NY Post: Feds Launch Criminal and Civil Probes Into JP Morgan’s Silver Trades

MrOrganic

http://jessescrossroadscafe.blogspot.com/2010/05/ny-post-feds-launch-criminal-and-civil.html

BigE

Text

cladking

<< <i>http://jessescrossroadscafe.blogspot.com/2010/05/ny-post-feds-launch-criminal-and-civil.html

>>



I hope it's not too late.

I'm pleased it involves a criminal investigation.

cladking

Ya' got me.

This looks fake.

storm888

I dislike JPM, but if all the Feds find is the old "English
whistleblower" stuff, I suspect there is not much there.

Changing the way options are attacked/defended at/near
expiration would kill every trading market in the world.

Nothing generally wrong with defending your position and
attacking that of folks on the other side of the trade.

Good publicity for the folks that want more regulation,
though.

sebrown

<< <i>Ya' got me.

This looks fake. >>




Not fake......Feds probing JPMorgan trades in silver pit

PerryHall

What effect will this probe have on PM prices next week? Any ideas or guesses?

sebrown

I don't know for sure, but it was my excuse to spend another $2k on ASEs today.

cohodk

If no wrong doing is found, as is all too often the case in these matters, then what?

1970SilverArt

I want to be wrong on this but I do not think that JPM will be found guilty of anything. JPM has too much money to buy a not-guilty verdict. We will see what happens.

mhammerman

"If no wrong doing is found, as is all too often the case in these matters, then what?"

Don't forget that we are watching our leaders craft a set of regulations and appoint a set of directors to moderate investment banking options. There are going to be highly politicized and polarized groups that have some kinda dog in this hunt. Look for more stories of this type as the different sides of this issue try and hype the media. It's a new world. Storm's summary regarding all this cryin' and moanin' beginning to attract regulations seems to me to be a pretty fair assessment. I guess that until some folks start getting charged with crimes, ala Enron, then it's just media...respond accordingly, methinks

Got Cash?

MrOrganic

<< <i>http://jessescrossroadscafe.blogspot.com/2010/05/ny-post-feds-launch-criminal-and-civil.html




>>




INTERESTING THEORY

JPMORGAN was behind thurs 1k point drop to send a message to washington????? (leave us be)

http://www.zerohedge.com/article/here-who-traded-what-and-how-much-yesterday

MrOrganic

here's the guys theory


All I am saying is that I knew about this on Wednesday. If forced, I will look for the article. Then, according to Zero Hedge, JPM was the heaviest trader on "Down your Throat" Thursday. Coincidence? I do not know, but I have seen conspiracy theories with worst plots. Also, JPM has to do something overt so that the dumb politicians get the picture and comply with the will of the banksters. Just sayin.



Okay, here's the link

http://www.cnbc.com/id/15840232?video=1485831315&play=1

Jim Rickards talked about it on Wednesday on Squawk Box in the last 2 minutes of the video.

Link to JP Morgan trying to dump 24 million plus shares

http://www.zerohedge.com/article/here-who-traded-what-and-how-much-yesterday

I figure the other banks (machines) got spooked just jumped in for the ride.

gsa1fan

Gov't went to bed with to big to fail boys already. You think they really will prosecute them?

My guess is Tim Gietner trying to make it look good to get main street satisfied they did some thing.

How is "Talking heads" covering all the bond buys? Some got shuffle for them? Jus saying

storm888

IF the Feds can prove that JPM has been Naked Shorting,
there might be some minor consequences.

The CFTC and the SEC says that NS contains two elements:

1. Fail to locate.

2. Fail to deliver.

A locate violation is hard to prove, when my pal will swear
he was my locate.

A delivery violation is easy to prove; so far, I don't see such
a fail by JPM or their pals.

The pro-reg gang does not need real violations; they ONLY
need headlines to garner support for their favored legislation.

..........................

The rants of zerohedge and GATA are fun, but, IMV, they
either "don't get it," or they knowingly spin false notions
to pump their own agendas.

................


EVERYBODY should have some metals.

