Tuesday, February 28, 2012

Silver Exposed

Silver Exposed

A massive scheme involving powerful banks… 
secret informants… perhaps even the 
federal government… is converging right now… 

And it's about to push silver past $200… 

By Peter Krauth.
Chief Resource Strategist 
The Money Map Report 

Most people have little idea what's been going on behind the scenes in the silver market. 

But as a global resource specialist, I've been rubbing shoulders with the speculators… miners… traders… and "insiders" who set and move the price for metals like silver for over 30 years. 

The event I'm about to tell you about is so outrageous, it will raise the hairs on the back of your neck. 

Yet it's creating an opportunity of unprecedented size – at a time when few opportunities exist. 

It stems from a massive scheme that appears to involve traders… investment banks… and, as some suggest, even the COMEX and the federal government itself. 

It's so big, it could put the Hunt Brothers attempt in 1973 to actually "corner" the silver market to shame. 

Once you see the details of this current event, you'll understand just how big this opportunity is. 

And it was all triggered by a trader named Andrew Maguire… his testimony to the CFTC… and a class-action complaint against the biggest financial players in the silver market. 

It was filed as Case No. 8157...

This situation could be ripped from the pages of a Hollywood thriller, except for one difference. This story is not fiction… and it's happening now. 

It all starts with the increasing scarcity of silver. According to some, the world has consumed so much silver in the past few decades that supply has collapsed by 95%
The supply of silver has not been as low as
it is today since the year 1300 A.D.

At the same time, demand for silver is increasing at an alarming rate. 

And yet… the shocking truth is that the price of silver has dropped like a rock. 

It defies all reason… because reason and fair trade have nothing to do with it… 

And it raises questions like… 
Is the price of silver being kept artificially low? Why is this happening? Is there a collaborated effort?

Nobody admits to knowing every last detail, but I'll try and sort it out for you here. 

And amid all the questions, one thing is clear… it's all about the money.

According to Maguire and a class-action complaint, between 2008 and 2011, this scheme allegedly raked in billions of dollars in windfall profits for the big players, all by keeping the price low… 

At the expense of ordinary people like you and me who were left wondering how in the world the price of silver could decline…
  • Even while the electronics boom is devouring more silver than at any time in history…
  • Even while billions of citizens in China and India are buying and hoarding silver like crazy.
This report will answer that question for you. 

You'll also clearly see why this scheme is finally collapsing… 
And why… after being suspiciously low for several years… the price of silver is now on the verge of soaring to $200 an ounce or more.

Many believe a lot more. 

Most importantly, you'll see how you can use this information for yourself, in a completely legal and ethical way, for a chance to reap extraordinary profits from silver. 

The kinds of gains I'm talking about are large… could be extremely large. In fact, the last time something like this happened, investors pocketed upwards of 195% in just a few months

If we use similar ratios – or if you choose to "leverage" these gains with a simple move – the gains could possibly be two to three times that size

I have to warn you right here. The story you're about to hear is alarming. It's an outrage. 

The allegations are huge. Here are just a few… 

If you're not prepared to hear the shocking details – and to take action to turn this to your advantage – then please click out of this report now. 
It all started on March 16, 2008

Andrew Maguire worked on the London Metal Exchange trading silver through the COMEX (the world's foremost exchange in Chicago) for more than 40 years. He spent his life in the trenches with the biggest silver futures traders in the world. 

During the summer of 2008, he sensed something was going very wrong. It began about the time JPMorgan acquired Bear Stearns in March of that year… 

In the purchase, Morgan took on Bear's enormous short positions on silver; that is, their billion-dollar bets that the price of silver would fall. And if it did, they would make a vast fortune. 

The only problem was this: On the very day that Bear went out of business – March 16, 2008 – silver reached a multi-decade high of $21 an ounce

For anyone who owned these bets… when the price of silver is rising… well, that's not a good position to be in. 

The losses can be devastating – enough to push a trading unit (even a whole company) into bankruptcy, just like it did for AIG. 

