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Valyooo (99.63)

Why would jpm want to short silver?

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December 14, 2010 – Comments (23) | RELATED TICKERS: JPM , SLV

I am very bullish in silver. I am not denying in any way that they are heavily shorting silver. But I've asked why so many times to so many people and still have not got an answer. I legitimately want to know what jpm would have to gain from shorting silver and not covering at the bottom, it makes no sense to me. What would be their reasoning for trying to manipulate the market?

Please, give me an answer, and nothing else. I don't wanna hear "believe it or don't" or anything like that, I'd just like to know the theory of why they would do this

23 Comments – Post Your Own

#1) On December 14, 2010 at 4:19 PM, Entrepreneur58 (40.25) wrote:

The futures markets are where people who don't actually own something sell it to people who don't actually want it.  Thus, if you have an increasing number of people who don't want to actually own something, you need someone else who doesn't actually have any of it to sell it to them.  Got it?

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#2) On December 14, 2010 at 4:59 PM, MoneyWorksforMe (< 20) wrote:

Who's to say they didn't cover at the bottom and then subsequently reopen another enormous position? 

And I think it is very safe to say that if it was very easy and profitable the first time, they would be very inclined to do it again...and again....and again...ad infinitum so long as they are able to get away with it... 

We're talking about big banks and greed here, is it really that hard to fathom? 

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#3) On December 14, 2010 at 5:04 PM, starbucks4ever (98.95) wrote:

Because metal bugs want a beautiful story that will make them stop worrying.

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#4) On December 14, 2010 at 5:09 PM, chk999 (99.98) wrote:

This is kinda the point I don't get. The JPM people are not noticeably stupid. They know that we will have inflation due to the massive stimulus program. So they have to know that silver will go up, just due to the inflation. So why they would have a huge, unhedged, short position makes no sense to me.

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#5) On December 14, 2010 at 6:47 PM, MoneyWorksforMe (< 20) wrote:

chk999,

I often wondered the same. I have two possible solutions, neither of which I'm completely satisfied with.

1.) JPM's position was so large that skilled manipulation would move the market generally in its favor regardless of other market forces.

2.) JPM was conspiring with the fed. Perhaps this was a joint operation, that would be mutually beneficial: JPM could have virtually complete control over the silver market, while tame silver prices give the illusion that the fed's out of control monetary policy is not creating inflation.

Of course this is just conjecture; and,I am bullish on silver for multiple reasons that do not include the allegations involving JPM. 

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#6) On December 14, 2010 at 7:29 PM, Lostromo2 (< 20) wrote:

The manipulation in the price of silver is actually more about gold than anything.  The price of silver is highly correlated to the price of gold, but it's cheaper.  Thus JPM can take a huge position in short silver at a discount to the price of gold and still have the effect of keeping the price of gold in check.  The simple reason for this, is gold (and silver) historically have been used monetarily around the world and can be viewed as competition to the U.S. dollar.  The Fed cannot have this because they need the unlimited supply of fiat currency that the dollar provides to keep funding the deficit and thus the American way of life.

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#7) On December 14, 2010 at 9:19 PM, HarryCarysGhost (99.75) wrote:

Dude, I have no idea what JPM is doing. Seems like a bad bet to me but I'm not in bed with the Gubernment. So who knows.

Way I see it is I bought the physical in the teens as a hedge against inflation. (which in my mind we won't be seeing until 2012)

Now if Silver goes down in the interim, I did'nt get my full position of SLW in place, and I can dig some shares of Great Panther. Full position of Endevour in place.

So I'm gonna chill and let them play their little games.

Peace. 

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#8) On December 14, 2010 at 10:25 PM, silverminer (31.36) wrote:

I answered your question, You must not have returned for an answer. I also discussed the issue here.

 

 

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#9) On December 15, 2010 at 8:12 AM, ChrisGraley (30.23) wrote:

Is inflation good or bad for Creditors?

Is it possible to manipulate silver and make money?

Is it probable that you'll make money if you have a government backstop?

How hard is it to manipulate silver if you control both ends of the market?

 

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#10) On December 15, 2010 at 9:26 AM, Valyooo (99.63) wrote:

Sinchi, thanks. Sorry I didn't see your response sooner, my computer crasheed so I have none of my bookmarks so I've been forgetting to check back on some threads. My question is, since its a free market, should there really be a limit on how much of one thing somebody can buy? If so, what's the limit? If they wanna buy all the silver, so what? Also how could we "crash jp morgan" if. They control the price, not us?

@ the first post, that doesn't sound anything out of the ordinary for comexx

@2 if they did infact cover at the bottom, wouldn't that have sent silver to 5000 an oz like all the articles say?

Also, other currencies print too right? So why would only america need to do this? And a weak dollar bumps up pm's, not vice versa. So if gold and silver start going up in price, do u think the general public would lose faith in the dollar? No, they don't understand that stuff. Only us finance guys do, and we see this inflation whether or not gold and silver stay artificially low

Thanks again sinch for gprlf and sl, they are two of my bigger winners

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#13) On December 15, 2010 at 1:25 PM, jatade1 (42.96) wrote:

Just my 2 cents worth.  First off, we must concede that JPM is not stupid and also not likely to make a stupid trade and lose so much money.  That being said...what could possibly be their purpose in shorting silver (a known fact at this point though amount guesstimates vary widely). 