EVERYBODY should be leery that the huckster-count of
TV-pumpers is reaching/surpassing critical mass.

cohodk

<< <i>here's the guys theory


All I am saying is that I knew about this on Wednesday. If forced, I will look for the article. Then, according to Zero Hedge, JPM was the heaviest trader on "Down your Throat" Thursday. Coincidence? I do not know, but I have seen conspiracy theories with worst plots. Also, JPM has to do something overt so that the dumb politicians get the picture and comply with the will of the banksters. Just sayin.



Okay, here's the link

http://www.cnbc.com/id/15840232?video=1485831315&play=1

Jim Rickards talked about it on Wednesday on Squawk Box in the last 2 minutes of the video.

Link to JP Morgan trying to dump 24 million plus shares

http://www.zerohedge.com/article/here-who-traded-what-and-how-much-yesterday

I figure the other banks (machines) got spooked just jumped in for the ride. >>




SPY traded 636 million shares on Thursday, and your link says that JPM traded 24 million--less than 4%. Whats the point the author is trying to make? Not sure what the deal is with the indication of interest thing either.

What may be of greater interest is that on Thurs and Fri, the volume was almost exactly the same on SPY. 636 mil vs 637 mil.

I mentioned when the "Volcker Plan" was first announced----as a response to a senate seat loss---that the Administration had picked the wrong fight. Jamie Dimon and Lloyd Blankfein will still be leading JPM and GS, long after Obama, Volcker, Geithner, Pelosi, Reid, Frank have been booted from office. The banks have the ability to make this economy completely stop. Maybe they should?

AboutAg

<< <i>

<< <i>Ya' got me.

Not fake......Feds probing JPMorgan trades in silver pit >>



FYI, this is just a re-hash of what has been known for weeks (DoJ 'probe') and years (CFTC investigation). The only news is that a newspaper is reporting it; the content of their report isn't news to us.

cladking

<< <i>What effect will this probe have on PM prices next week? Any ideas or guesses? >>



I don't believe there's much doubt that manipulation has been occuring.

In the past the regulators had a plausible deniability that any illegal activity
was taking place. This will be lost in an investigation. While it's possible there
won't be criminal charges they will have no choice but to end the manipulation
at thisa point or risk criminal charges themselves in the future.

Look out!

cladking

Perhaps the 73c gain Friday was the leakage of this news.

storm888

"...I don't believe there's much doubt that manipulation has been occuring...."

/////////////////////////////////////////


I guess the question will be, "Is such manipulation illegal?"


I suspect that the answer will be "no."

cladking

There is enormous pent up pressure on the price of silver. It is largely
inertia that has kept the silver price far away from the realm of rationality
for three decades but there has also been apparent manipulation that
artificially greatly enhances the apparent supply and thereby suppresses
the real demand. Many people who believe they own silver, don't. Many
compabnies which believe they have vast holdings of silver to protect
their supply needs actually own paper that has value only so long as
everyone believes those who issue paper have enough money toi cover
it. This is a ponzi scheme of the worst sort because when it blows up it
will not only ruin individuals who trusted the paper but millions who are
employed by them.

While this end to the nonsence might be in time there will still be turmoil
in the silver and gold market at least breifly as many readjusty their ex-
isting positions. Frankly I pray this isn't the trigger that results in a ration-
alization of silver prices because it will be most disorderly with such vast
amounts of paper floating around.

This ain't gonna be nothing like the default in nickel.

storm888

"...but there has also been apparent manipulation that
artificially greatly enhances the apparent supply and thereby suppresses
the real demand. Many people who believe they own silver, don't. Many
companies which believe they have vast holdings of silver to protect
their supply needs actually own paper that has value only so long as
everyone believes those who issue paper have enough money to cover
it. ...."

///////////////////////////////////////////////////////////


I suspect that most - maybe ALL - of the folks holding paper
bets know exactly what they bought.

Those LONGS are betting on price hikes; they are not remotely
interested in taking delivery of tons of silver. And, most would
not have the cash to do so in any event.

Most options guys understand that they will NOT be taking
delivery of their silver. They expect - if they win - to collect
cash. They are ALL trading on margins of about 10% to 25%;
they don't have the money to take delivery of the metal that
is represented by the derivative.

They are ONLY betting on price moves.

BUT, it is true that the issuers of paper must have the cash to
make the bet good in order for the LONGS' bets to be paid. So far,
no real problem in regulated markets.

