With JP Morgan (JPM) losing many billions of dollars on its silver short position, the CME has been helping JPM manipulate the price of silver down in recent days by raising margin requirements for those who buy silver futures contracts. A little over a week ago the margin requirement for a single silver futures contract of 5,000 oz of silver was $8,700. After rising to $12,000 during the past week, on Thursday the CME announced that it is being increased once again to $14,000, and will be increased again on Monday to $16,000. That is a 84% increase from 8 days ago and pure manipulation of the silver market.
This is similar to how the government manipulated the price of silver down in 1980 after it reached an all time high of $49.45 per ounce. In 1980, the government claimed that the Hunt Brothers “cornered” the silver market with their concentrated long position. By raising margin requirements and halting people from buying new silver futures contract positions, it caused forced liquidations and the price of silver fell to $11 per ounce a couple of months later.
This dip won’t come anywhere even remotely close to what occurred in 1980. The fundamentals for silver are completely different today. The 1980 high of $49.45 adjusted to the CPI would equal $140 per ounce in today’s dollars and over $400 per ounce once you consider how the CPI understates inflation with geometric weighting and hedonics.
While the Hunt Brothers’ concentrated long position was impossible for them to sell without causing silver to crash, JP Morgan’s concentrated short position that exists in silver today would be impossible for them to cover without driving silver up to near $100 per ounce.
NIA accurately predicted this latest decline in silver, but we also predict this decline won’t last for long. Silver will very soon quickly and easily fly past $50 per ounce and on to new all time highs. We might see some more profit taking in the short-term and it could take a few months for silver to make its next monster rally, but the rally is coming sooner rather than later.
Just like how silver had to decline because everybody who owned it was making a profit, silver prices will soon have to bottom and rapidly take off substantially higher. There are simply too many people on the sidelines today who were waiting for silver to dip before either accumulating a position for the first time or increasing their current position in silver. The dip we were all hoping for has arrived and we need to take full advantage of it while it lasts, because it won’t last for long.
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