver futures since taking over Bear Stearns and the bank’s taking of physical silver deliveries this month has occurred while it is still the biggest short with 18,000 contracts (90 million oz) still held net short. In order for JPMorgan to have taken delivery of 735 contracts this month for their own account and benefit means it had to be long those futures contracts while at the same time being short many more futures contracts. This is permitted by the CFTC and the CME, as commercials can hold open long and short positions in the same month (not allowed for non-commercials), but please step back and consider what I just said.

By being the largest COMEX silver short, JPMorgan has exerted the largest negative price influence on silver while, at the same time, has stepped up as the largest taker of physical silver on the COMEX in the first two delivery days of the March contract. Is this not, on its face, the most egregious and crooked circumstance that one can imagine? Manipulate the price lower and then scoop up the metal at bargain prices with the blessing of the regulators. With such blessings, it’s no wonder JPMorgan is considered the US’s most politically connected bank.

***

Mind the mechanics of the silver manipulation described above, in particular from JP Morgan. The combination of the short concentration to suppress the silver price with the physical delivery through COMEX silver is not described by other analysts. Ted Butler rightfully points out that this remains underexposed, even in the precious metals blogosphere.

This article is based on a commentary of Ted Butler’s premium service at www.butlerresearch.com which contains the highest quality of gold and silver market analysis. Ted Butler is specialized in precious metals market analysis for over four decades.

 

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