The Latest Bank Participation Report

69
Sun, Mar 9, 2014 - 5:22pm

If you've been following the daily changes to open interest and the weekly changes to the CoT, then the changes to the monthly Bank Participation Report should come as no surprise. Some perspective is needed, though, and I hope to provide some in this post.

Let's start by going back to the beginning. No, not this year or even last year. Not 2011 or even 1999. Let's go back. Way back to the time of the troglodytes. (OK, that's just an excuse to include this video)

Nonetheless, you may not know that back in the caveman days, there were gold futures markets. Yes, there were. And it shouldn't surprise you that, even then, The Cartel Banks were NET SHORT. I did a Google search and found the BPR from March 3 of the year 112,365 BC.

DATE GROSS LONG GROSS SHORT NET

3/3/-112635 31,262 114,707 -83,445

The Banks, whether from the Neanderthal or the Cro-Magnon period, were always NET SHORT and those positions continued uninterrupted until 2013. Then something amazing happened.

On the Bank Participation Report of June 4, 2013, The Banks suddenly moved NET LONG. Never before in human history had this occurred and many folks saw this as an aberration.

DATE GROSS LONG GROSS SHORT NET

6/4/13 US Banks 56,751 27,129 +29,622

non-US Banks 24,035 49,075 -25,040

TOTAL 80,786 76,204 +4,582

But it wasn't an anomaly, an aberration or a misprint. As paper price was deliberately massacred by these same banks over the preceding nine months, the movement from NET SHORT to NET LONG was not surprising at all. In fact, the NET LONG position actually grew over the next few months.

DATE GROSS LONG GROSS SHORT NET

8/6/13 US Banks 90,949 31,476 +59,473

non-US Banks 25,957 47,996 -22,039

TOTAL 116,906 79,472 +37,434

It was about this time that we noticed that it wasn't all the banks that increasingly NET LONG, it was just one. And since it was just one...and that one was a "US Bank"...it was logically deduced to be JPMorgan. JPMorgan was the prime accumulator. JPMorgan was adding longs like crazy at the price bottom and JPMorgan now held a cornering position in Comex gold futures. What happens next and which direction price moves would ultimately be determined by what JPM does with their massive LONG position. Would they sell it on the next rally? Would they stand for delivery and break The Comex?

By the time the calendar flipped to 2014, not much had changed. JPMorgan was still NET LONG a boatload of contracts and the non-US banks had gotten in on the act, too, as they had also moved nearly NET LONG. Price also had begun to rally. From a New Year's Eve Double Bottom near $1180, things were looking rosier by the day.

DATE GROSS LONG GROSS SHORT NET

1/7/14 US Banks 59,291 20,032 +39,259

non-US Banks 26,128 32,492 -6,364

TOTAL 85,419 52,524 +32,895

As price continued to rally through January, we all waited with anticipation for the February BPR. Would The Banks be NET SELLERS? If so, how much? We soon had our answer.

DATE GROSS LONG GROSS SHORT NET

2/4/14 US Banks 68,658 24,937 +43,721

non-US Banks 18,752 48,860 -30,108

TOTAL 87,410 73,797 +13,613

The dastardly non-US banks (Scotia, HSBC, DB, Barclays, UBS etc) were dumping longs and adding shorts, clearly in a desperate attempt to contain and blunt the 2014 rally. In contrast, it appeared that JPM was standing against the other 23 banks and adding LONGS and the same time. Then, through February, price continued to rally nevertheless and gold was up nearly $100 over the month. What would the March BPR bring? More of the same? Hardly.

DATE GROSS LONG GROSS SHORT NET

3/4/14 US Banks 56,272 30,669 +25,603

non-US Banks 17,526 54,385 -36,859

TOTAL 73,798 85,054 -11,526

"OH MY GOODNESS", they all exclaimed! "The Banks are once again NET SHORT!!" "Head for the hills!!!"

Meeeehhhhhh.....maybe. Let's dig a little deeper first, though.

