JPM and Silver Futures

[Fibonacci Guy]

(04-13-2012 03:52 AM)Fibonacci Guy Wrote:  [size=medium]

As a retired professional commodities trader with a thiry-seven year history of trading and managing trading accounts, I have followed with interest the unfolding drama surrounding JPM and the public outcry relative to their alleged manipulation of the silver futures market (COMEX).

Please be advised that I am speaking as an individual and have no personal or professional relationships, or contacts, with anyone from JPM, or any of their clients.

Personally, I have no evidence about JPM's guilt or innocence. However, in my opinion, I seriously doubt there is manipulation on their part. There is a strong possibility that the hedges in question (25% of open interest) are completely legitimate. If JPM wanted to capitalize on the silver market through manipulation, they could do so much more effectively by pushing the market up and creating a bubble, as per 1980-81.

First of all, silver is a poor hedge against inflation for most small investors because of the volume of metal one must acquire. This is especially true in the emerging markets where few people own safes. It is very heavy and difficult to hide in your closet, or under your mattress. Ever try carrying eight or ten (100 oz.) silver bars in five- gallon buckets from the coin shop to your car in downtown Chicago...I have. I had to go into traction the next day. Transporting the stuff on an airliner is out of the question. You need a commercial safe to store the stuff...gun safes are a joke.

Secondly, silver and copper are mined from the same ore. When copper prices are high, the sale of the copper component will cover the cost of production (dollars per ton of ore removed). The mining companies may or may not hedge the stored silver... most do. As the price of copper drops below the cost of production and additional revenues are needed to create a steady cash flow, silver may be sold at that time and the hedges lifted. The hedges are often in the back months, so the net effect from buying the paper hedges and selling cash silver puts pressure on the front month's futures, affecting the spot market (down) and the back contracts (up).

If the hedges are spread out over time and the silver is delivered against expiring contracts, then the back months are not necessarily affected that much.

What we have to worry about is the practice of large brokerage firms using the futures market to profit from previously sold derivatives.

Example: Writing tons of call options and then pushing the market down.

Thirdly, no one really knows how much physical silver exists throughout the world. The big question mark is Russia. During the Cold War, Russia was the largest producer (not the largest exporter) of gold, oil, cotton, industrial diamonds, industrial metals, etc. Their silver and gold reserves remain a mystery. Russia has a long history of using secret accounts with Wall St. firms. This practice may be continuing today.[/b]

I was surprised, as was Ted Butler, that Blythe Masters of JPM would make a pubic statement defending her firm's silver position after four years of silence. The timing of this appearance on CNBC has significance, in my opinion.

I think the silver market is about to take a significant hit, along with gold and the stock market. In my opinion, JPM is worried about the public outcry that will follow should the silver market experience significant selling. JPM is in fact defending itself before the event. This could be the greatest free trading tip that Wall St. has ever given the public. Be thankful...it doesn't happen often.

If silver prices were about to explode to new highs, as some have suggested, JPM would be redeemed. I believe the analysts at JPM are shart enough to fully understand the dynamics of the silver market and are afraid of being falsely accused when the silver market crashes.

My own technical work on the silver charts does not indicate a bull market is coming...in fact, just the opposite. When you consider that the bull market in gold has exceded its 1980-81 high by more than 100% and continues to trade over a period of months at, or near, that level (not a spike caused by short-covering), and silver has yet to exceed its 1980-81 high of $55...well, this is not a bull market scenario.

Silver's recent high of $49.00 was a short-covring rally that was unsustainable. It was a warning. Keep in mind that the demand for silver has been affected significantly by the photography industry, which began using digital cameras after the 1980-81 bull market in silver.

The electronics industry prefers gold-plated circuit board connectors over silver because silver will corrode and needs constant cleaning. Ditto copper.

Speaking of other metals, has anyone placed much significance on the relative value of platinum to gold. The last time I looked, gold was selling at a premium to platinum...not a good sign. It indicates weak industrial demand and could be signaling trouble for the stock market and the metals markets.

In closing, I would like to bring everyone's attention to the fact that the evaporation of wealth that occured during the 2000-02 dot.com crash and the crash of 2007-09, was in excess of $100 trillion. Nobody knows the exact amount. We will probably never know. Add to that evaporation the losses of wealth in Europe and other industrial economies that trade with the US and Europe.

