JP Morgan’s Silver

JP Morgan and Silver.

JP Morgan has added about 50 million ounces of silver to its COMEX approved depository stock pile since 2011.

JP Morgan’s increase in its holdings coincides with large decreases in the silver stock piles of bullion banks HSBC and Scotia Moccata.

Does JP Morgan’s accumulation of silver mean they are trying to corner the silver market?

JM Bullion

UPDATE: JP Morgan and Silver- August 27, 2016

The Tiny Silver Market

Silver is a very valuable metal with many industrial uses. It is used in electronics, solar panels, tableware and medical equipment. Silver is also prized for its beauty and is used to fashion jewelry. Investment demand in the form of silver coins and ETF’s has soared since the financial crisis of 2008.

Sales of American Silver Eagles

American silver eagle sales 1986-2015

Sales of American Silver Eagles have skyrocketed during the years following the financial crisis of 2008 and hit a record of 44 million in 2014.

Sign Up For Updates Here!

Sales of Silver Coins from the Canadian, Chinese, Perth and U.S. Mints

Sales of silver coins from the Canadian Mint- silver maple leaf coins, Chinese Mint -silver panda coins, Austrian Mint- silver philharmonic coins, Australian Mint- silver coins and bars and the United States Mint - American silver eagle coins continue to grow and set records

Silver coin sales at the Canadian, Chinese, Perth and U.S. Mints have increased dramatically since 2008.

Silver Exchange Traded Fund Demand

Silver ETF demand chart

Silver ETF demand soared following the financial crisis of 2008. Silver ETFs now hold over 500 million ounces of silver.

Silver is rare.

Fewer than 900 million ounces of silver are mined each year. As silver is produced, it is consumed. Unlike the gold market where there are massive gold hoards at central banks and in private vaults, there are no major government silver stock piles and silver demand is met primarily by current mining production. According to the Silver Institute and the CPM Group, silver has been in a supply defict for the past few years.

Silver is cheap.

We have often remarked how cheap siver is in nominal dollars per ounce (under $16.50 an ounce at the time of this post) and in relation to the price of gold as measured by the gold silver ratio that is about 72 to 1 today.

At current prices, an entire year’s global silver supply can be bought for about $13-14 billion.

The Hunt Brothers recognized the value of silver and accumulated hundreds of millions of ounces in the late 1970’s before being driven into bankruptcy on Silver Thursday in 1980 by a change in COMEX rules.

Warren Buffet, an outspoken gold critic also once owned 130 million ounces of silver.

Now JP Morgan is acquiring a large amount of silver.

Is JP Morgan Trying to Corner the Silver Market?

Gold Core’s able precious metals analyst Mark O’Byrne has taken notice of JP Morgan’s silver holdings increase and has posed the question: “Is JP Morgan cornering the silver bullion market?

JP Morgan Silver Stocks

jp morgan silver stocks held in their depository

JP Morgan has increased its silver stock pile to well over 55 million ounces.

JP Morgan’s Accumulation of Silver Is More a Defensive Than Offensive Measure

From examining the chart above, it’s easy to discern the huge increase in JP Morgan’s 55 million ounce silver stock pile. Yet does such an large increase in silver holding signal JP Morgan’s intention to corner the silver market?

For starters, 50 million ounces is ten times less than the amount of silver that is locked in silver ETFs (JP Morgan is the custodian for SLV, the largest silver ETF) and less than 7% of the annual global silver mining production. JP Morgan would have to amass far more silver before they could be considered to be within striking range of cornering the silver market.

JP Morgan Acquiring American Silver Eagles?

Mr. O’Byrne cites respected veteran silver analyst Ted Butler’s contention that JP Morgan’s silver hoard is much larger, perhaps 350 million ounces and that JP Morgan is in a position to corner the silver market.

Earlier this year, Mr. Butler surmised that JP Morgan had been accumulating a large percentage of the record number of American Silver Eagles produced over the past few years. Given that the annual production of American Silver Eagles only represents a single digit percentage of the annual global silver mining production, acquiring large amounts of silver eagles would not be the most efficient way of cornering the silver market.

