Silver “upside fireworks”

Friday’s COMEX Commitment of Traders Report showed another big decline in the Commercials (big bullion banks) short positions in silver futures.  For new comers, ‘shorting’ the market is making a bet it will fall (and if you are big enough… actually making it fall in the process).  We reported a few weeks ago Ted Butler’s claims around JP Morgan’s role in all of this.  We also mentioned in recent radio weekly wrap that the US Department of Justice has launched an investigation on manipulation of the gold and silver markets.  This is just context for what Ted Butler had to say again last week:

“When I spoke of the coming silver price melt up in the past, JPMorgan was hardly on the silver scene. But starting with the rescue of Bear Stearns in early 2008, JPMorgan had become the new big Kahuna in silver, holding net short positions on the COMEX that exceeded 200 million ounces on a number of occasions. 

Then, in 2011, the bank switched strategies and in addition to remaining the big COMEX short seller (and milking untold hundreds of millions and even billions of dollars of profits from the technical funds), began to accumulate the largest privately owned physical silver position in history, an amount I place at upwards of 350 million oz. Over the past few months, JPMorgan has taken a significant amount (12 million oz) in COMEX silver futures deliveries in its own name and moved all that silver into its own warehouse. As I’ve remarked previously, this highly transparent acquisition of silver suggests JPM’s accumulation may be near completion. 

Very recently (meaning over the past 2 or 3 weeks), I believe the bank has made aggressive moves to close out its giant short positions in both SLV (based upon the large and highly counterintuitive metal deposits of 11 million oz into the trust) and on the COMEX. When anyone appears to be finishing an epic accumulation of an asset, combined with an aggressive short covering in that same asset, it is not unreasonable to think upside fireworks may be close at hand.