Surely by now you have heard about the viral campaign to bankrupt JPM espoused by one Max Keiser by buying physical silver, thus causing JPM to cover it's supposedly large “naked short” on silver.
Here's an example of the Viral attempt at bankrupting JPM-please excuse the language in the following video, I do not condone it and I hope everyone understands that I'm using this video as it represents in a nutshell the viral movement.
It is claimed, on the CME's COMEX metal exchange silver market, over half of the silver short positions are held by two North American Banks, JPM and the Bank of Nova Scotia (BNS) with JPM holding the biggest silver short position on the COMEX and the third implicated being HSBC. Both JPM and BNS hold hedge accounts which makes them immune to the 6,000 COMEX silver contract limit, the hedge limit for JPM and others with hedge accounts is unknown and not publicly available.
JPM is also the custodian for the SLV ETF which according to most analysis and the viral movement, probably does not hold all the silver which is another JPM short on the silver market.
Beware the SLV prospectus.
“Under certain markets condition where illiquidity exists, the price of the I-Shares may diverge from the price of silver and fall” furthermore in the prospectus, the silver in the vault IS NOT independently verifiable.
I've never been a huge fan of Motley Fool, however, there is another side of the story or at least another perspective.
Here's what I noticed at the end of the day on Friday when comparing the GLD ETF with the SLV ETF
GLD does show a small relative divergence, but I think part of it is the speed in which the rally at the EOD took place (in other words, the divergence could have been some profit taking into the weekend or just 3C not being able to move up as quick as price). It doesn't look very out of place to me.
However, SLV...
SLV showed resistance in the red square box with the candlesticks showing long upper wicks as price tried to approach the $29 level that seems to be resistance that is actively defended and 3C was quite clear about the divergence being negative.
Furthermore...
In the red box, you can see the reaction to the CME's increased margin rate as SLV backs away from $29 again, before that however, there were negative divergences as SLV rose toward the $29 level. Perhaps a call was made seeing it may have been on course to breakout through $29 despite the negative divergences perhaps trying to stop it from doing so? You can see the negative divergence on the rise recently toward $29 which seems to be a level of great interest.
Here you can see SLV has twice met with some resistance near $29-perhaps an area that would trigger margin calls? That's a real question mark as I do not know. the first arrow is the same day CME raises Margin requirements on silver -announced on Nov-9th.
I don't cover physical and tangible assets, if you see an opportunity here and choose to pursue it, you can always buy physical silver which is running in short supply and is a smaller market then gold, with more industrial uses. It also would seem to be a better metal to own then gold if you truly believe 1 of/or two things: If you believe there is this viral campaign that will bring down JPM and cause physical silver to shoot up or if you truly believe that the fiat currency system called the $US dollar will be nullified. Imagine trying to conduct business with specs of gold rather then pieces of silver.
Considering the disclosures in the SLV ETF and considering “if” JPM was forced into a short squeeze, it would be difficult for them to take physical delivery of silver if they indeed do not hold the amount they are supposed to in SLV, the disclosure in the prospectus gives them some cover, meaning SLV may not be the best way to play this silver manipulation theme if you are inclined to.
One way you may want to consider is the silver miners who have not seen the same resistance as SLV.
Compare the charts of SLV resistance vs the miners breaking out.
HL
PAAS
SLW
SSRI
Silver miners may be a win-win. Compared to a quick look at the list of gold miners, the silver miners list is certainly outperforming the gold miners list.
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