Considering The Latest Bank Participation Report

The latest Bank Participation Report was released last Friday afternoon. I know that's six days ago but I needed some time to give it full consideration...and I'm still not certain I can draw any real conclusions. So, here's what I think along with things that I think I think.

First of all, three very important points about this and all other past and future BPRs:

  1. There are two categories, US Banks (the 4 largest but this is 80-90% JPM) and non-US Banks (the 20 largest including The Scoshe, Douchebank, HSBC, Barclays, UnlimitedBS).
  2. The information could be completely worthless and and full of lies and distortions. Why? Unlike the weekly Commitment of Traders Report where open interest between Specs and Commercials has to cancel each other in zero-sum fashion, the monthly BPR simply relies upon the reported position data from the 24 banks. This means a bank could conceivably report completely falsified numbers to the CFTC. What's to stop them? It's not like the CFTC sends auditors out each week to verify the data.
  3. The information only measures reported positions on The Comex for the 24 banks. Of course, many or all of these banks often maintain mountainous "offshore" positions in countless, exotic derivatives. So, even if a bank cares to accurately report its Comex positions, you're likely only seeing one side of a position. For example, a bank may write an exotic, over-the-counter call for a customer/muppet. To hedge the risk of this bet, the bank might purchase X number of Comex contracts. In the BPR, you'd only see the futures contracts, not the offshore derivative.

With these two points in mind, let's start with the latest BPR from the survey taken last Tuesday, June 3 with price at $1245.

DATE                       GROSS LONG                   GROSS SHORT                     TOTAL

6/3/14 $1245 382,141 total OI            

US Banks                          42,075                                       33,093                                  +8,982

Non US Banks                 18,990                                       51,808                                  -32,818

TOTAL                              61,065                                       84,901                                  -23,836

This is an "improvement" over last month...but not much:

DATE                       GROSS LONG                   GROSS SHORT                     TOTAL

5/6/14  $1308  404,700

US Banks                           54,774                                      42,615                                  +12,159          

Non US Banks                  22,136                                      65,098                                  -42,962

TOTAL                               76,910                                      107,713                                 -30,803

So, over the past four weeks and as price declined by $63 or about 5%, the US Banks dumped some longs and covered some shorts, as did the Non-US Banks. In the end, the combined 24 banks reduced their total, NET position by about 20%. Woo-hoo. As of last Tuesday, the banks are still NET SHORT. Thus, I'm not quite ready to give the all clear for June.

Of course, like anything else, this data is not much help without context. Want to know why gold has been savagely and counter-intuitively attacked ever since the start of QE∞? All you need to do is go back to the BPR of 10/2/12 and you'll have your answers. For when QE∞ began, The Banks were caught flat-footed and already short hundreds of tonnes of paper gold. Price simply could NOT be allowed to zoom higher, at least not from $1800. The next 9 months were all about raiding price to inspire the Specs to take on the short position from The Banks. Take a look at these next two BPR summaries and note the date and price of each.

DATE                       GROSS LONG                   GROSS SHORT                     TOTAL

10/2/12  $1800  480,908

US Banks                          40,625                                      146,809                               -106,184

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

TOTAL                              75,506                                       260,254                               -184,748

DATE                       GROSS LONG                   GROSS SHORT                     TOTAL

7/2/13  $1220  410,399

US Banks                          69,656                                        24,939                                +44,717

Non US Banks                 34,904                                        58,656                                -23,752

TOTAL                             104,506                                      83,595                                 +20,911

Isn't that remarkable? By engineering the counter-intuitive decline and then accelerating the decline with the massive raids of 4/12-15 of 2013, The Banks were able to convert a NET SHORT position of nearly 185,000 contracts into a NET LONG position of nearly 21,000 contracts. That's a NET change of 206,000 contracts or 640 metric tonnes of paper gold! Criminal bastards.

OK, so what else can we deduce from just this information above?

  • The total, 24 Bank GROSS short position has been reduced from 260,254 contracts to 84,901 last week. Still a significant amount but also almost exactly what it was at the bottom late last June and early July.
  • Total open interest plummeted by nearly 100,000 contracts from 10/1/12 - 6/3/14. Why? Because the Banks have closed out over 90,000 NET contracts.
  • The biggest overall change, by far, comes from the US Banks (JPM). On 10/2/12, their NET position was 106,184 short. At its peak on 8/6/13, it had flipped to 59,473 NET LONG and now as of last week it's down to 8,982 NET LONG.

