Banks On The Run

The latest CFTC Bank Participation Report brings the usual horrors and it confirms our "inherently unfair" thesis. However, there's also a bigger picture that gold investors everywhere need to consider.

Before we begin, the usual background:

  • The CFTC's Bank Participation Report is issued monthly from a survey taken at the Comex close on the first Tuesday of every month. The report summarizes the combined positions of the four largest U.S. banks (primarily JPM, MorganStanley, Citi, Goldman but occasionally others) and the twenty largest non-U.S. banks (Scotia, HSBC, DeutscheBank, UBS, Barclays and others).
  • These reports might be utter nonsense and complete falsifications. Just last year, JPMorgan was fined by the CFTC for "repeatedly submitting inaccurate reports relating to the required reporting of positions". See here:

I will leave it up to you, dear reader, to assign or withhold legitimacy to/from the data. My job is simply to report to you on what the data shows...and it's sickening.

Ole Turd has written volumes over the past few weeks, describing the inherent unfairness of the Comex paper derivative market structure. (An example: Unlike other "markets", The Bullion Banks simply create new paper contracts whenever speculative demand increases. They do this to blunt momentum and stall price. Then, as price invariably retreats, The Banks use Spec liquidations to cover and withdraw these very same contracts.

For example, during January's price rally of over $100, total Comex gold open interest rose from a low of 371,000 contracts to a high of 451,000. Now that price has fallen back $70, total Comex gold open interest has drawn back down to 403,000. Near round-trip in price, near round-trip in open interest, too. Neat trick, huh? It's good work if you can get it.

We've documented this along the way by monitoring the daily open interest changes as well as the CFTC's weekly Commitment of Traders Report. Therefore, last Friday's Bank Participation Report was not surprising but it was grotesque, nonetheless.

I'll save you the gory details this time of how the BPR has changed, month over month, for the past two years. I just wrote about this again last month and you can check it out here if you'd like:

Instead, this time I'd simply like to focus on how the 24 banks have changed their positions over the past month and the past year. It's pretty remarkable stuff.

A little over a month ago and with price at $1219, the January BPR survey was taken. When the report was released three days later, it looked like this:

                                         GROSS LONG                   GROSS SHORT                     TOTAL

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

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

TOTAL                                  44,713                                       117,548                                 -72,835

What this shows is that, as of January 5 2015, the combined position of the 24 largest banks in the world that trade paper gold was 72,835 contracts NET SHORT. That's 7,283,500 ounces or about 226 metric tonnes. It's interesting to note, of course, that the entire Comex gold vaulting system only holds 8,166,900 troy ounces (registered and eligible) or about 254 metric tonnes.

Over the next four weeks, price and open interest both rose and by the time this most recent BPR survey was taken last Tuesday, gold was up $41 to $1260 and total OI was up 25,000 to 419,524 contracts. The report, released late last Friday showed this:

                                         GROSS LONG                   GROSS SHORT                     TOTAL

U.S. Banks                               9,163                                        65,901                                 -56,738    

Non U.S. Banks                     20,009                                      96,264                                -76,255

TOTAL                                   29,172                                      162,165                                -132,993

As you can see, as of last Tuesday the 24 largest gold banks were now NET SHORT 132,993 Comex gold contracts. That's the equivalent of 13,299,300 troy ounces of paper gold or about 414 metric tonnes.

More startling and in confirmation of our "inherent unfairness" storyline, over the past four weeks:

  • Price rose by $41 or 3.37%
  • Total Comex gold open interest rose by 25,503 contracts or 6.46%
  • The total 24 bank NET SHORT position rose by 60,158 contracts or 82.6%

Oh my goodness. Just typing those numbers makes me want to vomit. And to think that there are still Cartel Shills and Apologists out there that claim that "the banks are just making a market" and/or "hedging for miners". If you believe that, I've got an Idaho potato farm to sell you.