The global economic machine was on the brink of a melt-down in 2008, when Congress passed the first bail-out bill, and signed by GWB. The world was on the brink. Fast forward to the present, a mere three and one-half years later and now we are suddenly in an inflationary spiral...this is nonsense. The bail-out packages passed by Congress and signed by both GWB and Obama amount to only a small fraction of the total wealth that was destroyed...perhaps 10% at best.

The bail-out packages amounted to nothing more than a band-aid. No economic growth has resulted. We had our sugar "high" and now we need some real protien.
Our national blood sugar is dropping precipitously. We need real food. Without real economic growth, our nations wealth (held in residential, commercial, institutional and industrial real estate) will continue to decline.

There is no doubt that the US Dollar will someday be replaced by the Chinese Yuan as the new reserve currency of choice. To understand the ramifications of that event, simply study the British economy after the US Dollar replaced the Br. Pound as the world's reserve currency. Effectively, we have three reserve currencies now, the Dollar being the strongest.

Note: I will post later on the subject of our federal debt and its future effect on the Dollar.

size]

FG

[Lydia]

Put China and Mexico into that mix as well.

(May 5, 2011) Just before the close today, word is that Mexico purchased 93 tons of silver and Russia 18 tons. These are the actions of money-tigers not the public. They’re BUYING at these levels. Don’t mistake the massive selling of paper Comex contracts due to recently increased margin on un-backed silver contracts for the value of the real metal. Mexico, Russia and China know what the value of Silver is and, these low pushed-down prices are their opportunity to turn back the clock and load up on Silver.

On the Gold front: China and Russia buying gold for protection against currency reset. Article

[vikingwoman]

Yeah, Lydia, I'm thinking gold for currency change, silver for everyday tender.

That's my gut.

I am definitely thinking of buying silver and there was a guy on fast money who is buying silver high and buying it higher.

[TastyThoughts]

(09-19-2012 11:41 AM)vikingwoman Wrote:  Yeah, Lydia, I'm thinking gold for currency change, silver for everyday tender.
That's my gut.
I am definitely thinking of buying silver and there was a guy on fast money who is buying silver high and buying it higher.

Labor out of love builds loving communities, the ultimate money.
Led into gold is metaphoric, Believing that any substance can substitute a loving community as a road to wealth is an illusion.
maybe knot?

[vikingwoman]

(09-19-2012 11:58 AM)TastyThoughts Wrote:  

(09-19-2012 11:41 AM)vikingwoman Wrote:  Yeah, Lydia, I'm thinking gold for currency change, silver for everyday tender.
That's my gut.
I am definitely thinking of buying silver and there was a guy on fast money who is buying silver high and buying it higher.

Labor out of love builds loving communities, the ultimate money.
Led into gold is metaphoric, Believing that any substance can substitute a loving community as a road to wealth is an illusion.
maybe knot?

i totally agree. i posted something that that same effect on one of the pinned threads...can't quite remember off the top of my head...

[Fibonacci Guy]

(09-19-2012 12:09 PM)vikingwoman Wrote:  

(09-19-2012 11:58 AM)TastyThoughts Wrote:  

(09-19-2012 11:41 AM)vikingwoman Wrote:  Yeah, Lydia, I'm thinking gold for currency change, silver for everyday tender.
That's my gut.
I am definitely thinking of buying silver and there was a guy on fast money who is buying silver high and buying it higher.

Labor out of love builds loving communities, the ultimate money.
Led into gold is metaphoric, Believing that any substance can substitute a loving community as a road to wealth is an illusion.
maybe knot?

i totally agree. i posted something that that same effect on one of the pinned threads...can't quite remember off the top of my head...

Have you read, "The Alchemy of Finance," by George Soros? He describes the practice of capitalizing on the spread between market perception and reality. He failed to mention who the alchemist were who create the perceptions (illusions). Of course we all know who they are. The master creators of illusion who dominate Hollywood and Madison Ave. have few equals.

From our religions we find morality. From our morality we determine our rules of law.
Destroy a nation's religion and on what is the rule of law now based?

