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JP Morgan's Record Silver Position

Summary

JP Morgan's COMEX Warehouse has more Silver Bullion than the 1980 Hunt Brothers and 1998 Berkshire Hathaway (Buffet / Munger) did.

From 0 to 133.7 million ounces after $50 oz USD Silver in April 2011.

What are the reasons for allegedly holding the largest short and long position in COMEX Silver (net-short) and Silver Bullion (long).

Roll in your Hunt Brother graves.

Eat your still beating hearts Buffet and Munger (1998 Berkshire Hathaway).

Does JP Morgan’s record-sized silver stack portend much higher prices ahead?

This potential silver trade has taken about a half century to fully formulate. It got its start with US silver demonetization (1965) and the inception of the full fiat currency era (August 1971).

Since then there have been two $50 oz USD silver spikes (mid-January 1980 & late April 2011), various investor and mining company lawsuits, and a few record sized silver holders along the way.

Below are three of the largest, including JP Morgan's now record size version:

The Hunt Brothers

1973 to 1980 - 100 million oz Silver

Driven by the then growing price inflationary fears, the Hunt Brothers amassed 100 million oz of physical silver bullion holdings by the late 1970s.

They proceeded to stray from prudence by combining their relatively safe physical silver bullion bet with out sized, riskier trades using leveraged derivatives by betting long on the COMEX silver futures contract exchange.

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By the middle of January 1980, the silver and gold price were both exponentially rising and driving then Federal Reserve Chairman Paul Volcker to worry on a daily basis about the very viability if the US dollar back then.

So much so, that ultimately the COMEX commodity futures exchange abruptly and temporarily changed silver futures contract trading rules (e.g. liquidation trading orders only). The Hunt Brothers and other long COMEX silver futures contract traders lost billions in the subsequent price collapse. Anyone trading in gold COMEX contracts at the time likely took heed and moved on into the smaller less large pits for palladium and platinum (those two precious metals hit all time record highs only a few months later).

The Federal Reserve with a consortium of 21 banks and lending institutions, were forced to bailout the Hunt Brothers to a tune of $1 billion USD. That loan likely came with then record high early 1980s interest rates. The Hunts were later tried and fined hundreds of millions of dollars in court. Their legacy continues to be openly scapegoated by the court of public opinion still to this very day.

Without coincidence other commodities like crude oil, and precious metals like gold, platinum, and palladium also hit record high prices in early 1980 without market ‘cornering’ traders attached.

Warren Buffett, Charlie Munger, Berkshire Hathaway

1998 to 2006 - 129.7 million oz Silver

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Under the directive of Charlie Munger & Warren Buffett, Berkshire Hathaway bought their then record sized 129.7 million ounce silver stack in 1998 only to sell later in 2006 (allegedly to begin the underlying silver position of SLV, the still most popular silver ETF traded today).


Since 2006, JP Morgan has been both an active SLV Authorized Participant (one of only a few financial institutions able to withdraw physical silver bullion from SLV's London warehouses for equity shares). As well also, JP Morgan is the sole SLV Custodian since the exchange traded fund began in 2006. This means they are in charge and ultimately responsible for overseeing all the physical silver being held in SLV.

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JP Morgan Chase

2011 / 2018: +133.1 million oz Silver

This latest record silver bullion acquisition saga stretches its alleged start back to the Global Financial Crisis. In March 2008, Bear Stearns (a then large trader in silver futures derivatives) collapsed and was taken over by JP Morgan.

Only a few years later JP Morgan began adding silver bullion to its COMEX coffers, coincidentally following the near $50 oz price high of silver in April 2011.

This same firm, whose namesake once testified before the US Congress over a century ago stating “Money is gold, and nothing else”, now has a record high 133.1 million ounces of physical silver in its COMEX warehouse inventory.

Why?

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The start of JP Morgan’s COMEX silver bullion stacking began only a few months removed from outspoken financial commentator Max Keiser's November 2010 public plea to ‘Buy Silver, Crash JP Morgan’.

This was broadcasted across the world on Russia Today (RT is funded in whole or in part by the Russian government).

As a quick aside, the Russian government has been actively acquiring physical bullion heavily over this same time. Here you can see their pictures to prove it.

Perhaps an early 2009 silver price of $9 oz to a 2011 spring $50 oz high, gave JP Morgan a long silver trade idea which it has since acted upon?