Anyway, draw you own conclusions. If you'd like to persist in a belief that these "markets" are "free and fair", knock yourself out. As we end this month's exercise though, I'd like you to consider the implications of one more BPR survey data table. First, check out the data, itself:

                                        GROSS LONG                   GROSS SHORT                     TOTAL

U.S. Banks                               68,658                                        24,937                              +43,721

Non U.S. Banks                      18,752                                         48,860                               -30,108

TOTAL                                    87,410                                         73,797                               +13,613            

So, now you're wondering...when was this survey taken? And at what price and open interest? Well, I hope you're sitting down. I also hope that you haven't recently eaten.

The data listed above was from the BPR survey taken exactly one year ago, on February 4, 2014. Price that evening was $1252 and total open interest was 368,279.

Therefore, with price nearly unchanged YoY and with total open interest up by about 51,000 contracts, the 24 largest gold-trading banks have massaged their NET position by 146,606 contracts. A NET change of 14,660,600 troy ounces or 456 metric tonnes....






And this is where I will leave you. Ponder that bit of information for a while. You might ask yourself..."Self, what in the world are The Banks so afraid of? Why would they go to such great lengths to keep price from rising? How is this even legal?"

Those are certainly good questions to ask and I look forward to pondering the answers and addressing the implications in the days ahead.



Pug Nuggets's picture


I love competition.

What If's picture

Keep staking

Keep staking

AIJ's picture

Beware of Greeks bearing gifts

...the gift that keeps on giving

tyberious's picture


probably worse for Silver!

Keep Stacking!

Gamble's picture

Same ol same ol

Nothing changes ! What can we expect hmmmm "more pain"

gamble gamble

Fred Hayek's picture

Oh, hell, someone will have to

Citibank and JP Mor-gan were shorting every-one

Safety Dan's picture

Rate “Sensitive” assets have

Rate “Sensitive” assets have rough week, these break support

02/07/2015 at 7:10 am, filed under Govt. bondsreal estateTLTUtilitiesNo Comments



Interest rate sensitive assets like Government bonds (TLT), Real Estate (IYR) and Utilities (XLU) have benefit greatly from falling rates and the macro theme of deflation, pushing all of them much higher over the past year(s).

Over the past year, each of these has gained 25% to 50% more than the S&P 500. The above chart reflects the strong rally in Utilities the past few years and how it remains inside of a well defined rising channel.

XLU of late has been creating bearish wicks at the top if this channel at (1). This past week, XLU broke short-term support at (2). The lower right chart is of TLT, which reflects that a bearish rising wedge looks to have formed and the support of this pattern was taken out this week, as TLT in one week wiped out a months worth of gains.

One month ago the Power of the Pattern shared "10 Reasons Why Interest Rates Are About to Reverse"  (See post here)  

A decline in these rate sensitive assets and a rise in yields this week does NOT prove a new trend is at hand. Trend changes take time and what took place this past week at resistance could become very important in the weeks ahead if weakness in this complex continues.

Safety Dan's picture

Sovereign debt scares– is the

Sovereign debt scares– is the U.S. immune?

12 Replies

Many people are finally coming to a realization that should have been evident long ago: Greece’s debts are not going to be repaid. And as discussion turns to who might be next, it seems a good time to revisit the question of whether the United States could some day find itself in similar trouble. I am substantially more optimistic about this than I was a couple of years ago, and here is why.
Continue reading →

Let me begin by clarifying that the difference is not, as many other observers have often asserted, the fact that the U.S. debt is denominated in our own currency and therefore could always be repaid just by printing a sufficient quantity of dollars. Reinhart and Rogoff (2009, pages 111-116) documented more than 70 separate historical instances of overt default on domestic public debt. Jesse Schreger, a promising Ph.D. candidate from Harvard, has nicely laid out the theory for why that is. Overt defaults on government debt are costly, but so can inflation be if the government takes the alternative route of trying to monetize the debt. Which course a government takes– outright default or big inflation– will depend on the relative costs of those two options. Schreger does a nice job of demonstrating that a rational assessment of these alternative risks gets priced into the market valuations of sovereign debt around the world.

Historical and projected future interest rate on 10-year U.S. government debt as predicted by the CBO in Feb 2013.

This entry was posted on February 8, 2015 by James_Hamilton.

Paul Mathis : H.L. Mencken said:

“The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary.”

ReachWest's picture

Incredible - Pivot Point Approaching.

