Silver Price Scandal

A few follow up comments about the still rather remarkable announcement by the Department of Justice concerning the guilty plea by the former JPMorgan trader for spoofing in precious metals. Contained in the announcement was the statement that the guilty plea was accepted and sealed on Oct 9, nearly a month before it was unsealed on Nov 6. With a rather short sentencing date approaching on Dec 19, and the time it took to unseal the plea, it may be assumed that the trader has already fully cooperated in the hopes of reducing his jail time, said to approach 30 years with no cooperation.

The thought of facing serious jail time for someone that never thought such an outcome was possible for everyday practices known to supervisors and other traders at the bank had to come as a shock. For years, the trader was riding high, a master of the trading universe in a highly respected position, now suddenly facing incarceration. Companion reporting suggested that JPMorgan itself was unaware of the guilty plea, according to a person with knowledge of the matter. It was not indicated if the CFTC was closely involved. Since the former trader left JPMorgan last year, it’s not hard to imagine how his cooperation with the DOJ could remain unknown to the bank.

No one in the silver market is as crooked as JPMorgan and the announcement by the Department of Justice of a guilty plea by one of its former traders is the first solid connection between my allegations of the past ten years about JPMorgan and a finding of wrongdoing by a trader for the bank in COMEX silver and gold. This goes a very long way towards vindicating my narrative of the past ten years.

It’s been reported by Bloomberg that the Justice Department asked a judge overseeing a civil antitrust case against JPMorgan to postpone the case for six months “to protect the integrity” of its ongoing criminal probe. This indicates that the Justice Department is serious about pursing the matter of a silver price manipulation and JPMorgan’s involvement.

Inside the bank, this must come as a bombshell. Further indictments appear inevitable. If the media gets wind of the full story it could turn into a momentous scandal reaching to the top. A lot of people at JPMorgan must now be sweating bullets. What they have been doing for years is clearly illegal. Nobody can get by using tactics like spoofing to suppress the price of a commodity in the futures market while loading up on the physical asset itself. How could they be so myopic as to pull of this gross manipulation in silver for almost eight years without fear of consequences? They have 150 million ounces of their silver hoard in their COMEX warehouse which is more physical silver than the Hunt Brothers acquired in the 1980 silver scandal.

To repeat, JPM acquired that silver and much more by suppressing the price in the futures market and scooping up physical silver at prices they manipulated lower.  That’s a far more serious crime than spoofing. Another major crime in silver (and gold) committed by JPM is that it has never taken a loss in more than a decade when adding to COMEX short positions. The maintenance of a perfect trading record over a decade in something as hazardous as shorting silver is as impossible as a lifetime batting average of 1,000. Only if the game were seriously rigged could such a feat occur. I could provide the DOJ with a paint-by-the-numbers illustrated playbook documenting JPM’s impossibly perfect trading record if they should request it.

One thing is certain, upper management at JPMorgan can’t plead ignorance of what their underlings have pulled off in silver. I have sent my accusations and proof of wrongdoing to the board of directors, the senior management and their legal counsel time and again over the past eight years. In addition, I have sent 1,000 similar emails and letters to the Commodity Futures Trading Commission and the CME group (COMEX). It seems to me that if JPM could have answered and easily explained away the allegations, they would have done so long ago.

The fact that JPMorgan has essentially eliminated their manipulative short position in the past week may mean they are turning over a new leaf. That has profound implications for the silver market. 

Ted Butler 

www.butlerresearch.com