For the sake of my argument we are going to assume that all of the monetary policies being pursued around the globe will result in at least moderate rates of inflation and precious metals are going to increase in value substantially over the next 5 to 10 years.  If you had highly skilled analysts (again assuming JPM has their share) and they provided you with this information you would want to own as much physical (vs paper)precious metals as you can as cheaply as you can...correct?

So JPM decides that silver is going to increase greatly in value.  They could begin buying all they could (substantial amount with their deep pockets) which would cause the price of the precious metals to skyrocket, or they could short the paper silver while buying the physical.  I have a hunch that this has been their game.  I believe (just personal belief no proof) that JPM has been an active acquirer of physical silver over the past 12 to 18 months.  This could be accomplished any # of ways including but not limited to buying shares in mining compnaies, buying hedged production from mining companies, long term options to purchase etc. etc.

If you paid attention to the housing bubble when it burst all of the good big banks managed to come out smelling like a rose.  In fact one Good Samaritan sold toxic paper while simultaneously placing bets that the toxic paper they were selling was worthless and then reported huge profits due to their bet paying off.  Don't be fooled, most of these huge banks know what they are donig and it's not to make us money.  "If" you can figure out the game you have a chance for a tiny piece of the cheese.

jatade

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#14) On December 15, 2010 at 2:15 PM, Starfirenv (< 20) wrote:

Val- Here's a snippet from a pretty good read w/link. Hope it helps you.
 

"The shorts of ‘paper gold’ at J.P. Morgan [the Fed in drag] are selling the daylights out of the paper market and simultaneously buying exclusive rights to producers’ future production so they can try to fudge their way through an unmitigated fraud and settle a big enough chunk of their bad bets to keep this ‘systemically ruinous’ precious metals ponzi-scheme alive."
  From here-

 http://news.goldseek.com/GoldSeek/1286223866.php



 

 

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#15) On December 15, 2010 at 2:23 PM, ETFsRule (99.94) wrote:

"The shorts of ‘paper gold’ at J.P. Morgan [the Fed in drag] are selling the daylights out of the paper market and simultaneously buying exclusive rights to producers’ future production so they can try to fudge their way through an unmitigated fraud and settle a big enough chunk of their bad bets to keep this ‘systemically ruinous’ precious metals ponzi-scheme alive."

This is just a jumble of words, it means nothing.

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#16) On December 15, 2010 at 2:38 PM, ETFsRule (99.94) wrote:

Investment in silver is ridiculously high right now, which could imply that it is currently in a bubble. In 2009, the investment in silver was nearly triple the amount invested in 2008 (according to the estimates at my link below). If investors start to sell their silver, there could be a quick drop.

Also, there is the fact that most of the demand for silver comes from other areas: industry, photography, jewelry, silverware, etc. Demand for silver in many of these areas has been dropping off for the past decade, and I see no reason to believe that this trend will turn around anytime soon. The total demand for silver has been pretty much constant - actually, in 2009 the total demand was lower than it was in 2000.

Source:

http://www.silverinstitute.org/supply_demand.php

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#17) On December 15, 2010 at 3:01 PM, Valyooo (99.63) wrote:

@13 that makes a lot of sense actually, I like that idea. Only problem is, wouldn't them covering their shorts cause prices to skyrocket the same as if they bought silver in the first place? Imo their only way out would be for people to start thinking silver paper is a fraud and people won't buy it and only buy silver (doubtful)

My biggest problem (especially with copper, not as much with silver) is if silver has so many industrial uses and jewelry use, the fact that there are so many etf's based on silver and the price is going up due to investing rather than industrial demand, then what makes this not a bubble?

Etf's piling copper to sell it as an investment when it produces no value and the etf holders won't use it makes no sense to me...what would make it go any higher? Atleast silver has the "last resort money" thing going for it. Copper doesn't, so I don't see the argument for it

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#18) On December 15, 2010 at 4:46 PM, tekennedy (70.60) wrote:

A reason for owning silver while shorting silver futures might be to make it easier to short in the future(closing a future position is easier than making deals w/ companies,etc) while holding a relatively neutral position short term. Just a thought.

Without a detailed balance sheet its not possible to figure out for sure IMO...it could easily be a hedge against another commodity or a bet against industrial use of it or a hundred other things.

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#23) On December 17, 2010 at 5:33 AM, brizzlekizzle (39.41) wrote:

Well see, if the price of gold is suppressed, and silver is not, the suppression will become obvious and so silver must be kept down as well. Shorting silver in this way is allowing people to buy into the silver profits without buying silver, keeping the price somewhat controlled for the moment, this explains why silver can now rise on a day when gold falls and the dollar rises, because really silver is a pretty rare thing and must against all powers that be, rise in price. Having a private bank handle the dollar band aid that is not associated with printing our currency allows some plausible deniability. Although they may make owning silver bullion illegal someday, there will be a need for it, and profits can be had for the creative mind, so we should all be thankful for the opportunity to buy it so cheaply.

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