J.P. Morgan Chase, HSBC May Have Gained Billions from Influencing Silver Prices

For most, the Stock Market is a daunting and complex system of numbers and codes.  The intricacies of each push, shove and nod toward an investment that is seemingly worthy of buying or selling may be intimidating.  But in the case of silver, it’s black and white: when you own the market, you control the market.

Mega-banks J.P. Morgan Chase and HSBC have been under suspicion for manipulating the value of precious metals, particularly silver, since 2008.  A recent article in the New York Times alleged the two companies have earned billions of dollars from what could be a gigantic, market manipulation.  Allegations state that JP Morgan and HSBC spread a rumor that the value of silver would depress dramatically.  Of course, the claims were artificial, but because they owned such a substantial cut of commercial net short silver futures, they were essentially the silver market makers.   When the price of silver plummeted based on their continued bearish actions, JP Morgan and HSBC cashed in.

JP Morgan and HSBC together “controlled over 85 percent of the commercial net short positions” and “a market share in excess of 90 percent of all precious metals derivative contracts, excluding gold,” according to the New York Times.  Short positions are essentially bets that the value of an investment will move downward.  For JP Morgan and HSBC, these short positions were a sure thing; when you own 85 percent of the silver market short positions, it’s easy to drive the market down and reap the benefits.

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