WB: JPM is in worse shape then we ever dared to hope.
This is what I am now hearing from traders on the floor. These traders are not even sure if Blythe knows the full extent of JPM’s silver exposure.
When I first started to realize that JPM has shorted far more silver than they could ever hope to cover, my first question was “why would they do that?” Not only that, why do it with a commodity where you must report your positions through the COT and Bank Participation Report? After all,the whole world can see what you are doing. [my added comment: Ted Butler included!]
Now I know the answer. According to Max Keiser and now a couple of other independent sources, it seems the reasons why first Bear Stearns and now JPM are so desperate to manipulate the price of silver down is due to the fact that BS and JPM shorted billions (yes billions not millions) in ounces of silver through their derivatives.
Just like Joe Conason at AIG, silver shorting through derivatives have caused literally billions in losses not the millions that we know about publicly. That is why JPM has been so desperate to manipulate the price of silver downward so blatantly. If I am right about this, then JPM will be dead when silver hits $60 or so. Based upon the COT and BPR, if silver hits $60, JPM will lose around an additional $6 billion dollars, a large number but not nearly large enough to bring down mighty JPM.
But what is not known is that due to the way that its derivatives are written, JPM’s losses are exponentional once silver breaks $36 or so. Rumors has it that JPM could be losing as much as $40 billion once silver is above $50. It has something to do with how the derivatives are written with payment tied to the price of silver.
Since JPM was a price manipulator with respectt to the price of silver, JPM assumed that any derivative payments tied to silver would be less than they would be tied to some other index like the CPI or TIPS implied inflation index. JPM’s inability to hold down the price of silver relative to other measures of inflation will cause unbelievable losses due to a mismatch in their derivative structures.
In essence,JPM has bet (a huge amount)through derivatives that silver will never outperform inflation. And why not,since JPM assumed that it will always be able to manipulate the price of silver. We have now come to understand that JPM’s loss exposure to silver is much greater than we have ever dared to hope.
WB: In an effort to clear up some recent confusion regarding my latest posting, I will try to explain what I have recently uncovered.
JPM’s current short silver position is estimated to be approximately 150 million ounces down from the recent 180 million ounces in August. The losses from these positions are easy to figure out. For every $10 rise in the price of silver, JPM will lose $1.5 billion. But what I have recently discovered is that through its derivative positions, JPM will lose about 5 times that amount ounce the price of silver is above $36. And ounce silver is above $45 dollars, JPM’s losses will increase to 8 times the amount of losses in their short positions. The reason is that as the price of silver increases, certain provisions get activated which multiplies the losses.
One reader asks the question why isnt the price of JPM going down to reflect the lossesd in silver. My answer is that the price of silver is not high enough to begin to trigger losses in their derivative positions. But once silver approaches this critical level say around $36, then you should begin to see the price of JPM stock begin to reflect these losses.
I don't agree with your information. I do agree with another post from you.
" JPM created a "structured product" that allowed clients to "bet" on the silver/inflation ratio, thinking they were in control of the price of silver. If silver passes $36, JPM has to pay $5 for every additional $1 in the POS. At $45, it becomes $8 for $1 in the POS. This means anything over $36, starts to break JPM's back, according to WB."
"This would explain the short of another 30 million ounces, which reeks of desperation. It serves them right, taking on a gamble that big, just because they thought it was rigged in their favor."
JPM is not going alone, they are using client's money as well. They have several large clients, the Highbridge group and several hedge funds. Call JPM if you have a few million and say - I want to short silver. After an account is opened, a background/financial check would be done. Just see what they tell you about your investment options on this subject.
"JPM is not going alone"
There is HSBC as well. They work with the "President's working group on financial markets", and as mentioned et al..
No paper sales after today...I like PM's up tomorrow and rest of week, we'll see about next week. Of course, there could be a disaster brewing to prevent things..the "unknown" factor.
..what you mean is, by joining the JPM short pool, you think you're participating in the use of your money to put a thumb on the roulette wheel because JPM is using client money to do just that.
JPM is an American corporation. The COT report show's net positive on the commercial's for gold and silver(so called smart money). JPM has large asset's in many countries and many different situation's. Never under estimate their theme of increasing shareholder value.
It would appear to me that, if everyone started buying silver coins and physical bullion it would drive the price of silver up to $50.00 and put a significant cramp in JP Morgans style of operations. not to say anything about the billions, they would lose.