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Crash Silver, Buy JP Morgan and Prevent Financial Armageddon

Stock-Markets / Banking Stocks Dec 10, 2010 - 04:48 AM GMT

By: Nadeem_Walayat


Best Financial Markets Analysis ArticleThe "Crash JP Morgan, Buy Silver " internet campaign has been gathering momentum for several months now as individual investors increasingly jump upon the rolling bandwagon by buying a few silver coins. The high profile proponents of the campaign include Max Keiser, Mike Maloney and Alex Jones amongst many others. Whilst they are correct in identifying JP Morgan as being the worlds largest market manipulator that continious to leech the life blood out of the US Economy via the corrupt institution that is the U.S. Federal Reserve Bank that literally makes unlimited funds available at JPMorgans disposal.

However, the crash JP Morgan proponents have not considered the consequences of crashing JP Morgan which would act as a contagion that could bring about the collapse of the worlds global financial system.

JP Morgan IS too big to Bailout

The Crash JP Morgan proponents identify the following reasons with the aim of driving Silver to as high as $500 an ounce.

1 – JP Morgan has a huge short position in Silver – estimated to be 3.3 billion ounces – tied to an enormous, extremely precarious $65 trillion derivatives position.

2 – Various exchanges around the world have been caught manipulating the price of Silver using 'naked' short sales i.e., counterfeiting.

3 – Of all the actively traded commodities traded around the world, Silver is one of the least plentiful and its supply is shrinking, but its industrial uses are multiplying. The 'networked' age of global communications is built with Silver.

4 – Hedge funds are taking physical delivery of Silver – adding substantial demand as well as exposing these exchange's naked short positions – who are already scrambling to deliver – jacking prices up to multi-decade highs – and inspiring these predatory funds to buy more Silver.

5 – There are billions of people around the world who are aware that banks have been committing fraud and embezzlement who are upset that their politicians seem only interested in helping the banks commit more fraud – who are looking for a cheap way to non-aggressively fight back and decapitalize these banks.

6 – Many of these people have the access and wherewithal to purchase 1 ounce of Silver – thus removing hundreds of millions of ounces of Silver from the 'paper' market – forcing additional scrambling by dealers to fill orders by buying back short positions – inspiring the funds to buy and take physical delivery of even more Silver – creating a colossal short squeeze – in which JP Morgan stands to be the biggest loser.

7 – Buying Silver is how the world is monetizing its anger at the banks who stole their wealth.

The crash JP Morgan proponents identify JP Morgan as having some $1.5 trillion in derivatives tied to their silver short position alone, as part of an estimated $70 trillion of derivatives exposure, which is larger than the size of the global economy and 5 times the size of the U.S. Economy. If the financial markets ever thought JP Morgan was at any risk of defaulting on any of its derivatives positions then there would be a run on JP Morgan Lehman's style. Unfortunately to bailout JP Morgan, the cost to prevent a run on the U.S. Financial system that could within hours collapse the whole global financial system would make Novembers QE2 look like chicken feed. The print run would run into the trillions if not the tens of trillions as counter parties to JP Morgan's derivatives panicked.

What would be the consequences of a flood of Perhaps $10 trillion Bailout Dollars ?

Loss of confidence in the U.S. Dollar resulting in a collapse of value triggering an Hyperinflation panic event as dollars were dumped for any commodity or resource so as to prevent purchasing power wipeout, sending interest rates soaring and bringing world trade to an abrupt halt that would risk the collapse of civilisation as we know it today, with financial armageddon eventually resulting in actual real world armageddon much as Europe Experienced Armageddon from September 1939 to 1945, but this time with tens of thousands of hot nukes thrown into the chaos equation.

So yes, Crashing JP Morgan may result in Silver hitting $500, BUT without food, energy and chaos in the streets with a high risk of eventual global nuclear conflict, holders of silver coins may wish they could turn back the clock and instead campaigned for Crash Silver, Buy JP Morgan and Prevent Financial Armageddon!

