How They Did It

The Vaults of London are empty. The GLD is being drained. Eastern demand remains insatiable. So how did The Banks manage to maintain the paper price downtrend in 2014? It's quite simple actually.

Before we get started, please go back and re-read this post from April of last year. No, the fractional reserve bullion banking system has not yet collapsed but that doesn't mean we're not still headed in that direction:

One more time, here's Bloomberg Industries' Ken Hoffman on December 13, 2013:

And here's an updated chart of the primary downtrend that we've been following since May of 2013 (click to expand):

So, how did they do it? How have The Banks managed to cap price and maintain the downtrend, thereby managing sentiment and ensuring that western demand for gold has not returned? Again, per Ken Hoffman, what will The Banks do if western demand returns? From where will they get the gold?

As you can see on the chart above, my trendline is clearly valid. Each and every time price met or exceeded the line in 2014, it was almost immediately forcibly reversed and shoved back lower. This takes a lot of momentum-blunting selling but from where did all of this selling originate? The answer won't surprise you.

Recall that every month, the criminally corrupt and complicit CFTC puts out a report called the "Bank Participation Report". This report gives summary positions of the largest US and non-US banks in every major futures market and cen be found at the CFTC website:

As this pertains to gold, each month the report summarizes the positions of the four largest US banks (a combination of JPM, MorganStanley, Citi, Goldman and others) as well as the twenty largest non-US banks (a combination of Scotia, HSBC, DB, UBS, Barclays and others). Keeping in mind that JP Morgan was fined last year by the CFTC for deliberately and repeatedly reporting false and inaccurate data (, the latest report is instructive nonetheless.

Again, these reports are issued on the first Friday of every month, taken from data surveyed on the first Tuesday of every month. Here's how the BPR of January 7, 2014 looked. On that date, paper price was $1229 and total Comex gold open interest stood at 383,021 contracts:

                                            GROSS LONG               GROSS SHORT                  TOTAL NET

U.S. Banks                                59,291                                  20,032                                  +39,259

non-U.S. Banks                       26,128                                  32,492                                    -6,364

TOTAL                                                                                                                                   +32,895

So, repeating...One year ago, after price had fallen in 2013 from near $1800 to near $1200, the 24 banks held a NET LONG position of 32,895 contracts.

Now, of course, a NET LONG position was something entirely new for The Banks. They'd been NET SHORT since time immemorial. In fact, one year earlier on January 8, 2013, the 24 banks were NET SHORT 128,051 Comex gold contracts. In a bit of remarkable good fortune <sarc>, The Banks had managed to use the 30% price drop of 2013 to adjust their net position by over 160,000 contracts! Now with price bottoming in late 2013, they seemed poised to profit immensely from a rebound.

But paper profits are not what this is all least not here at The End Game when the Banks' very survival is on the line. Again, Ken Hoffman told us that "the vaults of London are virtually empty" and he wondered from where the gold would come if  western investment demand were to return in 2014. The solution offered by The Banks? Sell! Sell into every rally!! Maintain the downtrend at all costs for as long as possible!!! And, again, the proof is in the chart posted above.

And what does this look like from a Bank Participation Report standpoint? Last Friday, the latest report was released, based upon the survey taken just last Tuesday with price at $1219 and total Comex open interest of 394,021 contracts:

                                            GROSS LONG               GROSS SHORT                  TOTAL NET

U.S. Banks                                11,728                                  37,321                                    -25,593

non-U.S. Banks                       32,985                                 80,227                                   -47,242

TOTAL                                                                                                                                    -72,835


Now, take a look at those numbers again. For the calendar year, price and open interest have barely changed. However, The Banks have once again adjusted their net position by over 100,000 contracts.

Now, why would they do that? At the beginning of 2014, The Banks had positioned themselves for HUGE profits from a rising gold price and, if they had simply stood down and allowed the market to rise, this is exactly what would have happened. A 25% rally from $1200 to $1500 would have netted them nearly one billion dollars. A BILLION!

But that's not what they did. Instead, by selling into every rally, thereby blunting momentum and keeping the downtrend in place, The Banks converted a 32,895 contract NET LONG position into a 72,835 contract NET SHORT position. That net change of 105,730 contracts is equivalent to nearly 10.5MM ounces or nearly 330 metric tonnes of paper gold.

So are The Banks stupid? Have they suddenly forgotten that they're managed and populated almost entirely by greedy, soulless demons hell-bent on maximizing profits and bonuses? Or, perhaps, is something different in play here...a larger agenda?

Re-watch Ken Hoffman from December of 2013:

"The bigger story than the decline of gold is what's actually happened to the gold. You could go into a vault in London a couple of years ago and they were packed to the rafters with gold and the gold would trade from me to you to somebody else. You could walk into those vaults today and they're virtually empty. All that gold has been transferred out of London, 26 million ounces. It's gone to Switzerland where it has been recast into a higher grade, shipped off to Hong Kong and then into China, never to return.