  • First and foremost, note the similarities in the US Bank position from last Tuesday to 6/4/13. Hmmmm.
  • Note the change in the Non-US bank net position over the past two months.
  • Based on these two bullets alone, I would contend that The Civil War in gold continues. JPM Morgan is still NET LONG 45,000-50,000 contracts. The other 23 banks are desperately shorting gold, attempting to cap price and keep it below the technically-critical $1350-1360 area.

    Which side will win in the end? That's hard to say but I certainly think it would be foolish to bet against the ultimate Masters of Darkness. I mean, seriously...the other 23 banks continue on as if it's business as usual...selling while prices rise and covering on dips...while JPM maintains it's NET LONG position acquired while price from $1800 in October of 2012 to $1200 in June of 2013.

    And just in case you think that this is it and that this latest report shows that price can go no higher, check this final list of data below. It's from the BPR dated 10/2/12. Back then, The Bernank had just announced QE∞, price was near $1800 and The Banks were facing disaster. The rest is history...a counter-intuitive price smash from which we are all still trying to recover. Note the combined bank positions from that day and ponder just how much farther the banks can go, if they choose.

    DATE GROSS LONG GROSS SHORT NET

    10/2/12 US Banks 40,625 146,809 -106,184

    non-US Banks 34,881 113,445 -78,564

    TOTAL 75,506 260,254 -184,748

    Clearly, the other 23 banks have a lot of ammo left to use to contain rallies. But the key to 2014 and beyond continues to be JPMorgan. What will they do with their NET LONG position? Will they flip it back to NET SHORT? Will they stand for delivery? Will they <gasp> actually add to it on continued price strength? We'll see. The next few monthly BPRs will hold the clues.

    TF

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      69 Comments


    Mar 9, 2014 - 5:23pm

    Just a heads up

    I'll probably make this a public thread sometime on Monday.

    nzallblack
    Mar 9, 2014 - 5:32pm

    $10 Dollahs makes me Holla!

    My 1st FIRST! Thanks Turd!!

    2c piece
    Mar 9, 2014 - 5:48pm

    anyone else concerned?

    Anyone else concerned that Michelle Obama and children are planning a trip to China and Biden is planning a trip outside conus?

    stewie
    Mar 9, 2014 - 6:01pm

    TURD SHORT TERM THOUGHTS?

    Turd what are your thoughts short term now til May time frame. Sideways consolidation, downward consolidation or few days consolidation and rally into $1425 number by end of March? 

    I'm reading lots of different opinions. Also if JPM were to flip short again wouldn't that close Comex if they raided the price again as all the phyz buying it would draw down all comex phyz supplies. 

    https://www.youtube.com/watch?v=geHLdg_VNww

    s1lverbullet
    Mar 9, 2014 - 6:07pm

    Top 10

    Yeahhh!

    CPE
    Mar 9, 2014 - 6:16pm

    JPM

    Whatever they do with their position, it will at least smell better with Blythe, the witch, out on her fanny.

    ReachWest
    Mar 9, 2014 - 6:17pm

    Neanderthal Dreams

    Thanks Turd - great explanation of where things stand. 

    I come from a long line of Neanderthals and frankly, I'm not surprised to learn that the banks were net short during the hey-days of my ancestors.

    Perhaps things are finally about to change. Sounds like it hinges on JPM.

    CPE
    Mar 9, 2014 - 6:21pm

    Re: anyone else concerned?

    My only concern about Moochelle is that the silverware is still there for the next Prez. As for Biden, that clown is in the monkey video above.

    -SilverIsMoney-
    Mar 9, 2014 - 6:26pm

    Gold price opens

    Gold price opens flat...lol...right...

    infometron
    Mar 9, 2014 - 6:38pm

    @-SilverIsMoney- Gold price opens

    Don't think PM markets open until 7:00PM Eastern Daylight Savings Time today...

