JP Morgan`s Blythe Masters enters defense mode

Blythe Masters, the famous and infamous, depending on who you`re talking to, head of commodity trading desk at J.P. Morgan, made a rare appearance on CNBC today.

She denied blogosphere rumors about J.P. Morgan being involved in silver manipulation, saying "it would be wrong and we don`t do it". She made the case that it might appear so from the outside due to hedging of client positions by having short positions to offset price volatility.

However, it would be most interesting to know who exactly are all those clients she`s talking about. One of the accusations brought about against J.P. Morgan is that the FED is using JP as a proxy to manipulate the silver price. If this is true, J.P. Morgan doesn`t do anything by itself but rather representing a client(the FED), acting as a tool. It`s a well known fact that J.P. Morgan is part of all those closed door FED meetings as you can see in this article written by Lynn Forester de Rothschild and in the picture below. Take note that not only that J.P Morgan shows up among the banks that held closed door FED meetings but it outmatches the other banks by far when it comes to the sheer number of held meetings. 

Blythe concludes the interview on an interesting note, dismissing the need for certain transparency after pandering to the politically correct crowd:

"..the key is to ensure that that regulation is good regulation and with this type of topic the devil is almost always in the details. So in the interest of greater transparency, less systemic risk in the system, less connectivity between major players...on all of those things we feel great strides have been made in advancing regulation to promote those objectives. Having said that, we have to aware of unintended consequences and there`s a real risk of those unintended consequences. For example: if you make it difficult for institution to transact in commodity markets by excessively exposing their actions to the public domain too quickly, it would actually drain liquidity and make it harder for those institutions to hedge."

Of course, if the rumor claiming J.P. Morgan is acting as FED`s proxy in manipulating silver and gold prices is true, "exposing their actions" would severely hamper their ability to play the market.

Where is silver heading short-term?

Head of Weldon Financial, Greg Weldon has a global following of some of the wealthiest investors in the world including individuals, institutions and financial firms.

When asked about silver specifically, Weldon replied, “Particularly in silver, you have done a lot of work (to the downside). You have to take a really big step back and say if this is a wealth deflation that has a little bit further to go to, what levels could some of these things decline to and still be in the context of an ongoing secular bull market?
Meaning a bull market that will ultimately produce new highs when you get another round of countries debasing their currencies. Because that will happen, it’s a question of how we get there. Silver has already retraced 50% of its entire bull market going back to the year 2000. You are coming into the 5 year moving average at $26. Could it dip to $21, it could. Could gold go lower, absolutely.


You can read here the full article.