So the most interesting thing, especially as we look into 2014, is if there ever is interest in gold again...and I'm not saying there is or isn't...that gold is just not there anymore. It's really amazing. They're building these 2,000 metric ton vaults for gold all over Asia and the Chinese, they don't want to have U.S. dollars anymore, they want to have gold." 

So, please allow me to summarize:

  • The paper price plunge of 2013 led to insatiable "Eastern" demand which not only depleted the GLD, it emptied the gold vaults of London.
  • The big fear of the bullion banks becomes "if there ever is interest in gold again, that gold just isn't there anymore".
  • Western demand for anything...stocks, real estate, gold, anything...keys off of a rising price. Therefore, the key to managing western gold investment demand is maintenance of the price downtrend begun in late 2012.
  • When the multi-year bull market resumes, "western" physical demand will return with it.
  • Demand for physical gold from a bullion banking system which doesn't have any is a significant problem.
  • And how does a bank, desperate to survive and perpetuate the current system, manage paper price and by extension, western physical demand?

January 7, 2014. Price $1229. Open interest 383,021. Total bank position NET LONG 32,895 Comex gold contracts.

January 5, 2015. Price $1219. Open interest 394,021. Total bank position NET SHORT 72,835 Comex gold contracts.

And again, by "adjusting" their net position by nearly 106,000 contracts, The Banks give you a chart that looks like this:

So what will 2015 bring? No doubt more of the same, at least for now. However, paper price clearly found a physical floor in November of last year, below $1180 and near $1150. Soon, support in this area will intersect The Banks' brutally enforced downtrend line. Before/when this happens, expect fireworks and tremendous volatility. Which direction price ultimately breaks will set the tone for remainder of this year.

As you might expect, my money is on a break UP and forward in price. That said, we've all learned that The Banks are dangerous and cagey villains...particularly when cornered. Therefore, remain alert and stay vigilant.

However, if the gold vaults are truly empty and if we did in fact find a physical floor to price late last year, then the price of gold is set for a massive rebound in 2015 as the market for physical gold finally wrests pricing control from the paper charade of the bullion banks. Be ready for an exciting and eventful year and prepare accordingly.








J.P. Cubish's picture

Thanks Turd

For all you do.  And every body else are cool too.

Mickey's picture

1230 touch and go

but its a good neighborhood to be in now

hui up almost 4% gdxj up almost 5%

gold and silver ok but lagging

serious money flowing to miners.

Blythesshrink's picture

Craig, it seems to me they

Craig, it seems to me they may be targeting the Chinese New Year (holiday starts feb 18th I think) for when the triangle resolves itself, with the hope of shoving it down then whilst our Chinese friends are on holiday. 

gold slut's picture

Top ten AND $1234.1!

Two good bits of news in one day, and on my day off, what a lucky boy.  As I watch the price rise, a bitter little voice in the back of my mind keeps saying 'any moment now comes the smash-down'.  Three years of being beaten-up by TPTB will do that to a gold-bug. (Cringes).

BarnacleBill's picture

My very humble opinion

is that when the fed/bb's lose control of Au$ pricing:

TPTB will:  - Demonize gold as the bastion of all of us "rich people"  to not pay our fair share; especially when the greater public will be sheared by bail-ins; it may be made illegal and/or onerous taxes will be levied on PM sales; etc.  When you are wielding as much power as they seem to, all that is necessary is to change the rules in a national emergency.  Hide your stash.

BarnacleBill's picture

I hope that...

I'm very wrong. 

ArtL's picture

JNUG on a tear since Dec 31

miners are stronger than I would have expected, given the caps on the price of PM's

gold slut's picture

@ BarnacleBill

Good point, the idea of tax on Au is something that lurks at the back of my mind to.

The thing that I always remind myself of, for comfort, is that Ag and particularly Au are, on the whole, the investment of the  rich and the super-rich.  Will TPTB screw-over themselves and their mates,??  

I suppose they could word legislation to protect themselves though,  but you raise a very good, and worrisome point.

Hellfish's picture

Two Words

@Barnacle Bill

Black Market

BarnacleBill's picture

The most worrisome part

to me is that I would have been scared back in the "old days" when the Legislative Branch was included in the separation of powers and had a say in things.  Now that this is too inconvenient in most cases (do they still let them decide on things like "National Ventriloquist Day"?), I am petrified at how swiftly our Rulers in the Exec Branch can implement things at will.  I don't expect any heroics from any branch of the Feds on this one.

BarnacleBill's picture

@ Hellfish

Yes I agree.  However, having been a law-abiding citizen most of my life, I HATE that I will be made a criminal when they require all transactions to be electronic straight to your IRS file and when I'm made to go on the black market to sell something that is vital to economic freedom.  The technology is already there without a doubt.

