Cutting to the (JPMorgan) Chase

Posted by on September 16th 2011 in CFTC, China, Federal Reserve, General Economy, Gold, India, JPMorgan, Monetary Policy, Short Sellers, Ted Butler, Wall Street | Be the first to comment!

Following a report that HSBC was dropped from a silver price-fixing lawsuit, leaving JPMorganChase as the only bank defendant in the case, an updated complaint includes allegations that “MorganChase regularly engaged in uneconomic trading activity in silver whose only purpose was price manipulation,” and, that it “used ‘fake’ and ‘spoof’ trades to manipulate prices downward, particularly in advance of contract expiration dates, when MorganChase held put options, which became more valuable as the price of silver was driven down.”

Ted Butler cited JPMorgan in his newsletter this week, pointing out that “The most salient feature to the silver paper trading mechanism is that the short side of the derivatives equation is extremely concentrated, while the long side exhibits very little indication of concentration. In other words, the silver longs are diverse and unrelated to one another. This is the hallmark of a free market. The short position is dominated by large financial institutions, led by JPMorgan, that are few in number but hold very large positions; the very definition of concentration. This is as far from a free market as it gets. Further, the shorts appear to act collusively, generally buying and selling in unison.” (scroll down at link for longer excerpt)

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