Understanding The Latest Bank Participation Report

If you look at it in the proper context, it makes perfect sense.

Again, in December of last year, Ken Hoffman of Bloomberg Industries inadvertently told us all that we needed to know about 2014. Rather than subject you to another lengthy dissertation on "the empty vaults of London", I invite you to review this post from last week if you need a refresher:


So if, as I and Mr. Hoffman contend, the vaults of London are empty, it becomes critical in 2014 for The Bullion Banks to do everything in their collective power to dampen price and momentum, thereby crushing sentiment and investment demand. And their strategy has worked! Even though price has surged over 10% YTD and gold is the top-performing asset so far this year, you'd never know it by listening to the financial "news". Instead, we're subjected to the constant drumbeat of sell-side recommendations and bullion bank scare tactics. Some examples:




Again, quoting Mr. Hoffman:

"So the most interesting thing, especially as we look in to 2014, is if there is interest in gold again, and I'm not saying there is or isn't, that gold is just not there anymore."

If, indeed, the primary goal of The Bullion Banks for 2014 is to control price and lessen physical demand, then we should expect heavy Bullion Bank selling on the monthly Bank Participation Reports and that is exactly what we have.

First a quick review...The monthly Bank Participation Report is a summary of the positions of the 24 "largest" banks, with the survey taken on the first Tuesday of each month. The report is broken down into two categories:

US Banks: The four largest but this is 70-80% JP Morgan. Each month it might also include Goldman, MS, Citi and others

Non US Banks: The twenty largest but this is primarily HSBC and Scotia with a little Barclays, DB, UBS and CS thrown in

On 10/2/12, with the onset of QE∞ and the subsequent, counter-intuitive and bank-rescuing price raid down from $1800, the BPR looked like this:

DATE                GROSS LONG                  GROSS SHORT                  NET POSITION

10/2/12 $1800

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

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

TOTAL                       75,506                                      260,254                                   -184,748

As documented here ad nauseam, The Banks used the price raid from 10/1/12 - 6/28/13 to dramatically alter their short position. Into all of the speculator selling, The Banks were buying and covering and by the BPR of 6/4/13, their combined NET SHORT position had flipped to a NET LONG position for the first time in memory. This position then grew and shrank through the balance of 2013 but, but by the BPR of 1/7/14, it looked like this:

DATE                GROSS LONG                  GROSS SHORT                  NET POSITION

1/7/14 $1229           

US Banks                     59,291                                       20,032                                   +39,259

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

TOTAL                         85,419                                       52,524                                    +32,895

The difference is startling. After being NET SHORT 575 metric tonnes of paper gold on 10/2/12 at $1800, The Banks were now NET LONG 102 metric tonnes at $1229. A remarkable bit of prescient trading, wouldn't you say?

Well, not so fast. It quickly became clear as the calendar flipped to the new year, that The Banks had built up this "war chest" for the sole purpose of suppressing price in 2014. Again, why? Let Ken Hoffman tell you:

"So the most interesting thing, especially as we look in to 2014, is if there is interest in gold again, and I'm not saying there is or isn't, that gold is just not there anymore."

And don't forget this chart. It is the single-most important chart you'll see for gold this year:

As the chart clearly shows (note the blue arrows), anytime price has risen thus far in 2014, The Banks have stood ready to sell longs and add shorts, thereby maintaining price below the trendline. This serves to reinforce the downtrend, maintain "the bear market" and suppress sentiment. Can we see evidence of this Bank scheme in the BPRs? You bet!

On the initial rally from The Double Bottom low of $1180 on 12/31/13, price reach the main trendline in late February. There was a BPR taken on 3/4/14 and look at the dramatic changes that had already occurred:

DATE                GROSS LONG                  GROSS SHORT                  NET POSITION

3/4/14  $1340    

US Banks                     56,272                                     30,669                                     +25,603

Non US Banks            17,526                                      54,385                                      -38,859

TOTAL                         73,798                                     85,054                                      -11,256

As you can see, in their vain attempt to suppress price and sentiment, The Banks had already flipped back to NET SHORT, adjusting their position by a NET of 44,151 contracts or 137 metric tonnes of paper gold. And it worked! Just two weeks later, momentum was halted and price was driven back by $110 in just two weeks. As the chart above shows, though, through April and May there were repeated attempts made to cross back above the main trendline and each attempt was rebuffed by The Banks. How do we know this? Let's look at the BPR from 90 days later.

DATE                GROSS LONG                  GROSS SHORT                  NET POSITION

6/3/14  $1244           

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

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

TOTAL                         61,065                                       84,901                                      -23,836      

The BPR certainly bears this out, does it not? As price kept trying to rally back above the trendline, The Banks kept selling. You can see this on the chart and now you can see it on the BPR, too.

