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Edmund Law
2nd December 2009, 18:08
There was a lot of publicity today about the decline in JP Morgan shares. They are probably being shorted which is ironic as they are the major silver short (the wheels of God grind slow but they grind exceeding small). The concern is they face an unspecified 'derivatives' bill of several billions (maybe the cost of covering their silver short or its insurance? .....this could be it folks!)

ccjoe
2nd December 2009, 18:43
There was a lot of publicity today about the decline in JP Morgan shares. They are probably being shorted which is ironic as they are the major silver short (the wheels of God grind slow but they grind exceeding small). The concern is they face an unspecified 'derivatives' bill of several billions (maybe the cost of covering their silver short or its insurance? .....this could be it folks!)

Please explain in lay terms? Thanks?

ryshay
2nd December 2009, 18:49
There was a lot of publicity today about the decline in JP Morgan shares. They are probably being shorted which is ironic as they are the major silver short (the wheels of God grind slow but they grind exceeding small). The concern is they face an unspecified 'derivatives' bill of several billions (maybe the cost of covering their silver short or its insurance? .....this could be it folks!)

Great post!

http://www.bloomberg.com/apps/news?pid=20601103&sid=aV8Hy1d1ENAM

Dec. 2 (Bloomberg) -- Revenue at JPMorgan Chase & Co (http://www.bloomberg.com/apps/quote?ticker=JPM%3AUS)., the second-largest U.S. bank, may drop by as much as $3 billion should most derivatives trades be moved to exchanges, a Sanford C. Bernstein & Co. analyst said.


JPMorgan, which had $77.3 billion in net revenue in the first nine months of this year, is among firms that face new regulations as Congress considers legislation that may restrict trading in the contracts. The proposals generally would require dealers and large investors to trade the most common derivatives on exchanges or regulated trading platforms.
JPMorgan “sees the largest risk from legislation mandating that all derivatives be traded on an exchange as opposed to through the OTC market, limiting the company’s ability to create customized products,” McDonald wrote, referring to the over- the-counter market. He declined to comment beyond the note.

But if I know Jamie Dimon, he won't go down without a fight! Watch the left hook, silverbugs!

http://dealbreaker.com/2009/06/22/Jamie%20Dimon-thumb-150x204.jpg

ccjoe
2nd December 2009, 19:00
Great post!

http://www.bloomberg.com/apps/news?pid=20601103&sid=aV8Hy1d1ENAM

Dec. 2 (Bloomberg) -- Revenue at JPMorgan Chase & Co (http://www.bloomberg.com/apps/quote?ticker=JPM%3AUS)., the second-largest U.S. bank, may drop by as much as $3 billion should most derivatives trades be moved to exchanges, a Sanford C. Bernstein & Co. analyst said.


JPMorgan, which had $77.3 billion in net revenue in the first nine months of this year, is among firms that face new regulations as Congress considers legislation that may restrict trading in the contracts. The proposals generally would require dealers and large investors to trade the most common derivatives on exchanges or regulated trading platforms.
JPMorgan “sees the largest risk from legislation mandating that all derivatives be traded on an exchange as opposed to through the OTC market, limiting the company’s ability to create customized products,” McDonald wrote, referring to the over- the-counter market. He declined to comment beyond the note.

But if I know Jamie Dimon, he won't go down without a fight! Watch the left hook, silverbugs!

http://dealbreaker.com/2009/06/22/Jamie%20Dimon-thumb-150x204.jpg

Anyone explain what this means?????????????? to silver?

ryshay
2nd December 2009, 19:11
Anyone explain what this means?????????????? to silver?

It does not mean anything yet--we already know that the Gary Gensler & CFTC are planning to introduce much stricter position limits in "commodities of finite supply".

Now, Congress is considering legislation that will force JPM and other banks to get out of the largely unregulated OTC market. This means that if JPM is short 200m oz of silver in the OTC market, then they need to move that position into the regulated markets like the COMEX. BUT--JPM is already way above the position limit at the COMEX on silver which is 6000 contracts. I think JPM has about 40K silver contracts on the COMEX!

So, how could JPM move these silver short positions from the OTC markets to the COMEX, when they are already way over their position limit?

Personally, I am waiting to see what the CFTC decides to do about position limits in silver before I get too excited.