In the case of America, it is based on the "New Immorality," fed to us by the creators of illusion. We invite it into our homes and actually pay for the privilege of being demoralized and corrupted. It appears on the face of a box we call television.

Who owns the box? The alchemists of finance. We have become addicts to television, consumerism, sports, sex, violence, war and quick money. Howard Beale was right.

Millions of young Americans have based their social behavior, morality and self-image on their individual heroic images created by the media.

Immorality is the disease that destroyed Rome. It is destroying (has destroyed) America.

FG

[vikingwoman]

(09-19-2012 12:50 PM)Fibonacci Guy Wrote:  

(09-19-2012 12:09 PM)vikingwoman Wrote:  

(09-19-2012 11:58 AM)TastyThoughts Wrote:  

(09-19-2012 11:41 AM)vikingwoman Wrote:  Yeah, Lydia, I'm thinking gold for currency change, silver for everyday tender.
That's my gut.
I am definitely thinking of buying silver and there was a guy on fast money who is buying silver high and buying it higher.

Labor out of love builds loving communities, the ultimate money.
Led into gold is metaphoric, Believing that any substance can substitute a loving community as a road to wealth is an illusion.
maybe knot?

i totally agree. i posted something that that same effect on one of the pinned threads...can't quite remember off the top of my head...

Have you read, "The Alchemy of Finance," by George Soros? He describes the practice of capitalizing on the spread between market perception and reality. He failed to mention who the alchemist were who create the perceptions (illusions). Of course we all know who they are. The master creators of illusion who dominate Hollywood and Madison Ave. have few equals.

From our religions we find morality. From our morality we determine our rules of law.
Destroy a nation's religion and on what is the rule of law now based?

In the case of America, it is based on the "New Immorality," fed to us by the creators of illusion. We invite it into our homes and actually pay for the privilege of being demoralized and corrupted. It appears on the face of a box we call television.

Who owns the box? The alchemists of finance. We have become addicts to television, consumerism, sports, sex, violence, war and quick money. Howard Beale was right.

Millions of young Americans have based their social behavior, morality and self-image on their individual heroic images created by the media.

Immorality is the disease that destroyed Rome. It is destroying (has destroyed) America.

FG

You are absolutely correct.

I started writing a book working title: The Financial Victory Garden: Lessons in Financial Survival from the Greatest Generation

Not the world's greatest title but hey...I write about the choices my parents (who were children during the 1930's) faced during their lifetimes. In 1980 when my parents were in their 50's they were in debt and had no retirement savings at all. By 1995 they were debt free and had a six figure savings balance. I write about how they did it (hint: they never refinanced their home, they had a vegetable garden and leveraged their hobbies and talents to make side money). Oh, and they didn't give a damn about status toys to impress other people. My mom also worked when it was not really cool for wives to work...that covered our ass during the 1970s. My dad died in 2004, but my mom is still around living pretty well at 87. And she is comfortable but still cheaper than dirt.

I think we will be seeing more and more people create their own victory gardens inside and outside - grow lamps are your friends. We saw a lot of that happening in our neighborhood in the 1970s and I think people are going to start doing it again and there are community gardens in many urban areas already well established.

[Fibonacci Guy]

(09-19-2012 01:33 PM)vikingwoman Wrote:  

(09-19-2012 12:50 PM)Fibonacci Guy Wrote:  

(09-19-2012 12:09 PM)vikingwoman Wrote:  

(09-19-2012 11:58 AM)TastyThoughts Wrote:  

(09-19-2012 11:41 AM)vikingwoman Wrote:  Yeah, Lydia, I'm thinking gold for currency change, silver for everyday tender.
That's my gut.
I am definitely thinking of buying silver and there was a guy on fast money who is buying silver high and buying it higher.

Labor out of love builds loving communities, the ultimate money.
Led into gold is metaphoric, Believing that any substance can substitute a loving community as a road to wealth is an illusion.
maybe knot?

i totally agree. i posted something that that same effect on one of the pinned threads...can't quite remember off the top of my head...

