Sat, Dec 7, 2013 - 12:10pm

To me, the evidence is conclusive. Let's see if you agree.

In college, I had a physics professor who, every time he demonstrated a mathematical formula, would conclude his work with "QED". There's a reason for this and I'll let wikipedia sum it up for you:

"Q.E.D. is an initialism of the Latin phrase quod erat demonstrandum, originating from the Greek analogous hóper édei deîxai (ὅπερ ἔδει δεῖξαι), meaning "which had to be demonstrated". The phrase is traditionally placed in its abbreviated form at the end of a mathematical proof or philosophical argument when what was specified in the enunciation — and in the setting-out—has been exactly restated as the conclusion of the demonstration.[1] The abbreviation thus signals the completion of the proof."

Well, after Wednesday night's Comex delivery reports, QED is also how I feel regarding the JPM NET LONG position I've been harping on for months.

As first noted in the July Bank Participation Report, a "U.S. Bank" is now massive long Comex gold futures. Experience told us that a position of this size...generally around 75,000 contracts...HAD TO BE JPM. However, this experience was just conjecture and we needed demonstrable proof. The first four days of December delivery provide the proof.

If you've been following along, I've estimated that, in a NET LONG position averaging 75,000 contracts, it was likely that at least half the position was in the front-month Dec13. That position was then rolled into Feb14 and April14 but not without causing some extreme volatility, which JPM used to their selfish price advantage. Additionally, because JPM issued almost 3,000,000 ounces of gold to the other banks through the Comex delivery process of Feb13, Apr13 and June13, it was to be expected that they (JPM House) would use their long position to stand for delivery this month. Not wanting to "break" The Comex...YET...JPM will eventually stand for 7,000-8,000 in December. If the entire system doesn't collapse first, look for them to stand for the same amount in February and April of next year.

Given all of that listed in the paragraph above, "proof" of JPM's NET LONG position will lie in just how much gold they actually take in delivery during December. If the total had turned out to be miniscule...like earlier this year....my entire analysis and conclusion could be justifiably called into question. If, however, JPM ends up stopping 90%+ of the Dec gold contract deliveries...

And what do we have so far? Wednesday alone was breathtaking. There were 2,472 deliveries announced. Of the 2,472, the JPM House account stopped (took delivery) of 2,389 or 96.6%. This brings the total for the first five days of the month to:

Total Deliveries: 3,558

Total Stopped by JPM: 3,400 or 95.6%

Total Issued (thus far) by HSBC: 2,216

Total Issued (thus far) by Scotia: 787

Now consider this. Back in the first half of this year, when JPM was desperately converting a 75,000 NET SHORT position into a 75,000 NET LONG position, it got stuck "holding the bag" and deliveries were made against it by the other banks. For the delivery months of Feb13, Apr13 and June13, it looked like this:

Total Deliveries: 34,571

Total Stopped by HSBC: 13,768

Total Stopped by Scotia (including March and May): 2,257

Total Stopped by Deutsche Bank: 5,918

Total Stopped by Barclays: 3,596

Total Stopped by JPMorgan House: 547

Total ISSUED by JPMorgan (House and Customer): 31,939

Guess what world? THEY WANT THEIR FREAKING GOLD BACK!! And they have cornered The Comex gold market in order to make this happen.

Ultimately, what does this mean to you, my dear Turdite? Let me again put it this way...

JPM is NET LONG something like 65,000-70,000 Comex gold contracts right this minute. (My best estimate based upon yesterday's Bank Participation Report.) What you have to decide is this: Just whom do you expect to win in the end?

  • The brainless Specs and the non-U.S. banks?
  • The ruthless JPMorgan?
  • Assuming no changes of position, a drop of $175 from here, toward the vaunted and much-hyped $1050 level, would "cost" JPMorgan about $1.5BILLION. Do you really think that JPM, holding a market-dominating and cornering position, is going to ALLOW that to happen? Seriously?? Well, we'll see, I guess.

