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17% Of Silver In Comex Gone In One Day

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Last friday a client of JPMorgan got tired of holding paper silver and asked for the delivery of 3.6 million ounces, which is 17% of all the registered inventory of silver. The full amount wasn’t met which begs the question what happens when others eventually follow suit and how long will it be before everyone panics and swaps paper for physical? Its long been know that paper silver out numbers physical, therefore someone is going to be disappointed when the paper is eventually traded for the real stuff.

This week’s interview with gold dealer Tom Cloud of National Numismatic Associates comes as precious metals are correcting and rumors are swirling around Comex silver.

Dollar Collapse: Hi Tom. It’s been an interesting couple of days for silver, with a big Comex draw-down being followed by a sizable price drop. If the silver market wasn’t so obviously free and honest, it might be tempting to suspect some kind of manipulation…

Tom Cloud: Late Friday afternoon a big client of JP Morgan requested delivery of 3.6 million ounces, which is 17% of all the registered inventory of silver (assuming it’s all really there). But only 1.6 million ounces were reported moved. A lot of people are asking where the rest of it is. If it wasn’t immediately available and the client allowed JP Morgan to move it in pieces, that’s another sign of very tight supply.

Ordinarily seeing that much silver inventory move would make the price go up, but at the same time they – probably the same people — were buying shorts to drive the market down late in the day when trading was slow.

DC: The size of the silver draw-down raises the question of what happens if a few more big players want to turn their futures contracts into physical metal. Would this cause a delivery disruption or outright default on the Comex?

TC: Somebody stepped up and said ‘no more paper for me; it’s time to get the real thing in my name.’ They’ve played the [paper silver] game and benefited from it and now they want their silver. But not everyone can do that. There is 100 times as much silver paper [in the form of futures contracts] as there is physical, which means a lot more people think they own silver than there is silver in the world. At some point someone will be left out. If 17% of Comex inventory is taken out in one move, then you don’t need that many more big players to take delivery to see this thing fall apart.

A lot of people were already worried about this, and what happened Friday certainly raises the odds that others with paper claims are going to ask for physical. This morning I’m seeing a lot of dealers buying a lot of silver for their own inventories. This is a very scary situation.

DC: Has an exchange ever defaulted on a commodity?

TC: I don’t know of one that has completely defaulted, where they drain their warehouses of product. So it would be a huge event. And the picture for gold, though not as urgent as silver, is also pretty tight, with futures contracts far exceeding available physical.

DC: So what does the prospect of a Comex default mean for precious metals investors? How can we play it?

TC: Only gold bars from major fabricators like ScotiaMocatta and Johnson Matthey can be used to settle a Comex futures contract. That is, they’re approved for future delivery. When the shortage hits, if you’re holding one of these bars the premium is going to shoot straight up, so in addition to a higher spot price you’ll make money on the wider premiums. Because of this, a lot of my larger investors buy Comex bars exclusively instead of coins.

There are now ten different mints producing Comex gold bars. Two years ago there were four. Comex is smart. They know it’s gonna hit the fan and are now willing to approve other brands in order to increase their sources of metal. I don’t think they’d be approving these other brands if they didn’t expect a default. It’s the same with silver. 24 months ago there were two approved fabricators, Johnson Matthey and Engelhard, making bars you could deliver on a futures contract. Today you’ve also got Ohio Precious Metals, Academy, and Royal Canadian mint.

But even in the absence of a Comex default, bars are cheaper than coins. They’re not made by a country, but by large refineries, and because of this their premiums are lower. One exciting thing that happened this year is the introduction of one-ounce Comex silver bars from Johnson Matthey. The premium is $2 an ounce, which is about $0.75 an ounce more than for a 100-ounce bar. But it’s a dollar an ounce cheaper than for a Silver Eagle coin, so they’re selling very well.

DC: How do you store Comex bars once you’ve bought them?

TC: Several ways. You can take delivery of them and arrange your own storage. The newest state-of-the-art depository is Diamond State in New Haven, Delaware. They’re tremendous. A buyer can arrange to have their bars shipped directly there, generally for free. They’ll handle the paperwork and charge an annual storage fee. If you buy through us, we have a warehouse where customers can store their bullion for three years for free. It’s allocated, so you own specific coins or bars, and it’s all insured.

Source: Dollar Collapse

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Wynter Benton Returns, Predicts Silver Will Trade Above $50 by Dec 31, 2012

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Wynter Benton is an ex JPMorgan Commodities broker who was well know for his accurate predictions via Yahoo’s forum in the silver market. After been missing for the last 11 months, has returned to predict silver to go to $50 per oz by the end of the year. A fascinating story of what happened to MF Global.

Silverdocters writes:

Benton claims that the Oct 31st 2011 take-down of MF Global was SPECIFICALLY designed to prevent the group of former JPM traders with a chip on their shoulders against their old boss Blythe Masters from taking delivery of a massive amount of physical silver and breaking JP Morgan’s massive naked short silver position.

Benton also claims that JP Morgan’s $36 silver derivative time-bomb is still in effect, and states that the ex-JPM traders have re-grouped, and that silver WILL trade above $50 before Dec 31, 2012.

Benton wrote on Yahoo’s forum of his latest prediction.

We wish to inform our followers that silver will trade above $50 before Dec 31, 2012.

The $36 silver derivative timebomb is still in effect for the Morgue so count the trading days once silver gets above $36.

