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

About the Author

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

  52 Comments

Captain Scott · Jun 14, 2016 - 11:28am

My First first?!

My First first?!

Fatso · Jun 14, 2016 - 11:28am
Danforth Coxwell · Jun 14, 2016 - 11:33am

3rd????

It has been a while.

AlienEyes · Jun 14, 2016 - 11:42am

Platipus

Platinum just took a $17 nose dive. Hmmmm.

brokerk22 · Jun 14, 2016 - 11:45am

They

are definetely going to try and fill that gap it looks like. We'll see. Charts have limited usage but before a fed day they just make it happen to get bankers more shares.

· Jun 14, 2016 - 11:54am

Gold still tracking with yen

If you want the HFTs to buy paper gold to new highs, then we're going to need a post-FOMC or Brexit move to new highs in the yen (new lows in the USDJPY).

luvabean · Jun 14, 2016 - 11:54am

ah marchas....just holding<3

so, there's alot to not know about the chinese...
this is an old doc that i just watched.
so yeah, there's probably no prediction as far as knowing what all the chinese are up to.
this was very interesting and altho old,
i am sure there are tendrils remaining throughout the country side.
unknown and strange to say the least...
alas, this world is one helluva' a melting pot.
https://www.youtube.com/watch?v=FHR9F4G0kvc
and, eh hem...
"keep stackin'!"<3
p.s.
hard to tell what the diversity of other cultures value, as you'll see...
even harder to predict the why and how of what they value....and how they adapt to cultures outside of their's to obtain what they want.
...and you thought the manipulation was confusing. this is a crazy world, and as common ground is sought...
things will probably be even more "interesting"
i do hope this doesn't offend anyone. it is obvious these folks aren't. just added it as i was astounded and had no idea of these practices...and realized that the "rednecks" of china are even more of a head scratcher than many uppity folks here in the states view our very own. just wow, huh?
yeah, this is off topic...and i apologize. but dang, they're gonna be in the sdr...time to think outside the box as the population outside of the westernized chinese probably vastly outnumber those 1%. juz' sayin<3

· Jun 14, 2016 - 11:57am

"Commodities" down across the board

Just a general nervousness about everything, I suppose, even the mining shares. This, too, shall pass.

kenmasters675 · Jun 14, 2016 - 12:02pm

miners look ugly. I was dead

miners look ugly. I was dead right on miners dropping.

For here it could move back up or drop back to 50 day MA GDX

i bought some miners here during this drop so hopefully it can move up but a move down to 50 day MA won't surprise me. 

Isn't yellen just gonna say they are going to increase rates slowly and lie bout it and drop gold anyways?

Miners are screaming gold crash. Hopefully we can see gold to $1,300 soon.

· Jun 14, 2016 - 12:03pm

For Maryann

She asked yesterday if I was intent upon holding my 7/29/16 GDXJ calls. The answer is: YES. Just added two more. Now have 5 total.

· Jun 14, 2016 - 12:11pm

Another look at DB

By any traditional TA measure, a closing low below the previous intraday low would be pretty bearish.

· Jun 14, 2016 - 12:19pm

Total gold OI up another

Total gold OI up another 13,000 yesterday to 539,000 on the $11 gain. Gotta wonder how many they're adding today to hold gold back from $1290+...

· Jun 14, 2016 - 12:28pm

FWIW re the S&P

I had also done this back on Friday and sold for a profit earlier today...thinking that the "market" will likely stabilize ahead of the Fedlines tomorrow. May look to get re-short then. I still have my 10 DB puts, though, and now can feel free to just leave them on since I've booked this other profit.

AGAU kenmasters675 · Jun 14, 2016 - 12:36pm

Ugly Miners ??

 It would be hard to call these Ugly -Huh ha ha

If anyone was lucky enough to but these in Jan they have not been ugly unfortunately I have held and added to these the last couple a years so I am just well back in the green

a 15 - 20% correction would not be unlikely here, so what? they are all headed up over the long term I haven't the inclination or the smarts to try and time trades during this market I feel safer sitting tight . I have made out well, cost averaging into these when they were on the canvas so I am following Jesse's advice "being right an sittin' tight" I will dump a few of my "pigs" over the next few weeks and take the losses - just readjust my portfolio etc

YTD

AG + 267%

MUX + 203%

PVG + 69%

MPUCF + 125%

BGAVF +417%

GGTCF + 168%

BHVCF +549%

RPMGF + 249%

RickshawETF · Jun 14, 2016 - 12:41pm

seventh

"Is this Heaven? No, it's the gold storage vault for the PBOC . . . "

Maryann · Jun 14, 2016 - 12:42pm

Thank you TF....

You read my mind. I was just wondering about that. Now, I have a question and please forgive me in advance if this is dumb as I am such an option novice but I was wondering if you have any concern about the gap between 34 and 36 on the GDXJ chart? I was looking at the put open interest and it seems high at those levels. Am I reading that right? Edit to add that that is for the Aug puts not July.

Thank you again! At my own risk, I am playing along at home. smiley

Maryann · Jun 14, 2016 - 12:43pm

No concern at all

If it goes down there, I'll buy 2 more. LOTS of time on this one.

AGAU · Jun 14, 2016 - 12:45pm

I hear ya

And didn't we just have a 15% correction in May?

