An Amazing CoT and BPR for Gold

141
Mon, Jul 8, 2013 - 4:57pm

Released just this afternoon, the July Bank Participation Report and the latest Commitment of Traders Report are so interesting that I felt they justified this new post.

So, let's dive right in. I'm not going to spend much time talking about silver because the data is somewhat skewed this week by the expiration of the July13 contract. The Large Specs added 3800 net long and the Commercials added 3700 net short, all due to expiration and rollovers and now we see why silver outperformed gold by such a wide margin last week.

The reports for gold, on the other hand, are astonishing. Let's start with the CoT. For the reporting week, price fell by $32 while total OI rose by 19,752 contracts. Check out these internals:

Large Specs dumped another 6,200 longs and added 7,200 additional shorts. This brings their net position down to just 20,700 contracts and drops their total net long ratio down to a preposterously low 1.15:1. Again, for perspective, shortly after QE∞ was announced last fall, the gold Large Specs were net long over 210,000 contracts. This means that, in the time since, they've been coerced into dropping their long exposure by over 90%.

On the all-important flip side, The Gold Cartel added another 21,427 new longs last week through the Tuesday cutoff. Because they also added 8,995 new shorts, their net short position only declined by over 12,000 contracts. However...and here comes the amazing part...their new net short position is just 22,776 contracts, roughly 70 metric tonnes of paper gold, and their updated net short ratio is also preposterously low at 1.12:1.

Remember, this entire "event" from the announcement of QE∞ last fall to today, has been staged in order to give The Bullion Banks the time and the ability to cover their massive paper short position. When QE∞ was announced in September of last year, the total Cartel net short position was 737 metric tonnes of paper gold. As of last Tuesday, they are now net short just 70 metric tonnes. That's an incredible and amazing drop of over 90%.

Now get this, the CoT survey was taken last Tuesday. On Wednesday and Friday of last week, the total dollar move in gold was down another $32. Over those two days, the total open interest n gold rose by 18,561 contracts. It recent form follows, then it is safe to conclude that the vast majority of this new OI was contract initiation on the short side by the Large Specs. If that's the case, then we headed into last weekend with a total Gold Cartel net short position as low as 5,000 contracts. TOTAL!! And now you see why I find this so incredible and amazing.

Next let's consider this month's Bank Participation Report. This aggregated report gives us a once-a-month look at the gross positions of those traders classified as banks, both U.S. and non-U.S. Now check this out...let's start with the report from last October so that you can see from another perspective just how steep the changes have been in the nine months since.

GROSS LONG GROSS SHORT

U.S. Banks 40,625 146,809

Non U.S. Banks 34,881 113,445

TOTAL 75,506 248,254

And now here are the numbers from last month (June). Note that the banks had moved from net short position of 172,748 to a small net long position of 4,582. This got everyone's attention and was well summarized here: https://jessescrossroadscafe.blogspot.com/2013/06/cftc-gold-and-silver-bank-participation.html

GROSS LONG GROSS SHORT

U.S. Banks 56,751 27,129

Non U.S. Banks 24,035 49,075

TOTAL 80,786 76,204

Well, we've all been waiting with baited breath for the July report and it just came in a few minutes ago. Would the banks continue to cover on these falling prices or were they adding to the downside momentum? We got our answer:

GROSS LONG GROSS SHORT

U.S. Banks 69,565 24,939

Non U.S. Banks 34,904 58,565

TOTAL 104,560 83,859

The total net long position grew by over 16,000 contracts to an astounding 20,701. But drill a little deeper...The U.S. banks actually added net longs of 15,000! The only thing holding the overall net position in check was the 9,500 new shorts put on by non U.S. banks (HSBC? Scotia? Barclays? UBS?) Do you think that The Fed warns, plans and advises the non-U.S. banks as clearly and succinctly as they do the U.S. banks?? The Fed IS the U.S. Banks. If Barclays or UBS is too stupid to see what's going on and they are actually adding shorts at these prices, well Hells Bells, go right ahead! Their selling simply allows the U.S. Banks to cover even more!

Look, I know these past nine months have been brutal and we've all suffered through the almost-daily pain of continued losses. But this is almost over! Yes, prices may continue lower, stopping and turning who knows where. However, I am 100% confident in my analysis of The Big Picture here. The major, too-big-to-fail, Fed-Primary-Dealer and Bullion Banks have now fully gotten themselves out from under what had been an extraordinarily wrong-footed net short position of over 146,000 contracts last autumn. They are now net long nearly 45,000 contracts! (And certainly more than that after last Wednesday and Friday.) That flip of 191,000 contracts took place while price declined by 30% from $1800 to $1250 and represents a change of position equaling over 595 metric tonnes.

Please, I beg you, remain patient and continue to stack physical metal. You will soon be rewarded with a rally that will surprise even the most ardent of bulls.