MFG was setup to prevent us from taking silver above $45 last year. Did anyone wondered why MFG failed precisely 30 days before our deadline or why no one can locate the vaporized money? It was designed SPECIFICALLY to stop us from taking silver up and out. Think about it.

Too bad The Morgue cant do that again this time cause we are beyond their reach now.

Once again, we are back. . . . . do da do da. . . .

http://finance.yahoo.com/mbview/threadview/?&bn=657e31ff-3231-3847-9760-4f6647a2dfc9&tid=1347560331309-c1ef57d8-049d-48bb-9918-c56a7832d4d9&mid=

Source: silverdoctors

 

JP Morgan’s Trading Loss May Hit $9 Billion

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Back in may when the story broke of JPMorgan’s London Whale costing the company $3 billion in trading losses, there was great shock but asked the question could it be much higher. Today the figure looks to be getting closer to $9 billion. BusinessInsider reports as follows:

JPMorgan’s famous London Whale trading loss could spiral as high as $9 billion according to Jessica Silver-Greenberg and Susanne Craig at Dealbook.

This is a staggering amount, especially since in May people were freaking out at that might be as high as $3 billion.

…..

POLITICO’s Ben White notes astutely that it’s nice timing for JPMorgan to let this news leak on the day the SCOTUS healthcare announcement will be released.

The $9 billion number was actually scooped first by independent journalist Teri Buhl earlier this week.

Losses on JPMorgan Chase’s bungled trade could total as much as $9 billion, far exceeding earlier public estimates, according to people who have been briefed on the situation.

..

The bank’s exit from its money-losing trade is happening faster than many expected. JPMorgan previously said it hoped to clear its position by early next year; now it is already out of more than half of the trade and may be completely free this year.

As JPMorgan has moved rapidly to unwind the position — its most volatile assets in particular — internal models at the bank have recently projected losses of as much as $9 billion. In April, the bank generated an internal report that showed that the losses, assuming worst-case conditions, could reach $8 billion to $9 billion, according to a person who reviewed the report.

With much of the most volatile slice of the position sold, however, regulators are unsure how deep the reported losses will eventually be. Some expect that the red ink will not exceed $6 billion to $7 billion.

CNBC (Andrew Sorkin) is saying he reckons its more likely to be $4-5 billion. Lets wait and see.
There is always MaxKeiser’s view on what is happening.
As we’ve been saying for two years. JPM uses it’s own stock to collateralize naked silver short positions (echoes of Lehman and Enron). My analysis has concluded that liability from a rising silver price vs. loss of collateral value of the stock renders JPM’s balance sheet null and void when JPM’s stock price drops below the price of Silver. We’ve only seen this a couple of times since I made this call two years ago, BUT NEVER ON A SUSTAINED BASIS of more than a day or so. When the price of Silver popped over JPM’s stock price, the London desk quickly fabricated a few billion fresh naked silver shorts to tamp silver’s price down. Given this week’s revelations regarding JPM’s reckless balance sheet incineration the ‘crash jp morgan, buy silver’ trade has never been more important as a way to take down this financial terrorist. The SLA has been winning battles all along. Now we are poised to win the war as well. Bye-bye Jamie. NOTE TO HEDGE FUNDS: Sell JPM’s stock naked to Hell. This is the easiest money you’ll make this year.

 

JPMorgan Planning On Shorting Euro

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The Slog has reported that JPMorgan has planned to short the euro and is planning for mid July. Although it is just a rumour right now, its one to watch out for.

EURO FUTURES: Is Jamie Dimon trying to get his money back?

This from normally reliable Asia-based sources:

JP Morgan is building massive short positions on the Euro throughout Asia. Almost all are timed to around Mid July.

 

GATA’s Bill Murphy Talks Of Gold Manipulation on Capital Account

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30 April 2012 – GATA’s Bill Murphy is interviewed on Capital Account.

  • Gold is unique as an asset class that is over 12 years on bull run.
  • Gold Cartel consists of Bullion Banks(HSBC, JPMorgan), the Treasury FED, BIS.
  • Cartel trying to slow down the asscent of gold (managed retreat).
  • Gold will eventually have to trade freely.
  • Gold is a barometer of financial health and this is the reason why its attacked.
  • Evidence has been gathered of manipulation since 1999.
  • The attacks are at certain times of day. (e.g. 3am New York time), attacks even when there is no news.
  • Central Banks are loading up on gold on the dips because they know how the Gold Cartel works.
  • Russia and China are very interested in how the Gold Cartel works and have approached GATA.

Silver Manipulation Attempt Fails

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Excellent news for Silver when a paper contract attack on silver price failed. The cartel dumped 102.5 million ounces in paper silver over 7 minutes in an attempt to manipulate the silver price down but failed.

Silver has put in a monster rally this week, and much to the cartel’s dismay, was preparing to close the week above $35.50 today, preparing a break-out next week that could potentially fill the gap from the September smash to $40, and see silver off to the races back to challenge the all-time nominal highs near $50.  Obviously, the cartel stepped in with a massive paper raid to prevent such a bullish weekly close.
That’s where things got interesting and likely induced more than a few Myocardial Infarctions today among JPMorgan execs.
Check out the following price and volume chart screen shot on this 1-minute silver chart courtesy NetDania.
Notice the massive volume that began at approximately 14:47, with 4,000 paper contracts dumped on the market in a single minute, followed by 2,500, 1,800, 3,200, 3,000, 2,900, and 3,100 over the next 6 minutes.

 

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