Darn - Another duplicate - for fun I've overwritten the original and left the dup.

ReachWest's picture

Incredible - Pivot Point Approaching.

Those are pretty incredible numbers!

A 456 Tonne change year over year to hold price in check. And - a current net short position of 226 Tonnes. As Turd asks, "What are they afraid of?" Hmm - I wonder.

Now, understanding that this is all made up fake gold and that there are approx 50 to 100 owners for each ounce of paper gold - I have to ask the question: What happens if the demand for real Gold finally takes off overnight (perhaps due to a geopolitical issue - hmm, don't know, but there might be a few of those out there..) Anyway - what happens if these banks can no longer play the game? How would they cover? At what price could they cover? 

Very interesting times. Very interesting corner the entire god-forsaken financial system has painted itself into. I've been watching this for some time and have for a long while thought the jig would soon be up .. obviously wrong up to this point .. but do feel we are drawing very close to the pivot point.

Thanks for the great explanation Turd. Most appreciated.

Safety Dan's picture

Nuclear Thorium Plasma

Patriot Family's picture

Perhaps they are afraid of "Patient Zero": Greece

I found this little write up pretty informative.  Chancellor George Osbourne seems to be a wee bit worried. I never really thought of Greece as a major threat, perhaps abbout as impactful as a mosquito bite.  I'm starting to change my mind and am looking at them as the start of a contagion.  The EU would've been far better off to let Greece exit the Euro the first time around:

Greece is a tiny little nation.  It has roughly $240 billion in GDP; a minuscule ~0.4% of the world's economic output.  So how does this little nation become the greatest threat to the world economic outlook?  There's only one way this can possibly be true: The rest of the world, specifically, the rest of the European Union, must have levered themselves at some obscene multiple (like 100:1 or more) such that if those bets go bad they're unable to be covered and the creditor is not part of the EU or the creditor's funds were fictitious.

Read the entire post in the link above.

silver66's picture

In the words of my friend 57goldtop

Dude, that is an outstanding post !!

Stack till it hurts boys and girls, shits going to get real ( I think but then again my track record is not so good lately)


cyclemadman's picture

Great stuff from Dr. Dave Janda

Just more conformation of what I think is going on in the world.

Dr Jerome's picture

the past year

Well, looking on the bright side, over the past year, we have significantly added to our stack, AND moved a significant step or two toward owning a get away home, with good gardening soil, free and clear of a bank lien. Although the BPR YoY report is disgusting, my family is better off than at this time last year.

wildstylechef's picture

What happens to all these shorts when black pigs start flying?

like perhaps Greece goes screw you EU and leaves

The middles east some one somewhere finally looses it and pulls a trigger that lets all hell loose

And then al those shorts will go screaming to get covered.

A rather perilous time to be playing Russian roulette

SS121's picture

New Greek Drachma would be worse than now...

if they move the greeks to the new drachma ND, so what.  The ND will still be a London Bros. owned currency issued by the London Bros. owned Greek Central Bank.  AND valued according to the London Bros. owned fx "charts". devil

It would be--  meet the new privately owned currency issued by the privately owned central bank with your country's name above the door... same as the old privately owned currency issued by the privately owned central bank that has your country's name above the door. more or less

-    -    -    -   -   -

-    -    -    -   -   -


It's all just inner-system reshuffling until

the silver chart  [Most Recent Quotes from] ceases to be the price reference

for the public's  Collecting coins is more worth it when you get authentic valuable coins by transacting with honest traders.  physical silver transactions.

THEN the real fun begins.

Only Silver and Gold are Money


flyinkel's picture

Ukranians using cluster bombs on Ukranians, Sad

Germany now estimates 50,000 dead.  5 Billion (minimum) of US $$$ went towards the destabilization of Ukraine.  This blast blew out windows in homes.  How would you feel if people from another state were sending rockets in your neighborhoods funded by Russia?  Why are their children any less precious than ours?  This insane madness needs to halt, the killing needs to stop, the US funding towards this endeavor withdrawn.  The populous doesn't want to spend money on this, why do the politicians?  What right do we have to tell the rest of the world how their country lines should be drawn, and who their leaders should be?