Again, after a 140% move to the new highs last week, you're going to get consolidation. It's inevitable. In the end, I'm up so much that I'm just letting it all ride. If I try to get cute and day trade, all I'll be is wrong and I'll miss out on massive reversals like the 10% beauty back on June 3.

Doople · Jun 14, 2016 - 12:55pm

Risk in Miners

The risk to the miners IMHO is to be out of the market. The returns have been excellent. Now we are in a seasonally weak time of year for gold until say the end of July but with Brexit looming and other fundamental issues, gold may not follow the play book. It does seem to me that the Shanghai Gold Exchange has stabilized the market some. The punishing drops seem to be less punishing. Now with this valuable information in hand plus $3.00 USD you can get yourself a cup of coffee at Starbucks.

infometron · Jun 14, 2016 - 1:25pm

Miners

Miners are modestly down (geez, I felt a wee tinge a la Gartman using that adjective, yuck!). Down, I think, just along with all the rest of the stawks... no biggie. Happily, I doubled down on UVXY last week. Check out these high fliers:

CPN (up over 1000%)

SSV (up over 1000%)

SBR (up over 800%)

SIL (up over 800%)

BBB (up over 500%)

B-B-B Baby, you ain't seen nothin' yet!

Bachman Turner Overdrive - You Aint Seen Nothing Yet
· Jun 14, 2016 - 1:25pm

NOT an active shooter

Sounds like disgruntled employee holding his boss hostage.

Marcrward · Jun 14, 2016 - 1:44pm

they probably tried to reduce his hours

Due to ObamaCare...

but hey, don't let a crisis go to waste...

Take away everyone's guns!

pbfurn · Jun 14, 2016 - 1:56pm

The Humility around here

concerning the brilliance on the part of some Turdites in the mining sector is a bit under whelming.

And all your children are good-looking and well above average?!?

pbfurn · Jun 14, 2016 - 1:56pm

The Humility around here

concerning the brilliance on the part of some Turdites in the mining sector is a bit under whelming.

And all your children are good-looking and well above average?!?

luvabean · Jun 14, 2016 - 1:59pm

so again, off topic...but alas, i subscribe for the taste...

i saw an upload on a channel i love,
i imagine she's a russian mail order bride here in ohio...and i was researching a bird here...and she came up on my algo....as i have varied interests...
alas, why not?
i loved this vid...made by a girl who is probably like me, from miles away...
and i loved the song, karaoke style<3
...and our sweet birdies<3!!!!
https://www.youtube.com/watch?v=8cLlk_94yBk
and now this...
common folks have abit of patriotism now matter where they come from...and where they end up...
thought this was pretty...have no idea what they're singin' or spellin'....but know what they mean.
cuz i can tell....
she's, i think, missin' home sometimes....and makes these bittersweet vids for her peeps back home...
and for herself, in the safety here.
https://www.youtube.com/watch?v=14fTEaHqPE8
as i watch i can only correlate what i feel.... but i bet i can jam some pidgin with her just fine.
it IS universal <3
love yer neighbors....no one knows definitively....and so much may come of the crux<3
i have invested in rmb and rubles...i hope to more invest in the people who could tell me more of a story of why my heart leads me so.
big world...lap it up. i wanna' hug every single person livin' inna' shack...like me, worldwide.
let's jam!
it's the endgame, made beautiful<3 

canary · Jun 14, 2016 - 2:03pm
AGAU pbfurn · Jun 14, 2016 - 2:14pm

humility @pbfurn

We did not look so good for the last few years but hey every dog has his day so don't piss on the parade mate- a little celebratory braggin' is warranted

of course my kids are fabulous - aren't yours and everybody else's ???

 or Do I detect some green envy here ?

Marcrward · Jun 14, 2016 - 2:16pm

Currency Risk

The Average Life Expectancy For A Fiat Currency Is 27 Years ... Every 30 To 40 Years The Reigning Monetary System Fails And Has To Be Retooled

David Galland notes:

Monetary scholar Edwin Vieira ... pointed out that every 30 to 40 years the reigning monetary system fails and has to be retooled. The last time around for the U.S. was in 1971, when Nixon cancelled the convertibility of dollars into gold. Remarkably, the world bought into the unbacked dollar as its reserve currency, but only because that was the path of least resistance. But here we are 40 years later, and it is clear to anyone paying attention that the monetary system is irretrievably broken and will fail.

What will replace it is still unclear, but I suspect that when the stuff really hits the fan and inflation rages the government will try the approach taken by the Germans to end their hyperinflation back in the 1920s, coming up with the equivalent of the Rentenmark – a dollar that is loosely linked to some basket of commodities and financial instruments. It won’t be convertible, because it would be impossible for bank tellers to exchange your dollar for a cup of oil, and a coupon off of a bond, and a chip of gold, or whatever makes up the basket – but it might restore some semblance of confidence in the currency. That’s one option. Another is that some government decides to make its currency convertible into precious metals; but that will only happen when all other less fiscally restraining systems have been floated and failed. Simply, at this point we can’t know what will replace the current monetary system, or when. All we can know is that the status quo cannot and so will not survive this crisis.

Regardless, between now and the point in time where the Fed throws in the towel on today’s fiat monetary system, you would have to be naïve in the extreme not to expect volatility, uncertainty, and wholesale financial dislocations
Captain Scott · Jun 14, 2016 - 2:16pm

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