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The news wires are all a buzz with the most recent scoop of Wall Street: JPMorgan’s investigation by the Department of Justice and the Commodity Futures Trading Commission over allegations of manipulating the silver market on the London Bullion Exchange and NYMEX.
By Melissa Pistilli—Exclusive to Silver Investing News
The precious metals are riding a mixture of fear and hope over Europe’s ongoing debt saga and the prospective road to global economic recovery.
Friday, silver posted a gain of 5.3 percent following gold up as fears in the euro zone overheated. Monday saw little movement as the metal gained about a dime to close at $18.55 an ounce in New York. Tuesday, the price of silver on the COMEX closed at $19.35 an ounce, up 4.5 percent.
Silver may still have farther to go, especially if analyst’s predictions about its yellow cousin prove true. Credit Suisse Group AG commodity research head Tobias Merath sees gold trading at $1250 to $1350 by the end of the third quarter of 2010. JPMorgan Chase & Co. pegs gold at an average of $1250 an ounce in the same period.
Speaking of JP Morgan . . .
The news wires are all a buzz with the most recent scoop on Wall Street: JPMorgan’s investigation by the Department of Justice and the Commodity Futures Trading Commission over allegations of manipulating the silver market on the London Bullion Exchange and NYMEX.
The New York Post had the story Sunday, sharing that the CFTC is pursuing a civil case, while the DOJ has launched a criminal investigation.
“The probes are far-ranging, with federal officials looking into JP Morgan’s precious metals trades on the London Bullion Market Association’s (LBMA) exchange, which is a physical delivery market, and the New York Mercantile Exchange (NYMEX) for future paper derivative trades,” reported the Post’s Michael Gray.
The investigations were sparked by allegations made by metals trader Andrew Maguire, who the Post interview last month. “JPMorgan acts as an agent for the Federal Reserve; they act to halt the rise of gold and silver against the U.S. dollar. JPMorgan is insulated from potential losses [on their short positions] by the Fed and/or the U.S. taxpayers,” said Maguire.
Mr. Maguire apparently went to the CFTC enforcement division in November of last year with information about what he claims to be criminal activity. He also contacted the Gold Anti Trust Association (GATA), who no doubt welcomed him with open arms.
Speaking before Congress in March, reported Mineweb’s Dorothy Kosich, GATA Chairman Bill Murphy said Maguire gave a detailed account of how “JP Morgan Chase signals to the market its intention to take down the precious metals. Traders recognize these signals and make money shorting the metals alongside JPM. [He] explained how there are routine market manipulations at the time of option expiry, non-farm payroll data releases, and COMEX contract rollover, as well as the ad-hoc events.”
Shady business on Wall Street is not such a surprise, but still an outrage. Whether criminal or civil charges will really brought against JP Morgan Chase remains to be seen.
On a Lighter Note . . .
CPM Group’s annual Silver Yearbook is out for 2010. The report highlights strong investment demand as the driving force behind rising silver prices in 2009 with investors buying 209.7 million ounces.
“This was the third largest amount of annual net silver purchases on record, surpassed only by the 222.2 million ounces purchased in 1980 and the 226.0 million ounces estimated to have been added to investor holdings in 1968,” said CPM in a news release.
CPM is forecasting investment purchases of silver will total 213.9 million ounces in 2010.
“Silver has definitely benefited strongly from the economic woes of the world,” CPM Group’s managing director Jeffrey Christian told Reuters. “Investors are looking at silver and saying: It’s a good buy because I can buy it as a safe haven like gold, and if the economy does get better, it’s an industrial play.”
Fabrication demand is also expected to rise 2.4 percent in 2010 to 631.2 million ounces on increased demand for electronics, flat-screen display panels, photography, solar panels, batteries, jewelry and silverware, amongst other industrial products. Mine production for 2010 is projected to rise 5 percent to 581.2 million ounces.
As far as prices are concerned, CPM Groups puts silver in a range of $15 to $21 an ounce for the remainder of the year.