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JP Morgan — Its Love for Silver

JP Morgan is Buying Lots of Silver

JP Morgan is buying monstrous amounts of silver. They have already stockpiled a very large amount of silver already. Being one of the most powerful banks in the world, is it fearing a hit to its reputation in case of another financial recession?

The bank’s stockpile of silver has already reached astounding levels within the last 4 years. Although it had nearly no silver by 2011, It drastically increased its silver stockpile by purchasing nearly 5M ounces of silver within one year.

The Hoarding Continues

According to COMEX data, this giant’s silver stockpile has increased more than ten times in size within the last three years and currently stands at more than 55M ounces. Its love for silver is so profound that recent deliveries of silver from COMEX to JP Morgan have been in very large amounts within a very short span of time. The data clearly shows that JP Morgan has bought more than 8.3M ounces of silver within the first few weeks of April.

Why this Sudden Interest in Silver?

The bank’s sudden interest in silver is not something to be taken lightly. JP Morgan’s executives obviously have a very big reason to invest so heavily in silver. The most probable reason to invest in such a recession proof commodity, it is to profit from a coming financial turmoil. Their discouraging attitude towards the economy’s current condition is evident from a recent statement given by the CEO of JP Morgan and Chase: Some things never change — there will be another crisis, and its impact will be felt by the financial market.

A Historical Perspective

This interest in silver may be explained by the very low price of silver right now. This bank’s current attempt to corner the silver market is so similar to the 1970s attempt by The Hunt Brothers’. They tried to control the market by investing heavily in the futures market for silver.

The company faced heavy losses as regulatory authorities increased the margins and silver prices rapidly fell. A group of US Banks saved the main brokerage firm involved in order to avoid widespread panic over the losses. This would have gone well for The Hunt Brothers if they had acquired physical silver instead of the futures contracts. The prices on these contracts melt away so rapidly in the case of a market reaction that one can’t do anything but face losses. The company had invested in such large amounts, that according to estimates, they had managed to gather a third of the total annual silver supply on leverage.

JP Morgan and its intentions

Some silver analysts believe that JP Morgan’s official figures for its heaps of silver are not correct. They think that JP Morgan has more than 350M ounces of silver bullion stocked away. It is important to remember that the total annual production of silver is at 850M ounces. If analyst estimates are right, JP Morgan is already in a position to corner the physical silver market. Their stockpile of the precious metal is already at more than 42 percent of the annual global silver production.

Therefore, this means that JP Morgan might be controlling the silver prices right now. It is depressing the metals price through holding the biggest short positions in the futures markets. They can couple this effect with their unlimited supply of money and you get a big bear market in silver to help JP Morgan buy large amounts of physical silver.

JP Morgan’s motivation

The biggest motivation for driving the price of silver lower might be because the Bank expects a financial crisis in the near future. It expects a great demand for silver in the very near future and wants to accumulate as much physical silver as it can. They will heavily profit from their stockpiles of silver once the prices start to rise due to a crisis. They could even reverse their positions in the futures market anytime and jumpstart the prices to rise at the right moment.

Follow the leader

Should you invest in silver? JP Morgan and its executives are in a very good position to judge what the state of the economy. Their connections with the US government, US Treasury and the Federal Reserve make them one of the most well informed institutions about the economy. If they think silver prices will rise, the prices will rise.

Silver, with its inflation protection characteristics and cheap price, has the potential to become an investor favorite in time of a future financial turmoil. This bank’s exclusive interest in silver and the continually increasing global geopolitical and macroeconomic risk make it very likely that silver prices will rise in the near future.

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