So, let's now look at the latest BPR, from the survey taken last Tuesday and released late yesterday. Price rallied through the four week period from $1244 to $1326. That's $82 or about 6.5%. In doing so, it broke the main trendline again but then stalled.

And why did price stall? Because The Banks are desperately trying to keep price in check and near the main trendline. Can we see evidence of this Bank selling on the latest BPR? Of course.

DATE                GROSS LONG                  GROSS SHORT                  NET POSITION

7/1/14  $1326

US Banks                    35,848                                     48,182                                      -12,334

Non US Banks           16,450                                      78,549                                     -62,099

TOTAL                        52,298                                     126,731                                    -74,433

So, in just the past four weeks and in a desperate attempt to suppress and contain this latest paper price rally, The Bullion Banks have added 50,597 new net shorts or over 157 metric tonnes of paper gold.

Does this conclusively prove my theory that The Vaults of London are empty and that the increasingly-desperate Bullion Banks will be willing to go to great lengths to contain any price rally that might improve sentiment and increase Western physical demand? I believe so. It certainly fits the pattern and it is precisely what you would expect them to do.

And again, why are they doing this? They had successfully extricated themselves from an historically huge short position at the onset of QE∞ and were actually positioned LONG at The Double Bottoms of 2013. Why would they work themselves right back into the same short trap? And don't give me that laughable excuse of "hedging". Reuters and GFMS just reported yesterday that total producer hedging increased by just 9 metric tonnes in Q1 2014. The total 24 bank net position changed by 180 metric tonnes in Q1 2014! http://www.reuters.com/article/2014/07/04/gold-hedging-idUSL6N0PF2J820140704

Nope. There is simply no other, logical conclusion. It looks like this:

  • To eliminate their excessive short position at the onset of QE∞, The Bullion Banks schemed the counter-intuitive selloff from $1800 to $1200 in 2013.
  • This allowed them to flip their position by 677 metric tonnes, from net short 185,000 contracts to net long 33,000.
  • What they didn't anticipate was the record physical demand that stemmed from the huge price discount. This demand drained the vaults of London and left The Banks without the metal needed to supply fresh demands from investors, should price, sentiment and demand return in 2014.
  • As price inevitably rallied, The Banks have been liquidating their long positions and printing new naked shorts, all in the hoped of containing the rally and maintaining the downtrend from April 2013.

What will they do next? Sell more, of course! It's what they do! They are trapped and, like any trapped animal, they will fight for their very survival. We must therefore expect continued raids and price pressure as the Banks desperately attempt to get price back below the main trendline. Will they be successful? Frankly, who cares? At this point, it doesn't matter. Both higher AND lower prices only serve to exacerbate their problem which is physical demand.

The Bullion Bank hold on the global gold price is breaking and it is tenuous at best. As Ken Hoffman told us, The Vaults of London are empty and there is no gold should Western demand return. The end of the fractional reserve bullion banking system is, most assuredly, coming as the connection between paper and physical price finally breaks. All you can do is...prepare accordingly.



wildstylechef's picture



Where do we go from here as the weeks ahead will tell the tale as the stock market has stretched the bubble as far as it can go. The government has stretched the truth as far as employment and debt spending. A large number of conflicts are petering on exploding into full fledge wars. Gold shortages are being kept at bay by the very banks and organizations that have sold the gold off buy using their cash to sell off paper gold and keep the price from breaking out.

But time is running out as we approach the prime months of August through September where gold explodes and markets collapse and we have the two at all time extremes. No matter the COT come sometime very soon this shall collapse and they will loose control of gold and sorry to say the US will loose control. December calls shall do very well.

AS TO COT OR  better yet DCOT  the most important group the producers are far off the massive shorts they had when gold was at the all time highs. Its the hedge fund patsies that are holding the most of the shorts and they are about to be screwed

CPE's picture



Swineflogger's picture

Confused As Usual


It occurs to me that as I drive my pickup hither and yon tuned in to a variety of AM stations, they are ALL pushing gold and silver buying hard and all day long.   What am I supposed to take away from this fact?  Are not enough people listening  .  .  .

EDIT: 3rd

Danforth Coxwell's picture


Just have to wait and see!!

Doople's picture

Interesting Week

Gold is overbought by almost any technical analysis. Wednesday is the release of the Federal Reserve minutes which makes this a good time to drive the metal down. The wild card is Thursday when the Indian government releases the new budget. Do the tough import rules regarding gold get eased? Could be a whip saw this week.

SteveW's picture


for a cogent well reasoned report, especially after yesterday's rant when I really got concerned about whether you might be susceptible to hypertension.

Good to see that you're taking it all in stride after a good night's sleep and not letting their machinations get you down. As you say they're screwed whether gold goes up or down. Sideways looks to be all they can manage right now.

