tag:blogger.com,1999:blog-14963913.post7502840928902640789..comments2023-10-27T20:27:57.900-04:00Comments on Kid Dynamite's World: JP Morgan and the Massive Silver Short - The Greatest Story Ever ToldKid Dynamitehttp://www.blogger.com/profile/17475987512856310577noreply@blogger.comBlogger45125tag:blogger.com,1999:blog-14963913.post-40225788253434866512010-12-20T08:48:00.012-05:002010-12-20T08:48:00.012-05:00it's not about MY position, it's about the...it's not about MY position, it's about the general ignorance in our financial society. our collective financial IQ is so low, and things like this demonstrate that over and over again, and remind me that we (As a nation) will continue to make horrible investing decisions that demonstrate said ignorance, and that we are doomed to repeat financial crises because we have no clue.<br /><br />and no, I'm not saying that buying silver is a horrible investment decision.Kid Dynamitehttps://www.blogger.com/profile/17475987512856310577noreply@blogger.comtag:blogger.com,1999:blog-14963913.post-90010973782346511442010-12-20T02:13:50.101-05:002010-12-20T02:13:50.101-05:00"Onlooker -it just makes me really depressed ..."Onlooker -it just makes me really depressed reading the comments on the Zero Hedge posts from people writing things like "I'm helping out - I bought more silver eagles today! Down with JPM!"... it's just so ignorant and misinformed. sad. "<br /><br />And yet, if you are indeed long slv, how can it hurt your position? That silver isn't returning to origins, and it's not like those holding it can easily liquidate en masse, right? In fact, it might be just the edge you need to keep that ETF above the daily fees.JK<br /><br />Just wondering why it is so upsetting for you. Are you saying it's like a paternal altruistic sort of thing you feel for these people?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-14963913.post-23409190344954002962010-12-18T03:13:24.879-05:002010-12-18T03:13:24.879-05:00KD-
You downplay the importance of a 100:1 paper:...KD-<br /><br />You downplay the importance of a 100:1 paper:metal ratio, because most people are maintaining spec positions that must net out by definition.<br /><br />However, it seems to me that having such a large paper:physical ratio can distort the price discovery mechanism badly; if lots of specs rush in to buy in excess of supply, new specs will rush in on the sell side. This distortion can lead to price distortion as well as oversupply if it leads to new investments in infrastructure.<br /><br />Specs are important to keep the market functioning and provide liquidity -- but that only requires ratios more like 1:1.<br /><br />By the same token, high paper:physical ratios also make manipulation by large paper positions much more effective.<br /><br />Further, gold is sort of a special case. When thought of as "money" rather than as a commodity, it must provide stability of quantity, which is the key property that makes it work as "money". A large paper:physical ratio makes a mockery of this property. <br /><br />COMEX treats gold and silver as commodities, not "money", and the banks appear to make use of this treatment to suppress prices and in this way support their deep investment in the fiat system. (/conspiracy off)<br /><br />On a slightly different topic:<br />I've read the GLD prospectus, which seems to boil down to "the gold is mostly in physical form, and is mostly in HSBC's vaults, except when it's somewhere else" and "no you don't have any rights to it". <br /><br />I too, like Purewater above, wonder where they are getting it. I wonder whether it is in fact leased from HSBC's unallocated accounts or from central banks. That could be quite profitable.<br /><br />Some Gold investors (or, bugs if you prefer) think of gold as money and an uncompromisable store of wealth, with a history dating back to sabre tooth tigers.<br /><br />These unhappy souls are interested in undilutable, counterparty free, savings preservation, that maintains clear unencumbered claims to physical with all the appropriate auditing and precautions.<br /><br />To the extent that GLD gold might have multiple claims of ownership, whether by leasing or other encumbrances, this dilutes the claims on the purported value held in trust. <br /><br />Under normal conditions, the trust should perform adequately, but under extreme conditions, performance cannot be guaranteed -- which is a critical safety function for this type of fund. Essentially such a fund must hold 100% reserve for storage, permitting no loaning, leasing, etc. without an explicit contract between the lessor and lessee.<br /><br />They would participate in a local and globally distributed exchange markets to implement price discovery, with secure means of phsycal settlement of all transactions. This might work something like the "bullionvault" trading platform.