Understanding The Latest Bank Participation Report

79
Wed, Jul 9, 2014 - 9:37am

If you look at it in the proper context, it makes perfect sense.

Again, in December of last year, Ken Hoffman of Bloomberg Industries inadvertently told us all that we needed to know about 2014. Rather than subject you to another lengthy dissertation on "the empty vaults of London", I invite you to review this post from last week if you need a refresher:

https://www.tfmetalsreport.com/blog/5901/halftime

So if, as I and Mr. Hoffman contend, the vaults of London are empty, it becomes critical in 2014 for The Bullion Banks to do everything in their collective power to dampen price and momentum, thereby crushing sentiment and investment demand. And their strategy has worked! Even though price has surged over 10% YTD and gold is the top-performing asset so far this year, you'd never know it by listening to the financial "news". Instead, we're subjected to the constant drumbeat of sell-side recommendations and bullion bank scare tactics. Some examples:

https://www.mining.com/morgan-stanley-gold-price-wont-see-1300-again-92623/

https://www.zerohedge.com/news/2014-07-04/complete-annotation-socgens-la...

https://www.marketwatch.com/story/gold-might-be-up-this-year-but-its-wor...

Again, quoting Mr. Hoffman:

"So the most interesting thing, especially as we look in to 2014, is if there is interest in gold again, and I'm not saying there is or isn't, that gold is just not there anymore."

If, indeed, the primary goal of The Bullion Banks for 2014 is to control price and lessen physical demand, then we should expect heavy Bullion Bank selling on the monthly Bank Participation Reports and that is exactly what we have.

First a quick review...The monthly Bank Participation Report is a summary of the positions of the 24 "largest" banks, with the survey taken on the first Tuesday of each month. The report is broken down into two categories:

US Banks: The four largest but this is 70-80% JP Morgan. Each month it might also include Goldman, MS, Citi and others

Non US Banks: The twenty largest but this is primarily HSBC and Scotia with a little Barclays, DB, UBS and CS thrown in

On 10/2/12, with the onset of QE∞ and the subsequent, counter-intuitive and bank-rescuing price raid down from $1800, the BPR looked like this:

DATE GROSS LONG GROSS SHORT NET POSITION

10/2/12 $1800

US Banks 40,625 146,809 -106,184

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

TOTAL 75,506 260,254 -184,748

As documented here ad nauseam, The Banks used the price raid from 10/1/12 - 6/28/13 to dramatically alter their short position. Into all of the speculator selling, The Banks were buying and covering and by the BPR of 6/4/13, their combined NET SHORT position had flipped to a NET LONG position for the first time in memory. This position then grew and shrank through the balance of 2013 but, but by the BPR of 1/7/14, it looked like this:

DATE GROSS LONG GROSS SHORT NET POSITION

1/7/14 $1229

US Banks 59,291 20,032 +39,259

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

TOTAL 85,419 52,524 +32,895

The difference is startling. After being NET SHORT 575 metric tonnes of paper gold on 10/2/12 at $1800, The Banks were now NET LONG 102 metric tonnes at $1229. A remarkable bit of prescient trading, wouldn't you say?

Well, not so fast. It quickly became clear as the calendar flipped to the new year, that The Banks had built up this "war chest" for the sole purpose of suppressing price in 2014. Again, why? Let Ken Hoffman tell you:

"So the most interesting thing, especially as we look in to 2014, is if there is interest in gold again, and I'm not saying there is or isn't, that gold is just not there anymore."

And don't forget this chart. It is the single-most important chart you'll see for gold this year:

As the chart clearly shows (note the blue arrows), anytime price has risen thus far in 2014, The Banks have stood ready to sell longs and add shorts, thereby maintaining price below the trendline. This serves to reinforce the downtrend, maintain "the bear market" and suppress sentiment. Can we see evidence of this Bank scheme in the BPRs? You bet!

On the initial rally from The Double Bottom low of 80 on 12/31/13, price reach the main trendline in late February. There was a BPR taken on 3/4/14 and look at the dramatic changes that had already occurred:

DATE GROSS LONG GROSS SHORT NET POSITION

3/4/14 40

US Banks 56,272 30,669 +25,603

Non US Banks 17,526 54,385 -38,859

TOTAL 73,798 85,054 -11,256

As you can see, in their vain attempt to suppress price and sentiment, The Banks had already flipped back to NET SHORT, adjusting their position by a NET of 44,151 contracts or 137 metric tonnes of paper gold. And it worked! Just two weeks later, momentum was halted and price was driven back by 0 in just two weeks. As the chart above shows, though, through April and May there were repeated attempts made to cross back above the main trendline and each attempt was rebuffed by The Banks. How do we know this? Let's look at the BPR from 90 days later.

