in Investment, Silver

Silver might be the best investment opportunity of our life time.

Silver can give Bitcoin like returns of 1,000%. Here’s why?

There are 6 reasons for that and it all comes down to the JP Morgan bank.

1. JP Morgan manipulation and silver certificates
No one knows this, but JP Morgans holds at least 675 million ounces[1] of the total 1.5 billion silver ounces that currently exist, according to respected silver analyst Ted Butler.

This would put the amount of Silver that JP Morgan controls to around 45% of all the silver that exists above ground, which would make JP Morgan the most powerful player in the global silver trade by a wide margin.

This is also six times as much metal as bought by the Hunts or Berkshire Hathaway.

Newer estimates put JP Morgan holdings at 1 Silver bullion ounces out of 1.5 billion total Silver ounces that exist ground, which would make JP Morgan the owner of 66% of all available Silver above ground, which would result in an unprecedented run on Silver[2].

However, how is it possible that JPMorgan, could acquire such a massive quantity of physical silver, with no general awareness that it was doing so? More importantly, how did they do it while silver prices steadily declined over the entire time of JPM’s accumulation?

For example, 150 million ounces of silver were acquired by JPMorgan through buying 100 million Silver Eagles from the U.S. Mint, plus another 50 million Silver Maple Leafs from the Royal Canadian Mint. All these coins were melted into industry standard 1,000 ounce bars since as there’s no way anyone to unload 150 million Silver Eagles and Maple Leafs.

More silver bullion than we know?

JP Morgan issued a massive amount of silver certificates and derivatives, which satisfied the market demand for silver even though those certificates were not backed by physical silver.

It is estimated that there are 100 Silver ounce certificates for every ounce of Silver. This means, the price of physical Silver should be 100 higher than it is right now in theory and possibly 30 times higher in practice, because the markets allow for some non-backed assets as long as the ratio remains reasonable. However, 100:1 ratio is not reasonable and will go back to the mean.

Here is the timeline:

Source: What is wrong with silver? This is the question everybody is asking[3]

To what end are JP Morgan pursuing this path of silver hoarding? Butler again:

The intent is to sell at as large a profit as possible. No one buys any investment asset with the intention of losing money, least of all JPMorgan. They didn’t spend the last seven years accumulating physical silver to sell that silver at anything but the highest price possible. I can’t tell you when JPM will let the price of silver fly, but I am certain that that day is coming.

The fundamental reasons for our very bullish outlook on silver is very reasonable. There are increasing global macroeconomic, systemic, geopolitical and monetary risks. Silver’s historic role as money and a store of value has already been identified time and time again in the past and history is repeating itself. It is also worth considering the declining and very small supply of silver, not to mention increasing investment demand from one of the world’s most powerful banks and other contrarian investors.

We should see JP Morgan’s accumulation as not just a sign to buy physical silver but also that the next financial crisis is coming and its time to diversify into physical gold and silver bullion coins and bars.

JPMorgan is using this financial crisis to begin pulling off the last act of their manipulation, making a killing from it. They did this by getting rid of their silver short positions in both gold and silver in recent days. They are now net long in both silver and gold. And, even with the physical shortage of silver and gold, JPM looks like they will continue to go even further into their net long position in the coming days and weeks[4].

This happened because large silver traders saw what was happening in the gold market and rushed to move around their silver positions before it happened in that market.”

The problem with all this, of course, is that it’s artificial price manipulation.

The silver market has been closely monitoring JP Morgan’s activities for some time. Since April 2011 the powerful bank has been accumulating silver at quite a rate.

Why would JP Morgan be stockpiling silver? It may be the case that they are anticipating geopolitical and financial turmoil?

This would not come as a surprise to JP Morgan shareholders who have previously received such warnings from CEO Jamie Dimon who has stated ‘there will be another crisis’.

Dimon has even admitted that the trigger for the next crisis may not be the same trigger as the last one – but there will be another crisis:

“Triggering events could be geopolitical (the 1973 Middle East crisis), a recession where the Fed rapidly increases interest rates (the 1980-1982 recession), a commodities price collapse (oil in the late 1980s), the commercial real estate crisis (in the early 1990s), the Asian crisis (in 1997),so-called “bubbles” (the 2000 Internet bubble and the 2008 mortgage/housing bubble), etc. While the past crises had different roots (you could spend a lot of time arguing the degree to which geopolitical, economic or purely financial factors caused each crisis), they generally had a strong effect across the financial markets.”

This is why the bank is often compared to the Hunt brothers when it comes to cornering of the silver market, but in truth the bank has been much savvier and is set to make far more. After all, the Hunt’s accumulated primarily paper silver, JP Morgan are going after the hard stuff. Had the Hunt brothers bought more physical silver bullion and less paper silver in the form of futures, they would likely have made even more money than they could imagine[5].