<br /><br />In general, the chicanery present in the operation of COMEX and the large speculators tends to skew the supply and demand curves in a general effort to discredit them as conservative stores of value.<br /><br />I believe strongly that possession of metals are the best and most conservative way to store savings, because the world is too complex and corrupt right now. I think that if a substantial part of the population hit upon this idea, they wold quickly change the monetary landscape, independent of JPM's efforts to control the outcome.derp2012noreply@blogger.comtag:blogger.com,1999:blog-14963913.post-43285501487131323482010-12-14T08:28:09.744-05:002010-12-14T08:28:09.744-05:00oh no, Anon - I FULLY understand the extent of mar...oh no, Anon - I FULLY understand the extent of mark to market insolvency - but that has nothing to do with silver - that's all.Kid Dynamitehttps://www.blogger.com/profile/17475987512856310577noreply@blogger.comtag:blogger.com,1999:blog-14963913.post-83094494219869134132010-12-14T03:12:01.595-05:002010-12-14T03:12:01.595-05:00You vastly underestimate the extent of mark to mar...You vastly underestimate the extent of mark to market insolvency and the desperate measures being resorted to across western finance and govts. Inadequate hedging is the least of it.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-14963913.post-90497078161323668702010-12-13T21:57:36.713-05:002010-12-13T21:57:36.713-05:00anon - why didn't you post these comments in t...anon - why didn't you post these comments in the new thread I just wrote? woulda been more applicable.<br /><br /> I'm suggesting that JPM made that comment in reaction to more hype spew from the Metal Heads. someone, maybe GATA, I can't prove it, drops a rumor that the regulators forced JPM to cut their "short"... the internet runs with it. the FT runs with it - but they have to ask JPM at least. JPM, says it's nonsense, and that they have no comment on their positions. <br /><br /> The FT ARTICLE ITSELF notes that JPM had no comment on their short position, so if you're reading ZH's "JPM Admits to, decreases massive short" story, well, more hype. <br /><br />I would love to see JPM put out a statement that they have a massive short and that they are reducing it. ;-)<br /><br />harveyorgan.. please... jeezus.Kid Dynamitehttps://www.blogger.com/profile/17475987512856310577noreply@blogger.comtag:blogger.com,1999:blog-14963913.post-51376275468840015362010-12-13T21:53:06.913-05:002010-12-13T21:53:06.913-05:00Incidentally, you should talk to Harvey Organ - He...Incidentally, you should talk to Harvey Organ - He can help explain it to you.<br /><br />http://harveyorgan.blogspot.com/Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-14963913.post-42491452870008096112010-12-13T21:52:16.054-05:002010-12-13T21:52:16.054-05:00So you're suggesting that JP morgan pre-emptiv...So you're suggesting that JP morgan pre-emptively denying that their captured regulator asked them to reduce shorts that are squeezing their fiscal balls closes the case here in favor of some sort of trading tactic?<br /><br />No, it's manipulation and it's ending right in front of your eyes if you'd get past your bad investment in paper PMs to see that.<br /><br />Enjoy the show, I know I am!Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-14963913.post-74375401273499445992010-12-13T19:37:48.236-05:002010-12-13T19:37:48.236-05:00Let's talk about that FT article... specifical...Let's talk about that FT article... specifically: <br /><br />"However, JPMorgan said in a statement: “It is absolutely incorrect to say or imply that the Nymex, CFTC or any other exchange or regulator has instructed or asked us to reduce our position.” The bank declined to comment on whether it had reduced its position in the silver market."Kid Dynamitehttps://www.blogger.com/profile/17475987512856310577noreply@blogger.comtag:blogger.com,1999:blog-14963913.post-56254903680787036242010-12-13T19:16:33.426-05:002010-12-13T19:16:33.426-05:00The CFTC recently released the Bank Participation ...The CFTC recently released the Bank Participation Report for December (Nov 2-Dec 7).<br /> <br />http://www.cftc.gov/dea/bank/deaDec10f.htm<br /> <br />The data shows a fairly large drop in Silver Short Futures in the US Bank Category where the huge JPM's short is reported. The US Bank Shorts dropped from 30,760 contracts to 26,332 contracts or just over 22M ounces. I guess we don't have to question why there was such an increase in Silver volatility lately!<br /> <br />Watch for this number to drops SUBSTANTIALLY before the CFTC implements it's position limits over the next few months.