The November Bank Participation Report

94
Mon, Nov 18, 2013 - 10:33am

I had planned to release publicly this column from last week. Since we are already seeing an increase in volatility this morning, I figured there was no time like the present!

After a couple of days of delay, your friends at the CFTC have released the latest Bank Participation Report for November and there are some very interesting new trends.

First, a refresher. The Bank Participation Report comes out just once per month with data usually obtained from a survey taken on the first Tuesday of the month. The totals are then aggregated into categories as the last thing the CFTC and The Cartel wants is anything close to full disclosure and transparency.

There are summary positions reported for the four largest U.S. banks in each currency, index or commodity and obviously which bank is involved varies from issue to issue. There is also a summary issued for the twenty largest non-U.S. banks and you can find the entire report here: https://www.cftc.gov/marketreports/bankparticipationreports/index.htm

As it pertains to the metals, the "U.S bank" total will always include JP Morgan (likely 70-80% of the entire total) and will also include the positions of "banks" such as Goldman, Morgan Stanley, Citi, BofAML et al. The "non-U.S. banks" included in the report are likely Scotia, HSBC, Deutsche Bank, UBS and the rest of the usual suspects.

OK, below is the raw data over the past five surveys since the price bottom on June 28. Look it over and draw your own conclusions and I will provide my own thoughts next. Keep in mind that both the U.S. and non-U.S. banks have been NET SHORT since time immemorial. The U.S. banks only became NET LONG as of the BPR dated 6/4/13.

DATE CATEGORY GROSS LONG GROSS SHORT NET POSITION RATIO

7/2/13 U.S. Bank 69,656 24,939 44,717 +2.79:1

$1246 non-U.S. Bank 34,904 58,656 23,752 -1.68:1

____________________________________________________________________________

8/6/13 U.S. Bank 90,949 31,476 59,473 +2.89:1

$1282 non-U.S. Bank 25,957 47,996 22,039 -1.85:1

____________________________________________________________________________

9/3/13 U.S. Bank 69,510 24,604 44,906 +2.82:1

$1412 non-U.S. Bank 23,626 60,350 36,724 -2.55:1

____________________________________________________________________________

10/1/13 U.S. Bank 80,375 22,368 58,007 +3.59:1

$1286 non-U.S. Bank 24,296 57,665 33,369 -2.37:1

____________________________________________________________________________

11/5/13 U.S. Bank 75,802 26,068 49,734 +2.91:1

$1308 non-U.S. Bank 19,006 58,486 39,480 -3.08:1



Jeezo-pete...where do we start? How about these four points?

  • Note that the NET U.S. Bank position is slightly more positive (long) than it was at the price bottom.
  • The non-U.S. Bank GROSS long position has been cut in half since the bottom in June. If you're wondering just whom has been selling to keep a lid on price...it's them.
  • As of last Tuesday, the size of JPM's NET LONG position is likely about the same as it was on each of the previous reports.
  • On a NET and ratio basis, the non-U.S. Banks have doubled their "shortedness" since the bottom in June. Of course, this is just "hedging for clients"....rrrrrriiiiggghhhttt....note that they've done this not by adding shorts but by dumping longs....after price had already fallen by 30%.

As I've often mentioned, we also need to look at the total Comex gold open interest and, as of 11/5/13, it was 386,796. Also on that day, the total open interest of the Dec13 contract alone was 198,626. So, of the total open interest, more than half (51.4%) was in the front-month Dec13. As stated repeatedly, I believe that JPM is the owner of almost the entire GROSS long U.S. Bank position, making their NET long something like 75,000 contracts. If they have spread that across the entire gold complex in a distribution that simply mirrors the overall open interest, JPM would be NET LONG about 40,000 Dec13 contracts, at least as of Tuesday the 5th.

THE ABSOLUTE NUMBER ONE MOST IMPORTANT THING FOR GOLD IS WHAT HAPPENS NEXT.

Does JPM stand for delivery in December? Do they stand for 10,000 or so but roll the rest into Feb14 and Apr14? Do they roll the entire 40,000-contract Dec13 position?

