For JPM stock to go down as silver goes up the majority of market paricipants would have to be aware of the full exposure to silver derivatives. I read through the anual report last year and did not see a clear documentation of the outstanding leverage to silver. One could have said the same thing about Enron and their own accounting, because it was not until Enron blew up that the market started to notice the rot off the balance sheet. For now the market buzz suggests even the analysts do not see a problem with the JPM derivative leverage and that is why the stock is not falling fast as silver rises.

What is of interest to me is how that company can post net trading gains in almost every day for a full quarter, even as the silver exposure alone must be creating huge losses just one the position that is assumed of 150 million ounces. How do they hide the mark-to-market liability on that exposure?

If in fact JPM is short far more then it is a bigger mystery. Do they carry the silver owned by the SLV as a corresponding offsetting long position, even though they do not own that metal and are just the custodians? Does that impair the real ownership to the fund unit holders if JPM has pledged that as colateral to their short trade? This does not add up based on what one may assume the losses are, and what JPM actually reports in their financial statements.

cheers!

mike