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-14963913.post-30530103844688528252010-12-13T19:15:40.174-05:002010-12-13T19:15:40.174-05:00http://www.ft.com/cms/s/0/7d699ca4-06ea-11e0-8c29-...http://www.ft.com/cms/s/0/7d699ca4-06ea-11e0-8c29-00144feabdc0.html#axzz182Q7kOQY<br /><br />Please respect FT.com's ts&cs and copyright policy which allow you to: share links; copy content for personal use; & redistribute limited extracts. Email ftsales.support@ft.com to buy additional rights or use this link to reference the article - http://www.ft.com/cms/s/0/7d699ca4-06ea-11e0-8c29-00144feabdc0.html#ixzz182ZNKT6r<br /><br />JPMorgan cuts back on US silver futures<br /><br />By Jack Farchy in London and Gregory Meyer in New York<br /><br />Published: December 13 2010 22:31 | Last updated: December 13 2010 22:31<br /><br />JPMorgan has quietly reduced a large position in the US silver futures market which had been at the centre of a controversy about its impact on global prices for the precious metal.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-14963913.post-87707414331025301782010-12-13T08:23:01.361-05:002010-12-13T08:23:01.361-05:00interested readers MUST read this piece:
http://w...interested readers MUST read this piece:<br /><br />http://www.financialsensearchive.com/editorials/townsend/2010/0419.htmlKid Dynamitehttps://www.blogger.com/profile/17475987512856310577noreply@blogger.comtag:blogger.com,1999:blog-14963913.post-59105168209649670892010-12-12T21:15:16.354-05:002010-12-12T21:15:16.354-05:00Excellent work as usual Kid! What a plethora of s...Excellent work as usual Kid! What a plethora of silver options info we have!<br /><br />I am just getting back into things so I will have to review.EconomicDisconnecthttps://www.blogger.com/profile/02802078645713106743noreply@blogger.comtag:blogger.com,1999:blog-14963913.post-37459773415240232242010-12-11T14:53:47.250-05:002010-12-11T14:53:47.250-05:00Keiser may not be that far off if you include tota...Keiser may not be that far off if you include total silver shorts, not just JP Morgan shorts,<br /><br /><a href="http://news.silverseek.com/SilverSeek/1290625106.php" rel="nofollow">Ted Butler interview</a><br /><br />" Butler: It varies over time, but at the time referenced in the lawsuit, JPMorgan, either alone or with another U.S. bank, held short on the COMEX the equivalent of 25% of world annual mine production<br /><br />Cook: How many ounces is that?<br /><br />Butler: In most recent CFTC data, it is 150 million ounces, but within the past year it has been over 200 million ounces<br /><br />...<br /><br />Cook: How many ounces are there held short in total?<br /><br />Butler: The total net short position in COMEX futures is around 550 million ounces, but <b>if you include everything, especially unbacked bank certificates and pool accounts, it grows to 2 or 3 billion ounces.</b>"Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-14963913.post-80759663580460873702010-12-11T08:16:33.370-05:002010-12-11T08:16:33.370-05:00"Also, the US Mint has been having trouble ge..."Also, the US Mint has been having trouble getting enough silver to mint coins, so how can SLV get it so much more easily?"<br /><br />US Mint is not buying silver, they are buying silver blanks which have to be manufactured, their problem is their suppliers have limited production capacity.<br /><br />There is no problem at the moment sourcing the wholesale form of silver (1000oz bars), but then again the Perth Mint (who I work for) probably has better connections than most. It all does come down to access and business connections and failing that, price.Bron Sucheckihttps://www.blogger.com/profile/00530576934994289879noreply@blogger.comtag:blogger.com,1999:blog-14963913.post-12218379622664902132010-12-10T22:32:34.869-05:002010-12-10T22:32:34.869-05:00Thanks for your response KD. I understand you aren...Thanks for your response KD. I understand you aren't giving advice but your opinions are invaluable to this mania you're talking about. I see it too.bryanhttp://www.commodityzen.comnoreply@blogger.comtag:blogger.com,1999:blog-14963913.post-36394292310812268562010-12-10T22:19:04.422-05:002010-12-10T22:19:04.422-05:00Anon @ 9:28 - I don't know that COMEX rule - d...Anon @ 9:28 - I don't know that COMEX rule - do you have a source? If that's true, then the excessive supply of paper contracts isn't an issue - because they're just paper and bear little resemblance to physical. That wouldn't make much sense to me though.<br /><br />re: SLV: see above. SLV doesn't buy silver - the authorized participants do. the silver is out there somewhereKid Dynamitehttps://www.blogger.com/profile/17475987512856310577noreply@blogger.comtag:blogger.com,1999:blog-14963913.post-34365284003782074892010-12-10T22:02:12.383-05:002010-12-10T22:02:12.383-05:00KD