    Now some would suggest that JPM's Comex position is simply a hedge, offset by an equally large net short position held OTC. (As Westley said: "It's possible, pig".) But if that's the case, how do you explain JPM's sudden desire to take delivery? Again, 95%+ of the December deliveries are being stopped to the JPM House Account. Look, I'm not claiming to be some kind of Comex depository and delivery expert, remember I'm just a guy from Kansas...BUT...if JPM was simply "net neutral" and "non-directional", why would they take delivery in the first place...AND...why would all of the deliveries be ending up in their own, proprietary account?

    Finally, there is always the possibility (some would same likelihood) that all of this CFTC and CME-generated data upon which I am relying is nothing but lies and fabrications, intentionally falsified in order to deceive. Of course that's a possibility and, frankly, a somewhat logical deduction given the layers of fraud and deception prevalent throughout not just the metals markets, but seemingly everywhere. However, note the consistency of the data. The NET LONG position was first shown in the BPR of July and it is playing out now, in real time, in December. That's a long time to manage and maintain a charade.

    Instead, I actually believe the data is (mostly) accurate. Look, where else do you see the type of analysis I just gave you? It's not as if it's being trumpeted by CNBS. Very, very few people take the time to figure this stuff out and put two-and-two together. And I can promise you, JPM doesn't give a rat's ass that you and I know this stuff. By the time everybody else catches on, price will have already moved and everyone will only look back with hindsight. JPM just wants their gold back before the current fractional reserve bullion banking system breaks, prices skyrocket again and a new global currency regime takes hold. And now, for the first time ever, they've cornered the Comex gold futures market in order to ensure that it happens.



    About the Author

    turd [at] tfmetalsreport [dot] com ()


    Dec 7, 2013 - 1:28pm

    Thanks, Reach!

    And to think....All of this for just $10/month, which you "get back" if you simply do what you're supposed to be doing anyway...stack 20 ounces of silver every month.

    I've tried to make this as affordable and reasonable as possible. If I was some greedy bastard, I could be charging $75 or $100 per month but that's never been the goal of this endeavor, nor will it ever be.

    Dec 7, 2013 - 1:32pm
    boomer sooner
    Dec 7, 2013 - 1:45pm

    Futures charts made easy.

    Futures charts made easy. Auto refresh to boot.


    Sorry if old news.

    Urban Roman
    Dec 7, 2013 - 2:15pm

    Still, if JPM (or PBOC for

    Still, if JPM (or PBOC for that matter) have enough phyzz to corner the paper market, why would they not want to drive the price even lower so they can buy MOAR?

    Dec 7, 2013 - 2:21pm

    Technicals confirm TF's fundamentals

    Weekly chart review of gold, confirming significant short-covering last week that needs to continue in order to turn the tide at last. First link is largest Babson perspective. Second link shows additional Babson support angle, with commentary.



    Click on the charts to enlarge them.

    Dec 7, 2013 - 2:33pm

    dgstage - DHS GALVESTON

    dgstage - Thank you for shining the light on yet another infringement on America's constitution. This brought back an experience my father recently had with the TSA:

    Papa Mammoth is an 87-year old WWII veteran.

    While enduring airport security last month, he forgot to remove his money - belt before walking through the X-ray body-scanner. Of course this triggered an alarm.

    The TSA goons made him take off his shirt in front of everybody else who was waiting in line, and subjected him to an extensive pat-down. Made him stand there in the cold for 5-10 minutes before they allowed him to put his own shirt back on.

    It is simply unforgivable to subject an 87-year old person...and a World War II veteran...to such degrading treatment. America is no longer the same country that he risked his life - and my existence - for.


    Dagney Taggart
    Dec 7, 2013 - 2:56pm

    Turd, Please comment.....

    on the amount of open interest on the Feb14 contract for 1900 and higher calls. Is this normal for the next delivery month?


