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."

Gold Daily and Silver Weekly Commentary - Year End Paint Is Dry, Metals Rebound

"You get tragedy where the tree, instead of bending, breaks."

Ludwig Wittgenstein

There was intraday commentary on the metals here.

I have included the CME metals depository data below. There were no additional deliveries noted on the 31st. There could be a little more action ahead, but January is a 'non-active month.'

The bifurcation of the precious metals market between paper and physical bullion is widening into a yawning gap. I do not know what will end this, but I suspect that it will end unexpectedly and quickly, and is likely to be noticeable.

Happy New Year. Welcome back.

SP 500 and NDX Futures Daily Charts - New Year Wobble

"Those among the rich who are not, in the rigorous sense, damned, can understand poverty, because they are poor themselves, after a fashion; they cannot understand destitution.

Capable of giving alms, perhaps, but incapable of stripping themselves bare, they will be moved, to the sound of beautiful music, at Jesus’s sufferings, but His Cross, the reality of His Cross, will horrify them.

They want it all out of gold, bathed in light, costly and of little weight; pleasant to see, hanging from a woman’s beautiful throat."

Léon Bloy

Last week a number of people asked what I thought about a certain wealthy New Yorker's comments on Pope Francis and his apparent 'lack of love for the rich.'  I had to look this quote up by Bloy in order to provide a suitable answer. 

While the short term technical may look good, the underlying economic fundamentals are disastrous.

But the real economy can keep doing what it is doing and be blithely ignored, while appearances matter more than the reality of the suffering that they will cause.

And for what? What?

NAV Premiums of Certain Precious Metal Trusts and Funds - Breaking Bad

There is a blizzard moving into the northeastern US this evening.

It may affect tomorrow's trade in equities.

I had put a decent short position on in the closing minutes of 31 December.  I have taken most of that off the table here and now.

I am long gold and silver bullion.

To my mind, prices were pushed to some short term extremes for the year end tape painting.

I tend to agree with much of Ted Butler's recent analysis titled 2013: The Year of JP Morgan.   If it becomes publicly available I will link to it.  For now it is by subscription only.

Ted thinks that JP Morgan is the major mover in the Comex gold market, executing market corners first to the short and then to the long side over the course of 2013.

They most likely have some privileged knowledge of the market structure and official policy, and perhaps even semi-official support in this, if nothing else than by indirect acquiescence, or turning a blind eye if you will.

Below is a recent video about gold buying in India.  China, southeast Asia, and the Mideast offer similar stories, except that the governments there are not trying to restrict purchasing to please the Western bankers.

Hubris Is the Basis of Tragedy

To the extent that any very serious people take note of this, it is to ignore it, and then deride it. History shows that those who represent fading and unsustainable regimes tend to ignore what is happening, then turn stridently against any opposition to their will by both words and actions. And finally, they lose.

There are some very good reasons why China and India and quite a few of the new emerging economies are seeking safe havens from the dollar. It is not because 'they hate our freedom.' It is not because 'they are ignorant of modern economics.' It is not because 'they are a bunch of gold bugs.'

It is because the Western financial system is a shell game of frauds, and remains largely unreformed, run by and for insiders. Recognition of a fraud first arises at the periphery.

And the dollar has become a major vehicle for exporting these frauds to the rest of the world through the mispricing of risk and the brazen manipulation of price discovery, in many financially related markets. How can anyone continue to ignore and even deny this pervasive and ongoing corruption in the markets?

If you do not understand this, you will probably be able to understand little of what is going on now, and will understand little of what may likely happen over the next few years. I would expect there to be quite a bit of disinformation put forward about it.

To paraphrase Upton Sinclair, sometimes it is difficult to get a man to understand what his career path and his wallet encourages him not to see.

Sometimes, but thank God not always, when flawed characters face a crisis they start breaking bad.  And overcome thereafter by greed, pride, and the will to power, they do not know when  to stop. 

And so they hurl themselves over into the abyss, and take a number of good people with them.

"Who are you talking to right now? Who is it you think you see? Do you know how much I make a year? I mean, even if I told you, you wouldn’t believe it.

Do you know what would happen if I suddenly decided to stop going into work? A business big enough that it could be listed on the NASDAQ goes belly up. Disappears! It ceases to exist without me...

You clearly don’t know who you’re talking to, so let me clue you in. I am not in danger. I am the danger. A guy opens his door and gets shot, and you think that of me? No! I am the one who knocks."

Walter White, Breaking Bad