The Latest Bank Participation Report

If you've been following the daily changes to open interest and the weekly changes to the CoT, then the changes to the monthly Bank Participation Report should come as no surprise. Some perspective is needed, though, and I hope to provide some in this post.

Let's start by going back to the beginning. No, not this year or even last year. Not 2011 or even 1999. Let's go back. Way back to the time of the troglodytes. (OK, that's just an excuse to include this video)

Nonetheless, you may not know that back in the caveman days, there were gold futures markets. Yes, there were. And it shouldn't surprise you that, even then, The Cartel Banks were NET SHORT. I did a Google search and found the BPR from March 3 of the year 112,365 BC.

DATE                                   GROSS LONG             GROSS SHORT            NET

3/3/-112635                                  31,262                              114,707                        -83,445

The Banks, whether from the Neanderthal or the Cro-Magnon period, were always NET SHORT and those positions continued uninterrupted until 2013. Then something amazing happened.

On the Bank Participation Report of June 4, 2013, The Banks suddenly moved NET LONG. Never before in human history had this occurred and many folks saw this as an aberration.

DATE                                   GROSS LONG             GROSS SHORT            NET

6/4/13        US Banks                   56,751                              27,129                         +29,622

                   non-US Banks            24,035                             49,075                         -25,040

                       TOTAL                     80,786                            76,204                         +4,582

But it wasn't an anomaly, an aberration or a misprint. As paper price was deliberately massacred by these same banks over the preceding nine months, the movement from NET SHORT to NET LONG was not surprising at all. In fact, the NET LONG position actually grew over the next few months.

DATE                                   GROSS LONG             GROSS SHORT            NET

8/6/13          US Banks                 90,949                             31,476                        +59,473

                   non-US Banks            25,957                              47,996                        -22,039

                         TOTAL                   116,906                            79,472                         +37,434                

It was about this time that we noticed that it wasn't all the banks that increasingly NET LONG, it was just one. And since it was just one...and that one was a "US Bank"...it was logically deduced to be JPMorgan. JPMorgan was the prime accumulator. JPMorgan was adding longs like crazy at the price bottom and JPMorgan now held a cornering position in Comex gold futures. What happens next and which direction price moves would ultimately be determined by what JPM does with their massive LONG position. Would they sell it on the next rally? Would they stand for delivery and break The Comex?

By the time the calendar flipped to 2014, not much had changed. JPMorgan was still NET LONG a boatload of contracts and the non-US banks had gotten in on the act, too, as they had also moved nearly NET LONG. Price also had begun to rally. From a New Year's Eve Double Bottom near $1180, things were looking rosier by the day.

DATE                                   GROSS LONG             GROSS SHORT            NET

1/7/14            US Banks                 59,291                              20,032                      +39,259

                     non-US Banks           26,128                              32,492                       -6,364

                          TOTAL                   85,419                              52,524                       +32,895

As price continued to rally through January, we all waited with anticipation for the February BPR. Would The Banks be NET SELLERS? If so, how much? We soon had our answer.

DATE                                   GROSS LONG             GROSS SHORT            NET

2/4/14            US Banks                68,658                              24,937                      +43,721

                      non-US Banks          18,752                               48,860                     -30,108

                          TOTAL                   87,410                               73,797                      +13,613

The dastardly non-US banks (Scotia, HSBC, DB, Barclays, UBS etc) were dumping longs and adding shorts, clearly in a desperate attempt to contain and blunt the 2014 rally. In contrast, it appeared that JPM was standing against the other 23 banks and adding LONGS and the same time. Then, through February, price continued to rally nevertheless and gold was up nearly $100 over the month. What would the March BPR bring? More of the same? Hardly.

DATE                                   GROSS LONG             GROSS SHORT            NET

3/4/14            US Banks               56,272                                 30,669                    +25,603

                      non-US Banks         17,526                                 54,385                     -36,859

                          TOTAL                  73,798                                 85,054                    -11,526

"OH MY GOODNESS", they all exclaimed! "The Banks are once again NET SHORT!!" "Head for the hills!!!"

Meeeehhhhhh.....maybe. Let's dig a little deeper first, though.

  • First and foremost, note the similarities in the US Bank position from last Tuesday to 6/4/13. Hmmmm.
  • Note the change in the Non-US bank net position over the past two months.

Based on these two bullets alone, I would contend that The Civil War in gold continues. JPM Morgan is still NET LONG 45,000-50,000 contracts. The other 23 banks are desperately shorting gold, attempting to cap price and keep it below the technically-critical $1350-1360 area.

Which side will win in the end? That's hard to say but I certainly think it would be foolish to bet against the ultimate Masters of Darkness. I mean, seriously...the other 23 banks continue on as if it's business as usual...selling while prices rise and covering on dips...while JPM maintains it's NET LONG position acquired while price from $1800 in October of 2012 to $1200 in June of 2013.

