| Anyone who has followed silver closely the last few | | | | thought; the economy was (and still is) in trouble. Silver |
| years has probably read of the alleged manipulation of | | | | is an industrial metal in high demand, but in short supply. |
| the price of silver. Investigators claim that JP Morgan | | | | A return to the long-time historical gold-to-silver price |
| has been responsible since March of 2008. It was in | | | | ratio of about 17-to-1 would increase the production |
| March of 2008 that JP Morgan took over the failed | | | | cost, and therefore sales price, of a wide variety of |
| Bear Stearns bank at the request of the U.S. | | | | products manufactured in the United States. |
| government. So, JP Morgan inherited the massive | | | | However, just this past week, JP Morgan announced |
| short position from Bear Stearns. On the very day | | | | that it will be closing its proprietary commodities trading |
| Bear Stearns failed, silver hit a multi-decade high of $21 | | | | desks. And last Thursday the price of silver again hit |
| per ounce. Those within the silver investing community | | | | $21 an ounce. As the twenty commodities traders are |
| who knew of Bear Stearns' huge short position had | | | | laid off and operations shut down over the next few |
| high hopes that JP Morgan would dissolve the massive | | | | months, will the short positions in silver be covered? |
| short position and let the price of silver find its | | | | Nobody knows for sure (except maybe a couple of |
| free-market price level. The expectation is that, in a | | | | people at JP Morgan). But given the one-week 5% rise |
| market free of manipulation, the price of silver would | | | | of the price of silver, some of us silver investing |
| eventually move back in line with its long-time ratio of 1 | | | | addicts, including yours truly, are making small bets that |
| 15th to 1/20th the price of gold. | | | | the short positions will be covered. |
| But it didn't happen. Shortly after the takeover by JP | | | | If JP doesn't try to push the price of silver down in the |
| Morgan, the price of silver pulled back - and pulled | | | | next four weeks, I would take that as a very good |
| back dramatically. It pulled back from a high of $20.92 | | | | sign that the short positions will be phased out. And |
| (London) March 17, 2008 to a low of $9.17 in Nov 2008. | | | | then I would consider raising my bet. With silver hitting |
| that is a 56% pullback. Gold also pulled back from an | | | | $21 and gold hitting $1,280 last week, it still takes 61 |
| intermediate high of $1,011 in March of 2008, to a low | | | | ounces of silver to buy an ounce of gold. that is still |
| of $713 in November; a pullback of only 29%. | | | | almost four times the historical average. |
| Why the disparity? The serious silver investing | | | | Some precious metals analysts are predicting a |
| community hypothesized that the government had | | | | pullback in the price of gold; to perhaps as low as |
| "encouraged" JP Morgan to maintain the massive short | | | | $1,050 an ounce. However, if gold does pull back to |
| position. A few cried foul, but nobody was listening at | | | | $1,050 an ounce, a historical 17-to-1 ratio of the price of |
| the time. Why would the government encourage a | | | | gold to the price of silver would put the price of silver |
| manipulative short position be maintained? Here is one | | | | at about $62 an ounce. |