What Drove Silver To $49 In 2011? And Could It Happen Again?

It’s fun. I know you’re a part of my site. I do those happy hours every couple of months. I missed the last beer with Turd. I’ll tell you what I’m gonna make sure I’m at the next one. I’m writing a note down and you can hold me to that. For everybody if you’re listening on my site we started doing this back in COVID days and we’d have zoom calls like everybody else and I just we’d all have a beer and on the zoom call you know people can type in and ask me questions and I’m whatever if you really want to know what I think about something okay I’ll be happy to tell you so anyway in this most recent call I went down this you know that recounting all of that from 2011 as I remember it.

I can’t remember everything that’s on my calendar even though I get the warnings but I remember what the hell happened in 2011 so I’m as I’m recounting this for everybody on that call I was like you know I should probably in case I just drop dead one day I don’t just take this to the grave because I don’t know I mean I probably and maybe I’m skewed and maybe my maybe my story’s wrong but I don’t know I think I know this probably there’s not a whole lot of people left. I love golden silver here so now that you’ve got us warmed up please continue okay so your role in all this my friend oh geez what did I do yes well but you did you played an important role in all of this in that you got to hold a Bart Chilton right before he dropped you know dropped dead when it what year was that when did he die that was a long time ago now 19 okay and I don’t know it would be unfair for me to characterize it as a deathbed confession but he was remarkably frank or maybe it was just that you actually asked him the questions that nobody ever asked him before but I shared with you and confirmed a lot of details that we always kind of wondered about right yeah remember the you know the did JP Morgan inherit Bear Stearns his short position and that kind of stuff right and maybe it was just that nobody ever thought to ask him because he was I think that was the case and interestingly if if you look at the original we reposted it later but if you look at the original one there was a comment from uh I believe Sherry Chilton I think that was his wife’s name but forgetting her that’s not the exact first name but someone using his wife’s first names made extensive comments saying the idea that this was a deathbed confession was false and she found it offensive so yeah I know for sure that was her I can’t say that but at least for context but anyway but he just he was very frank and forthright I mean he didn’t sense like he was trying to obfuscate and dance around and I mean he said he said directly he felt that you know the stuff should be known so it seemed like he appreciated that someone was asking about okay so um it could stop me if I’m like no no you didn’t like no Craig that’s not exactly how it went but whoever that was 2008 Bear Stearns goes to you and uh the CFTC goes to JP Morgan and says we’ve got this what he’s 20 25 000 contract short position in silver and you can have it we want you to take it but you’ve got to close it out and JP Morgan said they would by doing okay so far that how you remember Bart describing it yeah and then JP Morgan being the bankers that they are got in there and went hey wait a second we can make some money off of this and so they don’t do it they don’t close it out and they just keep it probably even made it larger you start chasing you know and you put even more shorts on to the point where it wasn’t an existential crisis but they were losing money and that last as silver starts to run you go back uh if you can pull it and I just because I remember this at the time I can’t pull them up say here’s the link but in April of 2011 that when we went from 38 to 48 that last I mean that’s 20 some odd percent in a month that was not the shoeshine boy and the taxi cab driver buying silver that was your short squeeze that was what was happening then was the commercial position was getting smaller and smaller they were being forced to cover they were forced to cover because they didn’t have any silver that they could deliver and so as price is going again you can see it in that chart uh back here and I’m pointing at it like anybody can see what I’m pointing at where’s where you’re going so as I mean it was 18 to begin the year and then went to 48 okay that was the old commercial short squeeze because JP Morgan had assumed that position they didn’t have any silver behind it and they got squeezed and then that’s when you had the mayday massacre and the five margin hikes in nine days and we all know what happened next what most people don’t know what happened next then is about the same time as this was all coming down rapid rubber stamp approval for JP Morgan to open their own COMEX vault that happened in May or June of that year they went from zero ounces and anybody can pull it up now and they haven’t added to it now in three or four years between 2012 and about 2018 steady three thousand contracts in this delivery month two thousand contracts at house I’m saying the house account of JP Morgan their proprietary account just kept taking delivery taking delivery of what you know I don’t know warehouse receipts or physical silver whatever but they went from nothing to 100 and whatever it is today 165 million ounces adding up the two categories I once the only real contact I ever tried to have with the CFTC I called them one day and said what’s going on here um and I had to leave that one third twice didn’t go too well from you yeah I’d leave a voicemail some guy actually called me back uh and said look there is bona fide rest assured this is all bona fide hedging because I somebody had taken delivery of way more than what the front month position limit is off of Dodd-Frank like what are you doing how can you this is all bona fide hedging which then got me thinking okay if you’re JP Morgan and you almost just got you know you lost a lot of money they were losing a lot of money in in uh April of 2011 so they said okay you know what we’re going to do we’re going to take some time we’re going to build up our own stockpile of physical so that this can’t happen again call it 150 million ounces that’s at 5 000 ounce of contract that’s 30 000 contracts that they can roll from May to July to September to December to March to May to July to September all these different front months 30 000 that they can have as a position and they can look at the CFTC and say well look we have 150 million ounces we’re just hedging okay and so if anyway getting to answer your question now Chris um if it ever gets when it ever gets sideways again you know because of physical demand you know the Samsung battery 500 million ounces a year or what whatever I don’t whatever JP Morgan considering continue to do this layer on the shorts take them off layer on the shorts take them off but if they ever get called to the carpet again they can just deliver the metal and they no longer have this risk you know price going to 70 and 80 dollars and they’re just short 30 000 contracts 150 million ounces and every dollar is 150 million bucks and it goes up 40 dollars as six billion whatever that I don’t even I lost track in too many zeros but you get the idea
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