JPMorgan Chase, one of the largest banking giants in the world, holds massive gold derivative short positions that could potentially exceed the bank’s total assets, according to some top money managers. This situation leaves JPMorgan in a very precarious position should the price of gold suddenly shoot up due to an unexpected event, such as a black swan event.
Dr. Stephen Leeb, a renowned money manager, has revealed that JPMorgan’s gold derivative short positions are so numerous and large that they likely exceed the entirety of the bank’s assets on hand. Leeb has expressed concern about JPMorgan’s exposure to the gold derivative market, stating that it is an open secret in the gold market that the bank is heavily invested in gold derivative short positions.
While this practice is not considered fraudulent, Leeb believes that it is a dangerous game that JPMorgan is playing, as it effectively keeps the price of gold artificially low. When a commodity or stock is short sold, the short seller is obligated to deliver that commodity or stock at a later date. The aim is to make a profit between the current price and a lower future price. In the case of JPMorgan, the bank appears to be selling the precious metal short using derivatives, which effectively keeps the price of gold artificially low.
Leeb warns that if the true price of gold is ever discovered, corrupt banks like JPMorgan could be in serious trouble. He believes that JPMorgan’s short positions could be much more significant than the company’s assets, which is a cause for concern. If the price of gold takes off and gets out of control, it could result in significant financial losses for JPMorgan.
However, Leeb doubts that JPMorgan as a company even knows how much of a threat its short positions are to its book. A short position carries unlimited risk, meaning the bank could be in serious trouble once the true price of gold is discovered by the markets. According to Leeb, “I doubt that JPMorgan even knows how much of a threat it is, but they’ll find out if all of a sudden you see the price of gold shoot up $1,000.”
Leeb believes that JPMorgan’s excessive shorting is a vicious circle. When gold is set to move, and its price is creeping up towards all-time highs, it essentially gets driven back down by banks like JPMorgan through shorting. Mega-banks like JPMorgan are playing with fire via excessive shorting that could sink them into oblivion were the right financial circumstances to transpire.
Some readers have noted that gold and silver prices have been kept artificially low due to massive short positions that are being maintained. The Federal Reserve is bankrolling these positions through its “primary dealers” – the mega-banks that effectively control the Fed. This has led to concerns about the integrity of the financial system and the potential consequences of the massive short positions being maintained.
In conclusion, JPMorgan’s massive gold derivative short positions have raised concerns among top money managers. While the practice is not considered fraudulent, it is a risky game that could potentially sink banks like JPMorgan if the true price of gold is ever discovered by the markets. The situation highlights the need for greater transparency and accountability in the financial system to prevent practices that could potentially destabilize the entire system.