Obviously, there's A LOT of historical BPR data available and you can drive yourself crazy trying to make draw reasonable conclusions (I almost did these past few days). But let me just give you one more data point to consider that, given where we are from a price standpoint, seems to be the most important at this moment in time.

DATE                       GROSS LONG                   GROSS SHORT                     TOTAL

2/4/14  $1252  368,279 (note the similarities to this month's report in price and OI)

US Banks                          68,658                                      24,937                                 +43,721

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

TOTAL                              87,410                                       73,797                                 +13,613

Well now, what do we have here? Notice that:

  • After a $140 roundtrip in price over 4 months, the total positions of the non US banks are nearly unchanged.

What has changed?

  • JPM and the other US banks have trimmed their GROSS long position by nearly 1/3 and they've consistently liquidated longs every month since October 2013.
  • JPM and the other US Banks have increased their GROSS short positions by nearly the same percentage over the same time period.

So, while price was driven higher, fueled by lower interest rates and speculation relating to Ukraine, JPM was selling the whole way in an attempt to contain the rally (below the all-important down trendline). Once price peaked on 3/16, JPM continued to sell, exacerbating the price selloff. This is particularly visible in the change from just one month ago, listed back at the top of the page.

In the end, what are we to make of all this? Again, first and foremost, you must keep in mind rules #2 and #3 listed at the beginning of this post. With those rules in mind, I'll leave you with these conclusions:

  1. JPMorgan and the other US banks control and set price on the New York-based Comex. As we began to point out last summer, all of the other non US banks seem to just be along for the ride, to some extent simply following JPM's lead.
  2. The current BPR structure (NET SHORT 23,836) is not nearly as outright BULLISH as it was on 8/6/13, 12/3/13 or 1/7/14 when the TOTAL, 24-bank position was NET LONG 37,000, 43,000 and 33,000 respectively.
  3. All thoughts of JPM "cornering the Comex" have been put to bed as they've trimmed their proprietary NET LONG position by more than half while price has declined $30 between 8/6/13 and 6/3/14.
  4. It would seem now that JPM only acquired the NET LONG position with the sole intent of using it to suppress any bounceback rally that appeared in late 2013 and 2014.

Please feel free to add your own observations and conclusions into the comments section of this thread.

TF

94 Comments

-SilverIsMoney-'s picture

First?

First ever for me?

silver66's picture

Atta boy SilverIsMoney

Celebrate by going to the LCS today and converting some fiat to real money

Silver66

wildstylechef's picture

turd

i'd be

Lugnut's picture

Are they taking a break under cover of the chaos ?

Have the events in the middle east given the banks a breather ? Do they think they can let the prices up some, as they are now (Gold $1273, Silver $19.54) because there is a reason for the rise, that being the fall of Iraq and the rise of crude oil ?

Markedtofuture's picture

GOLD 2020 FORECAST - June 12, 2014 'Sneak Peek'

FYI....Public Update continued...

June 12, 2014

Dear Gold Friends,

June 12 Turn Date Arrives a Day Early.

Today We Had Iraq News & Next Week the FOMC… Events are Heating Up for Gold!

In the New York Kitco Interview I stating Gold would ‘rise in May/June and would TOP in June before a final summer low’.  Gold pushed higher today June 12 closing up $12.30 at $1273.20!  The forecast for a June Top still holds!

I was hoping Gold would first drop $5 - $10 today on the Turn Date June, 12 and then immediately reverse back up and start its price jump up into the Blue Line tomorrow June 13.  Instead Gold turned up one day early and now sits just under the Blue Line of Overhead Resistance.  Next expect…

**************

NEW June 12, 2014 Public Update has been uploaded at www.Gold2020Forecast.com . 

At the top of the webpage you will see:

2. June 12, 2014 with June 18 FOMC Comments

**************

On page 2 of the June 10, 2014 Update I include a 2013 - 2014 Gold Chart.

If you have any general questions, feel free to email mail me at Gold2020Forecast@aol.com

All the best,

Bo Polny

boomer sooner's picture

BPR - House account only or

BPR - House account only or does it include customer accounts?

metalsbyamile's picture

Where is your stack? Paperized, Vaporized,or Sanitized

Possession is Nine-Tenths of the Law

Wednesday June 11, 2014 15:26

"...Even though the property was originally stolen, that if the victim or his heirs cannot be found, and if the current possessor was not the actual criminal who stole the property, then title to that property belongs properly, justly, and ethically to its current possessor." - Murray Rothbard

If you don't hold it, you don't own it. This should be the soothing mantra for all long-term precious metals holders.

