Last month, we (and many others) reported a giant 18.4Moz deposit of silver into the SLV ETF. We also discovered that JPM had opened a new warehouse in New York, accounting for 10,000,998.7oz of the 18.4Moz deposit. The JPM warehouse in New York is likely at the same location as their COMEX warehouse, and designed to easily move silver between COMEX and SLV.
We (along with others) speculated that the giant SLV deposit may have been related to the short position in SLV. Today, the short position was released, offering a surprise. The short interest in SLV went down by about 10,219,000 ounces.
The size of the change in this short position strongly suggests two separate components - a normal 219,000 ounce change in the SLV short position, and a 10Moz covering of a short position that JPM had created while they were filling up their New York vault with silver.
So this all but proves that JPM (the SLV custodian) indeed had a large short position in SLV. However, it also suggests that they created the short position as they were collecting silver, meaning that there was in fact silver behind those short shares.
For further information, see About.Ag/slv/JPMShortSLV.htm .
Disclosure: I am long SLV.