The Latest Bank Participation Report

52
Tue, Jun 14, 2016 - 11:25am

The latest CFTC-generated Bank Participation Report provides another case study of the methods through which the major Bullion Banks attempt to influence and direct gold prices.

We've written about these CFTC-generated reports so many times, it would be impossible to link every post. However, nearly every post began with these bullet points. Here they are again, just so that we're on the same page:

  • 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. In 2014, 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

Again, we know that what The Banks report as their "positions" provides an incomplete picture at best. Not only do The Banks maintain considerable long and short bets in the OTC market, they also operate numerous, offshore hedge funds and utilize these funds to take positions not included in the CFTC data as "commercial". So, what good are these reports? Similar to the weekly Commitment of Traders reports, the Bank Participation Report is only useful/interesting when considered historically...and that's what we'll do again today.

As you know, gold has been on a tear in 2016 as investors and traders around the globe have profited form being long. You would think that some of the "smartest" and "best-connected" traders in the world...those on Bullion Bank trading desks...would have profited from this 20% move as well. However, if you think that, you're dead wrong.

For your consideration, here are the last six CFTC-generated Bank Participation Reports for Comex gold. Please take some time to review them and be sure to note the size of the position changes in each category in relation to price.

1/5/16 @$1078 GROSS LONG GROSS SHORT TOTAL NET

US Banks 6,387 49,447 -43,060

Non-US Banks 35,499 37,698 -2,199

TOTAL -45,259

2/2/16 @$1127 GROSS LONG GROSS SHORT TOTAL NET

US Banks 9,136 54,150 -45,014

Non-US Banks 22,313 42,663 -20,350

TOTAL -65,364

3/1/16 @$1231 GROSS LONG GROSS SHORT TOTAL NET

US Banks 8,183 81,050 -72,867

Non-US Banks 20,514 72,777 -52,263

TOTAL -125,130

4/5/16 @$1230 GROSS LONG GROSS SHORT TOTAL NET

US Banks 11,099 88,208 -77,109

Non-US Banks 22,788 93,900 -71,112

TOTAL -148,221

5/3/16 @$1292 GROSS LONG GROSS SHORT TOTAL NET

US Banks 10,791 118,437 -107,646

Non-US Banks 21,905 109,511 -87,606

TOTAL -195,262

6/7/16 @$1247 GROSS LONG GROSS SHORT TOTAL NET

US Banks 12,704 73,928 -61,224

Non-US Banks 21,004 93,076 -72,072

TOTAL -133,296

Obviously, there are a few things here that should literally jump off the page at you:

  • First of all, check the gross long positions in both categories. Price rises over 20% yet these Banks hardly add or subtract any longs. In fact, look at the remarkable consistency of the Non-US Bank long position between February and June. Price rose $170 and then fell over $90 before climbing back. Yet, these 20 Banks barely budged their relatively tiny long position. What does this tell you about their ultimate motive? Is it to profit from alternately being long and short??
  • Look at the change to the total combined short position between February and May. It increased by 300%!! This while price was rising from epic lows near $1100 to just shy of $1300. Again, are these brilliant, MBA-carrying traders looking to profit or are they hoping to accomplish something else?
  • And, of course, be sure to note the changes from May to June. During this time, price fell nearly $100 and then rallied back $40. Did The Banks use this period to add some longs? Of course not. Instead, while the speculators were dumping long positions over fears of looming Fed rate hikes, The Banks were gleefully buying back and covering some of their massive, accumulated short positions. Note that the combined total net short position fell by 62,000 contracts or about 32% over this time period.
  • Lastly, at the peak on May 3, the total combined net short position of these 24 Banks was 195,262 Comex contracts. That same day, the CFTC-generated Commitment of Traders Report showed a "Gold Commercial" net short position of a near-record 294,901 contracts. So, of that record net short position and near-record open interest total back in early May (all issued in a desperate attempt to keep price below the pivotal $1308 level), The Banks themselves were responsible for over 66% of the total. Sixty-six freaking percent! This is NOT hedging or any other legitimate activity. This is Market Manipulation 101. Issue limitless amounts of paper derivatives until the point comes where speculative interest is exhausted. Use the selling that ensues to buy back your ill-gotten shorts, likely at a profit, but be at the ready to issue them again should price resume its uptrend.

