Thursday, December 09, 2010
Developing Silver Short Squeeze
It is widely known that J.P. Morgan holds a monster position in silver. The bank is apparently acting as an agent for the Federal Reserve in the market. A lower silver price helps keep the relative appeal of the U.S. dollar tete-a-tete the Chinese, who traditionally hoard silver coins for emergencies. By selling massive amounts of paper silver in the futures market, JPM has been able to suppress the price of the precious metal. It is believed that these short positions are naked (i.e. they are not backed by any physical silver). In fact, JPM is short more paper silver than physically exists in the world.
If the squeeze continues developing as it did all through 2010, JPM is kaputt and silver may reach 60 dollars an ounce.