    Regarding your earlier post, even though it is possible that things could change on a dime, with the world as we currently know it forever just a memory, there are a slew of intermediate scenarios between that day and today. One of the more likely, imho, is that your keen foresight investing in silver will pay handsomely in due course, enabling you to follow in the footsteps of Dr. Jerome and many others on this site. Reviewing Desiderata comes to mind:

    Go placidly amid the noise and haste, and remember what peace there may be in silence.
    As far as possible without surrender be on good terms with all persons.
    Speak your truth quietly and clearly; and listen to others, even the dull and ignorant; they too have their story.
    Avoid loud and aggressive persons, they are vexations to the spirit.
    If you compare yourself with others, you may become vain and bitter;
    for always there will be greater and lesser persons than yourself.

    Enjoy your achievements as well as your plans.
    Keep interested in your career, however humble; it is a real possession in the changing fortunes of time.
    Exercise caution in your business affairs; for the world is full of trickery.
    But let this not blind you to what virtue there is; many persons strive for high ideals;
    and everywhere life is full of heroism.

    Be yourself.
    Especially, do not feign affection.
    Neither be critical about love; for in the face of all aridity and disenchantment it is as perennial as the grass.

    Take kindly the counsel of the years, gracefully surrendering the things of youth.
    Nurture strength of spirit to shield you in sudden misfortune. But do not distress yourself with imaginings.
    Many fears are born of fatigue and loneliness. Beyond a wholesome discipline, be gentle with yourself.

    You are a child of the universe, no less than the trees and the stars;
    you have a right to be here.
    And whether or not it is clear to you, no doubt the universe is unfolding as it should.

    Therefore be at peace with God, whatever you conceive Him to be,
    and whatever your labors and aspirations, in the noisy confusion of life keep peace with your soul.
    With all its sham, drudgery and broken dreams, it is still a beautiful world. Be careful. Strive to be happy.

    © Max Ehrmann 1927

    Joe72 infometron
    Mar 9, 2014 - 6:47pm

    infomentron

    markets open at 6:00 pm

    Joe72
    Mar 9, 2014 - 6:58pm

    @ infometron

    Letters get me.....i like numbers.

    The markets are electronic right now....Austrialia @ 7:00

    I lose track of months...time goes by so fast.....need to find a way to slow things down.

    infometron
    Mar 9, 2014 - 7:03pm

    @Joe72

    Anything having to do with numbers confuses me so!

    I don't even know what time it is anymore...

    Edit: Unless I've just entered the twilight zone, it looks to me as though they will open in 3, 2, 1... like, right now.

    7:00PM in New York ;^) No gaps up though...

    Preparing My Position
    Mar 9, 2014 - 7:13pm

    Are the time frames comparable?

    One of the things I question - are contract numbers themselves really comparable from one time frame to another time frame (when they are years apart really.... )? I've been paying more attention to the swings in changes, than comparing the contracts from one past period to another present period.

    Patriot Family
    Mar 9, 2014 - 7:25pm

    It's flat... no new news to move Gold.

    Bias is to the downside with slightly positive unemployment report. Doesn't take much to move gold/silver prices up or down in the weekend/overnight market. I consider this flat. No news to really push prices around. Ukraine is already priced in in it's current condition. Japan and China mixing things up a bit would be a catalyst, but so far nothing out of the ordinary. Perhaps the world should count it's blessings.

    jezfry
    Mar 9, 2014 - 7:25pm

    Looks to me

    Like the cartel are still very much in charge with a bias towards a price drop in the near future but JPM positioned with a strong bias towards a price rise beyond that.

    Urban Roman
    Mar 9, 2014 - 7:39pm

    Copper looking crimson again

    Copper looking crimson again on Finviz.

    Patriot Family
    Mar 9, 2014 - 7:52pm

    This Zerohedge article is

    This Zerohedge article is very much in line with prior comments I made regarding Britain being the key to whether or not the rest of the world allowed Russia to continue with it's invasion of the Ukraine without significant consequences...

    https://www.zerohedge.com/news/2014-03-09/why-london-too-will-balk-sanctions-against-russia-and-putin-knows-it

    joeblack
    Mar 9, 2014 - 8:04pm

    Copper down as much as 8 cents

    Copper down another 8 cents in two hours.