This same kind of manipulation happens in every silver market cycle. First it was the Hunter brothers. Butler also says that JP Morgan is responsible for the ‘third great investment accumulation of physical silver’.

The first two were

First cycle – 1973 to 1980: 100 million oz silver bullion (plus 100 million oz of backfiring paper silver leverage)

A few second-generation wealthy trust fund brothers in the 1970s supposedly drove silver to a then-record high price of $50 oz USD. Of course, they were not alone, and the long Hunt Brothers story[6] is much more complex and exciting than that.

Likely mostly driven by inflationary price fears, the facts are that the Hunt Brothers amassed 100 million oz[7] of physical silver bullion holdings throughout the decade.

Source:[8]

Second Cycle – 1998 to 2006: Warren Buffett, Charlie Munger: Berkshire Hathaway Silver buying 129.7 million oz silver bullion

Berkshire Hathaway under the directive of Charlie Munger & Warren Buffett, bought their then record-sized 129.7 million ounce[9] silver stack in 1998.

In 2006 the holding company allegedly sold its silver bullion holdings to start the underlying beginning silver position[10] of the still most popular silver ETF traded today (SLV).

It is also interesting to note that during this similar timeframe, Warren Buffet’s buddy Bill Gates[11] also made an investment play in silver through PAAS silver mining shares, which he bought in 1999 and owned over a similar timeframe into 2006.

It looks like Gates’ silver playback then perhaps netted him over USD 50 million or a tripling in nominal values invested.

Source: Silver Prices – 100 Year Historical Chart[12]

Now, we are in the third cycle, the JP Morgan cycle, the evidence is abundantly clear.

“It seems that JPM has entered the final stages of its grand plan and is ready to drop the hammer on those who got caught short at the end.

When the hammer does come – and it certainly will, probably soon – the losses of the big commercial shorts will only contribute to the gold and silver price exploding and JPMorgan will finally have their last laugh”, Silver analyst Anthony Anderson stated 3 months ago[13].

2. Corona Crisis
In economic crises, people always flock to precious metals. This is one of the laws of what human beings do with their finances in times of crisis.

Now, we are facing possibly the largest economic crisis since World War II as explained by Angela Merkel[14], a run on precious metals is quite likely. It has already started for Gold.

Gold has just broken its previous ATH at 1,700€ and Silver has not moved much yet, even though Silver correlates strongly with Bitcoin.

Precious metals are always a safe haven in times of economic crisis (now).

That’s why gold just hit new ATH, because there has been a gold run for the last couple of months, which always happens during financial crises.

Go figure where people will move their money to.

This is now already happening. On March 12, the United States Mint said it temporarily sold out of American Silver Eagle bullion coins. “Our rate of sale in just the first part of March exceeds 300% of what was sold last month,” the Mint said.

Sales of the one-ounce American Silver Eagle coins were at 3.1 million so far this month, as of Wednesday, compared with total sales of 650,000 in the month of February[15], which is an increase of 400% just when the Corona crisis started. Coincidence? Surely not.

3. Store of value
Silver is a proven store of value and has been for thousands of years due to the following 4 reasons.

  1. Position as a status symbol through use in jewelery and investment
  2. Limited supply
  3. Growing mining costs per gram of silver
  4. Large demand by the industry of 56%[16], nearly double as much as that of gold with 37%

Here a few examples:

  1. A cell phone contains about one-third of a gram of silver, and cell phone use continues to climb relentlessly worldwide. Gartner, a leading information technology research and advisory company, estimates a total of 5.75 billion cell phones will be purchased between 2017 and 2019. That means 1.916 billion grams of silver, or 57.49 million ounces, will be needed for this use alone!
  2. The self-heating windshield in your new Volkswagen will have an ultra-thin invisible layer of silver instead of those tiny wires. They’ll even have filaments at the bottom of the windshield to heat the wipers so they don’t freeze to the glass.
  3. The Silver Institute estimates that silver use in photovoltaic cells (the main constituents of solar panels) will be a whopping 75% greater in 2018 than it was just 3 years earlier.
  4. Another common industrial use for silver is as a catalyst for the production of ethylene oxide (an important precursor in the production of plastics and chemicals). The Silver Institute projects that due to growth in this industry, 32% more silver will be needed by 2018 than what was used in 2015.

But that’s not the whole story. Unlike gold, most industrial silver is consumed or destroyed during the fabrication process. It’s just not economic to recover every tiny flake of silver from millions of discarded products. As a result, that silver is gone for good, and limits the amount of supply that can return to the market through recycling.