Have you read, "The Alchemy of Finance," by George Soros? He describes the practice of capitalizing on the spread between market perception and reality. He failed to mention who the alchemist were who create the perceptions (illusions). Of course we all know who they are. The master creators of illusion who dominate Hollywood and Madison Ave. have few equals.

From our religions we find morality. From our morality we determine our rules of law.
Destroy a nation's religion and on what is the rule of law now based?

In the case of America, it is based on the "New Immorality," fed to us by the creators of illusion. We invite it into our homes and actually pay for the privilege of being demoralized and corrupted. It appears on the face of a box we call television.

Who owns the box? The alchemists of finance. We have become addicts to television, consumerism, sports, sex, violence, war and quick money. Howard Beale was right.

Millions of young Americans have based their social behavior, morality and self-image on their individual heroic images created by the media.

Immorality is the disease that destroyed Rome. It is destroying (has destroyed) America.

FG

You are absolutely correct.

I started writing a book working title: The Financial Victory Garden: Lessons in Financial Survival from the Greatest Generation

Not the world's greatest title but hey...I write about the choices my parents (who were children during the 1930's) faced during their lifetimes. In 1980 when my parents were in their 50's they were in debt and had no retirement savings at all. By 1995 they were debt free and had a six figure savings balance. I write about how they did it (hint: they never refinanced their home, they had a vegetable garden and leveraged their hobbies and talents to make side money). Oh, and they didn't give a damn about status toys to impress other people. My mom also worked when it was not really cool for wives to work...that covered our ass during the 1970s. My dad died in 2004, but my mom is still around living pretty well at 87. And she is comfortable but still cheaper than dirt.

I think we will be seeing more and more people create their own victory gardens inside and outside - grow lamps are your friends. We saw a lot of that happening in our neighborhood in the 1970s and I think people are going to start doing it again and there are community gardens in many urban areas already well established.

Thanks for sharing the story of your parents. I feel sorry for my grand children because they don't have a clue about survival.

Good luck with your book.
FG

[Aquarius]

(09-19-2012 12:50 PM)Fibonacci Guy Wrote:  //...
From our religions we find morality. From our morality we determine our rules of law.
Destroy a nation's religion and on what is the rule of law now based?

In the case of America, it is based on the "New Immorality," fed to us by the creators of illusion. We invite it into our homes and actually pay for the privilege of being demoralized and corrupted. It appears on the face of a box we call television.

Who owns the box? The alchemists of finance. We have become addicts to television, consumerism, sports, sex, violence, war and quick money. Howard Beale was right.

Millions of young Americans have based their social behavior, morality and self-image on their individual heroic images created by the media.

Immorality is the disease that destroyed Rome. It is destroying (has destroyed) America.

FG

Absolutely, totally, 100% correct.

Unfortunatetly.



PS: Good to see you at ION again, FG.

[Aquarius]

(09-19-2012 01:33 PM)vikingwoman Wrote:  ...

I started writing a book working title: The Financial Victory Garden: Lessons in Financial Survival from the Greatest Generation

Not the world's greatest title but hey...I write about the choices my parents (who were children during the 1930's) faced during their lifetimes. In 1980 when my parents were in their 50's they were in debt and had no retirement savings at all. By 1995 they were debt free and had a six figure savings balance. I write about how they did it (hint: they never refinanced their home, they had a vegetable garden and leveraged their hobbies and talents to make side money). Oh, and they didn't give a damn about status toys to impress other people. My mom also worked when it was not really cool for wives to work...that covered our ass during the 1970s. My dad died in 2004, but my mom is still around living pretty well at 87. And she is comfortable but still cheaper than dirt.

I think we will be seeing more and more people create their own victory gardens inside and outside - grow lamps are your friends. We saw a lot of that happening in our neighborhood in the 1970s and I think people are going to start doing it again and there are community gardens in many urban areas already well established.

I wuld love to read that book, vikingwoman, or whatever portion of it you have already written.
I think you are about 15 years +/- younger than me.

My parents were young adults during the depression. Those years MOLDED that generation ... or at least those who were hard-working and careful with what few $$$ they could scrape together.
I grew up on such adages as "Waste not, want not", along with admonitions to clean up my plate because there were "starving war orphans" ... not that anyone ever explained to me how me cleaning up my plate would be able to help them.