And why would I expect them to roll and not just simply close the position? Well...they've maintained this massive NET LONG position now for over five months...why would they change and switch now, at this moment? No, there is every reason to suspect that JPM is NET LONG, waiting for some major event in the gold market. Some have suggested that the Comex position is just a hedge of a NET SHORT position held elsewhere in the OTC market. Maybe. But why the obvious and visible switch of Comex positioning...NOW...at the end of the historic, contrived and counter-intuitive move down from $1800 to $1200?

No, I'm not buying it. JPM has something up their collective sleeve. Their intransigence regarding their position has shifted the capping burden entirely onto the non-U.S. bank category. Expect this battle to continue.

In the days since the survey was taken, Dec13 open interest has fallen 33,000+ contracts to 165,035 as contracts are closed ahead of expiration. Accordingly, open interest in the Feb14 has grown 43,000+ from 66,227 to 109,102. As we've been documenting and as last week's CoT confirms, this is primarily new Spec shorting as indicated by the falling price. So, we can conclude that, as of this moment, JPM is still NET LONG 70,000+ contracts and maybe still 35,000 or more in Dec13. Therefore, RIGHT NOW, you need to understand something very, very important:

First Notice Day for the Dec13 is Friday, November 29. That's just one week from Friday! Expect extreme volatility in the days ahead. Though JPM is NET LONG and may stand for delivery in December of a significant number of contracts, enough that they could break The Comex if they so desire, they might not. They may simply choose to stand pat and roll their position into 2014. If/when they do so, there is no easy way for them to accomplish this feat without "disrupting the market" AND, given their track record of price manipulation, we must expect them to "leg out". What does that mean? Instead of simultaneously selling a Dec13 and buying a Feb14 for minimal to zero price impact, JPM may choose to dump 5,000 or 10,000 at a time. This would set off an enormous waterfall cascade of follow-on Spec selling, into which JPM buys their 5,000 to 10,000 Febs and Aprs at an enormous discount to where price was just minutes earlier. <11/18 edit: Today's $8 dump early in Comex trading was likely JPM "testing the waters">

You must understand that ANYTHING is possible over these next few weeks. The price of gold could skyrocket as JPM stands for an enormous amount of December deliveries. The price could also plummet to a retest of the $1180 low as JPM legs out and rolls their position. Again, ANYTHING IS POSSIBLE!

The best strategy for you is preparation and situational awareness. Understand and comprehend what is happening when you see this volatility. Recognize it for what it is and do what JPM is doing, namely BTFD, and get ready for a wild and wooly 2014.

TF

About the Author

Founder
turd [at] tfmetalsreport [dot] com ()

  94 Comments

fraxinus
Nov 18, 2013 - 11:44am

As Spartacus Rex illustrated yesterday (See "Inner Game") ...

UK gold imports have tailed off drastically this year. The strong message, is that the miners are increasingly by-passing Western markets, and delivering directly to Asia. No surprise really, and that puts the Comex on the road to being an artifact or wound up. Can't say I'll miss it.

ancientmoney
Nov 18, 2013 - 11:52am

Bitcoin . . .

Maybe I am an old fuddy-duddy, but how can bitcoin be a store of value?

I can see it as a way to do transactions, since most dollars today are nothing more than digitally created "money" similar to bitcoins. But SOV? Not for me.

But I'm just an old stick-in-the-mud, so pay no attention.

SS121
Nov 18, 2013 - 12:02pm

 Monday morning Bitcoin

Monday morning Bitcoin hype, right on time...

.

U.S. Agencies to Say Bitcoins Offer Legitimate Benefits

https://www.bloomberg.com/news/2013-11-18/u-s-agencies-to-say-bitcoins-offer-legitimate-benefits.html

The Department of Justice and Securities and Exchange Commission are telling a U.S. Senate committee that Bitcoins are legitimate financial instruments, boosting prospects for wider acceptance of the virtual currency.

