Again, ole Turd doesn't put too much stock in these reports as they are based upon "scout's honor" reporting from The Banks and JPM has already been fined for repeatedly submitting false information. So, FWIW....
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 you and get you leaning the wrong way. 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. This month, instead of simply reviewing all of the numerical changes, let's have some fun and see if we can determine just how fat those Bank prop desk bonus pools are getting. The latest "survey" was taken last Tuesday and here's what it showed when the CFTC released the report back on Friday:
As of Tuesday August 5, with price at $1091 and OI at 434273
US Banks 8997 long. 39347 short. NET -30350
NON US Banks 35915 long. 44093 short. NET -8178
TOTAL NET -38528
Back on July 7 with price at $1153 and OI at 452145
US Banks 7278 long. 43703 short. NET -36425
NON US Banks 36556 long. 62571 short. NET -26015
TOTAL NET -62440
And for perspective of why I repeatedly tell you that The Banks ALWAYS win:
Back on Feb 3 with price at $1260 and OI at 419524 and the Large Specs NET LONG 185015 and the Small Specs NET LONG 18000
US Banks 9163 long. 65901 short. NET -56738
NON US Banks 20009 long. 96264 short. NET -76255
TOTAL NET - 132993
The report in February was particularly egregious as "The Gold Commercials" had just been caught creating and adding over 56,000 new naked shorts over the previous two weeks alone as they were desperate to cap the rally that had begun in January. See this: https://www.tfmetalsreport.com/blog/6601/banks-run You should also listen to this podcast from 1/30/15. Start at the 15:00 mark and listen to the rest: https://www.tfmetalsreport.com/podcast/6575/tfmr-podcast-friday-january-30
So, price falls $170 or 13.5% in six months. Over this period, The 24 Banks reduce their NET short position by 94,465 contracts.
Over those six months, the four US Banks actually reduced the number of longs by 166 contracts while covering 26,554 shorts. It's impossible to know for sure but let's make a conservative guess...If you figure they made $100 on average on each covered short, The US Banks booked profits of $265MM.
Over those same six months, the twenty Non-US Banks have actually added 15,906 longs. They've been buying while the paper-trading Specs have been selling. Additionally, these 20 Banks have covered 52,171 shorts. Using the same guesswork math as above, these 20 Bank desks have booked profits of $521MM.
Again, these are just guesses. The realized gains over the past six months of lower prices could be less. They could also be more...maybe as much as $1,000,000,000.
It's good work if you can get it and this year's Holiday Party is going to include all of the vodka, hookers and blow The Monkeys can handle. It's also why The Banks will defend and protect their Cash Cow to the last available ounce.