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Will Buying Silver Crash JP Morgan?
ETF Daily News ^ | 11/24/2010 | Ian Wyatt

Posted on 11/24/2010 3:10:18 PM PST by SeekAndFind

I’ve been buying silver for the past few years now, and believe me; I never imagined that doing so would be a part of a political or societal movement. I’ve been buying for practical reasons – to protect some portion of my net worth from the eventuality and likelihood of a currency crisis.

But right now, at this very moment, there’s a group of people spurring a movement to buy silver in order to bankrupt JP Morgan (NYSE: JPM).

One especially vocal provocateur is financial analyst Max Keiser. He’s been credited with starting this movement. And to be honest, I think Max is spot on when it comes to his analysis. I just don’t know if his plan will work.

To give you the brief back story: for years – maybe even decades – a group of banks have allegedly been manipulating the silver market for their own gain.

I don’t doubt the claim. The Commodity Futures Exchange Commission is currently investigating JP Morgan’s alleged manipulation. On October 26 CFTC Commissioner Bart Chilton said,

“I believe that there have been repeated attempts to influence prices in the silver markets… There have been fraudulent efforts to persuade and deviously control that price. Based on what I have been told by members of the public, and reviewing in publicly available documents, I believe violations to the Commodity Exchange Act (ACT) have taken place in silver markets and that any such violation of the law in this regard should be prosecuted.”

To absolve this article of any double-speak: I still advise buying physical silver (and gold) – but I have my doubts that doing so will bankrupt JP Morgan.

Why? Well, for the same reason that I wouldn’t be surprised to hear about another Federal bailout of the auto, airline, bank, mortgage, rail, union, State, or Municipal sectors.

For incredibly stupid and altogether short-sighted reasons, the Federal Government has granted itself a suicide-pact mandate to let no large American institution fail. The Feds publicly prescribe to a falling-domino theory when it comes to these large institutions.

They either believe that allowing large institutions to fail would enflame problems across the country in some kind of Armageddon scenario…

Or they are simply using any crisis as an opportunity to put their sticky fingers in any pie willing to cede temporary (and sometimes permanent) control in order to avoid failure.

So will US Treasury Secretary Timmy Geithner allow his banker buddies over at JP Morgan to go belly up in the event that this “buy silver” campaign succeeds?

I’d be surprised. Right now, the US Treasury and JP Morgan interests’ are intertwined. The US Treasury needs banks like JP Morgan in order to play its shell game with the trillions of new Treasury issuances every year. JP Morgan gladly plays along and in return the whole banking system is backed by the full faith and credit of the Treasury.

Additionally, Timmy Geithner probably isn’t too big a fan of precious metals. When silver and gold make huge dollar denominated gains, it’s seen as dollar weakness across the globe. That makes his job much more difficult.

So the fact that JP Morgan is allegedly manipulating silver to the short side, puts them in Timmy’s good graces. I’m guessing he would reward them with a tip of the cap to the CFTC, the SEC and Congress with another bailout if necessary. Maybe change the rules to benefit silver’s short sellers and harm investors on the long side.

There are so many devious ways that the Federal Government could step in to lessen the blow for JP Morgan, and unfortunately I just don’t have a mind for deviousness.

Don’t get me wrong, I think it’s very noble to want to teach JP Morgan a lesson. It makes buying silver a win-win proposition right now. Even if Mr. Keiser’s movement doesn’t bankrupt JP Morgan, it will bring many of the problems inherent to our financial system spitting and screaming into the light.

It might even kick the end-game scenario for the dollar into high gear.

So for the record, I think it could be a good thing. I just don’t really see how the Feds would let JP Morgan crash.

TOPICS: Business/Economy; Culture/Society; Government; News/Current Events
KEYWORDS: cftc; crash; jpmorgan; silver
About the author:

Ian Wyatt is an active investor, a well-regarded investment expert and an Internet entrepreneur. He is the Chief Investment Strategist at Wyatt Investment Research, and plays a leading role in each of the company’s investment newsletters and trading services.