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The COMEX is the most important price discovery mechanism for world silver prices. Even its parent company’s CEO is on record stating current bullion prices are too low.

Why does JP Morgan now hold over 50% of the total COMEX physical silver bullion holdings?

For years now, hosts of silver market analysts have explicitly defamed JP Morgan’s activities in the world silver markets. They publically allege continued fraud and market manipulation by JP Morgan in silver without any defamation or libel lawsuits as repercussion (perhaps JP Morgan has discovery process fears). Regardless assertions remain that JP Morgan actively engages in a concentrated silver price suppression scheme (on the COMEX) whilst simultaneously acquiring physical silver bullion ounces on the cheap.

And not merely the current record 133.1 million ounces of silver that is transparently published in JP Morgan’s COMEX silver warehouse data (which could of course have their client interests attached), but also alleged are additional 100s of millions of more silver bullion ounces that have been withdrawn from SLV and potentially purchased through other sovereign silver bullion coin mint programs (specific estimates are as high as +675 million ounces in total).

Why allegedly acquire about 75% of a commodity’s annual global mine supply over a seven year timeframe if not for speculating on substantially higher prices in the medium to long term?

Maybe by acquiring large bullion positions JP Morgan is hedging higher ‘capital buffer requirements’ mandated by the BIS’ Financial Stability Board who explicitly cites JP Morgan as the most risk-laden global systemically important bank today (G-SIB).

Perhaps it’s simpler than that, mere future profits.

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Answers to these speculative questions will likely take years to play out. Problem with them is that once the answers become fully clear it will likely be too late to take any action. Failing and under-performing derivatives may be still be available (so long as markets aren't temporarily closed or limited with trading options), but physical bullion products will likely be difficult to acquire or priced way higher than would be reasonable to purchase and establish a beginning position with.

All this aside, the current fact remains. JP Morgan now has a bigger silver bullion position than any long silver bullion buyer that has existed in the modern age.

With assistance from record size derivative trading, this 21st Century secular bullion bull market is running about 2.5Xs the length of the last 1970s and 1980 version.

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I fully expect a 2020s mania for silver prices and bullion item values in terms of their real world goods and service buying powers ahead.

Bullion’s current cyclical price downside appears to be rather limited at today’s paltry price points (i.e. low bullion values compared to today’s ‘everything bubble’ historic valuations).

This current JP Morgan silver stash saga is just one of the most intriguing bullish silver setups ongoing. But there’s trillions of other reasons to be long physical silver and other precious metal bullion products currently.

Total global debt levels have now risen +56% above their 2007 starting points (IIF & BIS data). Expect a future combination of write off bankruptcies and currency debasement to service them.

The former head of BIS research is again ringing alarm bells calling for governments to step in to resolve the next financial crisis. Most will not hear or simply ignore him akin to his last warnings ahead of the 2008 Financial Crisis.

There is even now over 1,500 cryptocurrencies in existence. Keep Hodling if you like but only with what you can fully afford to lose.

Ask history or the Bank for International Settlements, "Which among these precious metal currency derivatives will endure throughout and beyond our lifetimes?" No-neck Agustin has his doubts on Bitcoin, but my suggestion is all currency derivatives are suspect especially when compared to physical precious metals in the 2020s.

Even a bond portfolio manager at PIMCO recently called for a sudden $5,000 oz USD gold price revaluation by the Federal Reserve to induce currency inflation to help ease debt and unfunded liability burdens. That is the level of lunacy a coming. 

Perhaps if we wait to see, it will be too late when the answers unfold.

Just like JP Morgan appears to be actively doing.

We suggest you do as they do. Buy your physical silver bullion now.

-- 

James Anderson

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Disclosure: I have no JPM or BRK positions and no thanks at these nose bleed valuations. I wouldn’t own nor ever pay 50 basis point annual management fees to SLV. In my studied opinion, SLV is an ETF investment vehicle, thus best for retail silver day traders not long term silver bullion holders. If you are bullish silver medium or long term just buy and own the bullion outright in hand or held as well in your direct (no middlemen) non-bank depository account with secure logistics providers like Brink’s, G4S, Malca-Amit, Loomis, etc.

Disclosure: I am/we are long SDBullion.com.