Looks like the London monkeys were asleep last night but what happened at 10 am EST as an excuse to slam PMs and how big was the dump?

snarf55's picture

These guys are desperate!!!

Hey Turd,

You should have seen the run rate early this morning on the good junior and intermediate gold stocks before the smash down.

There was volume and strangely, big bank participation all over the tape. When all that firepower that was used yesterday was

not sticking the desperate blew a big wad. If I'm correct, this smash down won't stick either.

We shall see.


Dr Jerome's picture

The Devil! Gold going down...

Does anyone else see the devil in this current chart pattern? Or maybe it is Batman. I wonder what this portends?


Seems like the Indiana have been helping the banks lately--with the gold restrictions last year and the sale of bullion recently. I predict their budget and policy will continue to be against us.

indiana rod's picture

Silver Shorts

Thursday, June 19, we had the 87 cents gap up in silver. The  C. O. T. Report for that week showed 100 million ounces of silver was sold short, a one week record

I can't help but think what the price of silver would be if not for all the naked shorts.

stackaloha's picture

Turd thank you

I have learned more about how markets worked since joining your site than I expected. I am new to paying attention to markets and the forces within, the way you explain it makes sense and converts to other types of markets. Thanks again

williamgetz's picture

Gold and Silver as Advertised on T.V.

Most likely it will be a bait and switch.  They will do their best to talk you into buying gold or silver certificates.  They will tell you that you can always redeem the certificates.   Most likely, there is fine print to protect them from ever having to redeem for physical.  They probably don't really even have the bullion in the first place, but lease it or something.   It's a scam for sure.  Just think of all the advertising money they are spending.

kardnul's picture

One of your best posts Turd

Indeed...."There is simply no other, logical conclusion."

infometron's picture

Reposting: A question regarding naked shorts

As this seems like a more appropriate thread...

I can see following your reasoning Craig that the BB can just print naked shorts ad nauseam with impunity, and that suggests a level of desperation that can only end when the whole system comes crashing down or is reset somehow (i.e., bailins).

What if they are not as out of control as that? Perhaps they have a backup plan? I'm not all that sure they are totally out of cards to play yet. Although I am speculating, it seems reasonable to me, I would very much appreciate yours and other turdites opinions of the following question regarding naked shorts:

I guess it is a concern, actually. I raised this point last week, and it seems all the more relevant now as the commercial naked shorts just keep growing and growing... What would the implications be of dumping extraordinarily large amounts of physical gold and silver on the market?

As noted previously, uncle Ted believes JPM has acquired a market corner on physical silver over the past year, and Steve St. Angelo reports significant draw downs of silver from the Shanghai exchange, and I recently heard that there have been hundreds of tons of silver recently withdrawn from SLV, and a fellow turdite recently suggested there are no indications of any scarcity of silver anywhere.

Also, we know Ecuador has recently coughed up gold to GS, and now India is apparently making hundreds of tons of gold available to the market. Also, to think that the powers that be (whether through central banks or not makes no difference) do not have significant amounts of hoarded gold somewhere would be hard to believe.

So, again, my question/concern: What is to stop the powers that be from dumping large amounts of physical silver and gold on the market (with their buddies/proxies standing in the wings ready to buy it up with both hands and feet). Wouldn't this make complete sense, as it would presumably drive the prices down, enabling the commercials to once again cover their shorts without soiling them!?

kryton619's picture

The Cartel

One of the lessons that I learned during the last smash down was to never under estimate the bullion banks.  THEY DON'T LOSE!  I have no doubt that they will successfully escape from their current short position by "convincing" the specs....to sell.

I had committed to holding off any further PM purchases until this happens BUT I received a call from my local coin shop.  He had an old vintage 20 oz Engelhard bar that he wanted to sell at a very reasonable price....of course he knows my weakness.  If it had of been any other product I would have said no....damn I hate when I fall off the wagon.

SilverX3's picture

Gold UP or DOWN from here, the banksters are screwed!!!

That's the singular most important conclusion drawn out of last 3 years' worth of trading action. All Turdites must hang on to their stacks and hang their hats on this fact alone.

Certainly time is running out for the bad guys and for the rest of us to prepare.

-SilverIsMoney-'s picture

Dr. J...

Remember 3-31-13? Go to Kitco and look at the daily chart (pretty sure thats the day anyway) we got an absurdly glitched out set of devil horns on the charts and two weeks later the price crashed horribly.

Pattaya7's picture

Miners hold the line maybe......

the miners sniffing out inflation?

FriendOfTheDevil's picture

Just thought I'd share ...

So I haven't read the article yet, but these trick planes fly over my house about 5-6 days /week ,,, It's honestly as if the farm fields out here are specifically used as the target area for all trick plane flyers in the NE corner.