1 posted on 11/24/2010 3:10:21 PM PST by SeekAndFind
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To: SeekAndFind
Act Now, CFTC Is Urged (WSJ)
2 posted on 11/24/2010 3:16:45 PM PST by Stentor ( "All cults of personality begin as high drama and end as low comedy.")
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To: SeekAndFind

Actually we can bankrupt all the big banks simply by using and holding cash.

3 posted on 11/24/2010 3:23:43 PM PST by SeeSharp
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To: SeekAndFind

Where are the Hunt brothers when you need them?

4 posted on 11/24/2010 3:26:59 PM PST by JPG (The GOP leadership is on probation. No second chances. Don't blow it.)
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To: SeekAndFind
JP Morgan will probably not be bankrupted, but they can be forced off their silver manipulations. If JP Morgan can't keep the price down, then they should have to cover their shorts or pay in cash in "fails to deliver" at some point. If they pay cash, that will be a slap in the wrist and they will get away with little damage. But the shorts will be gone and they will no longer affect the price of silver.

Or, customers can simply keep buying silver, such as in this campaign, and the COMEX will draw down its inventory by selling silver at an artifically low price. If that happens, there will be no silver available on the COMEX or London markets, and they will lose their pricing power, despite the short contracts. Buyers and sellers will find their own price for silver, at the mines, or on Ebay.

5 posted on 11/24/2010 3:36:08 PM PST by Vince Ferrer
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To: SeekAndFind

I seem to recall there a few civil suits out there against JPM. If so, it’s doubtful the Treasury is going to try to explain pumping money in to pay JPM’s civil judgments - and they could be huge. So I agree that buying alone won’t sink JPM, and that’s a good point. But the lawyer-sharks might deal them a fatal blow. Hard to believe the lawyers might do some good.

6 posted on 11/24/2010 3:51:04 PM PST by majormaturity
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To: SeekAndFind

The two best knowledge sources out there on silver manipulation and investment are these:

JPM won’t go under, too many ties to Goldman’s and thus Obama and Soros. They’ll bail them out as silver going too high will make Obama look bad.

There indeed is manipulation and in fact, the can got kicked down the road as they have options on silver shorting to the tune of 1B ounces...they paid the fee to roll these into December and January, so they’ll try to push the price down again and infinitum

7 posted on 11/24/2010 4:09:35 PM PST by CincyRichieRich (Keep your head up and keep moving forward!)
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To: SeekAndFind

Yesterday was the last day of trading for options on the December 2010 gold and silver futures contracts.

Overall, the prices of gold and silver increased and that should be a positive indicator of future price increases.

Though it would be premature to make bold statements based on trading today and Friday as both days are holiday influenced.

It does seem gold and silver are going to keep going up.

Whether JP Morgan is short the silver market is another issue. Could be and if it ends up being true, then silver will see $50

8 posted on 11/24/2010 4:19:39 PM PST by Presbyterian Reporter
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To: SeekAndFind

I don’t give a damn about J.P. Morgan, or the author. I invest in silver and gold to act as a hedge against the government....In the last couple of years, silver has been a great investment, gold not as good (silver 3X in 3 years, and gold 20% in 2 years.)

9 posted on 11/24/2010 4:54:55 PM PST by richardtavor (One of the rare establishment Republicans backed by the "Tea Party" movement that wants limited gove)
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To: SeekAndFind
If your author were really such a "well regarded investment expert", he would know that there's no such thing as the Commodity Futures Exchange Commission.

...and of course, there's no chance that a guy hyping silver isn't trying to lure suckers.

10 posted on 11/24/2010 5:02:46 PM PST by Mr. Lucky
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To: Mr. Lucky

If your author were really such a “well regarded investment expert”, he would know that there’s no such thing as the Commodity Futures Exchange Commission.

...and of course, there’s no chance that a guy hyping silver isn’t trying to lure suckers.

Don’t be a pin head wanker; one word slip...change Trade for Exchange and you get the picture...

11 posted on 11/24/2010 5:12:21 PM PST by CincyRichieRich (Keep your head up and keep moving forward!)
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To: CincyRichieRich


12 posted on 11/24/2010 7:00:47 PM PST by phockthis
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