thanks so much for this post - well researched...KD<br /><br />thanks so much for this post - well researched and very balanced - I have re-posted it in all its glory and detail on a local share forum here in Australia - something for the silver bugs to ponder...Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-14963913.post-91461705215793219912010-12-10T21:28:03.262-05:002010-12-10T21:28:03.262-05:00Isn't there a recent rule that at least on COM...Isn't there a recent rule that at least on COMEX you can no longer demand physical delivery, you must take paper profits?<br /><br />Also, the US Mint has been having trouble getting enough silver to mint coins, so how can SLV get it so much more easily?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-14963913.post-31293663667375136362010-12-10T17:39:17.974-05:002010-12-10T17:39:17.974-05:00bryan - I'm not giving investment advice here,...bryan - I'm not giving investment advice here, and I encourage everyone to do their own work and form their own opinions - but I am long SLV and see little in the form of global central bank policy that would reverse that trend.<br /><br />note, though, that the inaccurate hype (which I tried to address in this post) around the precious metals is starting to indicate some sort of mania... that's worth noting.Kid Dynamitehttps://www.blogger.com/profile/17475987512856310577noreply@blogger.comtag:blogger.com,1999:blog-14963913.post-11729661763507954752010-12-10T17:39:08.439-05:002010-12-10T17:39:08.439-05:00Watch this ... for example: http://www.youtube.com...Watch this ... for example: http://www.youtube.com/watch?v=K-92A2rYoB0&feature=player_embeddedbryanhttp://www.commodityzen.comnoreply@blogger.comtag:blogger.com,1999:blog-14963913.post-5451824787397631452010-12-10T17:34:34.027-05:002010-12-10T17:34:34.027-05:00Thank you! I posted about this on my blog, then re...Thank you! I posted about this on my blog, then realized like an ignorant child I was just following the crowd. I took a step back and started doing my own math and my own research. I do see silver going higher and higher but like it's been mentioned in this thread already, for a lot of other reasons, now very few of which is JPM's "huge short position" I play devils advocate with my investing and am usually a contrarian for the most part but I see merit in your postings, and others relating to this. I do agree however Q1 2011 will be a huge determining variable for the price. Do you agree silver is more rare than gold? I'm long 10+ years on physical silver already and plan to stay that way for another 10 to even 15 perhaps. Is there a scenario where you see the purchasing power of physical silver, or the exchange rate going to the reverse side?bryanhttp://www.commodityzen.comnoreply@blogger.comtag:blogger.com,1999:blog-14963913.post-71966761694357839492010-12-10T16:09:15.375-05:002010-12-10T16:09:15.375-05:00Kid - Yes, I know how ETF's work with the APs....Kid - Yes, I know how ETF's work with the APs. It's certainly possible the silver price is rising because of SLV demand but correlation isn't causation. It could also be COMEX short covering. Or both. <br /><br />Curmudgeonly Troll - JPM inherited their short silver position when they bought Bear Stearns.Purewaternoreply@blogger.comtag:blogger.com,1999:blog-14963913.post-23381885861972119112010-12-10T15:54:42.086-05:002010-12-10T15:54:42.086-05:00Curmudgeonly Troll - yes - that's another thin...Curmudgeonly Troll - yes - that's another thing - JPM has customers (silver miners) who strike OTC contracts with them where the miners sell silver forward, and JPM buys it (forward). So it's perfectly reasonable for them to have a short position in listed futures as a hedge. see this comment on Mish's addendum 2:<br /><br />http://globaleconomicanalysis.blogspot.com/2010/12/investors-hold-biggest-commodity.html<br /><br /><br /><br />"The biggest problem JPM might have could relate to the term structure of their shorts and offsetting longs. The OTC longs where they are counterparties to miner forwards have delivery schedules stretching out to up to 10 years, while they can only hedge at COMEX in the front month contract (due to other contracts not having enough liquidity) and have to roll that over."Kid Dynamitehttps://www.blogger.com/profile/17475987512856310577noreply@blogger.comtag:blogger.com,1999:blog-14963913.post-89917530278861992512010-12-10T15:51:14.244-05:002010-12-10T15:51:14.244-05:00Purewater - 1) I hope you know that SLV doesn'...Purewater - 1) I hope you know that SLV doesn't actually purchase the silver - see these posts if you don't get that: http://fridayinvegas.blogspot.com/search/label/ETFs<br /><br />2) of course, SOMEONE is purchasing this silver - perhaps the supply side isn't quite as tight as everyone thinks it is? Also, we know that Sprott tried to buy gold direct from foreign central banks, but was denied, right? Maybe the same thing happened with silver - the big US Authorized Participants may have access that Sprott doesn't.<br /><br />3) of course, you've noticed the meteoric rise in the price of silver, which seems like a perfectly natural response to the increased demand associated with the increased assets in the SLV trust.Kid Dynamitehttps://www.blogger.com/profile/17475987512856310577noreply@blogger.com