But within days of JPMorgan taking over these massive shorts, silver plummeted almost 17%. And over time, Morgan allegedlyadded heavily to that "short" bet. 

Take a look at the chart to the right. 

According to the original complaint, Morgan, along with another international bank, allegedly controlled over 85% of the commercial net short positions in silver futures contracts on the COMEX, as you can see below. 

On the surface, it looked almost crazy. Every uptick could turn into losses of hundreds of millions – even billions – of dollars. 

Yet by August 5, 2008, the suit claimed they were short 33,805 contracts – borrowed contracts that they would have to buy back at a lower price or else lose their shirts. They were potentially on the hook for a mind-numbing 169 million ounces of silver. 

That would be equal to 20% of the entire world's annual mine production, or the entire COMEX warehouse stockpile, the second largest inventory in the world. 

Somehow, they were very "fortunate." That is, if you can bend fortune to your will. 

From March 16 onward, the price of silver began to decline, directly in their favor

And it continued to sink. Like a stone. 

As you can see from the chart below, between July 14 and August 15, 2008 the price of silver declined from a peak of $19.30 to a low of $12.82 for a loss of 33%. 

Then it hit rock bottom… 

By October 2008, the price of silver was barely $9. The price of silver had been driven right into the ground. On the surface, the move was so irrational it defied all reason. 

For ordinary silver investors, the drop was catastrophic. 

But, according to an amended class-action complaint filed in U.S. Federal court against JPMorgan… 
During just one day's price drop, from August 14 to August 15, 2008, JPMorgan allegedly pocketed approximately $220,000,000 in PROFIT.

$220 MILLION in just 1 day? If true, imagine the profit potential of the entire 7-month freefall. 
Skill? Luck? Or Something Else?

Maguire was aware that the CFTC, the organization that regulates precious metal trading, had already started an investigation into JPMorgan and potential silver manipulation. 

But the CFTC investigation was getting nowhere. And Maguire thought he could help. 

So, in November of 2009, he signed on as an informant. 

According to e-mails Maguire released publicly, Morgan's traders allegedly devised a plan to invite their "outside" trader friends to get in on the action by sending "signals" just prior to a big move. 

Most experts agree that by "hitting the bids" hard with their enormous cash reserves, they had the potential to absorb any uptrend in price and get the desired results for their massive short contracts. 

Again, the class action complaint states as much… 

Whatever they may have done, the price of silver went down… and kept going down. Even while demand was increasing at near-exponential rates

And it netted some traders profits, big profits. Some estimates are in the BILLIONS of dollars between June 2008 and March 2010. 

Of course while the traders were getting rich… holders of smaller silver positions were suffering staggering losses as the price of silver was inexplicably suppressed. 

And that's what really bugged Maguire. 

On Feb. 3, 2010, Maguire e-mailed the commodity futures trading commission. He described two impending "manipulation events" that he had been told would occur two days later, when the Labor Department's non-farm payroll numbers would be released. 
"Both scenarios will spell an attempt by the two main short holders to illegally drive the market down and reap very large profits."

On Feb. 5, Maguire wrote another e-mail confirming that "silver manipulation was a great success and played out EXACTLY to plan as predicted." He added,
"I hope you took note of how and who added the short sales (I certainly have a copy) and I am certain you will find it is the same concentrated shorts who have been in full control since JPM took over the Bear Stearns position… I feel sorry for all those not in this loop. A serious amount of money was made and lost today and in my opinion as a result of the CFTC's allowing by your own definition an illegal concentrated and manipulative position to continue."

What happened next, though… 

On March 26, 2010, Maguire saw the squealing car come careening out of a side road while he pumped gas into his own car at a London service station, his wife sitting in the passenger's seat. But it was too late. 

The unidentified car plowed directly into Maguire's auto, almost killing him and his wife. 

The mysterious car then sped on, smashing two other cars and nearly killing a pedestrian before it swerved back onto the road at high speed.

