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JP Morgan is Taking Delivery of Silver. Why?

Written by Gary North on July 12, 2013

The commodity futures market allows speculators to bet against each other on where the prices of commodities are headed. Participants make money by out-guessing their competitors.

Only about 3% of the contracts ever result in delivery of the physical commodity. The speculators don’t want the commodities. They just want the price action.

All of a sudden, without warning, JP Morgan is demanding delivery of silver — not money.  This is never done. Well, almost never. Bunker Hunt tried that in 1979, and the COMEX changed the rules. He was trying to squeeze the silver market. The COMEX opted out. Hunt lost billions of dollars.

Now JP Morgan is taking delivery. What do they know that we don’t? They aren’t saying, of course.

If this practice spreads, there is going to be a squeeze on those who are short silver. They have promised to deliver silver at a fixed price on a specific date. If they are asked to make delivery, they will be hammered. They can’t do it. There is never enough of any commodity to fill the all of shorts’ promises to deliver. The commodities future market assumes that hardly any longs will demand physical delivery.

So far, there is no panic among the shorts. Silver’s price is down a little today. But it makes me wonder. Why would JP Morgan demand physical delivery? Is this getting close to the bottom for silver? My guess is yes.

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9 thoughts on “JP Morgan is Taking Delivery of Silver. Why?

  1. Bottom or not…..the worthless "peach backs" will show their true colors…that being in the RED! The only color that has any value is gold & silver and people will learn this lesson very soon. If silver has no value as some pronounce why is there such a premium on it?? JP Morgan may be the smartest guys in the room yet!!

  2. Texas Chris says:

    Glad I ordered another 1,000 oz two weeks ago. Once again Dr. North made me look like a genius.

    I owe you, Doc.

  3. The trouble I see with holding the actual gold or silver is that someone can physically take it from you. If you put it in a safety deposit box, the bank and the government are one in the same and they can take it that way. If you invest it in real estate they can raise the taxes on that to cost you more than it is worth. The only thing truly valuable is a lobbyist and the American people do not have those.

  4. Can someone recommend a reliable honest source for purchasing silver? Thanks…

  5. I would suggest you research for a reputable coin dealer in your area…..I have my local favorite that is very fair on markup.

  6. Harrison says:

    ProvidentMetals.com is my favorite.

  7. golddealer.com is great, been going through them for 8 years and they have low mark ups. California Numismatic Investments

  8. Online silvertrading.net is a good source. Larry LaBorde seems to be a good honest dealer. Also try Jason Hommel at http://www.jhmint.com. He's also scrupulously honest.

  9. Thanks guys.. great suggestions! I'm very new to all of this, I feel like it's a market segment where the buyer absolutely must beware…