DATE GROSS LONG GROSS SHORT NET POSITION

6/3/14 44

US Banks 42,075 33,093 +8,982

Non US Banks 18,990 51,808 -32,818

TOTAL 61,065 84,901 -23,836

The BPR certainly bears this out, does it not? As price kept trying to rally back above the trendline, The Banks kept selling. You can see this on the chart and now you can see it on the BPR, too.

So, let's now look at the latest BPR, from the survey taken last Tuesday and released late yesterday. Price rallied through the four week period from 44 to 26. That's or about 6.5%. In doing so, it broke the main trendline again but then stalled.

And why did price stall? Because The Banks are desperately trying to keep price in check and near the main trendline. Can we see evidence of this Bank selling on the latest BPR? Of course.

DATE GROSS LONG GROSS SHORT NET POSITION

7/1/14 26

US Banks 35,848 48,182 -12,334

Non US Banks 16,450 78,549 -62,099

TOTAL 52,298 126,731 -74,433

So, in just the past four weeks and in a desperate attempt to suppress and contain this latest paper price rally, The Bullion Banks have added 50,597 new net shorts or over 157 metric tonnes of paper gold.

Does this conclusively prove my theory that The Vaults of London are empty and that the increasingly-desperate Bullion Banks will be willing to go to great lengths to contain any price rally that might improve sentiment and increase Western physical demand? I believe so. It certainly fits the pattern and it is precisely what you would expect them to do.

And again, why are they doing this? They had successfully extricated themselves from an historically huge short position at the onset of QE∞ and were actually positioned LONG at The Double Bottoms of 2013. Why would they work themselves right back into the same short trap? And don't give me that laughable excuse of "hedging". Reuters and GFMS just reported yesterday that total producer hedging increased by just 9 metric tonnes in Q1 2014. The total 24 bank net position changed by 180 metric tonnes in Q1 2014! https://www.reuters.com/article/2014/07/04/gold-hedging-idUSL6N0PF2J8201...

Nope. There is simply no other, logical conclusion. It looks like this:

  • To eliminate their excessive short position at the onset of QE∞, The Bullion Banks schemed the counter-intuitive selloff from $1800 to $1200 in 2013.
  • This allowed them to flip their position by 677 metric tonnes, from net short 185,000 contracts to net long 33,000.
  • What they didn't anticipate was the record physical demand that stemmed from the huge price discount. This demand drained the vaults of London and left The Banks without the metal needed to supply fresh demands from investors, should price, sentiment and demand return in 2014.
  • As price inevitably rallied, The Banks have been liquidating their long positions and printing new naked shorts, all in the hoped of containing the rally and maintaining the downtrend from April 2013.

What will they do next? Sell more, of course! It's what they do! They are trapped and, like any trapped animal, they will fight for their very survival. We must therefore expect continued raids and price pressure as the Banks desperately attempt to get price back below the main trendline. Will they be successful? Frankly, who cares? At this point, it doesn't matter. Both higher AND lower prices only serve to exacerbate their problem which is physical demand.

The Bullion Bank hold on the global gold price is breaking and it is tenuous at best. As Ken Hoffman told us, The Vaults of London are empty and there is no gold should Western demand return. The end of the fractional reserve bullion banking system is, most assuredly, coming as the connection between paper and physical price finally breaks. All you can do is...prepare accordingly.

TF

About the Author

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

  79 Comments

  Refresh
ancientmoney
Jul 10, 2014 - 9:14am
agNau
Jul 10, 2014 - 8:51am
I Run Bartertown
Jul 9, 2014 - 7:27pm

Timeless Advice

Florida Road Construction Sign Hacked To Show Extremely Vulgar Message

The sign read: “F*** Her Right In The P****.”

https://tampa.cbslocal.com/2014/07/08/florida-road-construction-sign-hacked-to-read-f-her-right-in-the-p/

It's funny because I think it's an ode to this guy:

The Biggest Troll On Live TV: Fuck Her Right In The Pussy! Compilation

Normally, I'm not a fan of needless vulgarity. But in 2014 America, with the warped messages our society gives children, this is relatively normal and healthy advice. Quaint, even.

If you're curious, he even did an interview explaining why..."I did it because it needed to be done." "I don't consider myself an artist."

Fuck Her Right in the Pussy Guy "Exclusive Interview"
JML-2012
Jul 9, 2014 - 6:44pm

BagofGold

Your version is so much better, Mr. Horse just doesn't look complete without it.

Classic Gold

BagOfGoldJML-2012
Jul 9, 2014 - 6:16pm

JML...Who wouldn't want "free shit"?...