Current Status of the Crash JP Morgan, Buy Silver Financial Armageddon Campaign

Silver Price

The Silver prices has soared by nearly 60% in 3 months, which means that the of quoted JP Morgan Silver short position of $1.5 trillion would have grown to $2.5 trillion as a consequence of adverse price movement.

JP Morgan Stock Price Implies Silver Short Covering Responsible for Silver Rally

Bank runs, panics, bankruptcies and collapses first manifest themselves in the stock prices, long before they become headline news in the mainstream press.

The JP Morgan stock price is NOT behaving as though it is heading for an imminent collapse. In fact whilst the silver price has roared ahead JPM has been range bound with an upward bias, and the most recent price activity towards the upper end of the range is not exactly evidence of a stock price that is under distress due to a crippling short position being squeezed by speculators. The trend during the past few months is clearly corrective which therefore favours an upside breakout which may be imminent, and then what for the JPM Crash proponents and the silver price ?

Silver Price Trend Implications

This to me suggests that the oft quoted JP Morgan silver short position is far smaller than $1.5 trillion, as probably JP Morgan has been covering its silver shorts for many months. In fact the rise over the past 3 months is probably more due to JP Morgan short covering than the impact of the Crash JP Morgan campaign buying. This also suggests that whilst on going short covering should result in an upward trend for silver, however the JPM master market manipulators will also ensure that they periodically hit speculators and hedge funds hard if they try to take advantage of JPM short covering by SELLING silver hard to run the stops.

Silver has always been very volatile, so investors / traders need to be very nimble footed to ensure that they do not give up their gains, as at the end of the day the only thing that counts is banked profits.

Now don't get me wrong, I am not anti the campaign as probably in reality it has only had a marginal impact on the silver price, I am just highlighting the consequences of what actually crashing JP Morgan would probably be, in that JPM would take the global financial system down with it.

And as Charles and Camilla experienced in London last night, NO ONE will escape the consequences of financial armageddon and the breakdown of society.

A rampaging mob in central London who call themselves students attacked Charles and Camilla's car with cry's of "Off with their heads". The 'students' should consider themselves lucky that they did not get a bullet in the head from the armed police in the car with the couple.

My next in depth analysis / newsletter will evaluate the prospects for the Russian stock market during 2011, to receive this and all analysis and forecasts in your email in box ensure you are subscribed to my ALWAYS FREE Newsletter.

Comments and Source:

By Nadeem Walayat

Copyright © 2005-10 (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 20 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis specialises on UK inflation, economy, interest rates and the housing market and he is the author of the NEW Inflation Mega-Trend ebook that can be downloaded for Free. Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication. We present in-depth analysis from over 600 experienced analysts on a range of views of the probable direction of the financial markets. Thus enabling our readers to arrive at an informed opinion on future market direction.

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Nadeem Walayat Archive

© 2005-2022 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


10 Dec 10, 14:14
Silver Correction


In your estimation, is silver still targeting the $23 range?



11 Dec 10, 19:54

I banked my silver profits.

If it presents future opportunities then I will take another look, but no analysis or interest at $29 for me, especially as I expect sterling to strengthen against the dollar by some 20%



12 Dec 10, 03:21
JPM silver position

Hi Nadeem

I was of the understanding that the new Volcker Rule prevented US banks from any prop trading and a huge naked short in silver on JPM's own account would surely be a violation of that? I imagine they may have numerous clients for whom they are holding large silver short positions but that wouldn't be their liability. Perhaps it's the US Fed who according to the "Crash JPM silver $500" campaign have been funding this all so the consequence of the campaign would be to bankrupt the Fed not JPM. What do you think?

Thanks, Rob

12 Dec 10, 07:16
USD 74

Still keep the target for USD to 74 by Feb. next year?

If USD drops to 74, shouldn't Gold , Silver, general stocks rock much higher than current level?

Thank you!!


Shelby Moore
13 Dec 10, 01:12
Silver shortage analysis

I haven't commented for a couple of months.

In the past 24 hours I made innumerable comments on the facts of the "silver shortage" situation:

Search for "shelbymoore3". Make sure you read my quotes of the SLV prospectus, as it allows JP Morgan to settle in fiat instead of silver, irregardless of whether the auditor says physical silver is in their vault.