And just in case you think that this is it and that this latest report shows that price can go no higher, check this final list of data below. It's from the BPR dated 10/2/12. Back then, The Bernank had just announced QE∞, price was near $1800 and The Banks were facing disaster. The rest is history...a counter-intuitive price smash from which we are all still trying to recover. Note the combined bank positions from that day and ponder just how much farther the banks can go, if they choose.

DATE                                   GROSS LONG             GROSS SHORT            NET

10/2/12         US Banks               40,625                              146,809                      -106,184

                     non-US Banks         34,881                              113,445                         -78,564

                         TOTAL                  75,506                              260,254                      -184,748

Clearly, the other 23 banks have a lot of ammo left to use to contain rallies. But the key to 2014 and beyond continues to be JPMorgan. What will they do with their NET LONG position? Will they flip it back to NET SHORT? Will they stand for delivery? Will they <gasp> actually add to it on continued price strength? We'll see. The next few monthly BPRs will hold the clues.

TF

 

 

69 Comments

Turd Ferguson's picture

Just a heads up

MODERATOR

I'll probably make this a public thread sometime on Monday.

nzallblack's picture

$10 Dollahs makes me Holla!

My 1st FIRST! Thanks Turd!!

2c piece's picture

anyone else concerned?

Anyone else concerned that Michelle Obama and children are planning a trip to China and Biden is planning a trip outside conus?

stewie's picture

TURD SHORT TERM THOUGHTS?

Turd what are your thoughts short term now til May time frame. Sideways consolidation, downward consolidation or few days consolidation and rally into $1425 number by end of March? 

I'm reading lots of different opinions. Also if JPM were to flip short again wouldn't that close Comex if they raided the price again as all the phyz buying it would draw down all comex phyz supplies. 

s1lverbullet's picture

Top 10

Yeahhh!

CPE's picture

JPM

Whatever they do with their position, it will at least smell better with Blythe, the witch, out on her fanny.

ReachWest's picture

Neanderthal Dreams

Thanks Turd - great explanation of where things stand. 

I come from a long line of Neanderthals and frankly, I'm not surprised to learn that the banks were net short during the hey-days of my ancestors.

Perhaps things are finally about to change. Sounds like it hinges on JPM.

CPE's picture

Re: anyone else concerned?

My only concern about Moochelle is that the silverware is still there for the next Prez.  As for Biden, that clown is in the monkey video above.

-SilverIsMoney-'s picture

Gold price opens

Gold price opens flat...lol...right...

infometron's picture

@-SilverIsMoney- Gold price opens

Don't think PM markets open until 7:00PM Eastern Daylight Savings Time today...

Regarding your earlier post, even though it is possible that things could change on a dime, with the world as we currently know it forever just a memory, there are a slew of intermediate scenarios between that day and today. One of the more likely, imho, is that your keen foresight investing in silver will pay handsomely in due course, enabling you to follow in the footsteps of Dr. Jerome and many others on this site. Reviewing Desiderata comes to mind:

Go placidly amid the noise and haste, and remember what peace there may be in silence.
As far as possible without surrender be on good terms with all persons.
Speak your truth quietly and clearly; and listen to others, even the dull and ignorant; they too have their story.
Avoid loud and aggressive persons, they are vexations to the spirit.
If you compare yourself with others, you may become vain and bitter;
for always there will be greater and lesser persons than yourself.

Enjoy your achievements as well as your plans.
Keep interested in your career, however humble; it is a real possession in the changing fortunes of time.
Exercise caution in your business affairs; for the world is full of trickery.
But let this not blind you to what virtue there is; many persons strive for high ideals;
and everywhere life is full of heroism.

Be yourself.
Especially, do not feign affection.
Neither be critical about love; for in the face of all aridity and disenchantment it is as perennial as the grass.

Take kindly the counsel of the years, gracefully surrendering the things of youth.
Nurture strength of spirit to shield you in sudden misfortune. But do not distress yourself with imaginings.
Many fears are born of fatigue and loneliness. Beyond a wholesome discipline, be gentle with yourself.

You are a child of the universe, no less than the trees and the stars;
you have a right to be here.
And whether or not it is clear to you, no doubt the universe is unfolding as it should.

Therefore be at peace with God, whatever you conceive Him to be,
and whatever your labors and aspirations, in the noisy confusion of life keep peace with your soul.
With all its sham, drudgery and broken dreams, it is still a beautiful world. Be careful. Strive to be happy.

© Max Ehrmann 1927

Joe72's picture

infomentron

markets open at 6:00 pm

infometron's picture

@Joe72

Anything having to do with numbers confuses me so!

I don't even know what time it is anymore...
 

Edit: Unless I've just entered the twilight zone, it looks to me as though they will open in 3, 2, 1... like, right now.

7:00PM in New York ;^) No gaps up though...

Joe72's picture

@ infometron

Letters get me.....i like numbers.

The markets are electronic right now....Austrialia @ 7:00

I lose track of months...time goes by so fast.....need to find a way to slow things down.

Preparing My Position's picture

Are the time frames comparable?

