Shorting Silver Gets Slippery

By Todd Shriber

There’s something to be said about sticking to a set of beliefs or convictions no matter what the price. It’s admirable to say the least, but that doesn’t always mean it’s profitable. Such is the case when it comes to JPMorgan Chase’s (JPM) adventure with shorting silver.

Back in December, Trader Daily reported that the largest U.S. bank by market value was reducing its much maligned short position in silver. Sure seemed like a good idea at the time. After all, silver was wrapping a boffo performance in 2010, and analysts were predicting more of the same in 2011.

Well, old habits die hard, and that’s apparently the case with JPMorgan and the undying silver short. The most recent bank participation report from the Commodities Futures Trading Commission shows almost 25,600 COMEX silver contracts were sold short as of March 1.

The report doesn’t say that it is JPMorgan that is short most or all of those contracts. But Theodore Butler of SilverSeek.com is pretty unabashed in his assessment that it is in fact JPMorgan that is short those silver contracts. Butler writes:

There was a net increase in the US bank category of 6000 contracts to 25,000 held net short in silver. JPMorgan’s net silver short position, which had decreased by 11,000 contracts over the preceding three months to 19,000, had suddenly ballooned to 25,000 contracts (125 million ounces).

We’re not going to get into that hullabaloo about JPMorgan (or any other bank) manipulating the silver market. Rather, let’s look at a chart of an exchange-traded fund backed by physical silver and an ETF that tracks silver miners over the past month and ask why would anyone want to be short this metal?

Related posts:

1. JPMorgan: Some Friends Are SilverSure, short positions in silver and gold held by U.S. banks have been dwindling in recent months. But...
2. Silver Shorts: You’ve Been WarnedWe've been all over the JPMorgan/silver story for a few weeks now, and it's probably fair to say...
3. J.P. Morgan’s Silver Dump on the SlyPerhaps the coup de grace of J.P. Morgan's (JPM) foray into the silver market has mercifully arrived....
4. More Reasons to Not Be Short SilverTrader Daily has been beating the drum on the dangers of being short silver for a while now....
5. Heavy Metal: No Silver Medal for J.P. MorganJ.P. Morgan’s (JPM) proclivity for big-time metal trades looks like urban lore on the surface, but it is...

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