Representatives from the agencies told the U.S. Senate Committee on Homeland Security and Governmental Affairs ahead of a hearing today that the digital money offers benefits and carries risks

("digital money" - See, according to the FED, gold is not money. But according to these "agencies" Bitcoins are money. )

------

Bitcoin surges above $600 ahead of key week https://www.cnbc.com/id/101205416

Published: Monday, 18 Nov 2013 | 8:49 AM ET

...Federal Reserve Chairman Ben Bernanke stated that the bank had no plans to regulate bitcoin.

"Although the Federal Reserve generally monitors developments in virtual currencies and other payments system innovations, it does not necessarily have authority to directly supervise or regulate these innovations or the entities that provide them to the market,"...

------

The MSM Bitcoin pump is on.. Bitcoin is money... Fed gives it a pass... Agencies have meetings.... blah blah blah

what's next? "The World Needs an Official Digital Currency"... "New World Currency"... "NWC to be officially issued and monitorred by 'who?' United Nations?"(are they still in business?)... "The World's Central Markets and exchanges to officially convert to, and trade in NWC"

All the London Bros. outlets started the hype bright and early this Monday a.m. Will have to watch and see how far this epic failure ramps up before Silver destroys the whole thing.

Only Silver and Gold are Money, Keep Stackin'

Bollocks
Nov 18, 2013 - 12:09pm

bitcon

"Federal Reserve Chairman Ben Bernanke stated that the bank had no plans to regulate bitcoin."

There's the signal.

Who was it that said 'never believe anything until it's officially denied'?



SS121
Nov 18, 2013 - 12:10pm

@Admin HELP!

No idea how the Bitcoin post got double-posted, or how all the white space got there. It wouldn't let me edit/fix either.

[Note: fixed both -- Moderator]

tyberious
Nov 18, 2013 - 12:12pm

TPTB

Like digital money!! You have been warned!

InsAndArts
Nov 18, 2013 - 12:19pm

Thank You Turd...Lurker since watchtower days...2nd post.

Thank you Turd for staying on top of the situation, as usual.

I also want to thank you and your fantastic contributors, who have greatly added to my personal knowledge base. Thanks guys. I won't be posting much but I do greatly appreciate the site, the people and the work.

***

Funny story...

In the mid 1960's I was a rabid kid coin collector. When silver started to disappear I KNEW something was up! My little pea brain shouted "Those $#&* uckers."

We rode our bikes from bank to bank always pleading for silver using our last bit of 'kiddie cutness' to get something of value. When we learned the local Savings and loans president skimmed the tellers tills for silver with a sorting machine that was illegal for coin collectors to own, I KNEW something was rotten in the system! ( He put the bags in the trunk of his sedan) My anger burned! (laugh) Yes, I kid you not,I knew we were being 'played for suckers' at 10 years old!

But today we have this thing called "the Internet" and now we know.

And we 'know that we know'. And that certainty, my friends, is a beautiful thing.

So in a way, the whole PM 'enlightenment' via the internet is for me a vindication

of sorts. And a vindication for the old crazy gold bugs, who at the time, would say to me:

"One of these days kid, you'll see, this paper dollar won't be worth a damn thing!"

They've all passed away now. Rest in peace. Born around 1900 and already old men in the late 1960's, they were very kind mentors in coin collecting. After all these years, they've been proven right. They just never lived long enough to see it.

It's a unique type of evil that can outlast the span of a mans lifetime.

****

BTW I spent my collection on weed, cigs and beer in the 70's (smile)

Glad to be here. Thanks again everyone.

Peace

(I've posted my intro in the "Introduce Yourself" forum)

ggnewmex
Nov 18, 2013 - 12:25pm

t mosley

What firm or location did you use to purchase?

I saw MtGox out of San Fran.

thanks in advance

gg

Bollocks
Nov 18, 2013 - 12:26pm

more bitcon

I now give it a zero chance that the banksters are not heavily involved in it, and are very likely the originators of the technology.

I say zero chance because tptb will absolutely have control wherever there's a currency. It's the life-blood of the vampire squid. They will never allow anything to threaten that.

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