I also helped to explain the BIS report, as originally reported by Jason Hommel.

Wayat is correct that we can't take down JPM without taking down the entire corrupt financial system. But that is exactly what we need to do. Of course most will disagree, because they want the slavery system. Nadeem will argue that we can trade around the slavery outcome. Sorry with all due respect Nadeem, you either exit the King's harlot system or you end up in total slavery. The end time will have you connected to machine paying in your own blood. Digital currency is almost ubiquitous now. We are getting close, just need to bring the developing world into the debt slave system of the west. Maybe in our lifetimes.

David Ziffer
13 Dec 10, 23:20
What is the price of NOT crashing JP Morgan?

I'm afraid I agree with Shelby Moore. What is the price of NOT crashing JP Morgan? More of the same, I suspect. I am truly weary of all these paid-for politicians telling me how they saved the world by bailing these banks out. If you truly believe in free market capitalism (and I guess no one says you do) then where is your confidence in the self-correcting nature of free markets? This sort of fear-mongering is the sort of thinking that has kept tyrants in power since time immemorial. Give me the financial collapse, please, and also the much better world that will follow the failure of all those who were "too big to fail".

Vernon Jones
16 Dec 10, 07:17
crash silver

Dear Nadeem ; It is very important people understand the results of Crash JPMorgan(ie the fed).Financial Armageddon will come ! Do not let the Illuminatti - pick the DATE ! Make the FED go long silver - screw up their plans . Get 6 months of food now . All the cops/soldiers will be at home protecting their families !! Protect Your's . thank you

19 Dec 10, 11:38
What about the inflation megatrend?


You wrote: "Silver has always been very volatile, so investors / traders need to be very nimble footed to ensure that they do not give up their gains, as at the end of the day the only thing that counts is banked profits."

I must ask, what about the inflation mega-trend? Are you telling me you are accumulating profits in what you yourself have identified as a rapidly depreciating asset? I thought you were a long-term thinker. You should be accumulating profits in silver and other tangibles.

19 Dec 10, 13:01
Investing / Trading and Mega-trend

What I should be doing is to bank profits as that is the primary objective of trading and investing, and NOT getting married to investments, especially as my portfolio is commodities heavy.

What's real inflation 5% ? 6% ?

How much is silver up over the year? 80%?

John Larsen
20 Dec 10, 20:57
Silver Correction

I completely agree with you in your decision to sell

silver. My portfolio is also very commodities heavy.

A profit is a profit is a profit. I have once question

though. You originally saw the USD trading down to possibly

as as low as 69. With all that is happening here in the states, and especially with the individual state deficits,

I do not see the USD going down but possibly up to 90. Have

you changed your opinion on that.

Shelby Moore
22 Dec 10, 06:00
Sell silver at $45?


I will not sell this trend in motion, until the trend has topped. Good to see some people selling this minor correction, so that means we are not near the top yet.

I stand by my prediction, which has been spot on thus far:

We will get a huge correction in silver later, because of the reality that China's middle class has squandered their savings on a high rise bubble:

22 Dec 10, 13:19

only thing that counts is banked profits.

$45 ? what if it peaks at $39, and you keep waiting for $45 all the way to $12 ? (not a forecast)

Shelby Moore
22 Dec 10, 14:30
Silver trend reversal

If it peaks at $39, I can still sell at $30 and bank more profit than you did if you sold at $29.

We are walking into the early stage of interest rate hikes, that is when precious metals usually blast off, because the central banks are always behind the curve on inflation.

Oil hasn't even eclipsed its former high yet, Copper is barel back above it. Gold already topped its 1980 high and silver not even close yet.

We are in the thick of the inflation result from the prior QE, why jump ship just when it is getting rolling?

Sure we might get a correct back to $26 or so, before we go higher than $30, so you might bank a bit of profit if you re-enter at $26, but I am staying with the Inflation MEGA TREND.

Shelby Moore
22 Dec 10, 14:46
5% inflation is backward looking?

With commodities going bezerk, you think 5% is the true inflation going forward when that feeds through the supply chain? Precious metals are forward indicators typically.

