JP Morgan’s Alleged Manipulation of the Silver Market

Filed in Uncategorized by on May 10, 2010 0 Comments

On Friday, something strange happened in silver markets. I was sitting at my desk, eating some Fritos and daydreaming about the weekend. Suddenly, silver spiked 5% and I was jolted out of my pleasant daze. Advertisement Trouble Finding Your Next Breakout Oil Play? The last time I heard a reader say that, I couldn’t believe it. Soon after, I let him in on just one of our Bakken secrets. That was a little more than a year ago, and now he’s sitting on more than 1,230% from trading just one stock. Still don’t think there’s money to be made? Don’t make another trade until you read my new report … The move happened fast and silver barely budged for the rest of the day. Clearly, something happened. Action like that shown in the chart below doesn’t just occur naturally in the market. The red line shows 1-day silver prices for Friday ( chart courtesy of kitco.com ). I walked over to my colleague Ian Cooper’s desk. “What the hell’s going on with silver?” I asked. He didn’t know. Nobody did. A news search turned up zilch. Gold was near flat and ended the day up less than 1%. The dollar was down, but only by 0.5% or so. So the silver move was isolated. The price jump was a mystery, apparently— the good kind of mystery, if you own silver miners and bullion like I do. I didn’t think anything else of it. But this weekend, I came across an article that may shine some light on the spike. Saturday’s NY Post had a story about JP Morgan’s (NYSE: JPM) possible role in silver market manipulation. According to The Post , the CFTC and Justice Department have launched both civil and criminal investigations into the matter. JP Morgan has long been accused of depressing silver prices, along with several other “bullion banks.” Some theories say they are acting as agents of the Treasury Dept., keeping metal prices down makes the dollar more attractive as a reserve currency. Some think they’re just doing it to reap huge profits by moving entire markets. But this is the first we’ve heard of an official investigation with the possibility of criminal charges being filed. Gold & Silver Conspiracy Theorists Vindicated? Organizations like GATA (Gold Anti-Trust Action Committee) have been sounding the alarm about manipulation of precious metal markets for years. They accuse big banks like JP Morgan “naked” shorts on silver and gold — meaning they are promising something they could never actually deliver. GATA and other goldbugs have been dismissed as tinfoil-hat wearing morons all along (much like those who said Goldman Sachs was engaged in fraudulent sub-prime schemes… and we know how that turned out). Now…

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JP Morgan’s Alleged Manipulation of the Silver Market

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