...............................................

GATA and ZH continue to pump the falsely-constructed myth that "there
are a hundred times more metals represented on paper than there are in
the vaults."

The "myth" mixes apples and oranges.

The "myth" misstates the concept of "leverage."

The bets on the paper are expected to be paid in CASH; not metals.

The "leverage" is on the side of the LONG bettor, when he places his bet
with a fraction of the cash he would need to take delivery of the metal.

The amount of silver in the vault - except to the industrial enduser -
is totally irrelevant to the LONG bettor's goal in the transaction.



(Obviously, an ETF that is required to keep either full or fractional reserves
is a separate issue. So far, the SEC says the big ones are in compliance.)

cladking

<< <i>

BUT, it is true that the issuers of paper must have the cash to
make the bet good in order for the LONGS' bets to be paid. So far,
no real problem in regulated markets. >>



I mostly agree. But there are a few consideration beyond just that
this might not be a regulated market at the current time. It's not
only the silver which has multiple owners but I personally wouldn't
be surprised if this investigation shows that even silver still in the
ground has multiple entities who believe they own it.

One of the ways that the paper issuers might use to pay the longs
is by the issuance of more paper. This provides a double whammy
by decreasing the price and providing money as the price has crept
upward. This is the definition of a ponzi scheme; pay off those who
get in first by those who come in later. Eventually you run out of
suckers and if you're big enough then you hope that your size will
keep you afloat: The exchanges declare a force du jour and you get
off the hook for all your worthless paper and mountains of incom-
prehensible derivatives. Unfortunately in this case the Chinese ap-
pear to own the bulk of these incomprehensible derivatives and have
already denounced them. (or at least granted exceptions to prose-
cution to entities which refuse to honor them).

Leverage works both ways. The issuer will have huge losses on even
small contracts if the price goes dramatically higher. There is no pro-
tection unless the regulators allow it. If they must take extreme means
to stabilize these markets then it's likely there will be extensive crim-
inal charges against those responsible.

I guess it's time for another round of huge bonuses since the gravy
train may be pulling out of the station.



<< <i>The amount of silver in the vault - except to the industrial enduser -
is totally irrelevant to the LONG bettor's goal in the transaction.
>>



This is the status quo.

The regulators apparently expect to end the status quo probably be-
cause the situation is becoming increasingly unstable. Most longs do
believe they own silver. Some are aware of the risk of a sharp price
increase but most are not. But all the longs believe they own silver and
almost all believe that they'll get their money back plus any profits. In
other words rather than buy silver which is messy and hard to store they
have bought paper trusting the integrity of the system and the bankers.
This is real silver demand that is met with growing mountains of paper
rather than metal.

Then there is the so-called "warehoused silver". Many people allow en-
tities like banks to keep their silver for them. They are even charged
storage fees but in some cases this silver simply doesn't exist. It is cov-
ered by silver contracts that are expected to increase enough to pay to
buy the silver for those individuals who wish to withdraw their own metal.

Sure for every long there's a short but for every long there's hardly any
silver and just a relatively few shorters who probably would be swamped
almost immediately if it weren't for their own actions of leaning against
the collapsing dike.

cladking

The problems with maintaining the status quo are enormous. It's not merely
the fact that we are constantly approaching the day that geometrically increas-
ing demand outstrips available supply but that suppressing the silver prices
hastens that day considerally. People simply consume more of things which
are cheaper. It is used more, wasted more, and lost more. Millions of people
have silverware or various pices of silver in their homes and this is always sub-
ject to being lost to fire and other calamity. 1% of such items are lost each
year and most are unrecoverable.

Silver is still used for low value items because the price is so low that the per
unit cost is insignificant. These end up in the waste stream.

We're consuming silver like it's the 19th century but we have very little left.

We need to conserve it.

Those who wish to try to make a killing should keep in mind that silver production
is still very high and will swamp demand if it pushes the price sufficiently high.
This will remain a somewhat volitile commodity for a good long while. Use com-
mon sense if you want to invest in it. I consider the metal an investment in the
ingenuity and technology of man. It will play a greater role going forward. How
this will affect the price remains to be seen but at this time it must surely be great-
ly undervalued.