With all the options available these days, from traditional physical investing to the self directed IRA LLC, there is no excuse.

Traders and speculators are deal in derivatives.

Perhaps all well and good for the moment, until it comes time to cash in the insurance policy.

Brown's Bottom

Most of you are aware that Ecuador recently gave up half of its gold reserve to Goldman Sach in exchange for liquidity.

Think they will ever see that gold again?

In a way, it reminds me of Gordon Brown's gold sale of UK gold reserves over the period between 1999 and 2002.

It turned out that gold prices were at their lowest in 20 years, following an extended bear market. Many regard this is as the bottom.

But the point is possession. And no doubt this lies at the heart of the issues surrounding the gold in Fort Knox.

‘Possession is nine-tenths of the law’ is an expression meaning that ownership is easier to maintain if one has possession of something - or difficult to enforce if one does not.

Although the principle is an oversimplification, it can be restated as: In a property dispute (whether real or personal), in the absence of clear and compelling testimony or documentation to the contrary, the person in actual custodial possession of the property is presumed to be the rightful owner.

The rightful owner shall have their possession returned to them if taken or used.

The shirt or blouse you are currently wearing is presumed to be yours, unless someone can prove that it is not.

The principle bears some similarity to uti possidetis ("As you possess, so may you continue to possess"), which currently refers to the doctrine that colonial administrative boundaries become international boundaries when a political subdivision or colony achieves independence.

Under Roman law, it was an interdict ordering the parties to maintain possession of property until it was determined who owned the property.

This could go on forever in the case of fighting the elite banking establishment, or perhaps a foreign vault.

Think big banking corporations can’t figure out a way of implementing this in a crisis or as a preemptive strategy?

Corporate Individuals

Corporate personhood is the legal concept that a corporation may be recognized as an individual in the eyes of the law. This doctrine forms the basis for legal recognition that corporations, as groups of people, may hold and exercise certain rights under the common law and the U.S. Constitution.

The law views Corporations as entitled with many of the rights of individuals. This could serve to temper the power of possession. And perhaps facilitate the inevitable bail in.

For just as the myIRA was a distant conspiracy theory only a few short years ago, Cypress was carefully observed by the world financial elite, and is now on the verge of being institutionalized.

Of course, as you know dear reader, there are many hidden benefits of direct ownership.

You own the responsibility. The weight is not insignificant. And nor should it be. It is part of why the metals do not earn dividends. The burden of direct ownership serves as a constant reminder of value in market where price is a deluded concept.

Indeed, possession is the best way to neutralize manipulated price action. The price may change drastically, but nothing changes in the vault.

Some will likely see the turn when possession becomes, not nine-tenths of the law, but rather the onus is on the possessor to substantiate his ownership. This is where the tax man comes in.

By Dr. Jeff Lewis http://www.silver-coin-investor.com

Turd Ferguson's picture

here you go

MODERATOR

Bank Participation Report

Explanatory Notes

Since the 1980s, the CFTC has provided, on a monthly basis, the U.S. banking authorities and the Bank for International Settlements (BIS, located in Basel, Switzerland) aggregate large-trader positions of banks participating in various financial and non-financial commodity futures. Since the BIS used some of this aggregate data in its own publications, beginning in the late ‘90s the CFTC has posted the “Bank Participation Report” (BPR) for public access on its website (cftc.gov).

Separate reports are generated for futures and for gross options (not delta adjusted). The as-of date of the monthly BPR is typically the first Tuesday of each month, and publication on the Commission’s website occurs on the following Thursday or Friday. The BPR includes data for every market where five or more banks hold reportable positions. The BPR breaks the banks’ positions into two categories—U.S. Banks and Non-U.S. Banks—and shows for each type their aggregate gross long and short market positions. For purposes of protecting the confidentiality of participants’ market positions (as required under §8(a) of the Commodity Exchange Act), when the number of banks in either category (U.S. Banks or Non-U.S. Banks) is less than four, the number of banks in each of the two categories is omitted and only the total number of banks is shown for that market.

