JPM is aggressively shorting the gold and silver markets. Are they too big to fail? Seems to me one should be looking at the other side of this trade because when the short hits the fan it will be bloody!!
It's actually quite the opposite.Commerial traders like JPM have been covering shorts & adding longs for the past 3 months. Silverseek posts a beakdown of the COT report every Friday. In the silver futures market on 12/4/12 commercial traders held 96,924 short contracts & 38,410 longs for a net short position of 58,514 contracts. As of last week those numbers were 81,957 - 52,774 = 29,183 net shorts. Speculators have been the ones adding large numbers of short contracts. It has been alleged that the commercials are using high frequency trading & layering (issuing & then immediately canceling orders) to take out stops, allowing them to cover.All they'd need to do is give the "momentum" traders a little "nudge" to get them to add a significant number of shorts. (just look at all the recent postings saying silver is going to crash & it doesn't seem that far-fetched does it?) Anyway, silverseek's archives go back to Nov 2003 & in all that time the lowest gross commercial short was about 48% of total open interest. As of last week it was about 55%, down from near 70% in Dec. IMO we're very close to the bottom, but I expect them to take the price down a bit more next week as there's an FOMC meeting the 19-20th. Open interest is fairly high so if this is the bottom I don't think we'll be here long. This is all, of course just my opinion, not to be taken as investment advice. good luck