Silver Manipulation: How Banks Suppress Prices

In September 2020, JP Morgan Chase agreed to pay $920.2 million to settle charges that its traders manipulated precious metals and Treasury markets for nearly a decade. This was not speculation. This was not conspiracy theory. This was a federal settlement.

The Department of Justice called it "the largest spoofing resolution in history." The Commodity Futures Trading Commission documented thousands of instances of manipulation between 2008 and 2016.

What did they do? A technique called "spoofing" - placing large orders they never intended to execute, moving the market price, then canceling those orders and trading in the opposite direction. It is market manipulation, plain and simple.

"JP Morgan turned its trading desks into criminal enterprises." - Acting Assistant Attorney General Brian Rabbitt, 2020

Eight individual traders have been charged with federal crimes. Several have been convicted. These are not victimless crimes - every time they pushed silver prices down artificially, retail investors and miners lost money while the bank profited.

Silver manipulation is not just about spoofing. It operates on multiple levels, each designed to keep physical silver prices artificially low while banks profit from volatility.

The Spoofing Playbook

1. Step 1: Trader places massive sell orders (often millions of ounces of "paper" silver)
2. Step 2: Other traders see the huge supply and prices drop
3. Step 3: Before orders execute, trader cancels them
4. Step 4: Trader buys at the artificially low price
5. Step 5: Repeat thousands of times per year

The Concentrated Short Position

Beyond spoofing, a small number of banks hold concentrated short positions in silver futures. At times, these positions have exceeded the entire annual mining supply of silver. How can you short more silver than exists?

You cannot - unless you are creating "paper" silver that does not exist. This is the paper silver vs physical silver problem that regulators have failed to address for decades.

The "Waterfall" Decline Pattern

Watch silver prices long enough and you will notice a pattern: sudden, sharp drops that occur within minutes, often during low-volume trading hours. These "waterfall" declines hit stop-losses, trigger margin calls, and shake out retail investors.

This is not natural price discovery. Natural markets do not drop 3% in two minutes on no news.

Here is the dirty secret of the silver market: there is far more "silver" trading on paper than actually exists.

Industry estimates suggest that paper silver contracts (futures, ETFs, unallocated accounts) exceed physical silver by ratios of 100:1 or higher. This means for every ounce of real silver, there are 100+ ounces of claims.

This massive paper overhang suppresses prices. When investors want silver exposure, they buy paper. That paper does not require anyone to purchase physical silver. Supply and demand gets short-circuited.

But what happens when paper holders want physical? That is when the game ends - and prices must adjust to reality.

For over a century, silver prices were set daily by a small group of banks in London through a process called "the Fix." Three banks would get on a phone call and agree on a price. That was it. No open market. No transparency.

In 2014, Deutsche Bank admitted to manipulating the silver fix as part of a settlement with regulators. The bank provided evidence that implicated other banks in a coordinated scheme.

The silver fix was abolished in 2014 and replaced with an electronic auction. But the damage was done - decades of manipulation had suppressed silver prices and enriched insiders at the expense of ordinary investors.

"There is no silver market. There is a silver price-setting mechanism controlled by a few banks." - Chris Powell, GATA

The Commodity Futures Trading Commission investigated silver market manipulation for over 13 years before finally taking action against JP Morgan in 2020.

In 2008, 2010, and 2013, the CFTC announced investigations into silver manipulation. Each time, they concluded there was "no basis" for manipulation claims. Meanwhile, JP Morgan traders were spoofing the market thousands of times per year.

It took a whistleblower - former JP Morgan trader John Edmonds - pleading guilty to federal charges for the CFTC to finally act. Edmonds admitted to manipulating precious metals markets from 2009 to 2015.

For 13 years, regulators dismissed manipulation claims as conspiracy theories. Then the conspiracy turned out to be real. What else are they missing?

Silver manipulation is not just a Wall Street scandal - it directly affects your retirement savings and financial security.

If You Own Paper Silver

• Your "investment" may not be backed by real silver
• You are exposed to counterparty risk if the scheme unwinds
• You benefit banks more than yourself

If You Own Physical Silver

• You own a real asset that cannot be diluted by paper contracts
• You will benefit when manipulation ends and prices normalize
• You have no counterparty risk - the metal is yours

Think about it: if silver prices have been artificially suppressed for decades, what is the true value of silver? When the paper market meets reality, physical silver holders will be positioned to benefit.

Manipulation schemes do not last forever. Whether through regulatory action, market forces, or a breakdown in the paper silver system, eventually prices must reflect reality.

The Smart Money Strategy

1. 1. Own Physical Silver: Not paper, not ETFs, not pool accounts - actual silver in your possession or in allocated, segregated storage.
2. 2. Use a Silver IRA: Hold physical silver in a tax-advantaged retirement account with proper IRS-approved storage.
3. 3. Avoid Paper Silver Products: Unallocated accounts and leveraged products are vulnerable when manipulation unwinds.
4. 4. Think Long-Term: Manipulation can persist longer than expected, but fundamentals eventually prevail.