Well, well, well, JP Morgan now is advising clients to buy gold. I’m pretty sure they are not advising to buy gold from THEM because their inventory at COMEX has dropped to under 9 tons from the nearly 50 tons they had last year. Boy they are good “timers!” They made the call to clients back in April to sell gold short just before the ambush. Are they “good” or are THEY the ones who instigated the sale of 6 months global supply over less than 12 trading hours?
I mentioned earlier in the week that Ted Butler who has been on the CFTC’s case regarding silver manipulation for nearly 20 years has now reported that JPM has “cornered” the market in gold. He claims (I personally believe him as he is a meticulous researcher) that a bank (or 4 banks or less) have gone from net short 75,000 contracts at the beginning of the year to net long over 85,000 contracts currently. This is a swing of 160,000 contracts or 16 million ounces or about 500 tons. According to Mr. Butler, the current net “corner” amounts to a 25% position by the largest bank and 42% for the 4 largest banks in relation to all net longs.
So why is the above important? Because for the first time since at least 1999 (probably since the 1960’s) the “manipulation” is no longer to suppress the price. No, if JP Morgan is truly long then the “manipulation” will be to the upside and the “wind” will finally be at our backs. You can look at this in several ways. First, Mother Nature is there to give a natural push higher. Secondly, you can also look at this as a “surrender.” A “surrender” as in pushing the short side was (is) no longer possible as demand has been set on fire and inventories depleted by the artificially low prices.
This is VERY significant because JP Morgan “never loses,” or at least they had not one daily loss for the first half of the year (I think impossible but this is what they reported). Also interesting is that hedge funds who are continually fleeced are now more “short” gold than ever before so they are “set up” and in the crosshairs of destruction. If you asked me, this looks like JP Morgan finally doing what had to be done, they are simply running with the natural flow and no longer fighting it.
Switching gears just a little, we had a very bad day in ALL markets on Thursday. The Dow was down 225 points and CNBC had the nerve to call it a “low volume” drop. I heard this several times from both anchors and guests…so this was the spin, “low volume.” “Low volume” as in “nothing here to see, please move along.” But wait, was it really a low volume day? No, it was the HIGHEST volume day in 7 weeks! This was absolutely false reporting so that the “alarm” did not go off.
I mention the above “false reporting” because I suspect we will soon hear a different “spin” on gold and silver. You will recall that a week before the April “ambush” of gold and silver CNBC and Bloomberg ran all sorts of negative stories and even to the point where anchors would laugh childishly at the mention of anyone who was long. Now however, the natural forces for higher prices have become so great and it looks like JP Morgan is long…so you can pretty much bet the farm that the “stories” or the tone to the stories will change to the positive (how strange will this be?) and favor Morgan’s bullish stance.
If this is truly a “corner,” and I don’t doubt it, the shorts are in for Jim Sinclair’s long talked about “spiritual experience.” We will soon hear positive stories from the news channels, other banks and brokers will put up “buy” recommendations and a short squeeze rivaling the Hunt brothers’ silver squeeze can be expected. Please remember that it won’t take a lot of money to get this operation started and finished because this manipulation will have the natural force of a beach ball held too far under water for too long behind it! I would even venture to say that after “fighting” for all these years for every inch we gained, it will probably feel strange at a minimum and maybe even “scary.” I say “scary” because I myself know that I’d feel uncomfortable knowing that Wall Street is on the same side that I am but this had to come sooner or later. As I have said all along, you can obscure or hide Mother Nature for only so long before her will is too strong to fight…then you must yield and join her which is what it looks like JP Morgan may be doing right now.
To finish, I’d like to make an “outrageous” prediction (not outrageous at all). Gold will finish the year positive. We need about a $300 run from here to do it and 4 1/2 months’ time to do it in. In reality a move like this could be done in a month, a week or even just a day or two. In fact it can (I think likely) even be done while you are sleeping! I still believe that some sort of “mark-up” is in the cards and may even be kicked off at the G-20 Summit by our angry trading partners. As usual I have a question for you to ponder, if a “mark-up” of the price of gold had been decided on already…would JP Morgan be… A. short, B. long, C. really long, or D. really REALLY long and have the gold market cornered? A no brainer right?