There were reports out today that JP Morgan has now admitted to having their massive naked short position in silver and is taking steps to reduce it. According to the Financial Times in London, “JPMorgan has quietly reduced a large position in the US silver futures market which had been at the centre of a controversy about its impact on global prices for the precious metal.” According to a person familiar with the matter, “The decision by JPMorgan was an attempt to deflect public criticism of the bank’s dealings in silver.” JP Morgan said in a statement, “It is absolutely incorrect to say or imply that the Nymex, CFTC or any other exchange or regulator has instructed or asked us to reduce our position.”

NIA, along with the Gold Anti-Trust Action Committee (GATA), has been at the forefront of helping expose JP Morgan’s silver price suppression scheme. Over a year ago on December 11th, 2009, NIA declared silver the best investment for the next decade at $17.40 per ounce. NIA said in its December 11th article, “It’s not a coincidence that the day silver reached its multi-decade high of over $21 per ounce in March of 2008, was the same day Bear Stearns failed. Bear Stearns was a holder of a massive short position in silver.”

NIA went on to say, “The reason why we believe the Federal Reserve was so eager to orchestrate a bailout of Bear Stearns, is because Bear Stearns was on the verge of being forced to cover their silver short position.” NIA then said, “JP Morgan still holds the silver short position they inherited from Bear Stearns” and “JP Morgan will have to cover this short position or it could jeopardize their existence.”

On February 5th, 2010, JP Morgan was successful at manipulating the price of silver down to below $15 per ounce. On February 7th, NIA wrote an article entitled, “NIA Bets Big on Silver Price Recovery” in which it said, “NIA is betting big that this past week’s short-term decline in the paper price of silver was just a temporary wash out, before a huge surge in silver prices later in 2010. One of NIA’s co-founders purchased on Friday, 1,300 January 2011 $20 SLV call options at a price of $0.89.” These call options that NIA suggested went on to rise as much as 1,024% to a high this month of $10.

On March 25th, 2010, the CFTC held a hearing on position limits in precious metals. Bill Murphy of GATA (see NIA’s video page for an interview we conducted with Mr. Murphy on Thursday) was allowed to speak (within a five-minute time constraint). Right at the beginning of Murphy’s speech, there was a technical failure of the live television broadcast, which was mysteriously fixed as soon as he was done speaking. This did not stop Murphy, who was brave enough to present the evidence of Andrew Maguire, a former Goldman Sachs precious metals trader who on February 3rd became a whistleblower when he wrote to Eliud Ramirez, a senior investigator for the CFTC’s Enforcement Division, giving him the “heads up” for a “manipulative event” signaled for February 5th. Maguire described to the CFTC in February 3rd emails, exactly what would happen on February 5th (which did occur exactly like predicted), yet the CFTC refused to take any action against JP Morgan or the other conspirators.

Murphy was scheduled for several mainstream media television interviews after the CFTC hearings, but they were all abruptly cancelled at once. In the weeks that followed, Murphy’s car was stolen, his web site was hacked, and he was punched with brass knuckles and knocked out cold less than two blocks from his house. As for Maguire, a couple of days after the CFTC hearings, he and his wife were involved in a bizarre hit-and-run car accident in London where a second car coming out of a side street struck their vehicle. The hit-and-run suspect then hit two more vehicles when he desperately attempted to flee, which resulted in a police chase with helicopters. The suspect was nabbed, yet surprisingly, his name was never released and it was never made known if charges were filed.

On April 3rd, 2010, with silver at $17.89 per ounce, NIA wrote an article entitled, “Silver Short Squeeze Could Be Imminent”. In this article, NIA said, “With the spotlight now on JP Morgan, NIA believes they will be less likely to naked short silver at these levels and manipulate the price down like in February. With the mainstream media blackout, it is important for NIA members to work harder than ever to spread the word and help expose what could be the largest fraud in the history of the world.”