    PS. How do you know when a contract is settled for physical or fiat?

    Dec 7, 2013 - 3:03pm

    LBMA programme

    Maybe I missed a post about the LBMA 2013 PM conference but there were quite a few presentations which may provide a few more clues such as the forthcoming legislation changes re position margins, CBs' and banks, and other speeches presented including slide shows. Gives an interesting insight into how the big players see things panning out.


    Dec 7, 2013 - 3:07pm

    Garsh, do I ever LOVE Catholic intellectuals!

    Take this as a continuation of our discussion from a few days ago.

    This is a few snippets from a longer article, by a fantastic author, whose name you can google for more and still better. frontporchrepublic.com is generally good, too, if you're interested in authentic conservatism.

    PS: I'm with FDR. Pius XI's Quadragesimo Anno was one of my faves, too.


    The Triumph of the Liberal State

    by John Médaille on November 12, 2013

    It was sometime back in the Dark Ages—by which I mean the 1960’s—that I watched a television program in which two English comedians (I think it was Flanders and Swann of the “Hippopotamus Song” fame) explained British politics to an American audience. As I remember it, one of them said, “We have two major parties in Great Britain. One of them is the Liberal Party, which you Americans call ‘the Socialists,’ and the other is the Tory Party, which you Americans call ‘the Socialists.’” F&S certainly captured the American view of Europe at that time. But in fact, the differences between “us and them” in those days were not as great as we imagined.

    Western Europe was (and to a great extent still is) a collection of Social Democracies, with high levels of government services, a commensurate level of taxation, and a high degree of social equity and mobility. But the same was true of the United States. Indeed, in between the Second World War and the late 1970’s, American had built, in its way, a social democracy that resembled the vision of the good society outlined in Pope Pius XI’s encyclical Quadragesimo Anno, which Franklin Roosevelt had proclaimed “one of the greatest documents of modern times.”[1] America seemed to have fulfilled the Pope’s vision of a third-way between laissez-faire capitalism and socialism. This was the time of the “great compression,” when differences in income between rich and poor shrank to their lowest level. The portion of national income going to the top 10% fell from its pre-war high of nearly 50% in 1928 to a low of about 33%, and stayed there from 1947 to 1982.[2] America had created, arguably, the most egalitarian society on the face of the Earth and quite possibly in the history of mankind. And this is even more true if you exclude the condition of the States of the Old South and the condition of the African-Americans in those states. The two conditions, by the way, are related to each other; economically, it is just not a good idea to spend so much energy suppressing 40% of your population. But race and history weighed more heavily on the South than did economic loss.

    During this period, the CEO of a great company might make 20 times what his line workers made. That is enough to make one comfortable, but it falls far short of the 300-500 multiple that a CEO makes today. And the CEO and his workers shared a common life; the CEO just shared a bit more of it. They may not have been equals, but they were certainly neighbors. The worker might drive a Ford while the boss drove a Cadillac, but they drove them to similar places. The wife of a CEO would shop at the same stores, even if she purchased higher quality goods. They had similar houses, even if one were larger. The rich and the middle class were tied together in a common life by a common experience of war, depression, and the great struggle against communism.

    Even on health care, the issue that currently proves so fractious in American politics, the difference was less than meets the eye. The European social democracies had socialized the costs and often the delivery of health care. But America had also socialized these costs, through employment rather than through the government. Almost every worker had insurance paid for, in whole or part, by their employer. And as this system began to break down for the elderly and the very poor, we established Medicare and Medicaid in the early 1960’s to address the problem, and it was generally assumed that these systems would expand to include the whole population. Even Ayn Rand, who despised anyone who took government aid, ended up taking Medicare. Add to this the extensive network of veterans’ hospitals, at a time when a large portion of the population was composed of veterans, and the differences between Europe and the United States were diminishingly small. My parents were poor, but they never worried about medical costs; they had a “Blue Cross” card, which admitted them to any hospital, and a “Blue Shield” card which took care of the doctors.

