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Is JP Morgan Shifting Its Silver And Gold Shorts To Non-US Domiciled, And Thus Unregulatable, Banks?
Posted By admin On December 21, 2010 @ 5:38 am In Money Watch | Comments Disabled
Zero Hedge 
Dec 21, 2010
Going through recent bullion bank shorting information, Adrian Douglas has stumbled across a nugget that may explain the sudden willingness of JPM to admit to the FT, via proxies as obviously the bank would never expose itself to even remote market manipulation claims, that it has collapsed its silver short. The reason: even as US bank silver (and gold) shorts by US banks have been gradually declining, those positions established by non-US bank, and thus entities not under the CFTC’s control, have seen their silver shorts surge, increasing by orders of magnitude over the past several months. Is there a stealthy transfer of precious metals market manipulation taking place, one that exonerates the domestic, and therefore regulatable, suspects, while making foreign banks carry the burden of suppressing silver and gold prices? The reason: hand over the silver shorts to entities that would not be subject to the CFTC’s upcoming size limit rules. Per Douglas: “The sudden and massive increase in their short positions in both metals is conspicuous when compared with historical trading patterns. The fact that it occurs at a time when the US banks that are mega-short appear to be covering makes it doubly intriguing. It looks like a strategy to shift suppression and manipulation of the market to banks that are not under the direct supervision of the CFTC. Will these non-US banks be expecting to receive an exemption to position limits where US banks might not be successful?” We hope to get an answer to all these questions soon – Douglas has sent out the following letter to the only honest man at the CFTC, Bart Chilton, which explains Douglas’ findings, and demands an inquiry into just who these foreign banks are that are suddenly shorting silver and gold on the margin at alarming rates.
TO: Bart Chilton, Commissioner of the CFTC
From: Adrian Douglas, Director of GATA
Date: Dec 13, 2010
I would like to bring to your attention some very disturbing trends in the BPR before your meeting on December 16th regarding position limits.
In figure 1 below I have charted the silver short position of the US banks (blue line) and the non-US banks (green line and right hand scale) and all reporting banks, US + Non US (red line)
Looking at the trend of the US Bank silver short position it shows that it peaked at the end of 2009 and has been on a declining trend as shown by the blue arrow. At the same time the short position of non-US banks has been declining as shown by the dashed green arrow. But look what has happened since July 2010. There has been a massive increase in the short position of non-US banks. It has increased almost 1000% from 614 contracts in July to 6,329 contracts in December (delta + 5,715). This increase is so large it has more than offset the decline in the short position of the US banks over the same period which has reduced from 31,803 contracts to 26,332 contracts (delta -5,471 contracts). The combined US and Non-US bank short position is shown by the red line and this is now on an increasing trend as shown by the red arrow.
Which non-US bank(s) has increased its short position in silver so massively? What is that entity’s relationship to the US Bank mega-shorts, JPMorgan and HSBC? I know you can’t answer those questions publicly but these are questions the CFTC should be looking into. It looks suspiciously like the US Bank silver short position is being shifted to a bank or banks that are out of the jurisdiction of the CFTC. To further add to my suspicions the Financial Times has out-of-the-blue published an article that declares that JPMorgan is reducing its silver short position on the Comex.
That is impeccable timing don’t you think? And this newspaper has never once mentioned that JPMorgan Chase even holds a massive short position in silver but now confidently declares it is reducing it!
But the irrational exuberance of non-US Banks to suddenly massively short precious metals is not limited to the silver market. They have felt a similar compunction with respect to gold also.
Figure 2 shows the gold short position of the US banks (blue line) and the non-US banks (green line and right hand scale) and all reporting banks, US + Non US (red line). The blue arrow indicates that the US bank gold short position appears to have peaked in July 2010 and has declined from 161,378 contracts to 135,602 contracts (delta -25,776 contracts). However, we see that non-US banks after having been gradually reducing their short position from March 2009 suddenly in July 2010 aggressively increased their short position by more than 200% from 16,798 contracts to 53,120 contracts (delta +36,322). This more than offset by 40% the reduction in the short position of the US banks. As a consequence the short position of all reporting banks (US and Non-US) is now on an increasing trend as indicated by the red arrow.
Again I urge the CFTC to investigate which non-US bank(s) has increased its short position in gold so massively? What is that entity’s relationship to the US Bank mega-shorts, JPMorgan and HSBC?
A review of historical data indicates that non-US banks have not been major participants in the precious metals markets and have generally held fairly balanced positions between short and long holdings. The sudden and massive increase in their short positions in both metals is conspicuous when compared with historical trading patterns. The fact that it occurs at a time when the US banks that are mega-short appear to be covering makes it doubly intriguing. It looks like a strategy to shift suppression and manipulation of the market to banks that are not under the direct supervision of the CFTC. Will these non-US banks be expecting to receive an exemption to position limits where US banks might not be successful?
I consider that these trading patterns warrant investigation by the CFTC.
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URLs in this post:
 Zero Hedge: http://www.zerohedge.com/article/jp-morgan-shifting-its-silver-and-gold-shorts-non-us-domiciled-and-thus-unregulatable-banks
 the following letter : https://marketforceanalysis.com/article/latest_article_112010.html
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 Gold and Silver Prices Are Set In Libor-Like Daily Conference Calls Between a Handful of Big Banks: http://www.prisonplanet.com/gold-and-silver-prices-are-set-in-libor-like-daily-conference-calls-between-a-handful-of-big-banks.html
 Gold Shorts Cover At Fastest Pace In 13 Years: http://www.prisonplanet.com/gold-shorts-cover-at-fastest-pace-in-13-years.html
 Will Silver (And Gold) Prices Rise Now that the Feds Are Launching Criminal and Civil Investigations Into Manipulation of the Silver Market?: http://www.prisonplanet.com/will-silver-and-gold-prices-rise-now-that-the-feds-are-launching-criminal-and-civil-investigations-into-manipulation-of-the-silver-market.html
 Whistleblower Exposes JP Morgan’s Silver Manipulation Scheme: http://www.prisonplanet.com/whistleblower-exposes-jp-morgans-silver-manipulation-scheme.html
 Strong Indications of Gold & Silver Shortages: http://www.prisonplanet.com/strong-indications-of-gold-silver-shortages.html
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