Further, buying millions of American Silver Eagles would not be a cost effective way of cornering the silver market. It is unlikely that JP Morgan would be acquiring small one ounce coins that the U.S. Mint sells at a $2 premium per coin (at $20 per ounce or lower such a premium would be in excess of 10% per ounce). Rather, JP Morgan would more likely buy “good delivery” large silver bars eligible for trading on COMEX. American Silver Eagles can not be traded on COMEX.

Is JP Morgan going to open a chain of retail coin shops to sell millions of American Silver Eagles at $150 each?

The probability that JP Morgan is attempting to corner the silver market is no more likely than the liklihood that COMEX is in danger of an “imminent” default– a prediction that has been bandied about for the better part of a decade.

JP Morgan’s increase in its silver stocks doesn’t necessarily mean they are trying to corner the silver market. An increase in their silver stock holding provides them with insurance against delivery requests on COMEX and gives them more leverage if they wish to increase their short position. In addition, some of the silver in JP Morgan’s depository belongs to clients, not JP Morgan.

The value of the silver market is small and if you believe the silver manipulation theories, JP Morgan can make more money selling paper silver futures contracts every day on COMEX than acquiring 800 million ounces of silver and then trying to sell it all on the market at a profit.

How Comex Works

COMEX is a place where traders without physical metal sell to traders who don’t want physical metal. That statement is a bit of an exaggeration. The value of the long and short futures contracts traded on COMEX, however, far exceed the amounts of physical metal that is available for delivery. COMEX is, in a sense, a fractional reserve metals trading system.

Silver contracts on COMEX are traded in 2,500 and 5,000 ounce increments. Silver must be .999 fine and stored with COMEX approved depositories of which JP Morgan is one. (see below for the amounts of silver held in some of the other approved COMEX depositories)

COMEX serves as a market primarily for traders looking for exposure to the price of silver, not for those looking to acquire physical silver. COMEX can be used by market participants to hedge their silver market risk or by traders to make profits by betting on the price action of silver. The largest traders on COMEX are the bullion banks themselves, some of which also act as approved COMEX depositories. Most silver contracts are rolled over or traded prior to their expiration and no delivery occurs.

Open Short Silver Positions on COMEX

silver short positions on comex

Delivery requirements of open silver short positions by the largest traders may require amounts of silver that they do not have. JP Morgan’s increase in the amount of silver held in its depository make a non-delivery event less likely.

Open Long Silver Postitions on COMEX

silver long positions on comex measured by global mining production

Silver long positions, while smaller than short silver positions, are still outsized compared to the amount of physical silver available to fulfill aggregate delivery requirements.

COMEX Silver Deliveries

Despite the massive volume of silver futures contracts traded on COMEX, only a relatively small amount of physical silver is actually delivered.

Chart showing slv holdings vs silver mining production and comex deliveries

Under 100 million ounces of silver were delivered on COMEX in 2014.

JP Morgan’s Participation in Comex

J.P. Morgan is one of the bullion banks that form the London Bullion Market Association that make a market in physical gold and silver. They include: Barclays, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, JPMorganChase, Merrill Lynch/Bank of America, Mitsui, Societe Generale, Bank of Nova Scotia and UBS. The LBMA in London is where the largest trades of physical gold and silver take place.

Buy Silver, Crash JP Morgan

Max Keiser astutely pointed out in 2010 that JP Morgan did not have enough silver in its depository to meet large requests for physical delivery in connection with their COMEX short positions. (see chart above) Mr. Keiser initiated a buy silver crash JP Morgan campaign on the theory that JP Morgan would not be able to cover their short positions.

JP Morgan’s addition of 55 million ounces of silver to its depository since 2011 make the inability to cover their short positions less likely.

Size of JP Morgan’s London Whale Fine

The total value of the record number of American Silver Eagles sold in 2014 was less than the amount of the fine that JP Morgan paid to settle the its London Whale case. The ill fated London Whale trade itself cost JP Morgan over $6 billion in losses.

jp morgan london whale vs ASE 2014

JP Morgan paid more to settle its London Whale case than it would have cost to buy the entire 2014 mintage of American Silver Eagles.

