Most observers know there have been interesting movements in commodity markets of late, much of which has to do with curious developments among some of the largest banks in the world that have been reported in the mainstream media.
News readers recently learned that Goldman Sachs has been skimming profits by controlling aluminum supplies. In addition, J.P Morgan Chase has announced a plan to exit commodity trading.
It is especially interesting to note that JPM is exiting commodity trading when 18% of its last year’s overall corporate profit was made in that arena. Still, they probably got a tap on the shoulder from some place higher up. Sadly, these are not banks doing real banking.
JPM and Goldman in the News
Yes, the news about these banks sounds outrageous. It may even last maybe another day or two in the mainstream news cycle. Nevertheless, it has very little to do with precious metals on the surface, since JPM in particular, made it very clear that they were not leaving the precious metals arena.
This significant difference effectively separates silver and gold yet again from other commodities, although it seems to be just one more symptom of an overall disease where power and wealth are vastly over-concentrated in too few hands.
Furthermore, the Goldman aluminum warehousing issue was pointed out at least two years ago by fringe bloggers. Apparently, the main reason it made the NY Times recently was because of a senate hearing last week and the fact that the Coors/Miller beer lobby is big enough to matter.
The Silver Users Association and Politics
Nevertheless, many of the main players in silver still belong to the Silver Users Association, which has actually supported and promoted lower silver prices. This organization was the driving force behind the government dumping its stockpile of silver throughout the Seventies and Eighties.
Ultimately, the risk as prices return to equilibrium, is that the management of silver could once again become a political issue, and politics is merely economics gone wrong. Ominously, from the mainstream perspective, gold and silver "bugs" seem to be representative of a political group that is so far to the right they are almost left wing.
And yet most people seem to be just "fine" with the manipulation Libor, oil, equities and bonds —even though just about every government data point has become almost total fantasy — but they become shocked, yes shocked, at the thought of the gold and silver markets being manipulated. They seem to think these markets are firmly on the straight and narrow and their prices cannot be unduly influenced— except perhaps a long time ago by some “crazy” Texans.
In the end, JPM has once again inadvertently given silver rekindled monetary status which will likely stoke another wave of physical investment demand.