Armed with chase cars and helicopters, an army of London police pursued the would-be killer. And they ultimately nabbed the culprit. 

Yet, strangely, their attacker's identity or whereabouts have never been disclosed. 
The Second Break in the Great Silver Scheme

In the face of lawsuits and negative press surrounding the accusations, JPMorgan "quietly reduced" their massive silver short position in August 2010. 

Could it be coincidence that almost immediately, between September 2010 and April 2011, the price of silver TRIPLED from around $16 an ounce to more than $48 an ounce? 

In just those 8 months, from September 2010 through April 2011… 
… those who knew that the downward pressure on silver was weakening could have seen their investment TRIPLE… and pocket gains of 195%.

That would have been 7.5 times more growth than the S&P 500 returned over the exact same time period.

Now, if you're like me, you'd take a TRIPLE in a heartbeat. 

The reality is… those are small gains compared to what's on the horizon.
Last Gasp Effort Sets the Table for the 
Biggest Silver Run in History

Reeling from huge losses in the silver squeeze that began in September 2010, it appears that the market movers decided to try and stop the bleeding by resorting to their old tricks.

In March 2011, JPMorgan's net silver short position, which had decreased by 11,000 contracts over the preceding three months to 19,000, suddenly ballooned to 25,000 contracts.

And without warning, on May 2, 2011, silver was attacked by short sellers once again.
Within 15 minutes, the price of silver plummeted 12%. By the close of trading on Friday, May 6, silver fell by a stunning 29.8%. Mysteriously, the price drop corresponded exactly to a rapid series of margin increases carried out by the COMEX.

Some analysts believe the margin increase was timed to keep the massive short positions from losing money. No one can prove it – yet. Still, it's a juxtaposition of events that cannot be accounted for. After all, 43 million ounces were held in short positions… in a market that was heading higher once again… 

That's when the initial margin requirements skyrocketed from $11,745 to $21,600 – a whopping increase of 84%.

Thousands of investors had to dump their silver holdings like hot potatoes; at any price they could get; no matter how low or how much money they would lose. 

In a summer of 2011 interview with Silver Invest News, Eric Sprott, CEO of Sprott Asset Management LP, with $8.5 billion under management, and one of the foremost experts in the metals market, declared it to be manipulation plain and simple. 
"In my heart of hearts, I believe it was a manipulation,"Sprott said. "There was no market, it was a setup. They've just pushed it down. It's ridiculous."

Sprott went on to say, 
"I think it was the short – the people who were short that were caught. They were losing gargantuan amounts of money and therefore, they initiated the attack on May 1."

Yet despite all this, silver has withstood the attacks. Right now it's just re-loading.

As Ben Davies, CEO of Hinde Capital explained in August of last year to King World News: 
"Certainly along with many others in the market we understood the perhaps vile manipulation that was going on by some of the larger houses who, as we know, occupy that space. Clearly their positioning has been reduced substantially. I think that after you've had such a large move, the market has to acquiesce for a period of time, which is what we've been seeing…"

 Why the $200 Price Target is Modest

When analysts need to assess the global demand for silver, they turn to GFMS Ltd. and The Silver Institute. These two organizations are the "gold standard" for above-ground supply, inventory and usage statistics. 

Yet by their own admission, GFMS and The Silver Institute acknowledge that their reported data for "implied net investment" (that means institutional and retail demand for physical silver) is not an "observed" figure. 

When you strip away the jargon, it means one thing: 
Their numbers do not account for the huge demand coming from hedge funds or ETFs that must back their investments with physical silver.

Just recently, silver expert Eric Sprott discovered that the actual demand for silver, especially for investment, has been staggeringly underreported

As you can see from his chart to the right…

More than 225 million ounces of silver demand was "missing" from figures for the decade-long stretch that ended in December 2009. 

