Silver Stackers

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What’s with JP Morgan and its massive silver hoard?

Lawrence Williams | 28 April 2015 16:35

Silver guru Ted Butler believes JP Morgan may have amassed up to 350m ounces of silver bullion. If so, what’s behind this enormous holding?

All markets are rigged – and silver especially so! That may be a cynical appraisal but the fact remains that any entity with sufficient capital behind it can usually move any market in the direction that suits it – the size of the market concerned perhaps being the key factor here as to whether this would be easily accomplished, or even attempted! And silver is a small enough market to be in the sights of the big money which theoretically can move it whichever way it wants through huge forward purchases or sales in the futures markets.

As those who’ve been around a while will recall, oil billionaires Nelson Bunker Hunt and William Herbert Hunt, back in 1979/80 attempted to corner the silver market in just this way. As a result the silver price surged from $6 per ounce to a then record high of $48.70 per ounce. The brothers were estimated to hold one third of the entire world supply of silver (other than that then held by governments). As Wikipedia notes, the situation for other prospective purchasers of silver was so dire that the jeweller Tiffany’s took out a full page advertisement in The New York Times, condemning the Hunt Brothers and stating, “We think it is unconscionable for anyone to hoard several billion, yes billion, dollars’ worth of silver and thus drive the price up so high that others must pay artificially high prices for articles made of silver”.

But on January 7, 1980, in response to the Hunts’ accumulation, the exchange rules regarding leverage were changed, when COMEX adopted “Silver Rule 7? placing heavy restrictions on the purchase of commodities on margin. The Hunt brothers had borrowed heavily to finance their purchases, and as the price began to fall again, dropping over 50% in just four days, they were unable to meet their obligations, causing panic in the markets.

When the price of silver dropped below their minimum margin requirement, they were issued a margin call for $100 million. The Hunts were unable to meet the margin call, and, with the brothers facing a potential $1.7 billion loss, the ensuing panic was felt in the financial markets in general, as well as commodities and futures.

REST OF THE STORY: http://www.mineweb.com/news/silver/whats-with-jp-morgan-and-its-massive-silver-hoard/