Again, none of this should come as any surprise to regular readers here at TFMR. The purpose of this post is to continue shining the light of truth upon the fraudulent, paper derivative pricing scheme. Only when this scam/sham is finally defeated will price be allowed to reach its fair value. In the meantime, all those playing in the "Comex Casino" need to be aware of the forces aligned against them and trade accordingly.

TF

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  52 Comments

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adonisdemilo
Jun 15, 2016 - 4:05am

If DB can hang on until after

If DB can hang on until after the Brexit I suspect Draghi will do " whatever it takes " to stabilise the banks which will include getting DB off the hook as his first target.

benque
Jun 14, 2016 - 5:31pm

Yeah Marchas

Saw your post, so took a peek at the chart. Nice spike in gold, but silver just bumming along....for now.

Marchas45
Jun 14, 2016 - 5:12pm

Is That

a little glitch on the Chart? $1294.10

AGAUbently
Jun 14, 2016 - 4:40pm

Bravada

Just had some good drilling results I see not a bad little spec stock IMHO - looking for $1 plus by year end

Not advice - ya don't need that from me !! lol

RickshawETF
Jun 14, 2016 - 4:35pm

The Risks of Being Early . . .

So, I bought into this manipulation and debt overload relatively early -- 2013. Having moved early (and often) into bullion, coins, offshore vault storage, and the miners, I felt smug, satisfied, and dare-I-say-it, prescient. So, 2014 and 2015 taught me humility, patience, and tested my resolve to stay the course. I know I'm right -- just early, so it doesn't bother me a whole lot (ok, so I sometimes think if I'd stayed invested in "the market", and cashed out later, I would own more metal). I'm comforted by the adage: "It's better to be years early than seconds too late . . ."

Ah, so this brings me to the wife! In 2013 I convinced her to move a significant portion of her 401(k) into SIVR -- at $31.40 per share! She's down around $22K on her "investment", and I hear about it every month, when her latest statement arrives (especially since her "mainstream equities" have continued to appreciate). Of course, that has poisoned her to any other "advice" I offer on the metals, so I just have to suck it up, and await [eventual] vindication.

As Rick Rule likes to say, "You want to be in a position, with regards to your investments, where your only question is when, and not if . . ."

Blankone
Jun 14, 2016 - 4:23pm

More thoughts

AE, I totally agree about the coming down but the timettable is still incredibly foggy. Never in a million years did I think it would last this long but here we are in 2016. Who knows what these bastards will come up with next to prolong their pilfering of the middle class and take as much away as they can.

AlienEyes
Jun 14, 2016 - 3:54pm

DB

"DB is getting ramped back up too."

See ? That's why they want you to put your money in their bank at 5%...."forever" maybe.

AlienEyes
Jun 14, 2016 - 3:46pm

Thoughts...

"Im seeing that Dem. Congressmen walked out of a moment of silence and are demanding tougher gun laws."

Good ! Lets hope the rats don't come back.

I went downtown this morning and stopped at a light behind this HUGE truck with a nice rack on top. I was paying attention because I like racks. We were stopped in front of an antiques store that had a 'rainbow' flag hanging off of it and a guy standing in the doorway. The man in the truck rolled his window down and yelled at the guy in the doorway, "Hey dumb a$$ ! Its FLAG DAY, Not FAG DAY". Each flipped the other off and then the light changed and we all went along our merry way....thankfully. People are getting kinda 'tense'.

I think this country is changing. It's like enough is way more than enough. When an admitted socialist (commie lite) is running and doing fairly well, it's time to say something about doing something. I do not want this place called 'North Venezuela' ! At the rate its all coming down, I'm thinking a year from now, shiny and her silver sister will be more than twice what they are today. I don't think it can be turned around at this point without getting really tough. When the currently oblivious realize gold is going up and the dollar is going down.....duhhh. I could be wrong. I have been on more than a few occasions.

AE

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bently
Jun 14, 2016 - 3:45pm

Ugly Miners?

BGAVF, Bravada Gold, just leaped 33% on one trade with miniscule volume. Someone must have read your post!

jaw777
Jun 14, 2016 - 3:44pm

DB

is getting ramped back up too. SOBs

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