In yesterday’s COMEX daily report, JP Morgan Chase essentially covered its arse, for when it all falls apart, with this statement:
“The information in this account statement is taken from sources believed to be reliable; however, JP Morgan Chase & Co. disclaims all liability whatsoever with regard to its accuracy or completeness. This account statement is produced for information purposes only.”
What does this mean? Well in case of default its not their fault, even though its their own vault, I couldn’t make this stuff up even if I tried. One theory which seems very plausible, from Truthingold blogspot, is ‘that the Comex vault operators lease out a substantial portion of the gold and silver bars that they keep in both the “registered” and “eligible” account designations. It would be easy income for JP Morgan, a bullion bank who actively engages in gold leasing, to lease out the majority of the bars it stores for delivery – “registered” – and for investors who have taken delivery but keep their gold/silver in JPM’s Comex vault – “eligible.” After all, in any given delivery month, less than 1-2% of the open interest ever stand for delivery, making it very easy for a Comex vault operator to earn extra income by leasing out gold and silver that it knows it will never be required to produce for delivery.’
I am willing to bet a very large amount of money that this disclaimer was put on the warehouse reports starting yesterday as a result of the large amount of gold bars that has been physically removed from Comex vaults, and specifically from JP Morgan’s “eligible” account, since the beginning of the year. This means that it is highly likely that a significant portion of the remaining gold and silver sitting in Comex precious metals vaults – especially JPM’s – has been been hypothecated in some form.
For anyone who has witnessed what happened with MF Global and the illegal hypothecation of customer assets, a situation in which JP Morgan is/was inextricably tied, if you believe that Wall Street is willing to hypothecate the sacred customer accounts but would not hypothecate or lease out Comex gold, then you are either tragically naive or terminally ignorant.
To make matters even worse, I just looked up the Comex warehouse rules with regard to storage and guarantee requirements, and there is not any requirement that Comex vault operators establish “allocated” accounts for the individual customers who have taken delivery – theoretically – of gold or silver from the Comex and chose to “safekeep” it in a Comex vault. Here’s the link the to rules: NYMEX Storage Rules Chapter 7A
Yes, insurance is required, but there will come a time – likely sooner than most think – when there will be a rush by Comex vault customers to take delivery of the metal they have been ambivalently assured is sitting in a Comex vault. Unfortunately for them, they will receive a notice that will say “see the disclaimer on our website, check’s in the mail.”
So the financial terrorists of JP Morgan have sold the majority of their silver and gold holdings for profit and at the expense of its customers. In times when trust is lacking, this will certainly ruffle a few feathers but who will go to jail? Were any executives from HSBC sent to jail for laundering trillions in Mexican drug money and facilitating the death of tens of thousands of Mexicans? Were any executives sent to jail for Libor rate rigging, the $300 Trillion Benchmark effecting financial systems worldwide? What about the PPI scandal? The Credit Default Swap scandal? Nope, non of them. Too Big to Fail, Too Big to Jail, Too Big My Arse.