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.
3 comments:
If the squeeze continues developing as it did all through 2010, JPM is kaputt and silver may reach 60 dollars an ounce.
Let us hope so. There are credible people out there talking silver at $500/oz. Place your bets accordingly.
I'm not sure how Morgan is kaput if their position is as an agent and not for their own account? Also, since photographic film is becoming almost extinct (and silver flatware out of reach and less practical than stainless) there is decreasing industrial demand for silver - it becomes (like gold) something that is valuable because it is valuable.
When I visited Shanghai, my host told me that during the Cultural Revolution, Chinese would fling their gold and silver hoards into the Suzhou Creek (a river that passes thru Shanghai) because if the Red Guards caught anyone with any valuables they would beat or kill them. He says that afterward the Chinese government carefully dredged the river to turn up any valuables. His family had been the Omega watch distributor for Shanghai (Chinese, like Jews, love watches) but that of course came to a complete end. Today there are expensive Swiss watches on sale again but his family is not part of the trade anymore.
K
Silver is a good reservoir of value, moreso as the Chinese get richer. They are infatuated with silver.
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