Here's a photo my press secretary shot...& as you can see...Steven B. Horse was wearing his hat!!!...

Bag Of Gold

buzlightening
Jul 9, 2014 - 6:11pm

I love this site

ROTFL JML!!!!!

ancientmoney. head pigster demon, of jpigs latest farce is the throat cancer diagnosis. The golden parachutes from nuff nuff land are lining up for the big exit to places unknown. Put ankle tracking bracelets on the f-tards who haven't already had body doubles step in for them as the exit heats up before the crash. JML's lil scamBO pic is it real or is it kodak or whatever isn't real in a world of illusion. Now you see'em and now you don't. How many times the banksters goon-a roll up the wealth of our nation, sack it and pack it top places unknown; get away with it and wash, rinse, and repeat the cycle? By the time amerika checks the lint trap on this cycle there won't be a thin copper penny for any citizen. Oh the stooges left behind for financial countrywide cleanup will offer to cut a copper in half and give we the people the bigger half, if we don't hang'em and I think we're 80% stupid enough as a people to allow it; if not a higher allowable percentage. History won't be kind as we'll be all lumped into the dumbest people in the universe after this cycle bankster national heist. Many citizens within other more informed nations already tune in on us for a laugh in.

JML-2012
Jul 9, 2014 - 5:37pm

Turdite seen shaking hands with Obama?

Steven B. Horse, is that you? What's up with you shaking hands with the Keynesian Kenyan? BTW, you forgot to wear your yellow hat!

ancientmoneyinfometron
Jul 9, 2014 - 4:00pm

Infometron, Indiana rod re: JPM stealing silver . . .

"J P Morgan declares Force Majeure. The longs holding futures contracts are settled in cash. J P Morgan keeps the physical. The price of silver sky rockets. J P Morgan wins again."

LOL! "I don't have your silver, so here is the cash, but, oh yeah, I do have the silver, but I gave you the cash, so I get to keep the silver!" I suppose if anyone could get away with something like that, it would be JPM! Maybe another little fine... bad JPM, bad! Promise you won't do it again, even if we don't make you admit that you did.

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

The rules of SLV already allow the custodian (JPM) to steal the silver, so long as they replace it with its current fiat currency value.

SLV goes so far as to say even if fraud occurs, the custodian is held harmless; all they must do is pay for the missing silver. I've posted the exact wording here at least twice in the past--maybe someone else will now prove it to themselves.

Visit the FAQ page to learn how to track your last read comment, add images, embed videos, tweets, and animated gifs, and more.

agNau
Jul 9, 2014 - 3:02pm

Anyone that has ever water skied......

knows what's coming as the slack is taken out of the rope.... The miners are looking like boats.

buzlightening
Jul 9, 2014 - 2:49pm

Mark to fantasy markets wait

F*mc minutes with bated lingering bad breadth. What a crock. Wonder how long the felon yellens words will carry any weight whatsoever, more than a fart in a tornado. As Andy Hoffman has noted, the propaganda leg of the fed fuds 3 legged stool,(Market manipulation, Lame stream media propaganda, and QEternity), is getting kicked out from under it.

With the unavoidable impending financial crisis looming over the shadow debt markets x 10. The putrid stinking grandiose missile of hidden monstrosity mutating rotten sausage being rolled into place. While the piling of ground up paper pulp fiction sits now poised readying to launch. You can't help but know the next we never saw it coming ploy, will send guillotine investment over the edge among the masses. When mkts lose their heads as is insanely present today, there's hell to pay for those who have hidden behind the fried froth for decades. Can't say the top EEE global power brokers come to trial but there will be plenty of upper level bankstering ponzi heads offered upon the alter of paper pulp fiction daily in the coming 2nd half of 2014. When it rains it pours in bankster pavement body slamming and couldn't happen to a nicer set of ASSets among the former teflon crowd. Only those with kevlar long underwear will avoid the peoples court.

Subscribe or login to read all comments.

Become member and subscribe to Turd's Vault

Contribute

Donate Shop

Get Your Subscriber Benefits

Private iTunes feed for all TF Metals Report podcasts, and access to Vault member forum discussions!

