Your Latest Crime Scene Report

14
Mon, May 11, 2015 - 1:06pm

Late Friday saw the release of another in the inglorious line of Bank Participation Reports from the criminally-complicit CFTC. Why I'm even bothering to write about it is beyond me.

Before we begin, the usual background:

  • The CFTC's Bank Participation Report is issued monthly from a survey taken at the Comex close on the first Tuesday of every month. The report summarizes the combined positions of the four largest U.S. banks (primarily JPM, MorganStanley, Citi, Goldman but occasionally others) and the twenty largest non-U.S. banks (Scotia, HSBC, DeutscheBank, UBS, Barclays and others).
  • These reports might be utter nonsense and complete falsifications, designed to mislead and misdirect. Just last year, JPMorgan was fined by the CFTC for "repeatedly submitting inaccurate reports relating to the required reporting of positions". See here: https://www.cftc.gov/PressRoom/PressReleases/pr6968-14
  • I will leave it up to you, dear reader, to assign or withhold legitimacy to/from the data. My job is simply to report to you on what the data shows. Further, before we begin, I urge you to review this post from February: https://www.tfmetalsreport.com/blog/6601/banks-run

    OK, are you ready? Then let's get started.

    Over the course of the past reporting month, the price of gold has fallen by $17 while total Comex gold open interest rose by 9,427 contracts from 390,571 to 399,998. The "data" shows that the 24 Banks covered by the report decreased their combined NET SHORT position from 74,187 to 56,819 contracts over this time period.

    This is good news, I suppose, as this combined NET SHORT is the lowest reported total since November and December, which of course is when price was bottoming near $1150. Price then rallied over 13% in January.

    For today, though, I'd like to go back and re-visit two BPRs from the past so that you can see just how much the data has changed over the past couple of years. From there, you can decide whether or not this information has any use at all and you can assess whether, instead, it's still full of lies and deceit. For, in the words of the CFTC:

    "JPMS continued to submit large trader reports that contained hundreds of errors throughout the period from February 1, 2013 to February 2014."

    Do you really think that a fine of $650,000 was sufficient enough to get them to stop their lies and clean up their act? Hmmm??

    Alrighty, then. Check out this report first. This one is from October 2, 2012. QE∞ was just announced by The Bernank and gold was near $1800. All systems looked a "GO" for a renewed rally and push to new highs.

    10/2/12 GROSS LONG GROSS SHORT TOTAL

    U.S. Banks 40,625 146,809 -106,184

    Non U.S. Banks 34,881 113,445 -78,564

    TOTAL 75,506 260,254 -184,748

    As it turned out, gold wasn't ready to push to new highs. Instead, it sold off, highlighted by the extreme smash of April 2013, where it was clipped for over $200 in two days. By January of 2014, price was nearly $600 lower at $1229 and the BPR that the CFTC released on January 7, 2014 looked like this:

    1/7/14 GROSS LONG GROSS SHORT TOTAL

    U.S. Banks 59,291 20,032 +39,259

    Non U.S. Banks 26,128 32,492 -6,364

    TOTAL 85,419 52,524 +32,895

    So, if the data are to be believed, look at the obscene profits made by the 24 Banks during the manufactured decline in price. While price fell from by 30%, The Banks massaged their NET position by 217,643 contracts. That's 21,764,300 ounces of paper gold or about 677 metric tonnes!

    OK, now let's look at the data released last Friday. Recall that this is data taken from the BPR survey last Tuesday, when price closed at $1193...a tiny $36 or 3% lower than it was on January 7, 2014.

    5/5/15 GROSS LONG GROSS SHORT TOTAL

    U.S. Banks 6,966 29,851 -22,885

    Non U.S. Banks 29,748 63,682 -33,934

    TOTAL 36,714 95,533 -56,819

    The changes to last Tuesday from October 2012 AND January 2014 are breathtaking! But wait, but wait. I thought The Banks are just altruistic, benevolent market makers, in the business of simply creating orderly and fair markets for the CME/Comex. (At least that's what The Apologists always claim.) IF that's the case...and IF we assume that this information is accurate and reliable...AND THOSE ARE SUCH BIG IFS THAT MY FONT SIZE DOESN'T DO THEM JUSTICE...these changes over time sure are interesting. Let's make a few observations. Shall we?

    • The first thing that HAS TO jump out at you is the total Bank NET SHORT position. After moving to nearly 33,000 contracts NET LONG in January of 2014, The Banks are now nearly 57,000 NET SHORT. All the while, price has fallen by 3%. Hmmm. There certainly seems to be a movement afoot to contain price. Vault subscribers know of the importance of what we call "The Nemesis Line". You can see it below. The renewed NET SHORT position confirms the importance of maintaining this line for The Banks.

    • The Banks have managed this primarily through a U.S. Bank (read JPM) dumping of longs. On the BPR of 8/6/13, the U.S. Bank GROSS LONG position reached 90,949 contracts. As of last Tuesday, it was just 6,966 contracts. WOW! That's 83,000 longs closed out and buried.
    • Notice the minimal change in the US GROSS SHORT and Non-US GROSS LONG totals between 1/7/14 and 5/5/15.
    • The only other big change is in the Non-US GROSS SHORT position which has nearly doubled over the same time period from 32,492 to 63,682.

    So what to make of all this...if anything, given the suspect nature of the data.

    This isn't a "bullish" report but it isn't really "bearish", either. All it confirms is that The Banks still stand ready to naked short any future rally. They did this in January through the naked issuance of over 85,000 new contracts and we can be certain they'll pull the same stunt into any rally that develops over the next few weeks, blunting the impact and stalling all possible upside momentum.

    With the enabling and complicit CFTC on the side of The Banks, our primary hope remains the eventual emergence of a new, physical-only system to counter the corrupt LBMA and CME. Until then, we must expect more of the same while using the artificially discovered low prices to our advantage as we stack and prepare for TEOTGKE.

    TF

    www.tfmetalsreport.com/freetrial

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