And that figure doesn't include the demand from 2010, where the amount of trading in silver to ETFs and other investing vehicles was, according to Sprott, approaching 800 million ounces – a day!
The fact is: Understating demand has also been keeping the price of silver artificially low. Some suggest collusion. You be the judge.

You see, at the same time, demand for silver is on the cusp of hitting historical highs. 

Silver's use in industrial applications increased 20.7% last year to 487 million ounces.

That means as much as 50% of silver's total annual production is for industrial use… and that number is expected to rise another 36% by 2015.

As the world's greatest conductor of electricity – manufacturers use silver to make switches and fuses found in washing machines, computers, vacuum cleaners, drills, dryers and ovens. 

In addition, billions of silver-zinc batteries are manufactured every year for use in dozens of electronic devices such as cameras, remote control car keys, TVs and watches.

The list of products that need silver is enormous – and constantly growing… including the two biggest areas of all:
  • Photovotaic cells used in smart phones (1.6 billion cell phones were sold last year)…
  • Silver's recent ascent as a leading antibacterial agent being used by hospitals and healthcare facilities around the world. Today, you can even buy silver imbedded band-aids.
Yet amazingly, silver prices remain well below the all-time high of $50.35… 
And that was reached in 1980, more than 30 years ago.

In addition, the supply of silver is on a downtrend of historic proportions. 

And that doesn't even tell the whole story. Did you know that unlike gold, silver is 98% consumable? Most people don't.

What that means is:
Of all the silver ever mined – about 46 billion ounces – experts estimate that only about 1 billion ounces are left above ground in bullion form.

(By comparison, of the 5 billion ounces of gold ever mined, about 2 billion are available above ground in bullion form.)

That's because the rest has been consumed. Most silver, such as the metal used in electronics, is not recoverable. There's no viable way to get it back for reuse. 

In 1970 it is said there were 140 months of available above-ground silver, and by 1990 that shrank to 50 months. By 2010 it shriveled to perhaps as little as 11 months. 

Even more telling… 
  1. The amount of silver coming out of the ground is going down every year…

  1. Few, if any new discoveries have been announced in the past 10 years…

  1. Most silver comes out of the last stages of existing mines (with the exception I mentioned above)…

  1. The quality of silver mined is the lowest it's ever been… And…

  1. Like most metals, silver isn't mined in veins anymore. It takes many tons of earth and rock to process even an ounce…
The details on supply and demand can fill whole books. Bottom line: Silver is in demand… It's harder to get… And manufacturers and investors will be paying through the nose to own it. 
 A Question of Manipulation?

We're not foolish enough to believe that the market will not be gamed again for the gain of big institutions. I believe it would be one of the finest days in America if that were the case. 

Sadly, if money can be made bending the rules, it will be done. In the evolution of rigged markets, the next ingenious scheme has not even been thought of yet. 

But there are two big changes right now that you need to know about. 

These two new developments will likely free the price of silver (for a time, anyway) and make this historic run-up possible. 

The first game changer is building steam and getting bigger by the day. It has certain players running scared. Yet it's playing right into the hands of those savvy enough to get in early. 
The Biggest Pure Market in the World…

For years, there's only been one game in town. If you wanted to buy or sell silver contracts you had to trade through the Chicago Mercantile Exchange (CME). 

If you're not familiar with the CME, they also run the NYMEX (the world's largest physical commodity futures exchange), the COMEX (the global exchange for gold, silver, copper and aluminum) and the CBOT (for trading options and futures contracts on a wide range of products including gold, silver, U.S. Treasury bonds and energy). 

They even control the Dow Jones Industrial Average.

Outside of the U.S. it's seen as a monopoly because…

1. You have to trade in dollars. 

2. You have to abide by their rules. 

Everybody. Throughout the world. No exceptions.

That means that China has been shut out from taking delivery on silver – unless they purchased contracts through the CME. 

Yet the recently opened Hong Kong Mercantile Exchange is about to rewrite the book for silver buyers around the globe. It's going to make it very rough for the schemers to use their same tricks. 

