Silver Trading Gets Much More Interesting

Tim Iacono

This story has the potential to turn into something quite significant as it has long been believed that JP Morgan has depressed the price of silver through massive short positions that grew even larger after the early-2008 Bear Stearns acquisition.

Feds probing JPMorgan trades in silver pit

Federal agents have launched parallel criminal and civil probes of JPMorgan Chase and its trading activity in the precious metals market, The Post has learned.

The probes are centering on whether or not JPMorgan, a top derivatives holder in precious metals, acted improperly to depress the price of silver, sources said.

The Commodities Futures Trade Commission is looking into civil charges, and the Department of Justice’s Antitrust Division is handling the criminal probe, according to sources, who did not wish to be identified due to the sensitive nature of the information.

The probes are far-ranging, with federal officials looking into JPMorgan’s precious metals trades on the London Bullion Market Association’s (LBMA) exchange, which is a physical delivery market, and the New York Mercantile Exchange (Nymex) for future paper derivative trades.

JPMorgan increased its silver derivative holdings by $6.76 billion, or about 220 million ounces, during the last three months of 2009, according to the Office of Comptroller of the Currency.

Recall that, in the recent CFTC hearings on metals markets and the somewhat ugly aftermath in the gold and silver community related to the inner workings of futures markets, this was the one major issue that remained – that JP Morgan basically controls the silver price.