(NewsTarget) Should the price of gold ever shoot up from its current price by, say, another $1,000 in the coming weeks or months due to an unexpected “black swan” event, banking giant JPMorgan Chase would more than likely find itself underwater due to the massive gold derivative short positions it currently holds.
Dr. Stephen Leeb, one of the world’s top money managers, says that JPMorgan’s gold derivate short positions are so numerous and large that they likely exceed the entirety of the bank’s assets on hand – which is a very dangerous position in which to be.
“What I lose sleep over is how much exposure does a bank like JPMorgan have to the [gold] derivative market,” Leeb is quoted as saying, adding that it is an “open secret” in the gold market that JPMorgan is heavy in gold derivative short positions.
“This is not fraudulent, but it’s an open secret. In fact, it’s no longer a secret because they’ve been penalized so much for it. They’re trying to control the price of gold.”
(Related: Last summer, we reported that JPMorgan was found guilty of “spoofing” trades and rigging precious metals prices.)
If the true price of gold is ever discovered, corrupt banks like JPMorgan will be no more
When a stock or commodity is short sold, the short seller is on the hook for delivering that stock or commodity at a later date. The goal is to make a profit between the current price and a future lower price.
In this case, JPMorgan appears to be selling the precious metal short using derivatives, which is effectively keeping the price of gold artificially low. Will the banking giant ever be forced to deliver or cover these extravagant short positions?
“I mean, when you sort through all of these derivatives, what’s JP Morgan’s short position [in gold]? I can imagine it being much more than the assets in the company,” Leeb added.
“And if gold takes off and it gets out of control, then it’s ‘Katy, bar the door.’ You don’t know what is going to happen. So that’s the real threat in my opinion.”