One of the things I question  - are contract numbers themselves really comparable from one time frame to another time frame (when they are years apart really.... )?  I've been paying more attention to the swings in changes, than comparing the contracts from one past period to another present period.

jezfry's picture

Looks to me

Like the cartel are still very much in charge with a bias towards a price drop in the near future but JPM positioned with a strong bias towards a price rise beyond that.

Patriot Family's picture

It's flat... no new news to move Gold.

Bias is to the downside with slightly positive unemployment report.  Doesn't take much to move gold/silver prices up or down in the weekend/overnight market.  I consider this flat.  No news to really push prices around.  Ukraine is already priced in in it's current condition.  Japan and China mixing things up a bit would be a catalyst, but so far nothing out of the ordinary.  Perhaps the world should count it's blessings.

Urban Roman's picture

Copper looking crimson again

Copper looking crimson again on Finviz.

Patriot Family's picture

This Zerohedge article is

This Zerohedge article is very much in line with prior comments I made regarding Britain being the key to whether or not the rest of the world allowed Russia to continue with it's invasion of the Ukraine without significant consequences...

http://www.zerohedge.com/news/2014-03-09/why-london-too-will-balk-sanctions-against-russia-and-putin-knows-it

joeblack's picture

Copper down as much as 8 cents

Copper down another 8 cents in two hours.

Human Mushroom's picture

@Joe72

"I lose track of months...time goes by so fast.....need to find a way to slow things down."

The only way I know to slow down time is to get younger. I remember as a kid that a school year took forever to go by for Summer vacation to arrive. Now, at the age of 65, I find that a year is only 52 "very short" weeks.

I'll tell ya, I hate to pack away the holiday decorations only to take them back out a few weeks later.

Urban Roman's picture

Went looking for copper news

and found this:

Copper plunges on Chinese company default

COPPER futures have closed sharply lower on the London Metal Exchange (LME), after crashing to seven-and-a-half-month lows amid renewed concerns over Chinese economic growth.

The LME's flagship three-month copper contract was down 3.8 per cent at $US6,781 a metric ton at the PM kerb close on Friday, its lowest price since July 31.

Chinese solar-equipment maker Shanghai Chaori Solar Energy Science & Technology Co became the first Chinese company to default on a bond traded in the mainland on Friday, rattling investor confidence. The default comes amid broader fears about the impact of slowing Chinese economic growth on demand for base metals, which are used in everything from smartphones to household plumbing. China is the world's top metals consumer, accounting for about 40 per cent of global copper demand.

It'll probably put a dent in silver, too. But maybe not so much since silver is already dented, eh wot.

SilverRunNW's picture

Comedy and Humor!

"Ukraine is already priced in in it's current condition."

I'm glad to see humor and comedy aren't dead in America.   Thanks Patriot Family.

It's gotta be humor, cuz it ain't technical or fundamental analysis.  But it's as good an opinion as any.

Turd Ferguson's picture

Re DrC

MODERATOR

I still call BS and plan to write about this tomorrow.

In the meantime, 3.00 looks to be pretty important:

Urban Roman's picture

That number on Copper

3.00 means what? I understand gold and silver and platinum, they are generally USD prices (or other fiat) per troy ounce. What does 3.00 stand for?

infometron's picture

and away we go...

AU breaks 1330, AG almost touches 20.60 (Edit, but bouncing back a bit, fast, a good sign, so far)

Edit: @ Urban Roman... In this case, 3.00 is an important technical level that is serving as "support" for the price of Copper ($ per pound, I think). If it falls below that, 3.00 could then become resistance for the price moving higher. These are "technical" considerations, which I have come to think more of in terms of "trader psychology." Falling from a "3 handle" to a "2 handle" is another one of these psychological considerations. So what we have here is a potential twofer.

I'm no expert, but that is what my novice exposure here has led me to gather.

gearhead_24's picture

Screw it, I did some stacking today....

and this is what it looks like.

http://www.silversuperstore.com/wallace/sterling_silver_flatware/rose_point_silverware.html

Bought it from Ebay.

First time my wife is happy with my stacking.  :-)

GH

lakedweller2's picture

Boom, Crash, Thud, Bang, punch, kick, slap, steal, vomit

The EE is starting early.  Don't write your Congressman because he will have you evicted and hung in the town square.

ReachWest's picture

Hammering - hammering.

Bastards - the worse the geopolitical outlook is - the lower they drive Gold. This reeks of total desperation.

Maybe that airplane of Au from Ukraine has arrived to assist the bad guys with their manipulation.

joeblack's picture

Copper $US per pound

24 hour Copper $US Dollar price per pound

[Most Recent Quotes from www.kitco.com]

Weekend press: China PBOC’s Zhou: Rates To Rise In Early Reform Stage

People’s Bank of China Governor Zhou Xiaochuan said in comments published at the weekend:

Chinese interest rates are very likely to rise during the early stage of interest rate reform,

Cited in the official People’s Dail, Zhou speaking to National People’s Congress delegates

Further:

  • Said the impact of interest rate reform needs to be assessed in the longer-term and that rates could start falling again after a “new equilibrium” has been established
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