TF

https://news.goldseek.com/COT/1373312054.php

https://www.cftc.gov/dea/bank/DeaJuly13f.htm

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  141 Comments

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thatguy007
Jul 8, 2013 - 9:59pm

Impossible to say

But for me it's an indicator of significant stress and distrust within the financial system. Perhaps foretelling that something wicked this way comes.

sierra skier
Jul 8, 2013 - 9:57pm

London PM Gold Diverges From Gold Stocks!

https://www.gold-eagle.com/article/london-pm-gold-diverges-gold-stocks

A brief paragraph from the middle of this article.

"Then J.R. mentioned something peculiar possibly even a little scary. NEVER, since London gold had been trading freely (since 1968), has the monthly price ever failed to make a new high over a previous monthly price for as long as it has now. We have 8 consecutive months without making a new monthly high! It's just never done that before even after the 1980's top. This is something historical in the monthly price. It could mean the price is more oversold than ever before, or it could mean the whole price structure from 1968 is over and we are in a new world (price wise). "

donnojackshitSE
Jul 8, 2013 - 9:55pm

@SE

Your timing is similar to my thinking!

I have also been looking at Ivar's charts, and thinking, what if they are just 12 months out of synch?

Ivars, where are you buddy?

thatguy007
Jul 8, 2013 - 9:53pm

GOFO Negative

... but what the hell does it portend, reading the article it could mean crash or skyrocket... any help pls

Jul 8, 2013 - 9:52pm

From ZH

This is classic:

"BOP don't take this the wrong way, but I have seen that motherfucker Turd come on here and shit all over the ZH crowd. Fuck him, that arrogant piece of shit.

I put a lot more faith in what you have to say, than that wannabe dipshit.

You said he booted you off his site. That only enhances my point. I can deal with the Jim Willie stuff. But Turd is nothing more than Jim Willie suffering from mud butt."

"Jim Willie suffering from mud butt". I don't even know what that means but that's outstanding. I have to send that off to The Jackass. He'll love it!

donnojackshitSE
Jul 8, 2013 - 9:48pm

@Missiondweller

I am pessimistic that you will overcome the criminal banks and their collusive Governments to operate outside their system of currency (not money) control.

I read yesterday that if you had purchased Bitcoin from your Lloyd's bank account in the UK, they have just closed out your bank account.

If you become successful and thereby a threat, they will screw you-count on it!

Watcher
Jul 8, 2013 - 9:45pm

Yes,it's terrific

And upon review, Roche himself wrote the entire thing for ZH.

Great work! Again, all should read.

https://www.zerohedge.com/news/2013-07-08/historic-inversion-gold-gofo-rates-turn-negative-first-time-lehman

donnojackshitSwift Boat Vet
Jul 8, 2013 - 9:43pm

@SwiftBoatVet

The only advantage that we peons have is the Government's incompetence and criminality are generally telegraphed well before they enact anything.

So if your scenario is correct, we will see some evidence of the CONgress and other critters making sure they don't get their ill gotten gains made worthless, prior to these events.

Something nasty this way comes, but this lumbering festering giant will continue in one way or another for many years to come.

SEMissiondweller
Jul 8, 2013 - 9:39pm

@ Missiondweller

Imagine paying with gold based account that converts just enough gold to local currency to complete a transaction, but leaving the remaining balance in gold units.

-----------------------

How about this, instead? The goods and services are priced in ounces of either metal, not in currency terms. Remember how bad money chases out good money through the idea of a flash point at which the price of a metal exceeds the face value of a coin? Don't make that mistake. That has happened EVERY TIME in the history of civilization. An example of what I'm suggesting would be a shirt that cost so many ounces in either gold or silver, and the cool thing is, at the register when you make your payment, you're able to choose the gold or silver "side" of your account, as some people will have some of both on deposit at the bullion warehouse, or shortened to the "warehouse," as that is ALL they will be allowed to do, simply store the metal for safekeeping for a nominal fee. Anyway, you're able to choose either metal to help you use the stronger metal against the price of the item or service you're buying. You could be paying .10 ounce of silver for a nice shirt, or whatever tiny fraction of gold for the shirt. So, if you ask someone, "How much is that 50 lbs bag of pinto beans?" someone would say, "It's a quarter of an ounce of silver for the bag." No dollars, no yuan, no lyra. Just ounces. That way, there's no conversion needed as you travel from one country or even one state to another, depending on how far things devolve in the US. Another cool thing is that the electronics nature makes it possible to make purchases deduct for say, a cup of coffee, a very small amount such that a cup might end up costing only, say 1/20 or even less of a silver dime equivalent.

Thinking about this, however, it doesn't address how those who do not bank inside the system out of distrust would get change for a cup of coffee if the smallest silver piece they have would be a silver dime...

Watcher
Jul 8, 2013 - 9:37pm

Posted on earlier thread

GOFO Negative!

Submitted by S Roche on July 8, 2013 - 12:22pm.

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