03 January 2014

Ted Butler: 2013 – The Year of JP Morgan in the Precious Metals

Here is a very brief excerpt from Ted Butler's summary look at the precious metals market in 2013.

I find it interesting in particular because Ted watches all the Comex data closely, and builds his thesis on that.

Although his commentary is normally by subscription, he has made the entire piece for free here.

As a bullion bank and market maker JPM may have some explanations for what they are doing, and it may be perfectly innocent. If they provide them to the CFTC, I think it would be something that could well be made public.

I do not mean to be rude, but a mere reassurance that they are doing no wrong is hardly sufficient, given the many recent instances in which they have been found to be doing things that are wrong, even if they are able to settle them for money and technically admit no guilt. I believe Matt Taibbi recently referred to them as "a global criminal enterprise."

But the CFTC makes an unresponsive silence their usual policy on far too many market particulars. And that undermines market confidence. And it is an arrogance of government power that makes it clear why only a small minority of people have a favorable view of the current government in Washington for both parties.

The people should be able to have confidence in markets for them to operate efficiently, and it is the role of government to provide this oversight. This is what they are paid to do, and the taxpaying public, not the Banks, are their customers.

And that may be at the heart of our dilemma, a credibility trap. No credible action will be taken to reform because the excesses and abuses implicate the power elite, and their courtiers and enablers.

"From the very beginning of the year to the last two days of 2013, JPMorgan has dominated and controlled the price of silver and gold. Here are the documented facts. At the start of 2013, with gold at $1650 and silver at $30, JPMorgan held short market corners in COMEX gold and silver futures. JPM was short 75,000 gold contracts (7.5 million oz) and 35,000 silver contracts (175 million oz).

JPMorgan’s short market corners at the start of 2013 amounted to a 21% net share of the entire COMEX gold futures market (minus spreads) and an astounding (but typical) 35% of the entire COMEX silver market. No single entity had ever held such outsized and anti-competitive shares of any important regulated futures market. It is unreasonable not to associate such extreme market corners with what followed in price."