    The system was amazingly successful on the economic level. It was a period of rapid economic growth with the benefits spread equally from the highest to the lowest. America was prosperous, powerful, and united. Granted that a good deal of that “unity” came from a precarious world situation, which forced the parties to put aside their differences to join in the Great Anti-Communist Crusade. It is easy to forget now that throughout most of the Cold War, the Communists seemed to be winning. Communism spread from the Soviet Union, to Eastern Europe, China, North Korea, Vietnam, Laos, Cambodia, and Cuba. Marxist ideas were growing in popularity in South Asia, South America, and Africa. The very real threat led to a very real unity, even when the methods and tactics that we used were morally dubious at best; nevertheless, they allowed Europe and the Far East to develop their own systems while under protection of the American “nuclear umbrella.”

    This post war period of unity was actually a combination of two strains of thought, strains which displayed a relative similarity within an absolute difference. These strains are liberal collectivism rooted in individualism and Christian communalism rooted in personalism. That is to say, they are two very different views of what it is to be a human being.

    The Christian view of man, like the Aristotelian version which preceded it, saw man as basically a political animal, whose development and self-realization was tied to communities of family, neighborhood, city, Church, profession, and, ultimately, one’s nation, which was not ordinarily a nation-state. The human person only reaches his full potential within this dense network of relationships. These relationships were further characterized by a mutuality of rights and duties; one had rights only in and through these communities, and hence one had serious obligations to these communities. “Rights” arose from one’s membership in communities, and were dependent on fulfilling one’s duties to the communities.

    Liberalism takes the opposite view: the whole point of “liberation” is to free the individual from this network of obligations so that he might truly attain his liberty. This is not the “positive liberty” of traditional Christianity, directed towards the good of the person, but a purely “negative liberty” which merely means freedom from any external coercion. “Liberty” is this view means simply that a person may do whatever he chooses to do without hindrance from any other person, and most particularly without hindrance from any public authority. In this view, a negative “liberty” is the greatest good; hence “coercion” is the greatest evil.

    At this point an aggrieved liberal might object that I should not connect individualism and collectivism, since they are opposites. But they are not opposites; rather, individualism is the prerequisite of collectivism. It is difficult, or perhaps impossible, to collectivize a person whose loyalties are tied up with a dense network of communities.


    “Conservative” candidates now vie with each other over who has the deepest hatred of government, and which one will do more to destroy it. They worship the accumulation of wealth and proclaim that taxation is theft; they enumerate the functions of government they will “privatize” and compete with each other in denouncing the poor. Even the constitutionally-mandated post office has been laden by a conservative congress with accounting regulations that apply to no other business in America, indeed to no other business on the planet, regulations that are specifically designed to show that a very profitable business is actually unprofitable, and therefore needs to be privatized.

    The joke that these erstwhile conservatives do not get is that the old name for capitalism is “liberalism”; the term “capitalism” itself was the Marxist epithet for the liberalism which Marx despised. But as liberalism came into ill-repute during decades of economic turbulence at the end of the 19th and beginning of the 20th centuries, “liberalism” rebranded itself as “capitalism” and was sold as the content of a new “conservatism.” This may have been the greatest marketing trick since Tetzel’s sale of indulgences; certainly liberalism obtained an indulgence along with a new lease on life and a new home in politics.

    The nominally “conservative” Republican Party has therefore internalized the individualist-communitarian dichotomy; in this ideological schizophrenia, collectivism must always win. Capitalism, despite the disingenuous defense given by its supporters, is neither pro-market nor anti-state. It always seeks to replace free completion in the market with the rule of monopolies and oligopolies. And it is always in the self-interest of the monopolists to have a large and pliant government that can serve their interests. The higher the piles of capital, the thicker the walls of law and government necessary to protect them.


    Dec 7, 2013 - 3:09pm

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