Here’s the “Story.” A group of ex-employees of JPM, who HATE JPM and especially HATE Blythe Masters, head of the JPM commodity trading desk (who fired them) are aware of JPM’s large short position in silver and its inability to deliver real silver against those short sales. So this group, the spokesperson for which is “Wynter Benton” has decided to buy silver (i.e. go “long”) on the COMEX, meaning, they bought futures contracts. Specifically, March ‘11 futures contracts. Then, they “stood for delivery” meaning, when those contracts expired, they paid in full for them and stated their intention to receive silver for them, which is incidentally in the amount of 5,000 ounces per contract. But they have reason to believe that the COMEX doesn’t have enough actual silver to deliver on all the longs, so they expected - and received - a cash premium to settle in cash rather than take delivery. In other words, they are willing to be bought off in cash, rather than get 5,000 ounces of silver per contract. However, they weren’t willing to accept a “mere” 30% premium, they even refused 50%, and claim the premium they accepted was 80%, which means about $60/oz, which is incidentally some $120,000 in cash higher than the value of each contract, over and above their appreciating between when then got them in early Feb and expiry at the end of Feb. So the story goes. Wynter Benton posted on Yahoo in the JPM message boards.
What if they take the payout in cash then buy new future contracts and wait for delivery. It would payoff like a loose jackpot. Effectively no market.
So, let’s see if I understand. JPM is JP Morgan? By buying the contracts and getting an 80% extra payoff, these ex-employees are making Blythe Masters look bad because JPM will have to pay COMEX the 80% premium for handling this mess?? Any idea how many of these 5,000 oz contracts the long guys were holding?