But the CFTC decision and pending OTC Congressional legislation could potentially deliver a one-two punch knockout to JPM.

JPM will survive as a bank, though--they will just take a loss on those ridiculous short silver positions it has been building up, potentially.
Silverbugs are gonna party like it's 1999.

JPM is pretty powerful though...not to mention they are a part-owner of the Federal Reserve, so I wonder how JPM is going to get out of this jam...

wdwexe
2nd December 2009, 19:14
CCJoe, read the archived articles from Ted Butler. You know what derivitives are? How creative the banks have become bundling up garbage and selling it in a package that they don't call garbage. JPM shorts silver in huge #s generally keeping the price per oz down. Trying to lately. If they don't the lose the bet, but oh well, the fed will just print them some more FRNS at our expense.

ccjoe
2nd December 2009, 20:54
Thanks:)
Like the phone, even though I have NO clue how it works, as long as I can talk on it.
I have NO idea about your posts but I have 1/3 ton of .999 so I guess that's good and I guess I may be right saying 100 by next year and 300 by 2012
I hear and read Ted all the time but like Latin that I flunked, I don't understand that aspect of silver:(

tim
2nd December 2009, 23:41
if jp morgan is short 200 million oz ...they may buy call options for 300 million oz say around @40 strike price........... they cover their future shorts...silver shoots to 60 per oz ... presto they lose all theway UP TO 40 ON 200 MILLION... THEY MAKE ON 300 million OZ FROM 40 TO 60 do the math.......... they will find a way to make or break even on the deal.... bsides they have the monopoly money, they will print more if they need it
200 million at 20 per oz to 40 oz lose 4,000,000,000,
300 million at 40 per oz to 60 profit 6,000,000,000.
net 2,000,000,000.
assuming they buy back contract futures and out of the market at 40

ryshay
3rd December 2009, 00:00
if jp morgan is short 200 million oz ...they may buy call options for 300 million oz say around @40 strike price........... they cover their future shorts...silver shoots to 60 per oz ... presto they lose all theway UP TO 40 ON 200 MILLION... THEY MAKE ON 300 million OZ FROM 40 TO 60 do the math.......... they will find a way to make or break even on the deal.... bsides they have the monopoly money, they will print more if they need it
200 million at 20 per oz to 40 oz lose 4,000,000,000,
300 million at 40 per oz to 60 profit 6,000,000,000.
net 2,000,000,000.
assuming they buy back contract futures and out of the market at 40

Works in theory, but I understand that the options market is simply not big enough to support this kind of massive position. The options market is tiny given JPM is short 30% of the world's annual production. Remember, for every call option you buy, you must find someone to write it (for every long option you must find someone willing to take the opposite position). Know anyone that is willing to write call options on 300m oz of silver? I certainly don't. The miners are de-hedging their books, so not them. No one has significant stockpiles of silver lying around nowadays. The options market is just too small.

JPM is painted into a corner. And you know how a cornered dog fights...
Got silver?

SilverLite
3rd December 2009, 01:16
Works in theory, but I understand that the options market is simply not big enough to support this kind of massive position. The options market is tiny given JPM is short 30% of the world's annual production. Remember, for every call option you buy, you must find someone to write it (for every long option you must find someone willing to take the opposite position). Know anyone that is willing to write call options on 300m oz of silver? I certainly don't. The miners are de-hedging their books, so not them. No one has significant stockpiles of silver lying around nowadays. The options market is just too small.

JPM is painted into a corner. And you know how a cornered dog fights...
Got silver?
I do know a little about JPM and believe me they will fight...

But the nice thing is that us silver folk will do just fine... :)

tim
4th December 2009, 00:31
hmmm rshay u have a point in regard s to the option market being a small regulated market... BUT.. lets think like central bankers for a moment WE have no rules thats for the people......lets go to the otc markets and derivitives and swap with other central banks ill be JPM for a moment and sell /swap some spreads or call options with japans central banks that allow us both to win win...japan will selll me those calls... as the silver rises i get out from my short positions and make some profit as japan needs to cover their losses on the calls they can have the cental bank of japan print more yen to purchase the dollar to cover the trade and support the dollar .............????????????????? see the potentiol bullshit that can be made when u are a central bank>?? AND ITS ALLLLL LEEGAALLL