Monday, July 11, 2011

Calling JPM's Naked Silver Shorts

The COMEX has been looted of its silver during the last few months to little fanfare.   Not only has not many people noticed, but the ones that have have not asked who and why this happened.  It happened because JPM and other proxie banks were forced to cover their naked short calls, and they had to go out on the market and get the collateral.  This because long calls exercised their strikes and wanted payment.

How the price went crashing back down afterwards is hard to know considering that the dollar, with its inverse relationship to silver, only gained marginally, and there has been no let up of demand.  Supply is staying tight too, so the only reason can be the fact that oil and silver trade 1:1 and the SPR release, however brief, brought the price down.  The dollar showed its weakness, then.

JPM may have lost their shorts, but the longs ended up with collateral.  Could this have been a ploy from major buyers who knew when to exercise on JPM?  Was JPM willing to be a proxie?  More than likely this is true.  More than likely, this was an orchestrated plan so a few insiders could walk away with collateral at a cheap price.

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