Flying Wombat's picture

TF on Janda's "Operation Freedom"

Turd Ferguson Precious Metals Update; Alex Alexiev On Terrorism; Dan Roodt On S. Africa – Dr. Dave Janda’s “Operation Freedom”

Dr. Janda mentioned "The Wages of Extremism" so I linked to where you can get a fre PDF if you want to read it.

-- Eric

-SilverIsMoney-'s picture

Great stuff Craig...

Keep up the good work. I know you went through all this in the podcast already but I think it's great you made this public.

Homes's picture

The Big 'C' Word

BarnacleBill's comments keep me awake at night sometimes. For all the prepping and stacking going on, I feel that it is only a matter of time before TPTB will change the rules of the game and confiscate the prepared. Just think about it: Russia and China moves to a gold standard. Now, the Government "has" to confiscate Au/Ag because those bad Russian and Chinese made a direct attack on the USD and they need all the gold they can get to fix the economy. 

Has anyone considered overseas gold storage? 

"Plan for the worst, hope for the best." 

imach1's picture

Don't worry

Bob Chapman has said "don't make investment decisions based on taxes."  The government can take yor kids, possessions and life.  You shouldn't worry about confiscation.  Do what is right and stay on that path.

Left Field's picture

Is oil manipulated ?

I have been pondering oil. 

It seems too good to be true that oil has declined to under $50 and gas is $2 and change. Too Good to be true.

I will grant that a slowing global economy and rising production may have put pressure on price; however, is that all that is putting pressure on price? 

Using the example from the gold market, Is someone selling paper oil? Selling with the goal of forcing price lower. Selling oil they don't have and can't deliver into the market to enhance the downtrend.  I think so.

What is the Motive? I don't know but we can see the results and the consequences beginning to take shape.

In the short term- good for the US, excluding where all the new jobs have come from in the shale patches. Hard on the exporters ....Russia, Venezuela... 

In the long term of two or more years, maybe not so good for the US. We will slow our growth in energy production and in efficiency investments. Where we are the leaders today, we will be behind in a year or two. 

Who's pockets are deep enough to survive the inevitable losses when the real oil has to be delivered? 

Who can afford the losses on the trading oil and gold if we return to supply and demand governed markets? I would guess the Fed. Or the US Gov itself. Or a combination of a few central banks working in concert. 

Question, Who would lower the price of oil and why??


Left Field

4 oz's picture

Rory w/ Andy

Patriot Family's picture

I could see taxation - not confiscation.

I don't think it will be outright confiscation.  Additional windfall taxes on the selling of hard assets is a strong possibility and meets the goal of generating revenue without stealing from people.  If that looks highly probable, I'll sell before then and only keep my emergency stack.  There are other assets you can buy that will hold or increase in value long term  - but may not attract unwanted government taxation.  So some sort of balanced plan is necessary.  You have to know what to buy ahead of time so you can move from one asset class to another ahead of time and avoid panic selling.  I already have a pretty good idea of asset classes I'll be moving into to preserve our savings, but it all depends on the situation we'll be facing.  A full blown financial collapse will require different actions than imminent excessive taxes or penalties on holding PMs.

Once we meet our long term goals of gold/silver/PM holdings, we will re-evaluate where we stand on other holdings.  I'm not a wealthy guy, but want to keep making year over year progress.  We are diverting some money to food production and self sufficiency capabilities this year, but that should have a significant long term payoff, both financial and health wise.

SE's picture

It doesn't add up

That the banks went NET SHORT on the price decline.  A year ago, they were NET LONG, now they're NET SHORT?  This is not adding up...  Please explain...

jezfry's picture

Couldn't they?

Keep rolling and adding to their shorts to suppress price without ever needing to deliver? 

rxman's picture

control can be maintained from the long side per santa


lnardozi's picture

re: Has anyone considered overseas gold storage?

Here are the two most important sentences anyone will ever say to you:

1. If you don't hold it, you don't own it.

2. Keep meticulous records of ALL the precious you own.

Rounding out the top 5

3. Make sure you have RECORDED THE SALE of your precious metals.

4. Since there's been a huge decline in the past few years, MAKE SURE TO RECORD YOUR TAX LOSSES.

5. If you are on record as having sold your precious at a loss, you will not only have no recorded profits to be taxed, you will have no recorded precious metals on store and hence no future gains to be worried about.

Safety Dan's picture

The Coming Attack Upon Our

The Coming Attack Upon Our Water Supplies

  I have been speaking with some of my friends in the media, all who have separate off-the-books-sources who are all saying remarkably similar things in regard to what they say is about to happen. For the past several days and I have received two pieces of intelligence information which includes major contractors, American military forces and the Army Corps of Engineers and the fact ..

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