So not only will the ongoing growth in industrial uses keep silver demand strong, millions of ounces cannot be reused.

4. The Gold to Silver price ratio
The second strong reason that indicate a strong increase in Silver prices is the ratio of Gold to Silver price ratio is at its all time high at 110:1 even though it should be at around 15:1[17], since Gold is only 15 times scarcer than Silver. In fact, it should even be less than 15:1, because there is much more demand for Silver than Gold.

Right now the gold/silver ratio is oscillating around 100:1, which is much higher than the five-year average of about 50:1, a sign which is often the “precursor to a Silver bull run,” Silver Mines Ltd. Managing Director Anthony McClure told the Denver Gold Forum in September.

5. Demand for Silver is rising and rising while supply is falling and falling

Here is the demand for Silver over the last 50 years. It is rising and rising. [18]

The increased demand comes from renewable energies among others, which are already responsible for 13% of the annual silver demand.

and China itself is responsible for 30% of the annual demand for Silver.

All the while, Silver production has been falling and falling for 5 years now. This is possibly also due to JP Morgan’s silver certificate manipulation, which artificially suppressed the price of Silver, putting many Silver mines out of business, and thus suppressed Silver production.

6. Price stability of precious metals
Last but not least, the chance for precious metals to crash is near zero. The biggest crash that precious metals ever experienced in the last 20 years was of 40% over the span of 4 years. That’s it.

Gold has grown by 50% back to all-time-high of $1,800 over the last 1.5 years.

In the Corona dump, Gold only dropped by 15% while everything else dropped by 40% or more.

Source: Gold Price Chart, Live Spot Gold Rates, Gold Price Per Ounce/Gram[19]

Silver is more volatile than that, but its price stability is high since its price stability is tied very closely to gold.

This makes precious metals very attractive in times of crisis and uncertainty.

However, be aware that there is a chance that when the next stock market crash happens, Silver will go down short-term as well.

Conclusion

  1. JP Morgan possibly owns 1 billion of all the available 1.5 billion Silver ounces that exists, that’s 2/3 of all the available Silver
  2. We are now facing the biggest crisis in a century
  3. Silver has been a store of value in times of crisis for thousands of years and has massive industry demand that consumes 56% of all annual newly mined Silver.
  4. Supply of Silver is constantly falling while demand is constantly increasing without any demand for an investment.
  5. Everybody wants Silver, but there is not enough for everyone. This will inevitably lead to an increase in price.

JP Morgan is the main actor in the price manipulation of Silver. They aren’t doing anything without making large profits.

They actually don’t need to do anything and the Silver price would increase due to higher demand than supply. However, they can decide to stop issuing silver certificates and several more things that would make the silver price surge.

They will probably do this within the next year or two. The Corona crisis is the perfect opportunity for them.

However, what kind of returns can Silver bring?

  1. If it only goes back to its 15:1 Gold/Silver ratio, the returns would be 250%
  2. If Gold doubles in the same time, it would be 500%
  3. If the Corona crisis hits really hard and Gold triples, it would be 750%
  4. If JP Morgan is set on making the maximum profit out of their 10 year Silver heist, 1,500% returns would also be possible

When will this all happen? Within 3–5 years this is all possible depending on how bad the Corona crisis hits.

References

[1] The Last Great Silver Buy

[2] JP Morgan Now Bullish On Silver With 1 Billion Ounces and Gold With 25 Million Ounces

[3] What is wrong with silver? This is the question everybody is asking

[4] Silver Prices To Surge – JP Morgan Has Acquired A “Massive Quantity of Physical Silver”

[5] Is Silver a Good Investment? Here Are The Facts

[6] 1980 Hunt Brothers Silver Bailout & Scapegoating

[7] Analysis: Silver case hard to prove, despite Hunt Bros

[8] https://ep60qmdjq8-flywheel.netdna-ssl.com/wp-content/uploads/2011/05/hunt-brothers.png

[9] Investment In Silver

[10] https://www.resourceinvestor.com/2006/05/06/warren-buffett-sells-family-silver

[11] James Anderson on Twitter

[12] Silver Prices – 100 Year Historical Chart

[13] JP Morgan Now Bullish On Silver With 1 Billion Ounces and Gold With 25 Million Ounces

[14] Marius Kramer’s answer to Are we going to see a stock market crash in July or August worse than the March 2020 crash?

[15] Bullion Sales | U.S. Mint

[16] Why Buy Silver? 10 Reasons to Invest in Silver Now (w/ Charts)

[17] Silver has almost never been this cheap – but should you buy? | MoneyWeek

[18] Silver in Charts: Supply/Demand Crunch After Years of the Opposite[19] Silver Spot Price Live Chart

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