The BPR is based on the same large-trader reporting system database that CFTC economists use to monitor large-trader activity in the regulated futures and options markets, and which also is used to generate the weekly Commitment of Traders (COT) report. The BPR’s “U.S. Bank” and “Non-U.S. Bank” trader classifications are based on the self-description of a trading entity on its CFTC Form 40. Each trader files that Form upon first becoming reportable and every two years the trader remains reportable, or more frequently upon CFTC request.

If any reportable trader is “commercially engaged in business activities hedged by use of the futures or option markets,” it enumerates its business activities on Schedule 1 of the Form 40. If on that Schedule the reportable trader describes itself as a U.S. Commercial Bank or as a Non-U.S. Commercial Bank in any one commodity, that designation is applied to its positions in all commodities published in the BPR. A given business enterprise may have one or more trading entity among which are a U.S Commercial Bank or a Non-U.S. Commercial Bank, or a non-bank. Each trading entity could be a separate reportable trader, which would file a separateForm 40. Only traders that are classified as either a U.S. Commercial Bank or a Non-U.S. Commercial Bank are reported in the BPR.

The CFTC does not maintain a history of BPR data except for the rolling most recent 25 months posted on the Commission’s websit

unwired's picture

Everything is going....

swimmingly....

http://www.zerohedge.com/news/2014-06-13/ukraine-pm-warns-prepare-russian-gas-cutoff-monday

These comatose, no volatility markets are awesome. Its a new era. You can 'invest' and not WORRY ABOUT ANYTHING. Why didn't our gov't come up with this concept years ago? Could have saved us all a lot of grief......

ggnewmex's picture

LOL

O bummer to speak ( link on ZH)

no kidding, they put Marine force1 in the background.

He will talk tough before heading out on vacation I am sure!!!

LOL

stackaloha's picture

Turd, a question

At the risk of enlightening all of you to my level of financial ignorance,, what is the difference between a NET and GROSS position? I guess I need to know! Will someone please explain because I'm fairly certain I'm not the only one who has wondered the same thing.

Metalsbyamile, you are correct sir, possession is everything isn't it? That is why I'm so happy that my shack is reunited with me now that I'm back on the mainland. It will be well stashed very soon but it is always fun to consolidate the stack and look at it isn't it? To see the pile of stored labor as my shiny,undervalued, top secret stash! IT'S BEAUTIFUL! IT'S HEAVY, IT'S REAL! 

I go through my days with small efforts of waking people although as we know, people don't want to be awoken usually. I see some news and wonder how my fellow citizens become so gullible, it can be very discouraging. Then, (I know this may sound idiculous to some) I go home and hold a tube of ASEs, kookaburras, maybe a nice ag bar, and I truly do feel reassured and more hopeful. 

God bless Turdistan and all who visit!

ggnewmex's picture

wow, sad

He is saying, effectively

" Good luck Iraq"....

and 

we will help engage in dialogue

those poor people

Berk's picture

SSDD

Or growing up around my parts is was 'same sh#t, different shovel'.

That's what I thought they were doing.  Bastards. Bastards.angry

I'm convinced that the change we are all looking for won't be found in these Comex reports or BPR's. 

It will be on the front page news one day.

infometron's picture

Subtext of Obama's speech on Iraq

Iran has it covered

Orange's picture

Silver short sueeze

good article

http://seekingalpha.com/article/2266733-is-silver-set-up-for-a-huge-short-squeeze

I am just wondering during a squeeze, and the new 1% price caps if we quickly get into a situation of a bid but no ask. How would this play out in an extreme short squeeze.

Barfly's picture

Question - Longs

Wouldn't the sale of a long contract still count to drive price lower? So, even though a bank may have taken a net long position, the sale of those contracts could still be used to control price in a downward direction, right? And without the liability of having to possibly deliver metal as with a short contract.....

So, JPM may have flipped their position long, but they still hold the ability to drive price lower if they so choose. Is this correct?

infometron's picture

@Barfly

That is the way I understand it

litterbox's picture

think about this, comments please

Can someone please comment on the new Kitco Silver Fix platform that has been recently put in place on there website ? I just find it odd. Especially, come August the London Silver Fix will no longer exist. Not sure what to make of that ?
 

Barfly's picture

So therefore...

