Not a Good Time to be Short on Silver


"JPM lawsuits have a larger chance of success than they did a year ago."

The pressure on silver shorts has been relentlessly increasing. On the heels of CFTC's statement of intention to enforce antitrust regulations in the silver market, two lawsuits were filed against JPM and HSBC for manipulating the silver price. With the testimony of whistleblower Andrew Macguire and the admission of fraudulent activity in the silver market by CFTC Commissioner Bart Chilton, these lawsuits have a much larger chance of success than just a year ago.

One of those lawsuits is seeking group or class action status if enough investors sign up.

While lawyers and regulators are pressuring the banks by taking legal action, suffering for the silver shorts is just beginning. Whether or not the plaintiff's prevail in their legal actions, evidence that JPM and other banks have cornered themselves into enormous naked short positions on physical silver is coming to surface.

Sprott Asset Management has announced that it is planning to raise $500 million for a publicly traded silver ETF that will only invest in physical bullion trading under the symbol PSLV. Sprott already has a similar gold ETF that trades at a large premium to the price of gold—given Sprott's solid record, there is a possibility of mass redemption from the questionable SLV ETF by investors who reallocate into PSLV.

Demand for physical silver has increased such that the U.S. Mint announced on September 30th that it will increase its premium for silver eagles by a third.


Over the last few weeks, silver has oscillated between $23 and $25 as the commercial shorts have been thrashing in an attempt to find a weakness in bids. The $2 correction may already be over.

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