On May 13th, 2010, NIA released its critically acclaimed documentary ‘Meltup’, which featured our in-depth research on JP Morgan’s silver price suppression scheme. Thanks to the help of tens of thousands of NIA members who worked tirelessly to spread the word about ‘Meltup’, nearly 1 million people saw the documentary and became educated to the truth about JP Morgan’s silver manipulation. Without the hard work of NIA members, JP Morgan would have went on naked shorting silver for years and the topic would have never become mainstream.

In ‘Meltup’, NIA’s President Gerard Adams stated, “The current gold/silver ratio of 64 wouldn’t be possible unless silver prices were being held artificially low through manipulation. I don’t believe it is possible for the silver that JP Morgan is short to be backed by physical silver. Most likely, JP Morgan has been naked shorting silver, by selling paper silver that doesn’t physically exist.” Since the release of ‘Meltup’, the gold/silver ratio has fallen by a shocking 27% down to 47. Within the next few years, NIA expects the gold/silver ratio to at least fall to 16, which will mean another three times increase in the purchasing power of those who own silver. In fact, because silver prices have been held artificially low for so long by JP Morgan’s manipulation, there is a chance the gold/silver ratio will over swing to the downside and decline to 10 or lower this decade.

Throughout world history, there have been 46 billion ounces of silver produced compared to 5 billion ounces of gold. Although gold gets all of the headlines in the mainstream media, silver shares all of the same monetary qualities as gold. Based on historical production ratios, a gold/silver ratio of 10 down the road could certainly be realistic. In fact, considering that most of the silver ever produced has been consumed by manufacturing, a gold/silver ratio of much less than 10 is possible. Worldwide inventories of silver have declined 90% since 1940 from 10 billion ounces down to approximately 1 billion ounces today. NIA believes that a major shortage of physical silver is in the process of developing.

On September 9th, 2010, NIA released an article entitled, “Is JP Morgan’s Silver Manipulation Over?”. In this article, we discussed how JP Morgan was winding down their proprietary trading desks, which we felt were responsible for the silver manipulation. We stated that we were “hopeful but skeptical that the manipulation is coming to an end” and “cautiously optimistic at this time”. Since September 9th, the price of silver has gained over 50% and is holding strong near $30 per ounce. There have been no noticeable manipulative takedown attempts by JP Morgan.

NIA estimates that over the past 30 days, JP Morgan has covered approximately 4,000 silver contracts, which has corresponded with about a $4 per ounce upward move in the price of silver. We estimate JP Morgan to still be short approximately 26,000 silver contracts or 130 million ounces of silver, which equals about 18% of worldwide annual silver production from mining of 709.6 million ounces. If JP Morgan covers their entire silver short position and the price of silver was to continue rising by $1 for every 1,000 silver contracts that JP Morgan covers, silver would rise to $56 per ounce.

JP Morgan appears to be covering its shorts in a very managed and orderly way. We are not yet seeing anything that resembles a short squeeze, although one could occur at any time. If we see a major silver shortage and a real short squeeze, silver could literally rise to hundreds of dollars per ounce overnight. Silver’s all time high of $49.45 per ounce adjusted to the CPI equals $139 per ounce in today’s dollars. As all NIA members know, the CPI understates inflation through geometric weighting and hedonics. The real inflation adjusted all time high for silver is over $400 per ounce.

With almost everybody who has ever purchased silver being up on silver in terms of dollars, it is possible we could see silver prices take a breather in the short-term. NIA is hoping for a short-term pullback, but with so many investors waiting to buy on dips, there is a chance that a large short-term pullback will never occur. NIA is very pleased that for the first time in many years, silver prices appear to be trading based on free market forces and not the manipulation of JP Morgan.

It is important to spread the word about NIA to as many people as possible, as quickly as possible, if you want America to survive hyperinflation. Please tell everybody you know to become members of NIA for free immediately at: http://inflation.us

The run on land in the expanding Alberta Bakken Formation play has given a leg up to the exploration and production (E&P) companies that got in early. In this exclusive interview with The Energy Report, Senior Analyst Kirk Wilson of Calgary-based Clarus Securities details the best and the brightest prospects seeking light oil in the western Bakken.