    Human Mushroom Joe72
    Mar 9, 2014 - 8:07pm

    @Joe72

    "I lose track of months...time goes by so fast.....need to find a way to slow things down." The only way I know to slow down time is to get younger. I remember as a kid that a school year took forever to go by for Summer vacation to arrive. Now, at the age of 65, I find that a year is only 52 "very short" weeks. I'll tell ya, I hate to pack away the holiday decorations only to take them back out a few weeks later.

    Urban Roman
    Mar 9, 2014 - 8:11pm

    Went looking for copper news

    and found this:

    Copper plunges on Chinese company default

    COPPER futures have closed sharply lower on the London Metal Exchange (LME), after crashing to seven-and-a-half-month lows amid renewed concerns over Chinese economic growth.

    The LME's flagship three-month copper contract was down 3.8 per cent at $US6,781 a metric ton at the PM kerb close on Friday, its lowest price since July 31.

    Chinese solar-equipment maker Shanghai Chaori Solar Energy Science & Technology Co became the first Chinese company to default on a bond traded in the mainland on Friday, rattling investor confidence. The default comes amid broader fears about the impact of slowing Chinese economic growth on demand for base metals, which are used in everything from smartphones to household plumbing. China is the world's top metals consumer, accounting for about 40 per cent of global copper demand.

    It'll probably put a dent in silver, too. But maybe not so much since silver is already dented, eh wot.

    SilverRunNW
    Mar 9, 2014 - 8:18pm

    Comedy and Humor!

    "Ukraine is already priced in in it's current condition."

    I'm glad to see humor and comedy aren't dead in America. Thanks Patriot Family.

    It's gotta be humor, cuz it ain't technical or fundamental analysis. But it's as good an opinion as any.

    unwired
    Mar 9, 2014 - 8:30pm

    Mar 9, 2014 - 8:31pm

    Re DrC

    I still call BS and plan to write about this tomorrow.

    In the meantime, 3.00 looks to be pretty important:

    Urban Roman
    Mar 9, 2014 - 8:49pm

    That number on Copper

    3.00 means what? I understand gold and silver and platinum, they are generally USD prices (or other fiat) per troy ounce. What does 3.00 stand for?

    gearhead_24
    Mar 9, 2014 - 9:12pm

    Screw it, I did some stacking today....

    and this is what it looks like.

    https://www.silversuperstore.com/wallace/sterling_silver_flatware/rose_p...

    Bought it from Ebay.

    First time my wife is happy with my stacking. :-)

    GH

    lakedweller2
    Mar 9, 2014 - 9:12pm

    Boom, Crash, Thud, Bang, punch, kick, slap, steal, vomit

    The EE is starting early. Don't write your Congressman because he will have you evicted and hung in the town square.

    ReachWest
    Mar 9, 2014 - 9:14pm

    Hammering - hammering.

    Bastards - the worse the geopolitical outlook is - the lower they drive Gold. This reeks of total desperation.

    Maybe that airplane of Au from Ukraine has arrived to assist the bad guys with their manipulation.

    Preparing My Position
    Mar 9, 2014 - 9:15pm

    Close below 1330

    I'm looking for a gold close at 1329 or lower for Monday. 

    infometron
    Mar 9, 2014 - 9:17pm

    and away we go...

    AU breaks 1330, AG almost touches 20.60 (Edit, but bouncing back a bit, fast, a good sign, so far)

    Edit: @ Urban Roman... In this case, 3.00 is an important technical level that is serving as "support" for the price of Copper ($ per pound, I think). If it falls below that, 3.00 could then become resistance for the price moving higher. These are "technical" considerations, which I have come to think more of in terms of "trader psychology." Falling from a "3 handle" to a "2 handle" is another one of these psychological considerations. So what we have here is a potential twofer.

    I'm no expert, but that is what my novice exposure here has led me to gather.

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