In Ted Butler's Archive


For the last few weeks, I’ve been intensely focused on what I believe to be a developing double-cross in COMEX gold futures by JPMorgan. They are double-crossing the other 7 banks who have been their partners in shorting and manipulating gold and silver prices for many years. JPMorgan is positioning itself so flawlessly as to be nearly perfect in its execution, including the avoidance of any widespread knowledge of what they are doing. After all, a double-cross always includes the element of surprise and this one promises to be a doozy.

Data from recent Commitments of Traders (COT) reports indicate JPMorgan buying back massive numbers of short gold contracts disproportionate to anything previously seen. The market structure in COMEX gold is extremely bullish, thanks to aggressive managed money (hedge fund) selling and commercial (JPMorgan) buying. JPMorgan has been, by far, the largest single buyer of COMEX gold futures contracts over the past month and a half and particularly over the past three reporting weeks, buying back what I would estimate to be a minimum of 50,000 net short contracts and reducing its net short position to little more than 40,000 contracts.  These 50,000 COMEX gold contracts are the equivalent of 5 million ounces of gold. The world sits up and takes notice when Russia buys 600,000 ounces of gold in a month, as it did last month; yet practically no one noticed JPMorgan’s purchase of 5 million ounces of paper gold in little more than a month. It goes without saying that JPM made a large profit on its buyback of gold short contracts since it sold those contracts short at much higher prices; but the biggest payday for the bank lies ahead.

I’m fairly confident that this week’s new COT report will indicate a continued buy-back of gold (and silver) short positions by JPMorgan, based upon the price action through yesterday’s cutoff for the reporting week. I think JPMorgan’s actions may be profound for the price of gold and silver. The reduction of their short positions portends a very sharp price rally for gold and silver and other metals.

What about the 40,000 contracts or 4 million gold ounces JPMorgan might still be short – wouldn’t it lose $400 million for every $100 that gold rises? Yes, but I think JPMorgan may now be short even less than that and there is even a more important consideration – the 20 million ounces that JPMorgan has accumulated over the past five years means it is net long the equivalent of 16 million ounces of gold. That means for every $100 that gold climbs, JPMorgan will make $1.6 billion net, even if it is still short 40,000 COMEX gold contracts.

Just as JPMorgan is massively long physical gold, to the tune of 20 million ounces, the bank owns at least 700 million ounces of physical silver and likely more than that. There have been strong signs the bank is still acquiring physical silver (primarily though conversions of shares of SLV into metal). What this means is that even if JPM is short 150 million ounces of paper silver, it is still net long silver to the tune of 550 million ounces at a minimum. For every $1.00 higher in silver, JPMorgan stands to make $550 million. With potential profits of that magnitude at hand, it’s impossible to imagine JPMorgan not setting off the big precious metals move higher at some point. But here’s where the double-cross premise may kick in. What JPMorgan has just pulled off, namely, the massive buyback of gold short positions from other commercials was unprecedented.  It goes without saying that JPMorgan is intending to benefit.  Therefore, the most plausible conclusion is that we’re looking down the gun barrel of an explosive move higher in gold and silver because that would benefit JPMorgan the most. Their partners in manipulation (the 7 big banks and certain others) will be left holding the bag, trying to buy back their short position as the price rises.

JPMorgan has never been in a better position to let her rip to the upside than now, based upon a tactic it has never deployed before – a double-cross of other commercials. Therefore, I’m treating it as the opportunity I believe it to be, namely, that we’re on the cusp of the once in a lifetime opportunity that should have been realized long before now. It has taken a maneuver by JPMorgan that almost no one sees, including those that are being double-crossed, and that means something big is about to happen.

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