Silver Markets Cornered? What's next?

Still need convincing that silver prices are unnaturally, unsustainably low?

We’ve said it before and we will keep repeating that SILVER is staunchly in BUY territory and has been for some time. It is a metal with both industrial and monetary applications. It’s in HUGE DEMAND by a diverse array of fields. From jewelry to solar panels to biomedical to cosmetics, it is not just the mints that can’t get enough. Does it make sense for SILVER to be priced BELOW the average cost to get it out of the ground?

Speaking of mints not getting enough, in this week’s spotlight piece, Ted Butler of Butler Research makes the case that perhaps the big reason the mints have been continually selling out of silver bullion coins is because there is ONE BIG BUYER for nearly entire strikes!

Who is that ONE BIG BUYER and WHY?

JP Morgan is stockpiling silver every which way they can get it. As far as WHY they are doing this - it is complicated and speculative but Butler’s best guess could mean that JP Morgan (and anyone else holding SILVER) will end up with a fortune in profits once the price suppression stops.

Ted Butler makes a VERY solid case that BIG things are in store for the SILVER market and YOU TOO should be buying SILVER at every opportunity BEFORE the big shake up begins. Here is his case:

Epic Rise in SilverPrices Unavoidable! - by Ted Butler

In the annals of silver in the modern age, there have been two well-known instances of very large investor accumulations of the metal. First came the purchase by the Hunt Brothers and their associates in early 1980, followed by the purchase by Warren Buffett’s Berkshire Hathaway, 17 years later. The Hunts were said to control around 100 million ounces of actual metal (plus another 100 million ounces in long paper futures contracts), while Berkshire held as many as 129 million ounces.

Now there is compelling evidence of a third great investment accumulation of physical silver by none other than JPMorgan, one of the most powerful and connected banks in the world. From zero in April 2011, the amount of silver in the JPMorgan COMEX warehouse has increased to 120 million ounces. Just about every ounce moved into the JPMorgan COMEX warehouse over the past 7 years has come from futures deliveries stopped (taken) by JPM in its own name. JPMorgan took delivery of 14 million ounces in December and so far, 13 million ounces have remained in the warehouses from which the metal was delivered.

So this means that JPMorgan now holds more than 133 million ounces of silver in COMEX warehouses, or more than was held by the Hunt Bros or by Berkshire Hathaway at their peaks. There was a lot more silver in the world in 1980 and 1998 than there is today, meaning that JPMorgan’s accumulation is much more of an accomplishment than previous silver acquisitions.

JPMorgan’s COMEX warehouse silver holdings are only the tip of the iceberg. Beneath the surface, the true extent of JPMorgan’s physical silver accumulation is nothing short of mind-boggling. All told, including the verifiable 133 million ounces held in its own and other COMEX warehouses, JPMorgan holds at least 675 million ounces of actual silver.

Simply put, JPMorgan has acquired six times as much metal as bought by the Hunts or Berkshire Hathaway. Common sense would dictate that such a large acquisition as JPM’s 675 million ounces (nearly 45% of the 1.5 billion ounces of silver bullion in the form of industry standard 1,000 ounces bars in the world), could not be bought by any entity without driving prices sharply higher.

So how could JPMorgan do so without it being noticed and without driving silver prices sharply higher? The answer is that in addition to being the biggest physical silver accumulator in history, JPMorgan has simultaneously been the largest short seller in COMEX silver futures for the entire time since it acquired Bear Stearns in early 2008. JPMorgan has pulled off something that couldn’t possibly be replicated not just in silver but in any other world commodity. Never again will any one entity be able to accumulate 45% of the world’s supply of a commodity. JPMorgan’s accumulation is more bullish on silver than any other single consideration by a factor of 1,000.

I remain convinced that JPMorgan has the same intent as did the two previous great physical accumulators of investment silver, the Hunt Bros. and Warren Buffet. That intent is to sell at as large a profit as possible. No one buys any investment asset with the intention of losing money, least of all JPMorgan. They didn’t spend the last seven years accumulating physical silver to sell that silver at anything but the highest price possible. I can’t tell you when JPM will let silver prices fly, but I am certain that that day is coming. And considering the means and deception with which it has accumulated the physical silver it holds, watching JPMorgan distribute its holdings at the highest prices it can attain will be one for the history books. That’s what these guys do for a living.

Given the clear evidence of the historic and epic accumulation by JPMorgan of physical silver in amounts so massive, it’s near impossible to rule out an upside surprise in silver prices at any moment.