All this has to do with is the sound they make. Every time I see those big old drop lines on the chart ...

**As the planes climb and dive in an invisible constant circle being completed**

Anyway, enjoy the day all! Just thought I'd share what's going on in my afternoon sky's. lol


Kryger's picture

Re:Miners hold the line maybe......

Not sure what happened here? GLD is still down but both the Juniors (GDXJ) and the Majors (GDX) are at their  intraday highs.. would love to see the Explorer ETF and the GLD flip positive too..

CPE's picture


I'd make this a public post after a few day delay.  It's very well written!

legerde's picture

Infometron.. Maybe they have a plan.

 I listen to a lot of Jim Rickards.   He has pointed out that the Federal Reserve definitely makes it up as they go along.  They have tried QE1, QE2, OpTwist, QEinf, etc. etc. etc..   Also, Sprott and others try to analyze supply versus demand and the theory is that the difference has been made up by dishoarding "government" metals in order to keep the game going.  According to Sprott, it probably should have run out by now.  So maybe they dont have metal to drop on the market.  GOFO rates seem to point in that direction too.   As to JPM aquiring a market corner on physical.   That may be true.   I keep thinking about who is actually behind the naked shorting...  Is the big short​ USGovt to keep the game alive?   Is the big short China to purchase physical at a discount and then burn the contracts in the final act?

To suggest they have a backup plan is worth considering, but I don't see a way out for the reserve currency.

Speaking of Rickards.  I heard him yesterday say that 2 days before 9/11 a bond trader had a new customer show up to buy 2B worth of treasuries.   After 9/11 sold the treasuries for a huge gain and disappeared.   "Insider Trading" is for "Insiders".  

1 minute and 30 seconds for the story:  ​

Clarki Stomias's picture

Ken Hoffman on Gold and the Power Shift East

"I think the US is out of the game right now."


Oh yeah, there's also a CME mouthpiece on the interview as well.  And yes, he actually mentions weather...  Turdville needs to start a drinking game; shots every time weather is mentioned.

Owtovit's picture

@ infometron: reposting.....

Robbing Peter to pay Paul......

infometron's picture

@ legerde

Thanks for your comment. I agree that "making it up as they (whoever "they" truly are) go along" is probably more appropriate way of considering this FUBAR than "having a backup plan."

One of my concerns, re: gold, is that they (whoever "they" truly are) very likely have significant amounts of gold hoarded, ironically, "outside of the system." If so, it would not be surprising to me if they were willing to put some of that, shall I say "eligible" (?) gold to work (Turd would know the mechanics of that much better than I).

Uncle Ted seems pretty sure JPM has "tons" of silver at its disposal. How might they dump that if they felt so inclined? Again, I'm not sure how (or if) that would work.

Maybe one of the risks of dumping physical would be disclosure?

Amazing to me that relatively puny amounts (i.e., $10K or more) of currency transferred from one place to another or exchanged for precious metals or other currencies by the average dude requires a paper trail (to avoid/prevent money laundering), but transactions like a $2B purchase of TB don't?!!

Winder's picture

One more thing on global warming...

Dr Jerome's picture



That 3-31-13 AU chart says "We are in complete control. We move price where we wish."

I wonder if they have hte same ability today to take it down and are just toying with us? GOFO heading toward negative? But with the Indian gold arriving like the cavalry, the bankers may just bee holding the fort down until they can make their move. Exhaust the bulls, keep a lid on metals, then when the buyers have slowed down, here comes the hammer.

I am hedging my bullish trades with JDST these days (not much room for downward action). Sleeping better.

Barfly's picture

Infometron - JPM silver

I feel compelled to chime in here and remind you that there is a school of thought out there that the JPM silver hoard is there so that JPM can deliver silver to satisfy short contracts that went against them in a major way. Thus, it is a preparation for what they know is inevitable.

Bollocks's picture

well well...

So Rickards is finally opening up and speaking about 9/11 as having connections to being an inside job. But he doesn't think it was a controlled demolition.

It's nothing to do with thinking, thinking about it is the problem and always leads to doubt - it's obvious when you watch the towers fall - impossible by gravity alone. They got away with this because the majority are immersed in thought and don't see what they see with their own eyes, from their own experience, whenever anything falls onto something else.

Doubt is thought. That which we take for granted is at the root of all doubt.

Thanks legerde yes. Am listening to the full interview now.

infometron's picture


Good point, and that was my thinking as well (until my "bad feeling" started to step in). Wouldn't JPM's physical serve either way? And, moreover, wouldn't it actually work better for them to coordinate a physical slam down on price, say, with the right hand, while the left hand scoops it up, covering shorts all the way? Can you see anything that would prevent or discount such a scenario?

Barfly's picture

@ Infometron

When you know you're going to set your house on fire, you don't cancel the insurance before you do.

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