Find you favorite politician here

Fair warning, the sight does call itself "a rabid right wing extremist".  It's just easy to hunt down your local reps through them using zip code.

Search's picture

Sge deliveries - 82 tons

That is an insane number. Open interest now 524 tons.

before last week highest I saw was like 36.

from memory in last 3 days it's gone 50,60, 80.

sge withdrawals announced Friday will be crazy. All bought into last weeks smack done as cb buying inches higher.

we are going into the next stage

Search's picture

Sge deliveries - 82 tons

That is an insane number. Open interest now 524 tons.

before last week highest I saw was like 36.

from memory in last 3 days it's gone 50,60, 80.

sge withdrawals announced Friday will be crazy. All bought into last weeks smack done as cb buying inches higher.

we are going into the next stage

usk's picture

SNB buying EUR right now

ZH have tracked Bloomberg terminals and according to them there are 2 guys in Singapore who are buying Euros right now with CHF from the SNB. This world is insane. 

The stability of the financial system is this morning in the hands of 2 swiss monkeys attached to their desk in Singapore. 

What will tomorrow brings to us? A Danish monkey in St Vincent trying to save his ass? A Goldman Sachs expat in Hong Kong? An algo sent at the last minute by a JPM desk in London? A Draghi's son program designed to save greek bond holders?

Insane world.

Safety Dan's picture

42 ADMITTED False Flag

42 ADMITTED False Flag Attacks 

by WashingtonsBlog

Governments from Around the World Admit They Do It

There are many documented false flag attacks, where a government carries out a terror attack … and then falsely blames its enemy for political purposes.

In the following 42 instances, officials in the government which carried out the attack (or seriously proposed an attack) admits to it, either orally or in writing:

(1) Japanese troops set off a small […]


U.S. Military Expert Shoots Down Washington’s Weapons-to-Ukraine Argument 

Eric Zuesse

Michael Kofman isn’t just a defense expert; he’s specialized in the precise region where Ukraine is located. He spent years managing professional military education programs and military-to-military engagements for senior officers at National Defense University.  There he served as a subject matter expert and adviser to military and government officials on issues in Russia/Eurasia. And, now, he is telling the Brookings Institution war-hawks, and its insider ‘experts’ whose expertise is about getting America into invasions but not getting us out, and is certainly not about “winning” anything more than defense contracts — he is telling them that their arguments for getting us into sending weapons to Ukraine as our “proxy” against Russia, is a shockingly stupid and counterproductive idea for everyone but America’s armaments-makers.

SubjectivObject's picture


not taking no for an answer.

silver66's picture

Could not have said this better myself

From our friend SRSrocco posting over at ZH in comments

Technical Anal-ists who continue to try and forecast in totally rigged market are simply foolish. The only chart that will reveal the future fundamental value for gold and silver will be known as the REVERSE CLIFF FORMATION.

However... we will not see this chart until the GREAT FIAT CURRENCY REVALUATION EVENT takes place. 

Thus... there is only one excellent reason to own the precious metals... to protect oneself from the coming collapse of the GREATEST FINANCIAL PONZI SCHEME in history. 



usk's picture

Wow. the greek finance minister is crazy


If this guy starts talking like a Zerohedge contributor, I am very worried about Greece. the banksters are going to crach the country big time.

alivecatbounce's picture


Mr. Paul Coghlan somehow seems to be able to use his technical analysis with great success ... in those manipulated markets . How come ? Maybe its not about TA being invalid but rather the type of TA and the person doing it ? 99% of the TA is total BS anyway even in free markets just people losing their money little by little . No doubt at some point even Coghlan won't be able to draw anything on a chart that points straight UP though .

For example , Craigs TA works most of the time without using any fancy method, why ? Because he understands the market is manipulated ,that's why .

James Crighton's picture

@usk, regarding the Greek minister for finance

Respectfully Usk, I disagree.  Quite the opposite, Varoufakis is displaying integrity, honesty and insight. It is the international banking cartel that is being exposed - as the tide goes out - and Varoufakis and his supporters, are aiding the ebb.  And not a moment too soon.


DeaconBenjamin's picture

Sound like a ZH contributor? Greek FM sounds like Max Keiser

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