You think with $trillions in QE already completed and feeding through that we are not going to significantly eclipse the prior highs for commodities?

Specifically was China's massive simulust and credit expansion for capital spending expansion which is heavily weighted into commodities demand.

Nobody knows, but if the paper masters do take silver back down to $21, there will be massive offtake of physical. I don't think they can risk that. $26 maybe... one more bounce off that level before we go higher...

22 Dec 10, 20:19
Silver Inflation

My target for Silver for 2010 was $29 (Inflation Mega-trend ebook), I will look at silver again when I do a gold price forecast for 2011 in a few weeks time.

Shelby Moore
23 Dec 10, 00:47
China can't stop

China can not escape from negative real interest rates without an implosion of the global economy!!

Chinese have no place to put their money but the real estate bubble or precious metals.

It is to the moon or bust!!!!!!!!!! Bust now? I don't think so. Not yet.

"The three RRR increases since mid-November will drain a combined 1-trillion yuan ($150-Billion) from the banking system. Yet at the same time, the PBoC is injecting vast quantities of yuan into the foreign exchange market, as part of its effort to rig the value of the yuan against the US-dollar. In November, the PBoC injected 320-billion yuan ($48-billion) into the foreign exchange market, after injecting 519-billion yuan in October. Thus, hiking bank’s RRR to 19% has mostly been used as a tool to sterilize the central bank’s injection of yuan into the FX market.

China’s M2 money supply rose to a record 71-trillion yuan in November, standing +19.5% higher than a year earlier, and leaving its citizens shuddering in fear of a rapid loss of purchasing power. For Chinese citizens who seek safety for their hard earned savings, one-year deposit rates at China’s major banks are offered at a paltry 2.50%"

"The Fed’s QE-2 injections are providing high-octane fuel for the “Commodity Super Cycle” and steamrolling China’s efforts to combat inflation. The soaring costs of a wide range of commodities, from cotton, copper, crude oil, iron-ore, nickel, rubber, corn, rice, and soybeans, could spread to other sectors, and eventually saddle China’s economy with double-digit inflation rates."

"Beijing is caught in between a “rock and a hard place.” Beijing understands that if it allows the yuan to strengthen further against the US-dollar, to artificially lower the cost of imported commodities, that base metal and crude oil dealers could seize upon the move to jack-up commodity prices, given China’s increased purchasing power. There’s also lingering doubt whether unilateral PBoC rate hikes could derail the powerful “Commodity Super Cycle,” without the joint support of other key central banks, willing to tighten their monetary policies in tandem."

"The Gold market has been tracking the growth of China’s foreign currency stash for several years. Bullion dealers reckon that at some point in time, Beijing would see the light, and realize that its massive holdings of fiat paper money would eventually revert to its intrinsic value – Zero. Perhaps, in 2011, Beijing would clandestinely boost its dosage of precious metals, and start selling-off large chunks of British gilts, and Japanese and US-government bonds. A portfolio shift might already be underway. China imported 210-tons of gold in the first 10-months of this year, a fivefold increase compared with the same period in 2009, - Xinhua reported."

"So far, the PBoC is enforcing negative real interest rates, - discounted for inflation, to discourage a torrent of “hot money” from abroad from flocking into the Chinese yuan [...] By failing to close the gap between interest rates and inflation, the Chinese central bank flashed a green light to traders to resume buying commodities, and precious metals."

Shelby Moore
25 Dec 10, 05:17

Wages in the developing world will continue to track the rise in the silver price, until a silver dime is the wage every where in the world (2000 year history of one silver dime, 6 grams, as a daily wage). Period.

Asia is siphoning the capital out of the west, this is causing massive inflation in Asia. The real estate bubble in China (and else where) is because real estate is being developed faster than wages can rise, which is primarily because the price of silver is being suppressed by the fiat masters.

Silver must rise in purchasing power parity, whether it means housing prices and commodities must fall, or silver price must rise. I lean towards silver must rise in price, which means China will begin to export more of its inflation to the rest of the developing world.

You heard here first folks.

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