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A Ten Year Deal?

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December 21, 2017 - 9:53am

Here’s a thought that I fully acknowledge didn’t originate with me, but from a close associate, even though it incorporates many of my findings. If it does come to fruition, I will gladly reveal my associate’s identity to give him his proper due; but in case it doesn’t, I’ll spare him any embarrassment for an incorrect premise. As I think you’ll see, I can’t deny that my friend’s premise seems to tie up all the loose ends about the silver manipulation.

In a few short months, we will hit the ten year anniversary of perhaps the most seminal event in modern silver history – the takeover of the failing investment bank, Bear Stearns, by JPMorgan in March 2008.  Bear Stearns failed as a firm due to a variety of problems which, in effect, caused a run on the bank. But what makes the failure and subsequent takeover so prominent in silver history was the revelation shortly thereafter that Bear had been the biggest short seller in COMEX  silver and gold futures and was replaced in that role by JPMorgan. 

Since the takeover, JPMorgan has not only remained the largest short seller in COMEX silver futures, but has gone on to rack up a perfect trading record on the short side of COMEX silver; taking profits on every new short position it has added since taking over Bear Stearns and never, ever taking a loss. More importantly, for the past nearly seven years, JPMorgan has used its ironclad control over silver prices to accumulate the largest investment position ever witnessed in physical silver; and all at the depressed prices it created with its massive paper short position on the COMEX.  At this point, I peg JPM’s physical silver position to be no less than 675 million oz.

I’ve been on JPMorgan’s case since the fall of 2008, when I first uncovered that the bank was the new king short in silver. Because the evidence has been so strong that JPMorgan has both manipulated the price and accumulated a massive amount of physical silver, I lost any fear I had when I first started referring to JPMorgan as crooked in its silver (and gold) dealings. Yes, I still send the bank all my articles and I assume I would have heard from bank officials had they had any objection to what I write.

Because the takeover of Bear Stearns by JPMorgan was necessitated by concerns for the stability of the financial system, it was, basically, arranged and overseen by the highest levels of US Government financial regulators, the Treasury Dept. and the Federal Reserve. In a nutshell, Bear Stearns was too big to fail.  Yet fail it did, although the USG and JPMorgan took strong measures to contain the damage from the Bear Stearns failure. One of those measures was to prevent Bear’s failure from affecting the silver and gold market.

As the biggest short seller in COMEX gold and silver futures contracts, Bear Stearns’ failure would be expected to cause prices to explode in an orgy of short covering by the biggest short suddenly gone bad. Actually, silver and gold prices had been running to new highs back then as Bear Stearns lurched toward bankruptcy in mid-March 2008.  From the start of that year, silver had jumped by $6 to $21, a new 28 year price high and gold hit its then all-time high of over $1000, up $150 since year end, with both price highs occurring on the very day that Bear Stearns was taken over, March 17, 2008 (St. Patrick’s Day).

That was the day, of course, when JPMorgan took over the short reins from Bear Stearns, with full prodding, cooperation and participation from the US Treasury and the Fed. Almost from that day, silver and gold prices began falling and didn’t stop until October of 2008, when silver traded below $9, nearly 60% lower than when JPMorgan took over – not just Bear Stearns, but the market itself. Gold fell from its then all-time high of $1020 to under $700 by that October. And on these massive price declines in 2008, JPMorgan bought back much of its massive COMEX short position with profits of many hundreds of millions of dollars. This was the very first of the many coming successful manipulation campaigns conducted by JPMorgan upon its ascension to the very top of the silver market.

Not one word of the forgoing was made up and can be easily substantiated. I fully admit that as the events of 2008 unfolded, I didn’t have as clear a perspective of what was occurring as I do now, but 2008 was a big year for me, what with initiating the infamous 5 year investigation into silver manipulation by the CFTC and having the agency confirm my speculation that it was JPMorgan as the big COMEX silver and gold short. That being said, I had no idea back then about what would transpire over the next ten years in silver and gold. I had a pretty good sense that prices would move higher and they did, with silver up more than five-fold from the lows of 2008 to the highs near $49 less than three years later. But I never conceived that JPMorgan would regain control for the next seven years and pressure prices lower. Otherwise, I would have told you (and myself). 

Because of the involvement of the US Treasury and Federal Reserve in JPMorgan taking over Bear Stearns was so obvious, no one can deny that JPMorgan demanded and received something in return for “saving” the financial system; that reward being allowed to dominate and control the silver (and gold) market without regulatory interference.  To my mind, the reward included a hands-off agreement by which the CFTC was ordered to ignore the increasingly blatant dominance over the silver and gold markets by JPM. Many have further expanded this premise to claim that this proves the US Government is controlling the price of precious metals, but I’ve never gone that far (because nothing I have seen in my more than half-century of adult life persuades me the government I’ve observed over all that time is capable of such a feat).

While not a believer in full-blown conspiracy theories by any measure, it is also clear to me that the CFTC has handled JPMorgan with kid gloves, at best. How else to describe the behavior of JPMorgan in the silver market that no other entity could get away with? We don’t have to go much further than JPM never taking a loss on COMEX silver short positions and how it can be allowed to be both the biggest paper short and biggest physical buyer simultaneously.  How can one reconcile the broader concern of overall government control of precious metals prices in the face of JPMorgan’s specific actions in COMEX silver? My friend’s speculation does a pretty good job of answering that dilemma.

He contends that the US Government made a ten year deal with JPMorgan, giving the bank immunization against regulatory oversight in matters involving silver (and gold). And we’re certainly close to the ten-year mark of any such agreement. Again, I’m not claiming authorship of the ten year deal speculation, but I do wish I was the author. That’s because it aligns perfectly with everything I think I know about silver, the US Government, COMEX and JPMorgan. I never believed the USG would grant permanent immunity to JPMorgan for manipulating silver and gold, so a ten year deal fits as a substitute.

Certainly, JPMorgan has put the last ten years to good use, in both milking guaranteed profits from its COMEX short side paper dominance and then by beginning to accumulate physical silver seven years ago on a scale never before witnessed. Most importantly, the ten year deal fits perfectly with my “big one” premise, as it is downright remarkable what a good position JPMorgan has put itself in for a liftoff in price just recently. My friend holds that the coming end to this year marks the end of the ten year deal and I’m in no position to argue, since it was his idea to start with. Aside from me fervently wishing that his take will be the right take, I can find nothing to dispute it.

Ted Butler

December 21, 2017

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About Theodore Butler / Commentary Author

After publishing unique precious metals commentary on the Internet since 1996, I have decided to offer a subscription service. The main reason for the change is that I felt somewhat restricted by my weekly format.

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