JP Morgan’s Fines In Relation to the Silver Market

JP Morgan has paid a staggering amount of fines since 2011. Clearly, JP Morgan has the financial wherewithall to corner the silver market. According to the Forbes list of the world’s wealthiest persons, there are also seventy seven individuals, including Vladimir Putin (net worth $15 billion), whose net worth is large enought to buy an entire year’s global silver mining production).

Capability, however, doesn’t equate to intent. Cornering the silver market would not be worth the trouble, especially when there is easy money for JP Morgan and multi billionnaires to make easy money elsewhere.

jp morgan fines vs silver mining prodution

The amount of fines that JP Morgan has paid to settle alledged wrongdoing dwarves the value of global annual silver mining prodution.

Other Bullion Banks Acting as Approved COMEX Deposotories and their Silver Stocks

Bullion banks HSBC and Scotia Mocatta act as COMEX depositories and also trade for their own accounts.


HSBC silver stocks

HSBC’s silver depository holdings have been cut almost in half over the past year. How much of JP Morgan’s newly acquired silver, if any came from HSBC’s stocks?

Scotia Mocatta

scotia mocatta silver stocks

Scotia Mocatta’s silver stocks have fallen by about 2/3 over the past two years.

Sign Up For Updates Here!

Other Approved COMEX Silver Depositories And Their Silver Holdings

CNT Depository

CNT depository silver stock piles

CNT has massively increased its stock pile of silver.


Brinks silver stocks

Silver held by Brinks has remained relatively constant over the past four years.

Delaware Depository

Delaware Depository silver stocks

Delaware Deository silver stock have also remained relatively constant.

*Registered available for delivery
Eligible not available for delivery

Get Free Updates From

Subscribe to and get the free In Case You Missed Itweekly email as well as updates and analysis on gold, silver, real estate and the economy.

Also get the free report “Twelve Key Differences Between Gold and Silver” when you subscribe.

Subscribe to for free to receive gold and silver updates.

World Gold Charts were produced by Nick Laid of Sharelynx and reproduced here with permission.

Further Reading:

Who are the U.S. Mint’s Authorized Purchasers

Comex Long and Short Positions March 2015

Gold and Silver Manipulation – Actual

Gold and Silver Price Manipulation – Suspected

The Gold Silver Ratio

Gold Suppy and Demand

Silver Supply and Demand

How Much is a Year of Silver Mining Production Worth?

Silver Thursday

Gold and Real Estate Are Assets, Not Investments

Please visit the Smaulgld Store for a large selection of recommended Kindles, books, music, movies and other items.

You can support by making all your Amazon purchases through the search widget below and by ordering your gold and silver by clicking on the JM Bullion, BGASC, Goldbroker, Golden Eagle Coin, Perth and Royal Canadian Mint ads on the site.

DISCLOSURE: Smaulgld provides the content on this site free of charge. If you purchase items though the links on this site, Smaulgld LLC. will be paid a commission. The prices charged are the same as they would be if you were to visit the sites directly. Please do your own research regarding the suitability of making purchases from the merchants featured on this site.

Chart Disclaimer: Information presented here has been obtained from a third party and is presented for information purposes only. Smaulgld can not and does not guarantee the accuracy or timeliness of the data displayed on this site and therefor the data provided should not be used to make actual investment decisions. You should always consult a professional investment adviser before investing in precious metals or any type of investment. You acknowledge that Smaulgld assumes no responsibility for the integrity of data on this site.

The content provided here is for informational purposes only. Making investment decisions based on information published by Smaulgld (SG), or any Internet site, is not a good idea. Accordingly, users agree to hold SG, its owner and affiliates, harmless for all information presented on the site. SG presents no warranties. SG is not responsible for any loss of data, financial loss, interruption in services, claims of libel, damages or loss from the use or inability to access SG, any linked content, or the reliance on any information on the site.

The information contained herein does not constitute investment advice and may be subject to correction, completion and amendment without notice. SG assumes no duty to make any such corrections or updates. As with all investments, there are associated risks and you could lose money investing. Prior to making any investment, a prospective investor should consult with its own investment, accounting, legal and tax advisers to evaluate independently the risks, consequences and suitability of that investment. SG disclaims any and all liability relating to any investor reliance on the accuracy of the information contained herein or relating to any omissions or errors and as such disclaims any and all losses that may result.

Post Navigation