Australia’s leading television broadcaster has compared JP Morgan as silver price manipulators similar to Bunker Hunt in the late 1970’s, with one major difference. JP Morgan has a concentrated short position to drive the silver price lower.
Bullionmark CEO, Mark van der Sluys, who was interviewed by the Lateline Business program believes the silver price is manipulated lower to maintain confidence in paper currency in particular the US dollar. “It is well understood that interest rate markets are manipulated through Quantitative Easing and currencies are managed through market interventions, so why is it such a shock that large investment banks are managing silver prices lower to support broader central bank and government policy?”
When asked about the recent sell off in the silver price, van der Sluys suggests “that the silver fundamentals remain strong and precious metals are the ultimate hedge against Government and Central bank incompetency. Gold and Silver should be part of every investment portfolio.”
– Silver threatens Silver Thursday repeat (Lateline Business – ABC NEWS)
Australian Broadcasting Corporation
Reporter: Phillip Lasker
A recent rapid rise and fall in the price of silver has left many making comparisons with 1980’s Silver Thursday and Texan Bunker Hunt.
TICKY FULLERTON, PRESENTER: Silver has always been regarded as poor man’s gold.
And as gold continued to climb on the back of ultra-loose monetary policy, many investors were drawn to silver as a cheaper alternative and a store of value, and the price shot up.
But silver took a big tumble, in part driven by increased margin calls, leaving many investors nursing big losses, and that in turn has sparked a renewed interest in another silver crash, “Silver Thursday” and a Texan named Bunker Hunt.
Here’s Phillip Lasker.
PHILLIP LASKER, REPORTER: The super-wealthy Duke Brothers in the Paramount film Trading Places were wiped out after unsuccessfully trying to corner the market for frozen orange juice. The characters were inspired by Texas oil millionaire Nelson Bunker Hunt and his brother when they tried to corner the silver market in the 1970s.
MARK VAN DER SLUYS, BULLIONMARK: Bunker was the first one that really felt the wrath of political powers not liking people to have concentrated long positions in a smallish market that has political consequences. And the silver market is certainly a market that back in the 1970s and ’80s certainly had political consequences in terms of the way it makes the fiat or paper currency regimes be perceived by the general public.
PHILLIP LASKER: The Bunker Hunts tried to corner the silver market to protect their wealth. They were paranoid about inflation, as US president Richard Nixon moved the currency away from the gold standard.
NELSON BUNKER HUNT, OIL BILLIONAIRE (archive footage, 1970s): I don’t really keep track of – I never count my money. I just want to enjoy life and I don’t have to spend a lot of money to enjoy life.
PHILLIP LASKER: Bunker Hunt joined forces with Saudi millionaires to become the market’s biggest player, buying up to 60 per cent of an entire year’s silver supply during 1979. The price skyrocketed from US$6 an ounce to US$52 in a year.
Then in early 1980, investors fled from silver as gold tumbled and a credit squeeze took hold. Bunker Hunt ignored a margin call from his broker, Bache, so they asked the regulator, the Commodities Futures Trading Commission, to shut the market or force Hunt to pay up.
ELLIOT SMITH, DIRECTOR, BACHE & CO: They advised me that morning that they had word from the Bank of England that if they stopped trading it would be considered by the European market as a very bearish point of view.
PHILLIP LASKER: So regulators, fearing a global meltdown, did nothing. Silver prices collapsed in March 1980, costing Bunker Hunt $2 billion as he failed to meet his margin calls.
JAMES STONE, CHAIRMAN, CFTC: It has made people far more aware of the speculative, sometimes dangerously speculative, nature of these markets. It will therefore make them more cautious.
PHILLIP LASKER: 30 years later, regulators are again investigating claims two big banks, HSBC and JP Morgan, which held a massive 85 per cent of silver short positions, conspired to drive down prices in 2008. Those claims were prompted by independent bullion dealer Andrew Maguire, who told US regulators that a fraud had been committed when the silver price collapsed.
ANDREW MAGUIRE, INDEPENDENT COMMODITIES TRADER: We saw a massive take-down. And it really was time to say, “Look, we’re witnessing a crime in progress here.” So, I thought it my duty to really contact the CFTC to investigate.
PHILLIP LASKER: Mark Van Der Sluys says market manipulation is a fact of life which isn’t the exclusive preserve of investment banks.
MARK VAN DER SLUYS: We see it with interest rates being kept low through programs such as quantitative easing, which effectively is manipulation of the bond market; we see it in terms of interventions in the currency and foreign exchange markets.
PHILLIP LASKER: And when silver futures plunged 27 per cent earlier this month after derivatives market CME increased margins, the conspiracy theories were given new life, but not by Matt Kirk, who’s been trading for 25 years.
MATT KIRK, STONEBRIDGE SECURITIES: Those people who are been complaining about margins being increased maybe don’t have enough capital and maybe they’re not making money out of it.
PHILLIP LASKER: And Mark Van Der Sluys claims he’s making money by focusing on the big questions.
MARK VAN DER SLUYS: Do we think that governments are going to stop printing money to solve the debt crisis around the world? If you think the answer to that is yes, you shouldn’t own silver. If you think that answer is no, you should accumulate silver over time to protect your wealth.
PHILLIP LASKER: So cornering the silver market might not be such a crackpot idea.