The Justice Department announced a record $920 million penalty and a Deferred Criminal Prosecution Agreement (DPA) against JPMorgan (JPM) on 9/29/20. LINK-
The complaint seemed to focus mainly on “spoofing” which has been a problem but only the tip of the iceberg regarding JPM’s manipulation of the precious metal (PM) markets. Hopefully, though, it will at least be enough to cause JPM and the other big PM traders to at least back off on manipulating silver.
As of 10/13/20 the 8 largest silver futures short traders are still over 350Moz. short silver. Per Ted Butler these 8 traders are all or mostly big banks. I think this concentrated short position has to be resolved before we can really say that the manipulation has ended. Yes, for every short contract there is a long contract, but the long contracts are spread out among dozens of traders and not concentrated or collusive. You can bet if there were concentrated long positions equivalent to the current short position that “people” would be screaming and demanding that restrictions and/or higher margins be placed on those traders. What are banks doing speculating in the futures market (with their in-house accounts) anyway? Are these naked shorts? Or do they have the metal that they have already (in effect) sold? Who is going to sell them 350Moz. of silver and at what price?
The big 8 silver shorts were short 550Moz. in Feburary and were able to trim that down to 390Moz. during the big price smash in the middle of March when the price was $12/oz. But, since that time they seem stuck in this 350Moz. range with the price now at over $24/oz.
I am not a futures trader and don’t intend to start now. I think that the resolution to this situation will come from the physical silver market. Obviously, a few large traders can “control” a lot of silver in the futures market but that is not what futures is supposedly for. Futures trading has gotten out of hand, probably in most markets. The futures trading is dictating the price where it should be the fundamentals (supply and demand) of the underlying commodity that sets the price. But, I think the silver market is unique compared to most other markets in two important aspects:
- It is a relatively small market.
- It is both a commodity that is consumed and an investment asset.
If you really know and understand the silver market and the futures market and you think you can make some big money trading futures- then go for it and good luck. But, then you also know that silver is a VERY volatile market and the big silver shorts are not going to “give up” without a fight. I think for the vast majority of people owning paid for (not on margin) physical silver or shares of a ETF (like SLV) is the safest and best way to assure that they will have something when the price starts ratcheting up.
As I have said elsewhere on this site, I want this site to be an open forum of those interested in or who want to learn about silver. After the 2008 housing crisis and recession I heard an investor say that when he heard his barber talking about flipping houses he knew it was time to get out of that market. I think it may be the same with silver. When your barber or Uber driver is talking about buying silver, then it might be time to get out of the market. But, we are far from that level of public awareness now. I believe that public awareness will be the key to increasing demand for physical silver which should be the beginning of the end of the silver manipulation. Let me know what you think, your ideas on how we can spread the word. For instance- Main Stream Media (MSM) reports daily on the stock market. Why don’t they report on the Precious Metal (PM) market? How could we encourage them to do so?