You see, this is the first time in history that the Chinese (and silver investors all across Asia) can purchase silver futures contracts… and actually take delivery of the metal – in Hong Kong no less. 

There's little doubt that this will quickly become the gateway to silver into China – and likely all of Asia. 

No longer will the enormous Asian market have to answer to Wall Street when it comes to buying silver. 

Take a second to think how much of an impact this could very well have on the silver market.

Today the Chinese are the biggest consumers of silver on the planet – accounting for an astounding 23% of global silver consumption last year!

In fact, in 2010 silver demand rose 67% in China alone. And this number is expected to increase dramatically in the next several years. 

And even better: It comes at a steep discount too

You see, for those who want to trade silver futures contracts, the new Hong Kong Merc only requires investors to buy "in" with a 1,000 troy ounce minimum.

This is dramatically less than what is required back in the states where the minimum contract allowed by the CME is 5,000 troy ounces. 

What's more, the Hong Kong Merc has signed up a whopping 22 of the biggest brokerage trading firms in Asia.

It's already setting up a squeeze with the potential to be one of the biggest in the history of silver. 
The last silver squeeze saw silver skyrocket from $16 to $48 an ounce. But with the rise of the Hong Kong Merc, the inevitable coming super squeeze could easily dwarf those returns.

Hard-money heavyweights including Ben Davies of Hinde Capital, Jim Rickards of Tangent Capital Markets and QB Asset Management Co-founder Paul Brodsky have predicted at least another double in silver in a few months alone.

By some estimates, silver could well return 10 times investors' money for the early crowd.

Think about what that could mean…

In just a few, short months… maybe even before the snow melts… a hypothetical…

$5,000 could become $10,000… or $35,000 or $50,000

$10,000 could become $20,000… or $70,000 or $100,000

$25,000 could become $50,000… or $175,000 or $250,000

THAT'S A POTENTIAL QUARTER MILLION DOLLARS… on top of holding one of the world's most treasured commodities.

While the impact of the Merc is expected to outmode the schemers and skyrocket silver prices, another development is making this pressure cooker for silver prices explode. 
 The Pan Asia Gold Exchange 
(PAGE) Blows It Open

The Pan Asia Gold Exchange (PAGE) is about to open soon. Estimates are by June 2012…

Again, please commit this date to memory: June 2012. It could be one of the most significant moments in financial history. A moment that can put a decade of market misery behind you. 

PAGE will enable all 320 million retail customers – and 2.7 million corporate customers – of the giant Agricultural Bank of China to simply use their Renminbi, the Chinese currency, from their bank accounts to trade gold and silver. 

This no doubt is an historic event. 

Here's how Andrew Maguire recently described the scenario to King World News: 
"If just 1% of Agricultural Bank of China customers buy 500 ounces of silver, that would require 1.6 billion ounces of silver! 

"I believe the leveraged and naked existing short side concentration in silver will be blind-sided by this. 

"None of this potential new physical demand has been factored in by analysts and I expect a large and unanticipated drawdown of physical gold and silver over the next few months, ahead of the international contracts going 'live.'"

Maguire continued: 
"China is keen to diversify their cash holdings and is also encouraging citizens to make investments in gold and silver. The Pan Asia Gold Exchange is another step in this direction by opening up ease of access to physical gold and silver to their bank customers. This physical backed exchange is going to be a big game changer.

"This factor will ultimately destroy the remaining short positions in both gold and silver… In my opinion it will create a massive short squeeze

So what happens when silver is finally unfettered? How high could it run? 

We believe that initially, $200 per ounce silver would be a fair value. And we're not alone. 

Renowned gold industrialist, Rob McEwen, recently explained to Mineweb.com that as gold goes up… and if you use the 16 to 1 ratio… "$200 is conservative." 

And Peter Schiff, CEO of Europacific Capital told King World News: 
"I think eventually silver north of $200 with gold over $5,000 makes a lot of sense."

And how much could you make on the upcoming squeeze? Well, quite a lot. 

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