JP Morgan Chase – Manipulating Silver Prices

So we all know Chase Bank is run by unethical individuals that only care about increasing the bottom-line, regardless of how it affects their customers. However, now it appears that they are actually participating in a grand criminal conspiracy to manipulate the price of silver and artificially control the market for the precious metal. That takes them out of the league of shady companies that don’t care about their customers, and puts them in the class of a criminal enterprise like what Bernie Madoff ran for years.

Silver prices have been skyrocketing lately. The price has gone up over 80% in the last 6 months alone. It’s normal for precious metal prices to go up as the economy weakens – and this is a textbook example of that, but these increases far outstrip what normal economic activity would account for. In fact, the last time we saw abnormal increases in silver like this were when the Hunt Brothers cornered the market – something that was illegal and lead to millions of dollars in fines and lawsuits. So what do we owe this latest market manipulation to? JP Morgan Chase, of course!

JP Morgan Chase bought Bear Stearns in March of 2008, and as a result they inherited an enormous “short” position on silver that they had to somehow not lose Billions of dollars on. To keep things simple, a “short” is basically a bet that the price of something will go down by a certain date. For instance, if I thought the stock for Chase Bank would go down over the next month, I could buy a 30-day option to short the stock, and if the price went down I could make a nice profit. However, if the price goes up I would lose A LOT of money.


As we all know, the economy sucked in March of 2008, just like it sucks now. When the economy sucks, precious metal prices generally go up as people lose faith in the value of the dollar. So what do you do if you find yourself the proud owner of an enormous bet that the price of silver will go down, when all economic indicators point to the price of silver going way up? Well you use your enormous pools of wealth and political connections to manipulate the prices long enough to make a profit of course! Apparently, JP Morgan Chase controlled at one point, up to 85% of the silver market and as a result supply and demand was artificially controlled to deflate the price of silver, thereby making their bets payoff. According to this lawsuit against Chase Bank recently filed, Chase made Billions of dollars in illegal profits as a result of this scam between March of 2008 and June of 2010.

Once word got out about what they were doing, the price of silver began to skyrocket, as you can see in the chart below. Andrew Maguire, a 40-year industry veteran came forward and told how the scam was being operated. Shortly after he came forward, he and his wife were sent to the hospital by a suspicious hit-and-run driver that got off with a slap on the wrist due to some secretive back room negotiations. That sort of thing doesn’t just happen in the movies apparently.

Once the illegal scam became known in March of 2010, Chase (and HSBC who had since joined in on the fun) began to sell off approx. 1/3 of their short positions, which then allowed the price of silver to naturally go up. However, they still hold Billions of dollars in short positions on silver, and with the price going up the way it has, would stand to lose Billions. Of course, since they’re classified as “Too Big To Fail” by the Government, any losses they incur will in all likelihood be covered by taxpayers.

All of this has lead to an active campaign by some to try and bankrupt JP Morgan Chase by buying and taking physical possession of silver and keeping it under your mattress like the old days. The theory is that an increase in demand will allow the price to continue to rise so that Chase is stuck holding these short positions which will cost them Billions of dollars and could bankrupt them. Of course, we know the US Government will not allow Chase to go bankrupt, but we can always dream can’t we?

16 Comments

  1. fonestar April 5, 2011
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  5. admin April 21, 2011
  6. Chase Rep May 13, 2011
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