One of the world’s most powerful banks today is JP Morgan Chase. Their Chairman, whose name only has to appear in any leading media and 95% of the readers will recognize the name with JP Morgan Chase.Yet the most powerful always have skeletons in their closets: an Achilles Heel. Today it is easy to find them. If you type “JP Morgan” into Google, you will get 6444,000hits. Then search: “silver manipulation”, which will give you 225,000 results in .38 seconds, you will see JP Morgan is in all the top hits.
One does not have to be a Rhodes scholar to find the bad apple. The price of gold is above $1,700.00 an ounce and silver is slightly above $31.00 an ounce. Yet there is three times as much gold as there is silver in the known world supply. Central banks buy gold. They are the major buyers at this price. It is also used in making Jewelry. That is about it.
Now silver on the other hand, is the best conductor of electricity. It is also used in mirrors, solar panels and all kinds of medical supplies. In the COMEX (Commodities Option Metal Exchange) warehouses worldwide, more silver is being delivered than deposited. The bottom line is that demand is outstripping supply.
Now, November 2012, JP Morgan is short 32% the silver commodity while the legal short position is supposed to be 5%. It is a clear signal of market manipulation. A short position means that a seller has borrowed a security or a commodity contract from an owner so he can deliver what he has sold to the buyer. He then hopes to be able to buy back at a lower price and return it to the loaner. He is doing the reverse of buy low sell high. He sells high first and buys back lower later-hopefully. The risk is when one buys, one can lose what he paid for it. In a short sale, one’s risk is limitless.
Now for JP Morgan Chase to do this successfully they need three transactions or events to take place.
- They need a source of cheap money and low margin rates. The Federal Reserve policy for banking institutions, not individuals or corporations, will provide funds at almost or zero percent interest. This could amount to a billion or more?
- They need the use of a High Frequency Trade, or HFT, to set up the operation. This is done by an expensive computer program, which can, in a nanosecond, show a humongous amount of sell orders that will drive the buyers into the woodwork. This drops the price and as is the case with commodities, a sharp drop in price brings on margin calls. Margin calls bring on sell orders and the short sellers buy back in at a profit. This is morally illegal and HFT’s should be banned. Margin rates should be raised, because in the past economic tragedies easy credit breeds contempt for the rules of fair play.
- The third ingredient into Satan’s Stew is unscrupulous politicians and government henchmen.
Let us start with the chain of command in the commodity markets. The Commodity Future Rate Commission is made up of five individuals whose main task is to insure fair trades and stop manipulation. This is a most important mandate because the commodity price can influence the real product and cause economic disruptions worldwide. An example can be when some bright individual decided it would be a good and profitable idea to start an exchange trade fund in the commodity of corn. To start the fund they had to buy futures of corn. This raised the price and the speculators climbed on board. This caused the price of flour to increase. Countries like Egypt buy their corn meal from the United States. With the sudden price increase the Egyptian bread makers have to raise their prices. This, I believe, was the cause of the fiasco in Egypt in the last two years. These Commissioners have a highly responsible mandate: to keep the markets honest.
When it comes to silver manipulation they are stonewalling. In the old days they would have been tarred and feathered and sent out of town on a rail!
Now here is a rule. No politician will go out on the proverbial limb without a backup.
So we must go up the ladder of the chain of command. I will let you dear reader, speculate how far up the ladder it will go.
This manipulation is so large that to keep everyone quiet is beyond belief. Where and what are the members of Congress doing? Why has there not been a special investigation? Are members of the various finance committees being paid off? How much money was spent on their reelection?
Now the big puzzle: A leading market letter writer, Ted Butler, has written letters to the Chairman of the Board, Jamie Diamond, and all the directors of the bank. Not one single reply as of this writing. 11/13/2012.
This is my belief about the whole mess. Our paper currency system is teetering worldwide as our financial system is in chaos. When government bills have a negative yield that represents real fear. The world is awash in debt while the public is de-leveraging. That is deflationary.
The precious metal markets are being manipulated with paper currency. If JP Morgan were forced to “cover” its short positions it would take over 100 days and the price of silver would surpass that of gold on a temporary basis. There is not a government stockpile of silver to bail out the bank.
This would be an inflationary shock for the world. It would crash governments and force countries to go back to the gold and silver standard.
One thing is for sure. Governments cannot manipulate everything all the time. Once individual initiative is wasted – they will crumble of their own weight.
What will happen with the puppet politicians that believe they rule the world?
What will happen to us?