Is This the Buying Opportunity of 2010?

It’s the most frequent question readers have asked me lately.

Is there a buying opportunity thanks to the sell-off in municipal bonds and muni bond funds?

Municipal bonds are issued by states and municipalities to fund public works. Generally they are considered safe, but in November many muni funds saw their biggest one-day price drop since the financial crisis. Investors withdrew a record $5.4 billion from municipal bond funds within two weeks last month, according to Lipper FMI. Some funds fell by -5% or more and many hit 52-week lows.

So what exactly is going on, and more importantly, is this a chance to buy municipal bond funds for cheap and lock in attractive yields on some of the safest securities available?

Believe it or not, this sell-off wasn’t entirely unexpected. The pattern of a sell-off at year-end and a rebound in January well documented. It occurs when some investors sell before the end of the year to lock in their gains or losses for tax purposes. Then they buy back the same shares in January.

Typical year-end tax issues may help explain the sell-off. But this year there has been an unusual combination of forces at work that have amplified the selling and the potential opportunity.

For one, many states and municipalities are seeing record-high deficits, which show few signs of abating. Muni investors may be demanding higher yields (lower prices) to compensate for the higher risk of default.

At the same time, the recent election gave more control to Republicans. The victory could spell an end to the Build America Bonds program, which is set to expire at the end of December. If that program expires, the supply of traditional tax-exempt municipal bonds in the marketplace will increase by an estimated +35%, pressuring prices. In addition, the seemingly imminent decision to extend the Bush-era tax cuts means tax-advantaged municipal bonds will become less attractive for some investors.

Many of these concerns have been looming for some time, however, and likely have been priced into the muni market. Something else must have sparked the sell-off.

One catalyst may have been the Federal Reserve’s plan to buy $600 billion of short-maturity Treasury bonds. A buyback was expected, but most investors were surprised the Fed chose to focus on shorter-maturity bonds.

What does this have to do with the muni sell-off?

Muni bonds generally track Treasuries. By supporting short maturity bonds, the Fed positioned these for more modest losses than their long maturity peers. Some long maturity bonds lost as much as -10% of their value in the initial sell-off, but short maturity bonds fell only slightly — less than -2% in many cases. There are always exceptions, but generally shorter-term muni bond funds appeared to hold up better than their longer duration peers during the sell-off. That bodes well for their quick comeback in the new year.

Getting back to the original question, I think there is a year-end buying opportunity in municipal bond funds, as long as you stick with funds that meet a few guidelines.

(Note: If you’re a conservative investor, you might want to wait until a bottom is in place before investing in these muni funds — even those of the highest quality. The sell-off has been sharp and could continue in the weeks ahead.)

To pick 2011’s winners, I’m looking for funds with short maturities, taxable-equivalent yields above 6%, and high-quality portfolios rated “A” or higher by Standard and Poor’s. (Risk of default is already higher for most bonds because of rising government deficits, so avoid portfolios of questionable quality.)

This leaves you with a list of funds like Delaware Investments Minnesota Muni Income Fund II (AMEX: VMM) that have been part of the sell-off despite being safe and high-yielding. Come 2011, I think it’s this sort of find that will lead in a potential rebound.

Good Investing!

Carla Pasternak’s Dividend Opportunities

P.S. — If you’re looking for tax-advantaged income, it’s hard to beat municipal bond funds. But if you want higher yields, there are definitely other places to look. I’ve put together an educational piece on some of my favorite high-yield hunting grounds in my free course: The 5 Rules Every Income Investor Has to Know… And 3 Picks to Start Profiting Today. Click here to start reading.

Hopefully you know by now. In fact, it would have been nice to know a month ago … or better yet six months ago (or even better yet two years ago!) … Attention All You

Michael Campbell: David could we just start and give the broad brush first of all where you see sort of that precious metals a complex. I’m talking now the bullion itself and then we’ll move to the stocks.