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

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.

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