Any net long position held by a bank is simply fuel to manipulate the market down, or perhaps impede deliveries, not necessarily an expression of an expectation that the market is going to go any higher. Which would explain why the JPM's net long position has decreased and price hasn't gone anywhere.

infometron's picture

@Barfly

Exactly. And as some suggest, JPM is serving mainly as a proxy for either the U.S. (to keep the dollar up), or China (to keep the gold price down).

Levon's picture

Iraq ISIS images

Google Iraq ISIS images and you get a much clearer picture of what is actually going on. Savages in every sense of the word. This is one case where I hope the US or Iran or anyone moves in and obliterates those bastards completely wiping them and anyone associated with them from existence. Meanwhile on CNN: http://www.cnn.com/2014/06/13/us/iraq-us/index.html?hpt=hp_t1  This is a "you" problem? Thanks USA, you did a great job for Iraq. Way to liberate them.

gldslv's picture

stackaloha gross and net definitions

if you buy 10 long contracts and 10 short contracts --you would say the gross long is 10 and the gross short is 10

and your net position is 0

If you buy 15 long contracts and 10 short contracts --you would say the gross long is 15  and the gross short is 10

and your net position is 5 long...

It gets confusing once you try to compare a June long with say a November short.   you may have the same quantity of

each but the intrinsic net is not anywhere near even for long or short exposure.  That is why TF always compares the

same month contracts and why you can't look out many months out to get an idea of exposure for either side.

gldslv's picture

yes the sale would lower the price

remember everything is bid-ask.   When you sell you hit the bid.  the buyer will lower the bid as the sells come in.   Someone is always on the other side of the contract.   that is why those 2:30AM BB dumps are so impressive...the seller hits the bid, the buyer drops the bid price, the seller hits the lower bid, it drops again, hits the bid...down it goes... normal markets don't work this way.  But with a manipulated market with no regard to selling price (infinite money available for loses)..  the only regulator is the limits of availability of whatever it is you say you have to sell.

stackaloha's picture

Gldslv

Thanks, that is what I thought but wanted to make sure. I hadn't considered the differences between the expiry date of contracts in relation to each other so good point and thanks again for the response.

stackaloha's picture

Gldslv

Thanks, that is what I thought but wanted to make sure. I hadn't considered the differences between the expiry date of contracts in relation to each other so good point and thanks again for the response.

DeaconBenjamin's picture

Richard Rockefeller Dies in Plane Crash Outside NYC

iqDLq0ehq.AQ.jpg

Richard Rockefeller, a son of philanthropist David Rockefeller Sr. and former chairman of the Rockefeller Brothers Fund Inc., died when his plane crashed after takeoff from the Westchester County, New York, airport.

The single-engine Piper PA-46-500TP Meridian departed shortly after 8 a.m. today and went down less than two miles (3.2 kilometers) away near Purchase, New York, said an airport operations spokesman who declined to give his name. The pilot was the only one aboard, the spokesman said.

“The family is in shock,” said Fraser Seitel, a spokesman for the Rockefeller family. “It’s a terrible tragedy. Richard was a wonderful and cherished member of the family, a son, brother, husband, father and grandfather.”

Richard Rockefeller, 64, a physician who lived in Falmouth, Maine, was an experienced pilot and had celebrated his father’s 99th birthday at a dinner yesterday, Seitel said. He flew the plane to the Westchester County airport in White Plains yesterday.

Richard Rockefeller was an advisory trustee for the Rockefeller Brothers Fund, a philanthropic foundation begun in 1940 by the sons of John D. Rockefeller Jr., who was the son of Standard Oil Co. founder John D. Rockefeller. He is a past president of the Rockefeller Family Fund.

http://www.bloomberg.com/news/2014-06-13/richard-rockefeller-dies-in-plane-crash-outside-nyc.html

lakedweller2's picture

Things Could Go Down...maybe up

Based on history...probably down.  Based on fundamentals...things are manipulated.  Based on algorithms...probably down.  Based on bankers...probably down.  Based on the government...probably down.

Based on hope...maybe up later.  Based on logic and rational thought...who are you kidding.

tyberious's picture

Richard Rockefeller Dies in Plane Crash Outside NYC

Payback a bitch!

SilverSurfers's picture

TF said

silver was looking tasty. Not even end 2nd qtr, and getting some action. Yeah baby.

So, lets play a melody for miles, last seen driving a Russian Tank near Vorenezh.

In re RR, yours learned long ago, driving and thinking was a huge no no, like this guy could not afford a pilot. DUMB ....

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