Bank Participation Report Update

If it's to be taken seriously, the latest Bank Participation Report from the CFTC shows a completion of the full "wash and rinse" cycle from January. Does this set the stage for a renewed move higher in price? Not necessarily. However, the decks are finally clear should renewed buying interest in paper metal materialize in the weeks ahead.

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, designed to mislead and misdirect. 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, before you read further, I urge you to review this post from February, the past time I wrote on this subject:

For the purpose of this post, let's examine just three recent Bank Participation Reports....the report from January 5 with price at $1219, the report from February 3 with price at $1260 and last Friday's report based upon data submitted last Tuesday with price at $1210. Data from the three reports is laid out below:

January 5                    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

February 3                  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

April 7                             GROSS LONG                   GROSS SHORT                     TOTAL

U.S. Banks                               11,404                                      40,999                                 -29,595   

Non U.S. Banks                      23,222                                      67,814                                 -44,592

TOTAL                                   34,626                                      108,813                                -74,187

So, what stands out to you in this data? Here's what I see:

  • To manage price and sentiment, The Banks moved to cap the January rally through the issuance of nearly 45,000 naked short contracts between January 5 and February 3. That's the paper equivalent of nearly 140 metric tonnes of gold, conjured up from thin air to meet speculative trading demand.
  • The Banks also managed this buying pressure by selling more than 15,000 contracts of their existing long positions. This total move of just over 60,000 contracts served to absorb buying interest, dampen sentiment, cap price and reverse momentum.
  • In February and March, recently revised BLSBS data was used as cover to break technical indicators and chart patterns in order to send prices tumbling back lower.
  • Into this Spec selling, The Banks actively bought back almost all of the naked short positions they had created earlier in the year.
  • As of last Tuesday, the combined NET position of the 24 banks is now back to nearly the exact same level seen on January 5, before the January surge in price.

Wash. Rinse. Repeat.

Does this mean that, with this latest cycle complete, another price rally is imminent? Of course not. However, the combined total GROSS naked short position of the 24 banks is now back to levels last seen at the previous price bottom in December of 2014. So, from these levels, there's no obvious reason for The Banks to act to drive prices lower, either. What we're left with is a range-bound paper market that is looking for a catalyst either way.

As global physical demand remains high and, by all appearances, global physical supply remains tight, the price floor found near $1150 should continue to hold. As it does, renewed fundamental concerns should serve to drive prices gradually higher. Of course, The Banks will only act to suppress any new trend by once again issuing fresh naked paper. However, now that the latest wash-and-rinse cycle is complete, the "space" created on the Banks' books should allow them to issue this fresh paper without first actively moving to rig price even lower.

Be cautious yet optimistic. In 2015, gold is still poised to recover from the late 2014 washout lows. In doing so, it will post its first positive annual return since 2012 and mark a revival of the secular bull market that began in 2002.



ArtL's picture

There are lots of opportunities to be first!

Finally, number 1

Marchas45's picture

Bloody Hell Turd

Your busy today. Lol

Orange's picture


I hope you are right, as recently this shit has been getting to me. 

silver66's picture


This working for a living is getting in the way of being First



Dr Jerome's picture

Fifth. uh... 6th

I don't drink often, but when I do, perhaps a 5th is needed. Actually I have never needed a drink where a glass of wine would do... I'll pass this time and probably the rest of my opportunities also. So instead, I'll claim 6th. And my better half is calling me to dinner...

Safety Dan's picture

Off Subject.. Earthquakes Related To Sun Flares & More

This may unsettle you but 2-3 days prior to the Fukushima quake the sun let loose it's first x-class flare in quite some time. It takes that long give or take ~ 600km/sec or so to reach the earth.

The magnetosphere was said to be ringing like a bell when it hit.

Same thing happened prior to the New Zealand quake. You can watch it here.

6.5 Earthquake Near New Zealand! M6 Solar Flare Delivers! 2/2/14

With such a weak Ap showing (geomagnetic planetary index) in SC24 and an even weaker one expected for SC26 we can expect a rough ride with volcanic and earthquake activity as well as extreme climatic events for at least the next 20 years or so...

Safety Dan's picture

Obama Administration Plotting

Obama Administration Plotting Forced Adult Vaccinations

Alex Newman)  In collaboration with Big Business and special interests, the Obama administration’s Department of Health and Human Services (HHS) is plotting a new program to track Americans’ vaccination records, wage a massive propaganda campaign to “encourage” more inoculations, and foist more controversial vaccines on adults against their will. Federal bureaucrats and crony capitalists set to profit from the proposal claim the goal is to improve “public health,” and establishment media outlets have largely parroted that line so far. However, critics of the unconstitutional scheme, formally dubbed the “National Adult Immunization Plan” (NAIP), say the ultimate goal is to forcibly vaccinate all Americans and move toward a radical new healthcare paradigm in which medical “treatment” is delivered at gunpoint.

Safety Dan's picture

Interview with John McAfee:

Interview with John McAfee: Shocking information on privacy you won’t hear anywhere else

I assure you will not like what you hear. Meanwhile cover your mike, and tape your camera on your computer...

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