Comment: A few paragraphs from Ted Butler.

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A few paragraphs from Ted Butler.

JPM is adding to it's short position again. This fits with me thinking that they will have one more sell off. I think either before to the end of the 1st quarter.

I would estimate JPMorgan’s concentrated silver short position in net COMEX contracts to now be 35,000 contracts, after analyzing the companion monthly Bank Participation Report. This is the equivalent of 175 million oz, or almost 23% of world annual mine production (770 million oz). I know I harp on this matter, but I don’t think near enough. This is a preposterous amount for any one entity to hold and, in and of itself, is manipulative to the price of silver. That this amount is held by a US bank and is on the short side is even more preposterous. Banks should not be speculating in commodities and certainly not on the short side of the one commodity that could turn into a pronounced shortage. In a moment, I’ll try to dash forever the possibility that JPMorgan may be legitimately hedging.

The 35,000 contracts held net short by JPMorgan is also 34.5% of the entire short side open interest in COMEX silver futures, once the 50,000 spread contracts listed in the disaggregated COT report are deducted. It is not possible that such an unprecedented concentration is not depressing the price of silver, just as it is not possible that JPMorgan isn’t crooked in their silver dealings. I admit that one of two things is not right – either I’m dead wrong in labeling JPMorgan as the big silver crook or JPMorgan is dead wrong for being that crook. And I’m not trying to make this personal because what matters to me is if silver is manipulated, not who the manipulator might be. Let me see if I can make the case by looking at the COT and Bank Participation reports.

Some continue to suggest that JPMorgan has a legitimate reason to be so massively short COMEX silver and to short more. The most popular excuse is that JPMorgan is shorting for its clients, such as mining companies looking to hedge production. The continued inaction from the regulators in dealing with JPM’s blatant manipulation of silver gives credence to the hedging angle, as if the regulators were really on top of things. There is a simple dismantling of the JPMorgan is hedging fallacy by looking at COT data. JPMorgan sells short and the other commercials only sell in COMEX silver when technical funds and other speculators buy and vice versa. This is the essence of the market. If JPMorgan didn’t sell to technical fund buyers when those buyers came to market, the price of silver would explode. That’s basic. Therefore, that basically destroys the JPMorgan is hedging for clients nonsense. When JPMorgan sells thousands of additional COMEX silver contracts short, it is doing so to satisfy buy orders from technical funds, period. That’s proven in the continuous stream of data from the CFTC – as speculative long positions grow so does JPMorgan’s short position. It has nothing to do with mining companies hedging anything.

This does bring us to the real heart of the matter, namely, the corollary excuse that JPMorgan (and the other collusive commercials) are merely “market-making” or providing depth and liquidity to the silver market. There is more truth to this excuse than the hedging story, but it still falls way short of being legitimate. And make no mistake – this is the center of discussion between the regulators and JPMorgan and the other commercials. If the CFTC tried to go straight and deal appropriately with JPM’s concentrated short silver position and ordered this crooked bank to reduce its short position (as it should), the response from JPMorgan would likely be, “fine, but it’ll be on your heads when the price explodes.” There is no question that silver prices would explode if JPMorgan stopped selling short and/or moved to buy back existing shorts, so the CFTC and the CME go along with the market-making charade, rather than risk publicly discussing the details after silver prices exploded. In other words, the CFTC has gone along with the silver manipulation because the minute it ends, the agency will be under the spotlight. That’s the real reason the CFTC has dragged its feet on anything that would end the manipulation.