Key Economic Events Week of 1/18

1/19 10:00 ET Mother for SecTreas hearing
1/20 12:00 ET POTUS Inauguration
1/21 ECB meeting and rate decision
1/21 8:30 ET Housing Starts
1/21 8:30 ET Philly Fed
1/22 9:45 ET Markit flash PMIs (Jan)

Key Economic Events Week of 1/11

1/11 12:00 ET Goon Bostic speech
1/12 10:00 ET JOLTS job openings
1/13 8:30 ET CPI
1/13 1:00 ET Goon Brainard speech
1/13 2:00 ET Beige Book
1/14 8:30 ET Import price index
1/14 12:30 ET Chief Goon Powell
1/15 8:30 ET Retail Sales
1/15 8:30 ET PPI
1/15 9:15 ET Cap Ute and Ind Prod
1/15 10:00 ET Business Inventories

Key Economic Events Week of 1/4

1/4 9:45 ET Markit manu PMI
1/4 10:00 ET Construction Spending
1/5 Georgia U.S. Senate election
1/5 10:00 ET ISM manu PMI
1/6 US election certification
1/6 8:15 ET ADP Employment Report
1/6 9:45 ET Markit service PMI
1/6 10:00 ET Factory Orders
1/6 2:00 ET December FOMC minutes
1/7 8:30 ET Trade Deficit
1/7 10:00 ET ISM service PMI
1/8 8:30 ET BLSBS
1/8 8:30 ET Wholesale Inventories

Key Economic Events Week of 12/21

12/21 8:30 ET Chicago Fed
12/22 8:30 ET Q3 GDP final guess
12/22 10:00 ET Consumer Confidence
12/23 8:30 ET Durable Goods
12/23 8:30 ET Personal Inc and Spending
12/23 8:30 ET Core Inflation

Key Economic Events Week of 12/14

12/15 8:30 ET Import Price Index
12/15 8:30 ET Empire State Index
12/15 9:15 ET Cap Ute and Ind Prod
12/16 8:30 ET Retail Sales
12/16 9:45 ET Markit flash PMIs Dec
12/16 10:00 ET Business Inventories
12/16 2:00 ET FOMC Fedlines
12/16 2:30 ET Chief Goon Powell presser
12/17 8:30 ET Philly Fed
12/18 8:30 ET Current Account Deficit
12/18 10:00 ET LEIII

Key Economic Events Week of 12/7

12/8 8:30 ET Productivity & Unit Labor Costs
12/9 10:00 ET JOLTS jop openings
12/9 10:00 ET Wholesale Inventories
12/10 8:30 ET CPI
12/11 8:30 ET PPI

Key Economic Events Week of 11/30

11/30 9:45 ET Chicago PMI
12/1 9:45 ET Markit Manu PMI Nov
12/1 10:00 ET ISM Manu PMI Nov
12/2 8:15 ET ADP Employment Report
12/3 9:45 ET Markit Services PMI Nov
12/3 10:00 ET ISM Services PMI Nov
12/4 8:30 ET BLSBS
12/4 8:30 ET US Trade Deficit Nov
12/4 10:00 ET Factory Orders

Key Economic Events Week of 11/23

11/23 9:45 ET Markit flash PMIs
11/23 1:00 ET Goon Daly
11/23 3:00 ET Goon Evans
11/24 9:00 ET Case-Shiller home prices
11/24 10:00 ET Consumer Confidence
11/24 11:00 ET Goon Bullard
11/24 12:00 ET Goon Williams
11/24 12:45 ET Goon Chlamydia
11/25 8:30 ET Q3 GDP 2nd guess
11/25 8:30 ET Durable Goods
11/25 10:00 ET Personal Inc and Spend
11/25 10:00 ET Core inflation
11/26 US Market holiday

Key Economic Events Week of 11/16

11/16 2:00 pm ET Goon Chlamydia
11/17 8:30 ET Retail Sales
11/17 8:30 ET Import Price Index
11/17 9:15 ET Cap Ute and Ind Prod
11/17 10:00 ET Business Inventories
11/17 1:00 pm ET Chief Goon Powell
11/18 8:30 ET Housing Starts
11/18 1:20 pm ET Goon Bullard
11/19 8:30 ET Jobless claims
11/19 8:30 ET Philly Fed

Key Economic Events Week of 11/9

11/9 1:30 pm ET Goon Mester
11/10 7:30 am ET Goon Kaplan
11/10 10:00 ET JOLTS job openings
11/10 10:00 ET Goon Rosengren
11/11 Veteran's Day. Bond market closed.
11/12 8:30 ET CPI
11/12 11:45 ET Chief Goon Powell
11/12 2:00 pm ET Federal budget
11/13 7:00 ET Goon Williams
11/13 8:30 ET PPI
11/13 8:30 ET Goon Bullard
11/13 10:00 ET Consumer sentiment

Recent Comments

Forum Discussion

by mrcic, 2 hours 34 min ago
by scoremore, 3 hours 41 min ago
by canadapleasure, 9 hours 21 min ago
by scoremore, Jan 19, 2021 - 10:56pm
randomness