JP Morgan may be sitting on the largest silver accumulation in world history.
By Tim Taylor
What comes to mind when someone talks about the 1980’s? Most people would say Ronald Reagan, Chernobyl, or even Michael Jackson’s “Billie Jean”. But what about Silver Thursday? Years before we saw Yasuo Hamanaka, a Japanese trader, attempt to manipulate the copper market single-handedly, the billionaire Hunt Brothers attempted to do the same thing to the silver market after inheriting a fortune from their father H.L. Hunt, the oil tycoon.
Snap back to reality in the year 2018 and it looks like another big name will seem to conquer the feat several have tried and failed to do before: manipulate the stock market by buying up massive quantities of silver and letting the price skyrocket. As early as 2011, predictions have been that J.P. Morgan has stored close to 170 million ounces of silver. During that time frame the price of silver has fluctuated and has been available anywhere from $8.99 to $48.58 an ounce. It has spent a lot of its time in the $10 - $20 range, and is currently sitting at about $14.00 an ounce. To pair it with some potential growth numbers, the predictions fall anywhere from $8 an oz. to a shocking $1,000 or more an ounce.
Now, let’s do some rudimentary math. If J.P. Morgan spent roughly $20 an ounce, multiplied by 175 million, that comes out to 3.5 billion dollars. So, if the price stayed under $20 come time for them to sell, they’d have very small profit margins, if any. Let’s say the value hits $100 an ounce; they’d sell and make about $14 billion in profits. And if their potential dreams come true, and the price hits $1,000 an ounce, they would make away like bandits with an $175 billion-dollar payday. The bank’s current net worth, with all assets included, is valued at $2.543 trillion dollars, placing them at number six on the world charts. They take the number one spot in the United States and are officially the world’s most valuable bank in terms of market capitalization. As of 2017, their revenue is about $100 billion dollars annually, and growing. This potential stock market phenomenon would cut a check so large, it would cover what they profit in a single year.
Do you find yourself questioning how one company can amass such a wealth and not have any consequences? Well, you’d be right to. In 1980, the Hunt brothers went through with their plan after being slandered for weeks, and when the time came, they couldn’t meet their $100 million-dollar margin call. This struck fear into the market and investors across the globe. To fix the problem and avoid a 1.7 billion-dollar loss for the Hunt brothers, several banks put forward a 1.1 billion-dollar credit line to save the bank. Similarly, in 1996, Hamanaka reported a $1.8 billion loss for the Sumitomo Corporation from unauthorized copper trading, and later reported the losses reached $2.6 billion by the end of the year.
What does this mean for J.P. Morgan and the United States economy? Well, it could spell good tidings for those who are actively holding silver ounces, but in a time when a lot of indicators say we’re heading for another recession soon, silver will play a large role into how well our country’s economy will fare. The bank may come out on top and in good position over the next few years, but if this deal goes south, it could be cause for serious concern for the country and the entire market.
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